It looks as if the US government has beaten Chinese developer Greenland Group to a 41 percent stake in Park Lane Hotel, following the Shanghai-based company’s quiet retreat from a Manhattan acquisition it first announced in May of this year.
After Greenland announced the acquisition of the once-mothballed hotel renovation project, the vendor was revealed to be a company controlled by fugitive financier Jho Low. The confidant of Malaysia prime minister Najib Razak is being sought by Singapore as a person of interest in the investigation of Malaysia’s $1 billion 1MDB Fund scandal.
In the US, the Justice Department is looking to seize $1 billion in assets bought with funds diverted from the Malaysian sovereign fund, including a $200-million stake in the Park Lane Hotel owned by Jynwel Capital, a company controlled by Low. The family of the controversial figure is currently fighting the seizure in the US court system.
That $200 million stake was the same shareholding that Greenland had proposed to buy in the project being led by New York developer Steve Witkoff.
“After due diligence, we realized the asset was not mature and suggested to shelve the purchase,” Greenland Hong Kong Chairman Chen Jun was quoted as saying.
In its original announcement of the New York deal, Greenland had touted the acquisition as a tie-up with Kuwaiti investor Al Wasset which also owns a stake in the project. In pushing the Park Hotel off the table this week the state-run firm again turned to the Kuwaits for a positive spin, announcing the successful raising of an initial round of $300 million as part of an $8 billion real estate fund with Al Waseet,
Overseas Miscues Build Up For Hasty Greenland
Greenland chairman Zhang Yuliang is a pioneer when it comes to Chinese outbound investment, but his track record is littered with high profile missteps that may end up costing the developer billions of dollars.
Earlier this month, China’s leading developer on the Fortune 500 was left with egg on its face when their US partner revealed a potential $300 million write-down on its 30 percent share of its Pacific Park joint venture in New York.
The developer has also dealt with two major gaffes in Australia this year. In March Greenland was forced to abandon plans for a 31-storey condominium in Melbourne’s Flemington area after the city government delayed approval for it’s plans. Additionally, the Shanghai-based firm parted ways with the builder hired to construct the A$700 million ($501 million) Greenland Centre Sydney in May with the local construction outfit saying the mainland real estate giant was difficult to work with.
Maybe Those Internet Finance Plans Weren’t So Crazy
When Greenland first announced it was entering the Internet finance arena, there was some skepticism. The firm’s plans, which included the creation of an online marketplace for individuals to loan money to finance Greenland’s projects, has already posted a profit and could soon be spun off.
Chen told Reuters that Greenland’s financial services unit posted a profit this year, the first full financial year after it was set up, and the company is estimating that profits could double next year.