A Chinese real estate giant isn’t the first act from out of town to have its hopes turn into roadkill on LA’s boulevard of broken dreams, but that may not make Shanghai’s Greenland Group feel any better about its latest SoCal setback.
A US subsidiary of the state-owned property giant is said to have withdrawn from negotiations for a sprawling 1.9 million square foot (176,516 square metre) project in North Hollywood, California before paying a required $50,000 deposit, according to an account by real estate information provider CoStar, citing sources.
Greenland USA and its Dallas-based partner Trammell Crow had been selected for joint negotiations for developing the 15.6 acre (6.3 hectare) site by Los Angeles authorities in June of last year. Trammell Crow, a unit of CBRE Group, is now said to be moving ahead on plans for the mixed-use project independently.
The news marks Greenland’s latest overseas fumble, after the top-five mainland builder was reported to be walking away from the $2 billion Oyster Point project in the San Francisco Bay Area in September.
Greenland Chokes on LA Development
Greenland’s aborted effort in southern California is a public-private venture with the Los Angeles County Metropolitan Transportation Authority to develop a parcel around the North Hollywood station of the Red Line light rail system – the largest plot of land owned by the government agency.
The Chinese firm and its joint venture partner Trammell Crow, a unit of global property brokerage CBRE, were authorised to kick off talks with the transit authority last year after submitting two general proposals. At the time, the final proposal for the redevelopment, estimated to cost hundreds of millions of dollars, was expected to be voted on by the Metro board before the end of 2018, with construction starting in 2019.
The current plan envisages two high-rise residential towers, a mid-rise office building spanning 300,000 square feet (27,871 square metres), and 140,000 square feet (13,006 square metres) of shopping and restaurant space. Trammell Crow is still in discussions with Metro to present a final plan for public review in late 2018, CoStar reported.
Greenland is also in the process of developing the $1 billion Metropolis mega-project in downtown Los Angeles, consisting of 1,500 condos across three residential towers and an Indigo Hotel.
From Mega-Projects to Mega-Fail
The news comes less than three months after a Greenland-led Chinese consortium was revealed to be dumping the Landing at Oyster Point, a 42-acre waterfront site in South San Francisco. The joint venture, which also includes mainland firms Ping An Trust, Agile Group Holding, and Poly Sino Capital, bought the site from US developers for a reported $171 million in August 2016, with plans to develop 2.25 million square feet (209,000 square meters) of office and life sciences buildings.
According to a local media report, Greenland and its partners have agreed to sell the 21-acre first and second phases of the site to LA-based developer Kilroy Realty Corp, which has also secured a right of first offer to pick up the project’s third and fourth phases.
Greenland’s recent cross-border stumbles follow a set of international gaffes in 2016, including scrapping the $200 million acquisition of a 41 percent stake in New York’s Park Lane Hotel in November last year, amid US government scrutiny of the seller’s assets.
Earlier that same month, Greenland’s US partner revealed that Pacific Park – the $5 billion Brooklyn residential project in which Greenland had taken a 70 percent stake in 2014 – had suffered a potential $1 billion write-down amid construction delays and a weakening residential market.
Chinese Outbound Investors Go Back Home
Greenland has held back on offshore acquisitions in 2017 amid a Chinese regulatory crackdown on cross-border investment, following a deal binge in which the property behemoth chaired by Zhang Yuliang announced some $18.6 billion in overseas projects in the US, Britain and Australia in less than four years.
Greenland started to lay low after it paid $124.5 million for a residential site in Toronto last October – well in advance of the cross-border clampdown that began in earnest this past June. That restraint may explain why the state-run firm was able to avoid the kind of high-profile wrath visited upon fellow mega-investor Dalian Wanda Group, which on Tuesday denied reports that it was looking to sell off its entire $5 billion overseas portfolio.
Wanda has faced intense government scrutiny for its global acquisitions, as has another formerly prodigal investor, Anbang Insurance, which in August dismissed reports that it was under pressure to dispose of its $10 billion horde of offshore real estate assets.