You know it’s hard times in the luxury hospitality racket when even the owner of a Four Seasons hotel can’t pay their bills, as the Four Seasons Embarcadero owner reportedly hasn’t made their loan payments in three months.
The Florida-based real estate investment form Westbrook Partners would probably like a do-over on their $126.6 million purchase of the downtown San Francisco hotel that they would rename the Four Seasons Hotel San Francisco at Embarcadero. Months after that purchase, COVID-19 came along and wiped out tourism for a couple of years. Now interest rates are about double what they were when Westbrook took out their loan on the property, and business conferences that are the bread-and-butter of upscale tourism are still not back in full force.
So it was not ideal timing to take out a $72.5 million loan on the property, which Westbrook Partners did in 2019. And now the San Francisco Business Times is reporting that Westbrook is defaulting on the loan for the Four Seasons Embarcadero, reportedly not having made payments since December. They're now $3.15 million behind on their payments on the loan, according to a March 3 notice of default.
That default notice gives Westbrook another 90 days to pay up on the payments that are in arrears, and foreclosure is a possibility if they don’t.
As we’ve noted in similar default situations, the non-payment could just be a negotiating tactic to re-do the terms of the loan with their lender. Indeed, the Business Times points out that some high-profile borrowers “purposefully default on their loans as a way to commence negotiations with their lenders,” so that may be the case here.
But this comes on the heels of Hilton SF Union Square and Parc 55 hotels both being surrendered to their lender last June, and the Chronicle reported in January that the Hilton Financial District had also defaulted on their $97 million loan.
The Four Seasons Embarcadero, which is actually several blocks from the Embarcadero, occupies the top 11 stories of the 48-story 345 California Street building (though it uses the address of the adjacent 222 Sansome Street). It opened in 1986 as the Mandarin Oriental Hotel, then Loews Hotels bought it in 2015 and rebranded it as the Loews Regency. Westbrook Partners bought it to make it the Four Seasons Embarcadero in 2019, and while they did remodel the place, COVID-19 delays led to it not reopening permanently until June 2021.
A new Italian restaurant called Orafo opened in the building just last year, in February 2023.
This news does not affect the other Four Seasons hotel in San Francisco, which is at 757 Market Street (between Third and Fourth streets), or the Four Seasons Private Residences around the corner at 706 Mission Street.
Image: Four Seasons Hotel San Francisco at Embarcadero via Yelp
