China Oceanwide Faces Payment Demand After $175M NYC Default

China Oceanwide Holdings’ American dream is looking ever more like a broken one after the mainland developer was served with a default notice for a $175 million loan backed by the group’s troubled skyscraper project in Lower Manhattan.

New York-based lender DW Partners demanded the immediate payment of $165 million outstanding on the loan against 80 South Street after the developer missed a $1.3 million interest payment this month, Oceanwide said Tuesday in a filing with the Hong Kong stock exchange.

The Beijing-based builder, mired in stalled US megaprojects on both coasts, has sought a buyer for the site of the supertall development in New York City’s South Street Seaport area since 2019 after acquiring the property from the Howard Hughes Corporation for $390 million in 2016. The two-year loan from DW came due in May 2021, but Oceanwide received a six-month extension at the time, according to business news site Bisnow, citing local government records.

“The company is currently seeking legal advice in respect of the payment default with a view to addressing it in an appropriate manner,” Oceanwide chairman Han Xiaosheng said in the filing. “In addition, the company is also making continuous efforts to secure fundings to repay the outstanding sum.”

Shaky Foundations

The fresh blow to Oceanwide’s fading overseas empire comes after creditors in October foreclosed on the developer’s unfinished San Francisco mixed-use project, Oceanwide Center, which had served as collateral for about HK$2.5 billion ($320 million) in notes that Oceanwide failed to repay.

The $1.6 billion project, which envisions twin towers of 54 and 61 storeys, 1 million square feet (92,903 square metres) of office space, 265 residences and a 169-room Waldorf Astoria hotel, broke ground in San Francisco’s Transbay district in 2016 and originally had been scheduled for completion last year.

Oceanwide’s offshore units had issued HK$1.1 billion in notes to Spring Progress Investment Solutions in 2018 and HK$1.4 billion to a Singapore unit of Haitong International Financial Services in 2019. Both sets of notes expired with the principal unpaid.

For the New York project, Oceanwide had received permission to develop a single tower combining commercial and residential space that could reach more than 304 metres (1,000 feet) tall. But after plans ground to a halt, Oceanwide began marketing the site for about $300 million in 2019 and lowered its asking price to $200 million last year.

Collapsing Scenery

The developer’s stateside woes come in threes: the $1 billion Oceanwide Plaza in downtown Los Angeles is saddled with nearly $240 million in claims by contractors who say they haven’t been paid, according to an August 2020 report. The three-tower development, which began construction in 2015, had been expected to include a Park Hyatt hotel, 504 condo units and a 166,000 square foot shopping mall upon completion.

With its cash crisis mirroring the plight of other debt-saddled mainland developers, Oceanwide announced a corporate shake-up last July. In a filing with the Shenzhen exchange, the group said CEO and executive director Zhang Xifang and chairman Song Hongmou had resigned, along with the chief risk control and legal officer, the supervisory board chairman and a vice president.

Since that overhaul, Oceanwide has continued to seek buyers for various holdings, with distressed-asset specialist Sunac China Holdings agreeing in late July to acquire two finished developments in Hangzhou for RMB 2.2 billion ($340 million).

The two parties closed a similar deal in 2019, when Hong Kong-listed Sunac bought a pair of mixed-use projects — one in Beijing’s Chaoyang district and the other in Shanghai’s Huangpu district — from Oceanwide for RMB 12.6 billion.