Long Beach officials receive updates on Queen Mary restoration projects


Signal Tribune

2011 Queen Mary file photo

John Keisler, Long Beach director of Economic Development, reported in a memo to the city manager Nov. 4 that Urban Commons LLC, a privately-held real estate investment and development firm overseeing the Queen Mary, was working toward completing the ship’s restoration projects after the City had pointed out that the firm was “falling short” of the lease’s terms.

The City’s memo claimed that local media outlets “misrepresented” a letter sent to Urban Commons earlier this year as a notice of the company risking default on its lease. The memo stated that this was not the case and that the City sent a request for written updates on the issues such as the condition of the paint found on hull, funnel and top of the house area, replacements of expansion joints, side-shell repairs, the removal of lifeboats and other items.

Aside from physical repairs to the ship, the City also requested annual audited financial reports for 2018 and evidence of a Base Maintenance and Replacement Plan (BMRP) fund account.

The City gave Urban Commons until Nov. 1 to reply. The development firm responded to the letter on Oct. 22, saying that it would address the most crucial issues highlighted in the City’s monthly inspection reports by providing a construction bid of $4.8 million for side-shell repair and lifeboat removal.

Urban Commons also stated that it had temporarily stopped trading Eagle Hospitality Trust stock on Oct. 24 because of concerns from investors following initial media reports, according to the Nov. 4 memo.

Eagle Hospitality is a real estate investment trust in charge of collecting private-investor funds to maintain the Queen Mary and the development of Queen Mary Island, a City proposed project that would provide entertainment on the grounds around the historic ship. This action had a “significant impact” on the stock’s value, according to the memo. As of press time, the stock price of Eagle Hospitality Trust stood at 0.46 cents per share on the Singapore Exchange Limited market. On Oct. 25 it stood at 0.55 cents.

The development firm also included a draft copy of the BMRP fund account and an audited consolidated financial statement for 2018.
The 2018 summary shows that although the auditor is concerned with cash flow, liquidity and overall debt load, there has been a 67% increase in revenue-generating activity including special events, attractions, food and hospitality in or around the lease grounds. Revenue grew from about $36 million in 2015 to over $60 million in 2019.

The City is currently reviewing the financial reports and will meet with Urban Commons once it is completed.

The City currently hires a third-party engineer to conduct monthly inspections of the ship. According to the City, there are still issues on the ship that require additional review. A peer review is set to be completed sometime this month.

“The City values the continued progress Urban Commons has made to improve the structural integrity of the Queen Mary on behalf of Long Beach residents and visitors,” the memo reads. Monthly meetings between the City and the development firm are planned to take place.

The Signal Tribune reached out to Johnny Vallejo, Long Beach Business Operations manager, for further comment on the matter, but was unsuccessful by press time.