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> run down

These aren’t run down hotels. These are both rated 4.2 [0, 1] and while aren’t the greatest in the world are both Hiltons and decent hotels.

The criticism doesn’t change the nature of the original article in that San Francisco is less good as it once was and as a result businesses are defaulting on pretty big things rather than invest in keeping them up.

The inaccurate language seems to have a “everything’s fine here” kind of vibe to me.

[0] Hilton San Francisco Union Square (415) 771-1400 https://maps.app.goo.gl/EPnQC4pbbwRKNjNh9?g_st=ic

[1] Parc 55 San Francisco - a Hilton Hotel (415) 392-8000 https://maps.app.goo.gl/p9SprpPdGZxzbejf8?g_st=ic

The hotels may or may not be themselves run down, but there's also the neighborhood to consider, especially when you're talking about San Francisco.

I know someone who used to travel to SF for work a lot, like 10-12 times a year. He had a favorite hotel there that was a block and a half away from his office. But every single time, he'd rent a car, just to drive from the underground parking at his hotel to the underground parking at work. It was simply safer than walking.

It likely felt safer than walking but there is a 0% chance that a 1.5 block walk through San Francisco was truly more dangerous than a 1.5 block car ride. It’s much more likely that neither was dangerous at all.

Feeling of danger is subjective, I can easily imagine a car ride along shit-infested sidewalks and deranged homeless people feels less dangerous (and icky) than walking.

I mean, okay, but don't you think there's generally a correlation between “feeling of danger” and “actual danger”?

I'm not arguing with you, I'm arguing with other people here who apparently have no problem walking on shit, syringes and whatever else as long as loitering delinquents don't "look at them crossways".

Ah, gotcha, I see what you’re saying. I guess I’d just say that you seem to be implying that the human instinct for perception of danger is not really tied to actual danger. And while one could argue that in the modern day that may be true, I think there’s something to be said for the fact that our instinctual ability to perceive even potential danger has gotten us this far.

I remember spending entire days walking the city. I walked from a VC meeting to a lunch with a friend, it took over an hour.

Having said that, a lot has changed since 2009

Getting accosted several homeless people in a short stretch feels unsafe, especially to the sort of out of towner who is not inured to it, in a way that driving does not. Both have a very low risk per unit of travel, but in the moment we have no way of qualitatively measuring that risk.

I stayed in SF for a few nights, it was pretty shocking to me the amount of homeless people (euphemism creep: temporarily unhoused) and the various tactics they employed to try and get money. One lady was just screaming at people in a fast food restaurant, I guess she was hoping to get paid in order to go away. This was 20 years ago and I hear the situation has only gotten worse since.

California treating homeless people like sacred cows is eventually going to wreck their inner cities for everyone.

Maybe instead of complaining about homeless people we should complain about how capitalism creates homelessness.

Maybe instead of pretending homelessness is a strictly capitalist problem we should look at whether it’s been a problem elsewhere:

https://en.wikipedia.org/wiki/Homelessness_in_Russia

https://en.wikipedia.org/wiki/Homelessness_in_China

https://en.wikipedia.org/wiki/Kotjebi

You don't have a homelessness problem if you send the homeless to labour camps.

Why is capitalism only creating homeless encampments in San Fran and not generally in the US? Maybe it’s not capitalism at fault here but a government that is unwilling or unable to supply standard social safety nets like homeless shelters and addiction therapy.

> San Fran and not generally in the US

SF attracts homeless from all over the US, given its mild weather (great for living outside) and generous social services. It has been like that forever also, you can watch old movies from the 1920s about hobos jumping trains to get to SF (or LA, or Seattle, or Portland, or even Vancouver BC, choose any of the west coast cities, all for similar reasons).

People have freedom of movement in the USA, and they mostly take advantage of it.

> Maybe it’s not capitalism at fault here but a government that is unwilling or unable to supply standard social safety nets like homeless shelters and addiction therapy.

The issue is then how do you prevent one locality from having their resources swamped fixing what is really a national problem. SF can't fix the nations problems, so its voters/tax payers get jaded really quickly.

I encourage you to take a few days to walk around as a tourist in downtown San Francisco and ask how yourself: how could this situation be improved?

You’re right. For example in Soviet Russia – no one was homeless or unemployed, since everyone was guaranteed a place to live and a place to work. Granted, gulags did not have the most comfortable accommodations, and you had to work long hours for free to live there, and potentially could end up in a mass grave, BUT at least you didn’t have to be accountable for your decisions like in these pig capitalist societies.

Agreed, but we should also also talk about how the social left basically got mental institutions shut down in the 80s, and how there is literally no place to put people who are unable to mentally deal with life in america.

Mentally ill people are a massive part of the homeless population and we basically just yeet them out on to the street.

Well, keep in mind that he was working somewhat odd hours. He would often be leaving work at around 23:00 or later. There are definitely parts of San Francisco where you do not want to be walking even a single block through that late.

Oh for goodness sake. He felt safer than when he was walking. Renting a car to drive a block and a half is just ridiculous - unless maybe he's displaying obvious signs of wealth?

I stayed in the hilton union square in Feb and yes there are a lot of homeless people and addicts around but none of them even looked at me crossways

I don't know SF all that well personally, so I really can't say. I do know that where the person I know stayed was in the Mission District, which was (and still is) widely known to be among the more dangerous parts of San Francisco. I also know he was routinely coming and going at odd hours, 23:00 or later.

I also know that he had a permit to carry a gun, which (at the time) was near impossible to get in California, and that he in fact did so. Nevertheless, he chose to drive the block and a half rather than walk, because the last thing he ever wanted to do was be forced to use his gun.

I personally don't consider that to be an “obvious display of wealth”, but take it for what you will.

People love the Mission, move there for the night life specifically. It's lively and fun at 11pm.

This person sounds like they have some mental issues.

People who go out of their way to carry guns in cities usually strike me as "more paranoid" and not "more cautious". I am far less likely to trust their assessment of danger.

So because someone values their life and belongings, and has the proper training to wield a firearm, you are less likely to trust their assessment of danger? So then who do you trust?

And for the record, Mission has almost 4x the crime rate as California, which is already above the national average.[1] So it seems as though their “paranoia” was paying dividends.

[1] - https://www.areavibes.com/san+francisco-ca/mission/crime/

People who bring guns into urban areas have a bad assessment of danger, yes. There is almost no urban situation, especially on the street, where a concealed gun will help. It's not like anyone will give you a chance to draw your weapon if you are ambushed. And every mugger I've experienced or heard of starts with their weapon out or at least their hand on it. If you think you can quick-draw and beat them, you have watched too many movies.

And, for the record, the source you cited shows that crimes where you would be morally or legally justified to use deadly force to defend yourself (e.g. rape, murder, assault), are less frequent in California than the national average and less frequent in San Fransisco than in California's average. Absolutely, if you think using a gun is a valid response to someone breaking your car window you are absolutely not a good judge of threats. Nor are you a responsible gun owner and should be forced to surrender your gun.

Even through the worst parts of SF (hello caltrain station to the convention center), I never felt in danger when walking while visiting. Maybe this guy was a hypochondriac or something? I'm guessing some other factor was at play.

> may or may not be themselves run down

That are not run down. My complaint is against writers who are inaccurate. It’s frustrating and wastes my time when writers do this poor quality work with mistakes. And it doesn’t seem like a mistake so much as a deception.

It’s not “may or may not” as these hotels are clearly not run down.

You’re right about then neighborhood, but the point that the article is trying to make is that it’s the hotels that suck, not the neighborhood. But that’s not true

Not just hotels. Westfield just chose to default on its downtown shopping mall as well (the one that just lost its Nordstrom).

San Francisco progressives got their wish: those evil gentrifying techies are leaving in droves. Unfortunately for the progressives, that also means they are taking their money with them, that was being spent by SF like drunken sailors.

Thanks for posting this but, his article doesn't make a lot of sense to me. If he could show the property owner was having equal similar difficulties in other cities his point would be stronger. As it is, It isn't even clear what he's saying.

Also, Hilton Union Square SF didn't seem 'run down' to me. I just had a conference there two weeks ago. The area around the hotel seems pretty quiet though...

WSJ article seems fine as these things go.

That article is full of fallacies. Brick and mortars in other large cities aren't closing like they are in San Francisco, especially not in the the epicenter of the financial district. Hotel rates in other cities have reached record highs while SF has declined even with inflation.[1]

[1] https://www.otainsight.com/resources/blog/us-hotel-pricing-t...

They didn't "fail to repay." Nobody ever repays this type of loan. They failed to refinance. And the fact that no one would refinance their $725 million loan means that the property has seriously declined in value.

It appears that the only thing that has declined here is the free money support for the fantasy valuation being claimed by the REIT. There are a lot of reasons that hundreds of billions in commercial real estate loans are going to be written off in the next few years and the original article mentioned none of them...

Apparently it wasn't a fantasy valuation because the banks lent against it. It is now a fantasy valuation because the properties have massively declined in value.

Banks loaned subprime mortgages, enough actually to tank the global economy. Banks loaned for Musk's Twitter purchase. Free money tends to move the risk assessment done by banks in not a good way. Just ask SVB.

FWIW, SVB didn't go broke because of subprime loans. They had a bank run.

They mismanaged their risk. You make it sound like they did nothing wrong.

Can the other banks handle the same thing that happened to SVB?

From memory, yes. At least better, since SVB had an unusual high amount of uninsured deposits and Edit: other banks have more short term investments to cover withdrawls that were marketed to market, meaning they were more like cash equivalents than the long term stuff SVB had to sell at huge losses. And those losses kind of killed SVB.

If it’s a fantasy valuation then was the government collecting property taxes based on those fantasy values?

There's even more reasons that interest rates won't stay this high for long enough to matter.

> They didn't "fail to repay." Nobody ever repays this type of loan.

Largely, but not strictly true. When the property changes hands, the old loan is paid down by the original owner / creditor and a new loan is taken out by the new owner / creditor.

And when you pay off a loan with borrowed money the word for that is "refinance"

> And when you pay off a loan with borrowed money the word for that is "refinance"

Not really.

If I buy a house with a mortgage, I wouldn't say I refinanced the house just because the previous owners also had a mortgage. Refinance is only used when the owner is the same across loans.

> The hotels themselves are operated by other companies, and when Park Hotel defaults on a mortgage and walks away from the property, it means ownership of the property will change. That’s all it means for the hotel. The operating company remains the same.

I'm curious about this part. Is that actually true? That sounds like the contract that the management company has is with the lender to begin with rather than Park Hotels? Or is the contract structured in a way that even if Park Hotels sells, the new owner needs to honor that existing contract?

I would expect there is some clause in their contract about novating it on transfer of the property ownership. Properties do get transferred, and it would be beyond insane not to have such a clause. It's not as if the operator of thy hotel can just rent another space down the road.

But not my industry, just seems like it would be reckless from the outside.

I'm sure the contract has terms that determine what happens on a sale, return to lendor or whatever else is going on. But I'm not convinced that the assumption that "nothing changes for the management company" is such an obvious assumption.

The Hilton is absolutely run down. It's a very old building with some expensive decor inside. Walking in through an archaic vestibule and you see how dated it is. Look at the room photos in that link. The bathrooms have "granite" vanities but the floors and wall covering are so dated.

Even before COVID, other Bay Area cities have been building up convention space to compete with SF. SF hotels kept raising their prices and wonder where the customers are...

So Park Hotels bought a call option on SF real estate.

Surely they and their counter parties did some modeling and stress tests.

This is wrong. The new owner can select a new operating company.