Park Hotels Files Suit Over Property Taxes On 3 San Francisco Hotels
Virginia-based Park Hotels & Resorts, which last month said it would hand over two San Francisco hotels it owns to loan servicers, last week filed suit over property tax assessments on three others.
Park Hotels filed three separate lawsuits in San Francisco Superior Court June 27, according to the San Francisco Business Times. The suits allege city tax assessments overvalued three properties the company acquired in 2019 when it merged with Chesapeake Lodging Trust.
The hotels listed in the suits are the Le Méridien San Francisco at 333 Battery St., the Hotel Adagio at 550 Geary St. and the Hyatt Centric Fisherman’s Wharf at 555 North Point St. They total nearly 850 rooms.
Park Hotels is seeking an $8M tax refund, plus legal costs and interest, alleging that the San Francisco Assessor-Recorder's Office overvalued the properties in the months following the transfer of ownership.
Park Hotels paid $10.6M in tax on the properties, which were valued at $353M at the time of sale, according to the Business Times, but the assessor-recorder later determined that the market value was $532M. After an appeal, the valuation was adjusted again to $484.3M.
The company was also allegedly subject to penalties of 25% and 10% for delinquent payment of the transfer tax. Park Hotels disputes the city’s calculations behind those penalties as well as the basis for them in the first place.
In 2021, Park sold the Le Méridien for $221.5M to KHP Capital Partners and the Hotel Adagio for $82M to an affiliate of Magna Hospitality Group.
Park Hotels is a major player in San Francisco’s deflated hotel market, which has suffered since the pandemic cleared out business travelers and tourists alike.
In early June, Park Hotels said it had stopped making payments on a $725M CMBS loan connected to the Hilton San Francisco Union Square and the Parc 55 San Francisco. The hotels are the largest and third-largest in the city, with 1,921 rooms and 1,024 rooms, respectively.
In a release at the time, Park Hotels Chairman and CEO Thomas Baltimore said his company was working with its loan servicers and expected the properties to be removed from the Park Hotels portfolio.
