CLIENT: Morgan Stanley
LOCATION: New York, New York
ASSET TYPES: Hospitality
Marx|Okubo performed a property condition assessment of The Gansevoort Hotel. The property is a 20-story hotel, constructed in 2010 and containing 249 guestrooms.
Marx|Okubo evaluated the properties using an in-house team that included architectural, structural engineering, mechanical engineering, and disabled accessibility professionals. We also partnered with specialty consultants to perform in-depth reviews of the vertical transportation, envelope, and fire & life safety systems. Marx|Okubo’s team interviewed the Property Manager, Building Engineers, Elevator Technicians and other relevant parties, reviewed all available construction documentation and performed a detailed top-to-bottom review of both towers and all building systems. Marx|Okubo assessed the properties and provided detailed 10-year capital expenditure projections.
During our review, Marx|Okubo discovered that the water within the building condenser water loop, chilled water cooling loop, and hot water heating loop were not being properly treated. This resulted in corrosion in the piping within these loops and reduced the service life of the cooling tower, chillers, and hot water boilers.
A testing company was engaged to perform ultrasonic and metallurgic testing of the affected piping. The results confirmed the original assumptions that corrosion had resulted from the inadequate water treatment. A sizable reserve was recommended for the replacement of the cooling tower, condenser, and evaporator tubes of the two absorption chillers, and the overhaul of the heating hot water boilers during the hold term. It was also recommended that an annual allowance of funds be reserved for the replacement and repair of portions of the chilled water cooling and hot water heating piping that may fail during the holding term.
Our client ultimately decided not to acquire the property.