UNITE HERE Local 11 Releases Open Letter to Relevant Group Lenders and Investors

LOS ANGELES--(BUSINESS WIRE)--UNITE HERE Local 11 released a letter today signed by its co-president Kurt Petersen urging investors and lenders to consider real estate developer Relevant Group’s problematic history and whether the firm can remain competitive in the crowded Hollywood hotel market when evaluating whether to extend credit or offer forbearance.

Click here for the full text of the letter.

The letter states, “We write with concern regarding hotel and food service establishments developed by Relevant Group and its affiliates. As current and past investors and lenders with Relevant, you should be aware that Relevant Group establishments in Hollywood—the 114-room Selma Wilcox Hotel, the Citizen News food and entertainment venue, the Dream Hotel, and the Thompson hotel— are subject to potential labor disputes that may include strikes, boycotts and picket lines.”

It continues: “After Relevant agreed to a labor peace agreement with Unite Here Local 11 through hotel operator Hyatt covering the Thompson hotel, Relevant allegedly fired Hyatt and reneged on the agreement. Relevant has since taken the position that it will no longer agree to labor peace. As a result, in addition to the potential for labor disputes, Relevant may now be liable for breach of contract under Section 301 of the Labor Management Relations Act. Relevant Group did not reach labor peace agreements with UNITE HERE Local 11 covering the other properties.”

Relevant, which according to the Real Deal just lost its co-founder Richard Heyman, reportedly partnered with Colony Capital—a firm led by recently-indicted private equity mogul and Trump confidant Thomas Barrack—to solicit funds from the controversial EB-5 financing program and has faced allegations that contractors were not paid properly. Further, Relevant pushed back opening dates for the 190-room Thompson and, according to the Real Deal, “averted disaster” only by securing millions in “rescue” financing for the property.

The Hollywood Reporter wrote in March 2021 that the Thompson hotel’s opening was delayed due to unpaid fees from a contractor working for Relevant Group. “In 38 years in the business, this is the first time I've had to enforce a lien on a project,” said David Paternostro of Top End Terrazzo — known for their work on the Hollywood Walk of Fame.

According to construction lien data provider Levelset, as of August 27, 2021, Relevant Group faces $457,836 in eight active construction liens from contractors filed on Relevant’s Selma Wilcox hotel development.

UNITE HERE Local 11 is a labor union representing over 32,000 hospitality workers in Southern California and Arizona that work in hotels, restaurants, universities, convention centers, and airports.