UNITE HERE Flags Property Condition of Collateral Securitized in CGCMT 2017-P7

NEW YORK--()--On March 3, 2017 Citigroup Global Market Realty, Barclays Bank, and Rialto Mortgage Finance (New York offices) funded a $115 million loan to refinance debt on the Hilton Anchorage and Renaissance Concourse Atlanta Hotel portfolio owned by Columbia Sussex Corporation. Citigroup’s $28M portion of the loan is being contributed into CMBS CGCMT 2017-P7. Fitch Ratings and Kroll Bond Rating Agency have released their pre-sale reports for CGCMT 2017-P7.

“include a system to control all work that could disturb ACM.”

UNITE HERE has released several reports on environmental conditions at the Hilton Anchorage analyzing mold and conditions conducive to mold growth, as well as lead, and asbestos at the hotel. Potential investors may find this information useful as they consider investment options.

Highlights from UNITE HERE’s reports include:

  • Mold: The Hilton Anchorage has been combatting mold and conditions conducive to mold growth since at least 2014. Documented water leaks during 2016 in the front lobby and elsewhere suggest that hotel management has been unable to eliminate conditions that can lead to mold growth, a problem that first surfaced at the hotel in 2014 when the hotel took 48 rooms out of service for repairs. See photo from guestroom, February 2017. The hotel repaired 48 guest rooms in 2014, but leaks have persisted.
  • Asbestos: Hotel documents indicate that asbestos can be found in building materials throughout the Hotel. Between 2010 and April 2015, the hotel performed construction and repair work without analyzing the building material for the presence of asbestos (except once in 2012, when the hotel reported negative sampling results for building material in a storage closet) despite the Hotel’s Operations & Maintenance Plan for Asbestos-Containing Materials (ACM) requiring the Hotel to “include a system to control all work that could disturb ACM.”
  • Lead: Lead has been identified at the Hotel. Prior to October 2015, the hotel did not conduct lead testing in conjunction with any repair work performed since the current owners acquired the property in late 2005—in fact, it had no protocol in place for lead sampling until October 2015.

    Owner Columbia Sussex’s debt history might also be of interest to potential investors. According to UNITE HERE’s January 2017 analysis, 44 hotels representing 20,169 rooms—about 62% of Columbia Sussex’s 2007 portfolio based on total room numbers—were lost due to foreclosure, bankruptcy, or under other circumstances consistent with a failure to meet debt obligations, such as sale following appointment of a receiver. In 2013, the Marriott Corporation deflagged the Oklahoma City Marriott Hotel and Convention Center, which had gone into receivership in 2012. According to court filings from December 2014, the receiver reported that there was “mold . . . prevalent throughout the hotel stemming from leaking pipes, condensation and roof leaks.”

UNITE HERE’s reports can be downloaded by following this link: https://www.anchoragehiltonlenderadvisory.org/reports/

UNITE HERE is a labor union that represents 270,000 working people across Canada and the United States. UNITE HERE Local 878 represents workers at the Hilton Anchorage where there is currently an active labor dispute.

Contacts

UNITE HERE
Kumsa Baker, 416-384-0983 x319
kbaker@unitehere.org

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