Oceanwide, one of the largest real estate conglomerates in China, isn’t expecting to finish its Los Angeles flagship anytime soon –– or at anywhere near the price it first put on the project.
The Shenzhen-based firm said it’s estimating the currently stalled Oceanwide Plaza won’t be completed until December 2022. It has also indicated it plans to spend a total of $2.3 billion on the project, according to financial filings analyzed by The Real Deal.
The filings, made in August in China, offer some facts to go with recent word on the street that the developer was showing the Los Angeles property for sale, with a bargain-basement price expected. The buzz died down in recent months, however, and the filing might indicate Oceanwide will attempt to salvage the project even as it appears to have lost its grip on a similar development in San Francisco.
The unfolding saga is one of several coming out of China, where a number of major property developers are running up huge debts.
It’s a stark reversal from headier times.
Oceanwide originally said the condo, hotel and residential project in L.A. would be completed in 2018, with a total investment of $900 million, according to a mid-year financial report from 2015.
A year later in 2016, Oceanwide upped its estimated costs to $1.5 billion, keeping the completion date the same.
Since then, the development — which sits across the street from the Staples Center, taking up the full block from Figueroa to Flower streets — has faced a myriad of failed sales, more than $240 million in mechanics liens, as well as complaints from a group of Chinese EB-5 investors over alleged mismanagement. Last month, Lendlease Construction, the general contractor, exited the stalled project, forcing Oceanwide to find another contractor before it can resume construction.
The firm released third quarter earnings this week, but did not mention any financials related to its projects overseas.
It’s also not Oceanwide’s only U.S. project facing turbulence. Just this week, the firm disclosed that two of its debt holders seized control of its flagship project in San Francisco, after two of Oceanwide’s subsidiaries missed payments on $321.5 million of notes, for which the project was used as collateral along with shares in China Oceanwide Holdings International, the parent of Oceanwide’s overseas investments.
The Oceanwide Center project in San Francisco is also unfinished. According to the August filings, Oceanwide expects the Oceanwide Center to be completed in 2023. It originally estimated it would be finished in May 2021.
Oceanwide has already spent around $1.4 billion on the San Francisco project, and expected to invest around $3 billion in total, as of August.
It’s unclear how the seizure will affect construction and cost estimates, given that the debt holders — Haitong International Financial Services’ Singaporean unit and an entity named Spring Progress Investment Solutions — have the right to sell, dispose or replace the collateral.
On the other side of the U.S., the firm is seeking to sell its development site at the South Street Seaport in Manhattan for $200 million, far less than the $390 million it paid for it in 2016.
Oceanwide was also developing three projects in Hawaii, but has come to a deal to sell the land after listing it for sale last year.
The post Oceanwide’s LA gap swells to $2.3B appeared first on The Real Deal Los Angeles.
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