Walking away: San Francisco mall owner hands property back to bank as exodus continues
Westfield bolting San Francisco Centre mall as city struggles with rampant crime
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Shopping center giant Westfield is walking away from its San Francisco Centre mall, becoming the latest major company to leave the California city amid rampant crime problems.
Westfield confirmed to FOX Business Monday that the company and partner Brookfield Properties earlier this month stopped making payments on a $558 million loan securing the San Francisco Centre property.
Shoppers leave the Westfield San Francisco Centre on April 13, 2022 in San Francisco, California. Westfield revealed Monday the company and partner Brookfield Properties are handing the property back to the bank. (Photo by Justin Sullivan/Getty Images / Getty Images)
"For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property," the company said in a statement.
"Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward."
Westfield's move comes less than a week after Park Hotels & Resorts announced it had handed two prominent hotels back to the bank. The real estate investment trust said it was abandoning the Hilton San Francisco Union Square and Parc 55, saying the city's streets are unsafe and expressing doubts about the area's ability to recover.
A sign on the exterior of the Hilton San Francisco Union Square stands in front of the Parc 55 by Hilton Hotel on June 06, 2023 in San Francisco, California. Park Hotels & Resorts Inc. said last week it stopped payment on their $725 million loan (Photo by Justin Sullivan/Getty Images / Getty Images)
The departures come amid a growing exodus of retailers fleeing downtown San Francisco for various reasons as the city continues to struggle with retail theft, homelessness and a raging drug crisis.
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Westfield's decision to give up San Francisco Centre, which was first reported by the San Francisco Chronicle, appears to be due in part to Nordstrom shutting down both its downtown San Francisco locations. One of them is located in the San Francisco Centre property, and Westfield says the mall would only be 55% leased when Nordstrom leaves – far less than Westfield's other U.S. malls, which are 93% leased, on average.
The Westfield San Francisco Centre on April 13, 2022 in San Francisco, California. Westfield revealed Monday it has surrendered the property to the bank, becoming the second major company in a week to do so. (Photo by Justin Sullivan/Getty Images / Getty Images)
John Dennis, chairman of the San Francisco Republican Party blamed the city's leadership for Westfield packing up, and says to expect more companies to follow suit.
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"The Westfield San Francisco Centre is arguable the heart of retail in San Francisco," Dennis told FOX Business. "Another massive loss for the worst managed city in America. What's scary is we're nowhere near the bottom."