One of two boutique, luxury hotels that were meant to be part of a renaissance on mid-Market Street — which never really materialized — the Proper Hotel at Seventh and Market, now looks like it might fall into the hands of its lender.

As the SF Business Times reports, the Santa Monica-based Kor Group, which opened the hotel in 2017 with a bold new renovation by designer Kelly Werstler, has defaulted on its loan payments. The company took out a $28 million loan in 2021, which was expected to mature in February 2024, with an optional extension to February 2025, and the default notice was issued by lender Westbrook Partners on November 25.

A trust agreement reportedly outlines a scenario in which Westbook Partners takes over sole ownership of the hotel and leases it back to Kor Group, which could be a possibility moving forward, as the Business Times notes. And it's possible that Kor Group will remain on as an owner, with a February deadline now set for a potential sale.

Of all the hotel turnovers in the city over the last decade, both the Proper and the former Good Hotel (now the Hotel Garrett) at Seventh and Mission have suffered the most from the ongoing, very active drug market that has centered around UN Plaza, Sixth Street, and the nearby Nancy Pelosi Federal Building. While the face of mid-Market has certainly changed over 15 years, most recently with the openings of the nearby Line Hotel and the still mostly vacant IKEA shopping complex and food court, the fentanyl crisis and homelessness have generally kept the area less than savory. This is reflected in the Proper's Yelp reviews, which are summed up along the lines of one that begins, "THE LOCATION IS ROUGHHH."

Kor Group bought the very downmarket former Renoir Hotel in 2013 and undertook a multi-year renovation, following a general trend of gentrification that has seen a fair bit of new construction and cosmetic strange on this stretch of Market Street.

This latest financial news about the Proper comes shortly after the two-year-old Line Hotel, one block away, announced that it was being taken over by Hilton Curio Collection. And the news comes as major hotels around Union Square have been surrendered to their lenders, like the enormous Hilton Downtown SF Union Square.

Most recently, two weeks ago, we learned that the Hyatt Regency across from the Moscone Center in SoMa, was also being surrendered to its lender amid a depressed convention market in San Francisco that doesn't show signs of a quick recovery.