“San Francisco Mall Owner Defaults as Real Estate Troubles Escalate: A Foreboding Sign of the Times”

Westfield San Francisco Centre Mall Turns Over Ownership to Lenders Due to Pandemic Woes

The Westfield San Francisco Centre mall, co-owned by Unibail-Rodamco-Westfield and Brookfield Corp., is surrendering ownership of the property to lenders due to outstanding mortgage debt amounting to $558 million. The management will be handed over to a receiver. San Francisco has been one of the hardest-hit cities in the United States during the pandemic, with office and retail vacancies rising and safety concerns deterring visitors.

Nordstrom Leaves Westfield San Francisco Centre

Nordstrom Inc. recently announced that it would close its store at the site, citing a drop in customer traffic, and the changing dynamics of the city. The Westfield San Francisco Centre mall is situated in the heart of San Francisco’s Union Square district, one of downtown’s main shopping, and tourist areas. Sales at the mall fell to $298 million in 2020 compared to $455 million in 2019, with foot traffic declining by 43%.

Westfield’s Decision to Stop Paying Debt

Westfield San Francisco Centre’s decision to cease debt payments was widely reported. In a statement, the mall’s co-owner, Unibail-Rodamco-Westfield, said that given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy, and foot traffic, management had decided to begin the process of transferring ownership of the shopping center to their lender. This would permit the lender to name a receiver to operate the property moving forward.

Park Hotels & Resorts Inc. Latest to Stop Payments on Loans

Park Hotels & Resorts Inc. is the latest to join a growing list of San Francisco hotels and malls that have stopped payments amounting to $725 million on loans tied to two downtown hotels. This adds to the deepening real estate problems in the city that is struggling to bring back workers and tourists after the pandemic.

Mayor London Breed Responds to Westfield’s Decision

San Francisco Mayor, London Breed, said the mall’s decision to turn its management over to the lender had been “coming for some time.” She pointed out that Unibail-Rodamco-Westfield planned to exit the US market entirely, as the company was looking to reduce its financial exposure to the US radically. Breed believed the mall’s new management presented an opportunity to reimagine the future of downtown San Francisco to attract new types of business or educational institutions to revitalize the area.

Conclusion

The pandemic continues to devastate several cities worldwide, as their economies are struggling to bounce back. San Francisco is not exempt from the severe effects of the outbreak as it faces deepening real estate problems. The Westfield San Francisco Centre Mall, Park Hotels, and other San Francisco malls and hotels have ceased payments on loans due to the decline in sales, occupancy rates, and foot traffic as people are still wary about safety concerns. However, Mayor Breed remains hopeful that the city can reimagine the future of downtown San Francisco and bounce back from the current slump.