China’s Xinyuan Buys NYC Theatre for $66M in Latest US Condo Project

NYSE-listed Xinyuan Real Estate has purchased a theatre in Queens, New York from JK Equities LLC for $66 million, as the mainland Chinese developer prepares to build its third condo project in New York City.

Xinyuan, which in 2012 was the first major mainland builder to invest in the New York market, acquired the RKO Keith’s Theater, a shuttered landmark in Flushing, Queens, in an area that is rapidly becoming a centre for Chinese immigration to New York’s outer boroughs.

JK Equities had acquired the theatre site in 2013 for $30 million, and subsequently gained approval to convert the theatre, which started life as a vaudeville house that hosted the Marx Brothers and Mae West, into a condo development yielding up to 269 units.

With the transaction, Xinyuan, which says that it has sold as much as 75 percent of the Oosten project that it acquired in Brooklyn’s Williamsburg area four years ago, will become the fifth developer to take on the task of converting the landmark theatre into a commercially viable project.

Luring Chinese High Rollers to Queens

In a move that should attract high end Chinese clients, Xinyuan has reportedly hired Pei Cobb Freed & Partners, a design firm co-founded by award winning Chinese-American architect IM Pei to design the residential project.

“Given the location of this project, we expect it will be appealing to both local and foreign buyers and investors,” said Xinyuan chairman Zhang Yong. He added that, “The location for this project in downtown Flushing is ideally situated particularly as there is a shortage of inventory in the higher-end condominium segment.”

In recent years, the Flushing area of Queens has become a magnet for Chinese immigration, with the neighborhood being called home by a self-identified Chinese population of 486,463, as of the New York City Department of Planning’s 2010 census. Since that time, as China’s emerging middle class increasingly look for immigration options overseas, Flushing has attracted a growing stream of wealthier Chinese who are comforted by the steady stream of Mandarin heard on the streets and the shops and signs bearing Chinese characters.

When Canada’s Onex Corp began marketing 750 condos in its Sky View Parc project in Flushing during January last year, half of the apartments were sold within six hours, with ninety-five percent of the buyers being Chinese, according to an account in Bloomberg.

Taking on a Historical Site with a Bumpy Past

And Xinyuan may need the help of its faithful customers back in China to make the theatre conversion process a success.

The developer’s plans call for demolishing much of the former theatre complex, which has been shuttered since the 1980s, while maintaining the facade and lobby area. While Xinyuan has not yet specified how much it plans to invest in its condo project, the current plans call for a 16-storey, 195-foot (59-meter) tower.

Redeveloping the 1928-vintage theatre remained an unrealised dream for the theatre’s previous four owners, starting after another Chinese investor, Thomas Huang, bought the landmark with hopes of tearing it down and building a hotel.

Huang later pled guilty to two felonies for illegally demolishing historic elements of the building, before being forced to sell the damaged theatre to New York’s Shaya Boymelgreen in 2002, who planned to put up his own condo tower on the site. After Boymelgreen defaulted on a mortgage for the project, the theatre was sold to Patrick Thompson in 2010 for $20 million, who sold it to JK Equities three years ago.

JK hired Cushman & Wakefield to begin marketing the theatre site to new buyers in February this year, according to a report in Crain’s New York.

The Queens project is Xinyuan’s second New York deal this year, after the company announced in January that it had invested $57.5 million to buy a site in Manhattan. The developer, which plans to build 90 condos on the site on 10^th Avenue in Midtown, also announced on July 27^th that Lizhou Zhang would be replacing Xinqi Wang as the company’s CEO.