A historic hotel on San Francisco’s iconic Nob Hill has become the latest hospitality property in the city to face foreclosure after its owner was sued by lender Deutsche Bank AG.
The lawsuit filed in San Francisco Superior Court last week against the owners of the 400-room Stanford Court Hotel lists a number of grievances against Los Angeles real estate investor Michael Rosenfeld and his affiliate, Pine & Powell, ranging from allegedly failing to make payments on its $105 million mortgage to refusing to make $60,000 worth of repairs to guest elevators ahead of a major January conference that traditionally brings in significant business.
The bank seeks to appoint a receiver for the property as part of foreclosure proceedings that would allow the lender to take control of the hotel and potentially pursue a sale. Rosenfeld, Pine & Powell and Deutsche Bank didn't immediately return requests for comment.
Stanford Court is one of many San Francisco hotels falling behind and into default on pre-pandemic loans, including the Hilton Financial District earlier this month. Stanford Court's owner defaulted on a $105 million mortgage originated in 2018 from Deutsche Bank in 2022, then subsequently defaulted again in 2024, according to the lawsuit.
The suit seeks a temporary restraining order that would prohibit the hotel’s operators from “commingling, hypothecating, converting, concealing, conveying, assigning, misappropriating, misusing or otherwise transferring” any rental payments, insurance proceeds or other revenues for any purpose, other than paying down the debt.
Pandemic headwinds
According to the lawsuit, Deutsche Bank said that Stanford Court’s ownership had “frustrated” efforts to make critical repairs to multiple “dysfunctional” elevators, despite numerous complaints from guests, who were allegedly forced to walk through the hotel kitchen in order to take the service elevators on several occasions.
The bank said it was “forced” to pay about $5.3 million in advances to ensure the hotel’s continued operations, including paying real estate taxes and addressing issues with the hotel’s cooling system.
The lawsuit also accused the hotel’s ownership of failing to “protect” the property, and of actively engaging in “conduct that constitutes waste.” For instance, the bank said the owner had “unreasonably withheld consent” on a new insurance policy for the property until the property manager was forced to act with hours left before existing coverage would expire.
Rosenfeld previously lost his stake in a massive project in Los Angeles in 2022 after defaulting on loan payments following the pandemic-induced shutdown of the hospitality industry.
A number of hospitality properties in and around downtown San Francisco have been unable or unwilling to pay off maturing loans taken out before the COVID-19 pandemic hit in 2020, upending the fortunes of the hospitality sector. The city’s hotels were hit yet again in 2024 by a citywide hotel worker strike that began in late September, causing numerous cancellations.
Rising wages and other costs were top issues for hotel management companies in 2024, as hospitality companies continued to face headwinds. As hotel managers saw fewer paths to growth with a stunted transactions environment, many leaned on mergers and acquisitions to both grow their portfolios and their talent.