At a time when many Chinese investors are retreating from the US real estate market, leaving a trail of troubled projects and financial losses in their wake, Fosun International is poised to notch a significant win in lower Manhattan.
The mainland conglomerate is reportedly seeking a roughly $1.1 billion mortgage against the office tower at 28 Liberty, which is believed to be $300 million more than Fosun’s existing loan on the asset.
Deutsche Bank is vying to be the lead lender in the transaction, according to an account by US news outlet Crain’s New York Business, which cited several unnamed sources in its report last week on the prospective deal. The loan is likely to be split between the bank and other lenders brought in as partners, due to its large size, according to the report. Deutsche Bank may also choose to securitise the debt.
Fosun Property Holdings acquired the landmark 60-storey skyscraper, then dubbed One Chase Manhattan Plaza, from JP Morgan Chase for $725 million in late 2013. The refinancing deal reportedly under discussion would allow the Shanghai-based firm to retain control of the asset after its revamp and leasing up of the 2.2 million square foot (208,000 square metre) property.
Fosun Remakes a Trophy Tower
Fosun’s acquisition of the former headquarters of Chase Manhattan Bank marked the largest Chinese acquisition of a single building in the US at the time, part of a nascent wave of outbound mega-deals by mainland firms including Greenland Group and Dalian Wanda Group.
Built in 1961, the rectilinear tower is located between Pine, Liberty, Nassau, and William Streets in the heart of downtown Manhattan, within blocks of Wall Street and the World Trade Center. In 2014, the building’s new owner hired JLL to lease out one million square feet (93,000 square metres) of Grade A office space upon the departure of thousands of JP Morgan Chase employees.
Fosun spent millions to put the property through an extensive renovation of the lobby, elevators, infrastructure, and surrounding public plaza, including the addition of a large retail center to the base. As part of the repositioning effort, Fosun renamed the tower “28 Liberty” in 2015. The company ultimately lured an upscale restaurant, Manhattan, to the top floor and introduced office tenants including reinsurance company SCOR, the Office of the New York State Attorney and the London Stock Exchange.
The reported refinancing deal comes after Fosun, a privately held investment conglomerate chaired by billionaire Guo Guangchang, was rumored last year to be seeking a buyer for 28 Liberty. While denying a report that it had hired CBRE to market the asset for $1.6 billion, the company revealed that it was open to bringing in a “strategic partner” to take a minority stake in the tower.
Chinese Firms Face US Setbacks
Fosun may be looking forward to a successful refinancing of its flagship New York property, but not all Chinese deal-makers are faring so well in the US. Earlier this month, it was revealed that Z&L Properties, which is privately funded by Guangzhou R&F Properties’ co-founder Zhang Li, will be kicked off a pair of troubled residential projects in San Jose, California, after breaking the terms of its development agreement.
Earlier this year, China Oceanwide Holdings halted construction on Oceanwide Plaza, its $1 billion mixed-use development in Los Angeles, for two months as the company recapitalised its investment in the debt-laden project.
Beleaguered airline conglomerate HNA Group confirmed in January that it had sold a 90 percent stake in Manhattan office building 850 Third Avenue, reportedly at a loss, after picking up the asset in 2016.
Elsewhere in Manhattan, Fosun and partner JD Carlisle Development Group are building a 66-storey luxury condo building at 15 East 30th Street.