Chinese billionaire Wang Jianlin has added a new chapter to the unwinding of his plans for a global real estate empire as reports last week confirmed that his Dalian Wanda Group had sold a prime Los Angeles site that was one of its last remaining overseas properties.
Wanda has agreed to sell the eight acre (32,375 square metre) One Beverly Hills site along Wilshire Boulevard to a venture between Beverly Hills-based Alagem Capital and London real estate firm Cain International for a reported $420 million, according to a report by Esther Fung in the Wall Street Journal, citing market sources and Cain International’s CEO.
The sale of the project in the posh Los Angeles suburb, which is expected to close this month, had been anticipated for at least a year, and comes more than four years after Beijing-based Wanda purchased the Los Angeles project for $420 million, with plans what it said was a $1.2 billion hotel and retail development.
Wanda Sells to Feuding Neighbour
The deal sees Wanda selling off its property that bridges Wilshire Boulevard and Santa Monica Boulevard along Merv Griffin Way to neighbours that have feuded with the mainland group since it acquired the site of the former Robinsons-May department store in August 2014.
Alagem Capital, headed by hotel mogul Beny Alagem, and Cain International already own the Waldorf Astoria Beverly Hills and the Beverly Hilton, which are next to the Wanda site. Alagem had unsuccessfully sued the Chinese group and its Phoenix-based partners, Athens Group over traffic issues and other conflicts between their dueling billion-dollar plans to transform downtown Beverly Hills.
Wanda’s exit gives the Alagem-Cain joint venture ownership of a contiguous 17 acre site within the coveted 90210 zip code, according to the WSJ account.
“We are extremely excited to acquire this amazing property. Together with our existing Waldorf Astoria and Beverly Hilton sites, we believe we have one of the most unique and exciting collection of properties in the US, if not the world,” said Alagem in a joint statement with Cain International.
Sitting on a Prize for Four Years
Beijing-based Wanda beat out ten other bidders in 2014 to acquire the project near Rodeo Drive with plans for the project to provide company offices, retail space and the Los Angeles outpost of a planned global luxury hotel chain. Billed at the time as the group’s “first important step into Hollywood” the movie-land acquisition came two years after Wanda had acquired AMC Theatres for $2.6 billion and two years before its $3.5 billion acquisition of Legendary Entertainment.
At the time that Wanda acquired the project, the Los Angeles site had already been approved for construction of 235 condos and 21,000 square feet of retail space, with demolition of the former department store already underway.
Now the project is approved for 193 high-end condos and 134 hotel rooms across a 15-storey tower and a 13-storey tower designed by Getty Center architect Richard Meier. Construction has yet to begin on the property which remains vacant and contractors hired by Wanda had filed liens against the project for unpaid fees late last year.
Wanda had put both One Beverly Hills and its Vista Tower project on the market last year as part of a global sell off of its overseas real estate assets. Athens Group, which originally introduced the Los Angeles opportunity to Wanda, reportedly exited the venture in October last year.
Triple Five Balks at LA Deal
Reports in September had cited market sources as indicating that Triple Five Group, the Edmonton-based developer of Minnesota’s Mall of America, was set on purchasing Wanda’s LA site, but the Canadian company later decided not to go through with the deal despite having arranged financing for it.
“We had concerns about rising interest rates, higher construction costs and the lack of confidence in the depth of demand for the luxury condominium product given global uncertainties,” a spokeswoman told the WSJ.
Triple Five was also said to have agreed to purchase the luxury Vista Tower in Chicago, according to an account by the CoStar in September. It’s unclear if the company is continuing to pursue that opportunity.
Selling Off a Planned Empire and Settling Debts
With the One Beverly Hills sale, Chicago’s Vista Tower is Wanda’s sole remaining asset in what once was a $5 billion overseas real estate portfolio, after the company in January sold its billion-dollar flagship London project at a loss of nearly £30 million. During that same month, Wanda sold a pair of Australian projects that it had valued at a combined $1.5 billion.
Wanda’s disposal of its trophy properties followed pressure from Beijing to curtail cross-border investments and stanch currency outflows. The company, once one of the largest owners of foreign assets, with more than $40 billion of property worldwide, is estimated to have paid off about 216 billion yuan ($31 billion) of debt in less than two years, after China’s central government targetted Wanda in a campaign against over-leveraged, cross-border investors.
With its properties largely sold off, Wanda in September reached a $600 million agreement to hand over a stake in AMC Entertainment to private equity firm Silver Lake. During the past week the group was reported to be discussing a $700 million deal to sell a stake in its Legendary Entertainment movie production house to Saudi investors, although Wanda has denied the reports.