NEW YORK--(BUSINESS WIRE)--UNITE HERE released a report today for prospective lenders who might consider refinancing the debt of the Columbia Sussex Corporation (CSC)-owned Hilton Anchorage Hotel, which matures in March 2017. The union’s report provides details on mold, lead and asbestos at the Anchorage property, with a focus on developments in the last two years.
CSC acquired the Hilton Anchorage in late 2005. The debt secured by the property matures in March, 2017. It is securitized in a package of mortgage-backed securities, called JP Morgan Chase Commercial Mortgage Securities Trust 2007-CIBC18 (JPMCC 2007-CIBC18).
The report includes:
- In the Spring of 2014, Hilton Anchorage management reported working to repair 48 rooms with mold or the “possibility of water damage.” It reported repairing a room for mold most recently in May 2015. In June 2015, the laundry room flooded three times.
- In September 2015, the Hotel re-issued an Operations & Maintenance Plan for Asbestos, prior versions of which had been issued in 2007 and before. The most recent Plan confirmed that asbestos-containing and presumed asbestos-containing materials have been documented to differing degrees throughout the Hotel. However, the union has found no record that the Hotel analyzed for the presence of asbestos-containing materials in conjunction with construction/repair work it performed between 2010 until April 2015, except for a single occasion in 2012.
- In October 2015, the Hotel issued an Operations & Maintenance Plan for Lead. The Hotel conducted what it describes as a “limited survey” for the presence of lead, and reported finding lead-containing materials in 16 of 174 locations tested around the facility.
The report also details instances in which CSC lost properties to debt or regulatory action:
- HVS Consulting and Valuation Services appraised CSC’s Richmond Marriott in 2012 and asserted that “[a]lthough the property is relatively young in age, the hotel has not been refurbished since opening in 2001.” The property was transferred to a new owner in 2014 in lieu of a foreclosure transaction.
- CSC lost several gaming assets to bankruptcy following the New Jersey Casino Control Commission denial of a subsidiary’s license renewal in Atlantic City in 2007.
- CSC agreed to pay the landlord of one of its casinos $165 million in 2008 to settle a lawsuit alleging that the company failed to maintain the asset in competitive condition.
- A number of other properties were lost due to debt during the recession.
The report closes by discussing why, given the cyclical nature of the hotel industry, lenders should be mindful of the length of the current lodging cycle.
Read the report: http://unitehere.org/wp-content/uploads/LenderReport.pdf
UNITE HERE is a labor union that represents 270,000 working people across Canada and the United States. Its members work in hotel, gaming, food service and other industries. UNITE HERE Local 878 represents workers at the Hilton Anchorage where there is currently an active labor dispute.