Document evq17ongG9O5wrN0VoDxpKL0q

Wfi 001833 GRACE Construction Products Division TO: FROM: CC: R. J. Bettacchi D. M. Tafaro J. A. Danneker J. S. Hamilton P. E. Korenberg R. H. Locke J. M. Spiak R. C. Walsh J. J. Worthington DATE: June 27, 1986 SUBJECT: Asbes tos Issues The attached article refers to the decision of Metropolitan Life, Aetna Life Cm Casualty and Prudential Insurance to stop providing loans for buildin containing asbestos. It would appear that the requirement for "asbestos-free" certifications may be forthcoming for any projects involving these 3 large Insurers and rea estate lenders. DMT/pec Attachment D. M. Tafaro * 0<J00? 8 THE WALT. STREET JOURNAL FRIDAY. JURE 27. 1956 Three Large Insurers Prohibit Loans To Buy Buildings Containing Asbestos By l_AUKIt p, CuKt-N Staff Reporter of Thk vv*i i. Sr* h. trr Journal NEW YOP-X-Thrce M the nation's largest Insurance companies have quielly stopped providing loans lor purchases of buildings containing asbestos. Prudential Insurance Cn. o( America, Aetna LJ/e & Casually Co. and Metropoli tan Ufe Insurance Co. acknowledged that they had changed their policies with re gard to the cancer-causing substance In re cent months. Although none would elabo rate about Its reasons for doing so. the companies apparently are concerned about the continued marketability of such build ings and about the potential for default by purchasers due to liabilities from lawsuits filed by occupants. The Insurers, which are among the na tion's largest real-estate lenders, for at least two years have prohibited the pur chase for (heir own portfolios of buildings containing asbestos. . Asbestos was mixed Into plaster to Insu late -walls, pipes and ceilings in most build ings constructed before 1970. Increased at tention has been given to the mineral In re cent years as law suits have mounted and the Environmental Protection Agency has Issued more stringent standards lor Its re moval older buildings, tenants will flock to newer buildings that don't contain asbestos. That could cause a wave of foreclosures on older buildings and require major clean-up efforts before they could be resold. AJJ three insurers said they aren't seek ing lo change their policies with regard to asbestos-containing buildings they already have financed. But they said their policies do call lor removal or containment of as bestos If levels exceed federal guidelines. Not all Insurers have changed their stances. "We don't have a policy that pro hibits lending against" buildlhjgj that con tain asbestos, said George Pustar. presi dent of Equitable Real Esjate -Investment Management, a unit of E<5ujlable Ufe As surance Society of the ITS.'-' Several Wall Street investment banks also say they're noCprepared to nop rais ing financing for buildings containing as bestos. "Each case will stand on Its own," said Daniel Kearney, a managing director of Salomon Inc. Properties Are Less Marketable .In Hartford. Conn., an Aetna spokes man acknowledged that the insurer is "not providing financing on buildings con Liming asbestos," largely because the company believes these properties are becoming less marketable. Metropolitan Ufe and Newark. NJ.- based Prudential said they had adopted similar policies, but that exceptions might be made, depending on the level of as bestos. A PredenBal spokesman said the com pany's pcilcy has been In effect for "a few months." A source close to Prudential's real-estate division said the company had considered changing Us policy for "a long time," 2nd adopted the new stance In late April. a o a B -l Prudential, like other insurers. Is con cerned about the possibility that the EPA might call for more stringent measures re a. quiring lie removal of asbestos. PosslbUI.7 of Foreclosures Such measures could cause borrowers to ask tenants to vacate buildings for ex tended periods so that asbestos could be If you want to stay on top * of today's issues, don't aa e removed. Prudential believes, the source said, that :i this happens, owners win lose revenues and that lenders "would have to foreclose ca the properties.'' Added pressures are being brought by the boom in construction In recent years, which has lead to soaring vacancy rales for office space in most of the nation s ma- Inp riHhf 0**1 | settle for yesteroav's \WI a aj Street Journal. Call 800- , 841-8000^ or mail the cou g pon. For just $59 you'll get fhe Journal delivered every B B busirK2ssdavfbrsLxmonth.5. m 10004008