Shanghai’s Greenland Group has once again downsized its global ambitions by selling down US assets as it sold three development sites at its Pacific Park Brooklyn project to two New York-family owned firms, TF Cornerstone and Brodsky Organization, for an undisclosed amount, according to a Wall Street Journal report.
The announcement this month came as the 22-acre mixed-use development’s initial revenue, which has been generated primarily by apartment sales, was falling short of early projections, and despite Greenland USA’s restructuring effort in January this year to boost its ownership stake in the enterprise from 70 to 95 percent and accelerate the development of the $5 billion New York City mega-project.
The NYC-sell down was reported just four months after a Greenland-led consortium disposed of a San Francisco Bay Area site that it was never able to develop. Once among the most aggressive of China’s outbound acquirers, the Shanghai government-owned developer has joined China’s HNA and Anbang in scaling back its overseas holdings in the past year.
Local Developers Take Over Greenland Projects
Greenland’s three parcels of Brooklyn land, known as B12, B13 and B15, are located on 615 & 595 Dean Street and 664 Pacific Street respectively, and are approved for construction of residential towers, a school and public park space. B12 and B13 were sold to TF Cornerstone while B15 to Brodsky Organization. Both are well-known local developers with deep roots and long-term holdings in New York City.
“Greenland Forest City Partners is now in a position to accelerate development at Pacific Park, where we are fully committed to delivering industry leading, thoughtfully-designed residential buildings and community space to Brooklyn,” said Scott Solish, Executive Vice President of Development of Greenland Forest City Partners, the joint venture between Greenland and Forest City, in a statement.
Greenland USA made a splash in 2014 by venturing into the less developed territory of Brooklyn and embarked on one of the largest redevelopment efforts in New York history to provide 6,430 units of housing, including 2,250 affordable homes, along with other office, retail and community space.
But, the Pacific Park project was troubled and long-delayed from the very beginning. Greenland also underestimated how long it would take to build and sell apartments in the U.S, former Shanghai-based correspondent Esther Fung reported in the Journal account.
As the market shifted, Greenland and Forest City disagreed over how quickly to build Pacific Park. Earlier this year, the two companies restructured the venture so that Greenland now owns 95 percent of the project, up from 70 percent, with Forest City’s ownership down to 5 percent from 30 percent.
Greenland Joins China’s Stay Home Trend
Starting in 2013, the Shanghai property giant 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.
At the same time that Greenland hit a rough patch in Brooklyn, its headquarters in Shanghai said it was cutting back on financial support for the company’s US projects, the WSJ noted, citing a person familiar with the matter.
In California, Greenland also faced an uncertain future. Earlier this year, the company revealed that it was seeking a buyer for the residential and hotel components of its landmark mixed-used Metropolis project in downtown Los Angeles. In August, the Chinese developer announced it had bagged a $310 million construction loan to finish off the third phase of the $1 billion complex.
In June, Greenland USA and its equity partners dropped a $2 billion project at Oyster Point in the Bay Area community of South San Francisco by selling the development for $308 million. That disposal came after the consortium failed to change entitlements at the site to include housing. The company said that the buyer, Kilroy Realty Corp, has more expertise in building and operating biotech offices and labs.