China Oceanwide Selling Hawaii Residential Site to Local Developer at $25M Loss

China Oceanwide is set to give up another slice of its property holdings in Hawaii, with the cash-strapped mainland developer agreeing to sell its Kapolei West residential site on the island of Oahu to a local firm for $92.9 million.

The 484 acre (196 hectare) expanse comprises unimproved lots that the Beijing-based builder bought for $103.4 million in 2016 with the intention of developing 2,500 homes, a golf course, an elementary school and a transit hub. The buyer is a company managed by Honolulu-based Tower Development, Oceanwide said Wednesday in a filing with the Hong Kong stock exchange.

The property sits between the Kapolei community in western Oahu and a set of beachfront plots that Oceanwide also owns, including a 20 acre parcel that the group last month agreed to sell to local firm Alakai Development for $23 million, as well as 26 acres that Oceanwide had planned to transform into an Atlantis-branded resort but is reportedly looking to unload.

The developer led by chairman Han Xiaosheng said it would incur a loss of $24.8 million on the Kapolei West disposal after taking into account related transaction costs. “(T)he directors are of the view that the disposal is necessary and proper and represents a good timing and opportunity for the group for settling its outstanding indebtedness and also reducing the recurring finance costs,” Han said in the HKEX filing.

Empire in Pieces

Back in the continental US, Oceanwide remains mired in stalled megaprojects on both coasts.

In January, the developer was served with a default notice for a $175 million loan backed by the group’s troubled 80 South Street skyscraper project in Lower Manhattan. New York-based lender DW Partners demanded the immediate payment of $165 million outstanding on the loan against the asset after Oceanwide missed a $1.3 million interest payment the same month.

Oceanwide has sought a buyer for the site of the supertall development in New York’s South Street Seaport area since 2019 after acquiring the property from the Howard Hughes Corporation for $390 million in 2016.

Last October, creditors foreclosed on the developer’s unfinished San Francisco mixed-use project, Oceanwide Center, which had served as collateral for about $320 million in notes that Oceanwide failed to repay.

At the other end of California, the $1 billion Oceanwide Plaza in downtown Los Angeles is saddled with nearly $240 million in claims by contractors who say they haven’t been paid, according to an August 2020 news article. Australia’s Lendlease, a key contractor on Oceanwide Plaza, reportedly pulled out of the project last year after winning a $42 million court judgement.

Grasping for Cash

With its liquidity crisis mirroring the plight of other debt-saddled mainland developers, Oceanwide announced a corporate shake-up last July. In a filing with the Shenzhen exchange, the group said CEO and executive director Zhang Xifang and chairman Song Hongmou had resigned, along with the chief risk control and legal officer, the supervisory board chairman and a vice president.

Since that overhaul, Oceanwide has continued to seek buyers for various holdings, with distressed-asset specialist Sunac China Holdings agreeing in late July to acquire two finished developments in Hangzhou for RMB 2.2 billion ($340 million).

The two parties closed a similar deal in 2019, when Hong Kong-listed Sunac bought a pair of mixed-use projects — one in Beijing’s Chaoyang district and the other in Shanghai’s Huangpu district — from Oceanwide for RMB 12.6 billion.

Last November, Oceanwide completed the $1.3 billion sale of tech media and investment firm International Data Group to private equity giant Blackstone. The Chinese company had acquired IDG from the estate of late founder Patrick Joseph McGovern in 2017.