A consortium led by Chinese property giant Greenland Group has completed its exit from what was once touted as a $2 billion project on the West Coast of the US less than two years after buying the site.
Greenland USA and its equity partners closed the sale of the waterfront office and biotech project at Oyster Point, South San Francisco for $308 million last week. The buyer, Los Angeles-based Kilroy Realty Corp, plans to build an 11-building, multi-phase complex on the nearly 40-acre (16 hectare) site. Now dubbed Kilroy Oyster Point, the project is approved for 2.5 million square feet (232,000 square metres) of lab and office space.
The Greenland-led consortium, which also includes mainland firms Ping An Trust, Agile Group Holding and Poly Sino Capital, was first reported to be in the process of selling the site last September, after picking up the California project for $177 million in August 2016.
The news marks another overseas pullback for state-owned Greenland, China’s sixth-largest property developer by sales, which has scaled back its ambitions in California over the past year.
Chinese Investors Step Back
“Kilroy Oyster Point is a significant opportunity to expand our West Coast life science platform in a prudent and disciplined manner,” Kilroy Realty Corp CEO and chairman John Kilroy said in a statement. “It offers all the advantages we look for in new development — a strong location in a world-class market serving a dynamic industry with all the services and amenities required to attract today’s young, urban innovative workforce.” Skip Whitney and James Bennett from US west coast property consultancy Kidder Matthews represented Greenland USA in the disposal.
The Greenland-led group, Oyster Point Development (OPD), broke ground on the first phase of the development last October, including infrastructure for the offices, new parks and public amenities. “We are fully committed to helping the City of South San Francisco realize its vision for a revitalized Oyster Point,” a Greenland representative said in a statement at the time.
According to a Wall Street Journal account on Monday, Kilroy said that it had been in discussions with Greenland for two years as it angled to take over the commercial part of the project. Greenland had planned to rezone the parcel to build about 1,200 homes, but scrapped the scheme this past March in the face of local opposition.
Reports last year indicated that Greenland and its partners had agreed to sell the 21-acre first and second phases of the development site to Kilroy, which had also negotiated a right of first offer to acquire the project’s third and fourth phases.
The city council of the community south of San Francisco approved the multi-phased development of the Oyster Point area in 2011.
Greenland’s California Dreams Crumble
The dumping of the Bay Area project extends a series of international setbacks for the Shanghai-based developer chaired by Zhang Yuliang, following a regulatory clampdown on overseas investment by Chinese firms.
Greenland grabbed nearly $19 billion of overseas real estate projects from London to Los Angeles in less than four years, but its buying spree came to a halt last year, when Chinese authorities tightened scrutiny on offshore trophy property deals — in the process punishing fellow mega-investors such as Dalian Wanda Group and Anbang Insurance Group.
Greenland in February was reported to be seeking a buyer for a 56-storey, 736-unit residential tower within its $1 billion Metropolis mixed-use project in downtown Los Angeles, representing nearly half the homes in the scheme. The company is also said to have put the 350-room hotel portion on the block, four years after breaking ground on the 6.5-acre development.
And last November, Greenland USA was reported to have walked away from negotiations for a 1.9 million square foot mixed-use development in North Hollywood before paying the required deposit, leaving its Dallas-based partner Trammell Crow to move ahead on the project independently.
Spire Stumble Adds to Firm’s Woes
Greenland is also facing headaches across the Atlantic, as the company halted construction of its 67-storey residential skyscraper Spire London in order to review the design of the UK mega-project, amid claims that it needs another safety stairwell.
Greenland’s ambitions seem to be faring better on the US east coast, where the company boosted its stake in Pacific Park Brooklyn, a $5 billion mega-project being developed with Forest City Reality Trust, from 70 to 95 percent in January.