Friendly Foreclosure Agreement Allows Oxford Capital to Continue Operating Hotels in San Francisco

According to a leading San Francisco media outlet, Chicago’s Oxford Capital Group recently transferred ownership of four San Francisco hotels through a deed in lieu of foreclosure. Despite this, Oxford will maintain management of the hotels after what is commonly known as a “friendly foreclosure.”

Acore Capital, the San Francisco financier, now holds the titles to three SoMa properties and another in Lower Nob Hill. The properties in question are: the 152-room SoMa House at 121 Seventh St., the 121-room Hotel Garrett at 112 Seventh St., and Hotel Fiona. Additionally, the 48-room Hotel Julian at 940 Sutter St., a site made famous by Alfred Hitchcock’s film Vertigo.

Oxford Capital’s Chief Operating Officer, Sarang Peruri, expressed in an interview that this entire agreement is a restructuring arranged with the lender that has been planned over several six months of negotiations, yielding a very positive outcome for both parties.

American Pacific International Capital sold the four-hotel portfolio to Oxford Capital in 2019 for nearly $141 million, or $300,000 per room. Acore Capital was the lender that provided Oxford with nearly $113 million in financing for the purchase, and according to the Business Times, Oxford owed about $60 million to date.

According to Sarang Peruri, the three hotels located on San Francisco’s famous Seventh Street had their openings last fall, and Oxford Capital will also manage the opening of Hotel Julian, which is scheduled for the end of the year. This is in addition to some room expansions at both SoMa House and Hotel Garrett, and a new sports-themed restaurant also at SoMa House.

Peruri also mentioned that Hotel Julian in Lower Nob Hill will open soon after an extensive renovation. New features include a two-story, indoor and outdoor wine bar and cocktail lounge called Carlotta’s, a tribute to Hitchcock’s Vertigo, the former name by which the hotel was known.

Chris Darling, head of Green Street’s lodging sector, said that although San Francisco’s hotel industry continues to face significant challenges after the pandemic, it is moving forward, even with the very limited operation of the Moscone Center, a convention center whose activity has always benefited hotels in the area. For example, last year occupancy was around 66%, compared to 86% in 2019.

Despite its slow recovery, Oxford Capital, which invests in hotel assets in Los Angeles, Chicago, Boston, and Portland, continues to consider some possible new acquisitions in the San Francisco area, expressing through Peruri that it will take some time to implement business plans and maximize returns, and that the ideal situation is to have patient capital and stakeholders with a long-term perspective.

Foreclosures Available:

San Francisco: 4 homes available.

By Elias DaSilva | October 1, 2024