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The Yotel San Francisco was acquired for $62M in a foreclosure auction last month, with an affiliate of New York-based investment firm Monarch Alternative Capital submitting the winning bid.
The hotel’s previous owner, Synapse Development Group, defaulted on its loans in March. News of the transactions was first reported by the San Francisco Business Times.
Yotel reopened in 2019 after a five-year conversion process that transformed the property from its former life as an office building. The conversion was completed by Synapse after it purchased the property for $15.7M in 2014. The rooms in the hotel are micro-units, a trend in hospitality redevelopment at the time of the conversion.
Following the auction, Monarch granted a deed of trust on the property to Starwood Property Trust. Monarch retains ownership of the property but with the deed gives Starwood repossession rights as collateral on a $42M note Starwood granted Monarch in July, the Business Times reported.
The hotel is in the city's Tenderloin District at 1095 Market St. Rental rates average around $200-$250 a night, with the smaller room space and cheaper rates intended to serve as an alternative to the more costly Airbnb or competing hotels.
San Francisco’s hotel industry has recovered to a degree, but progress is slow. Occupancy rates increased from 31.79% to 71.56% between January 2021 and August 2022, as did key income metrics like average daily rate and revenue per available room.
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