State-Owned Shanghai Giant Teams Up with Toll Bros on $323M NYC Condo Project

The Shanghai government-owned firm best known for developing China’s tallest building is partnering with US luxury home builder Toll Brothers on a $323 million, 19-storey condo project in lower Manhattan.

NYSE-listed Toll Brothers announced last week that its urban development division will team up with SMI USA, a subsidiary of Shanghai Municipal Investment (SMI), to develop the 111-unit luxury project at 91 Leonard Street in Manhattan’s Tribeca neighbourhood.

The deal by the Chinese giant marks SMI’s fourth major investment in the New York market, and comes as mainland authorities have effectively barred the nation’s privately-owned firms from investing in overseas real estate.

Rare Cross-Border Mainland Deal

“With Toll Brothers’ great brand, reputation and track record, we very much look forward to collaborating with them on this project and see it as the first step in a long and successful relationship,” commented Tom Tao, president of SMI USA in a statement from Toll Brothers last week.

The joint venture between the US builder’s Toll Brothers City Living division and SMI USA has secured a construction loan from a banking syndicate for the project located a short walk from the Wall Street financial district and the Hudson River waterfront.

The building designed by architecture firms Skidmore Owings & Merrill (SOM) and Hill West will offer condos ranging from studios to four-bedroom units with expansive windows and high ceilings, and an array of upscale amenities from a sauna room to a rooftop fireplace.

Toll Brothers, a Fortune 500 firm, announced plans for the project back in 2015. According to an offering plan cited earlier this year by the local press, Toll Brothers intends to sell the 111 units for a total price tag of $323 million, with an average asking price of $2,185 per square foot.

Sovereign Funds Still Allowed To Venture Abroad

While the company’s US investments have been compared in the Chinese press to ventures by HNA and Fosun, SMI — which developed the 128-storey Shanghai Tower — is one of the few mainland firms to continue making major investments in American real estate in the second half of 2017. China’s central government has imposed strict controls on outbound real estate deals by mainland firms — curbs that were formalised by the State Council in August.

Even Shanghai-based Greenland Group, a state-owned development giant that is an affiliate of SMI, is stumbling overseas after having snapped up some $19 billion in real estate projects around the world over less than four years. The company has failed to make any new offshore investments in 2017, and an all-mainland consortium led by Greenland is now poised to walk away from a $2 billion mega-project in California’s Bay Area.

But the restrictions have had little effect on sovereign wealth fund CIC, which has reemerged as the country’s champion outbound investor in the property sector. Infrastructure investment is also favoured, with state-owned construction behemoth CCCC buying up Aecon Group, one of Canada’s biggest builders, for $1.18 billion last month.

SMI Builds Its US Portfolio

SMI notched its first major deal in New York in 2015 by partnering with local developer Ceruzzi Properties to buy a site at 520 Fifth Avenue for $325 million, where the duo plans to build $1 billion worth of condos.

SMI is also working with Ceruzzi on a 72-storey mixed-use development at 138 East 50th Street featuring 124 luxury residences. The Chinese firm invested in the project in 2015 and the partners closed on a $300 million construction loan this past August.

And in August 2016, SMI confirmed a partnership with New York’s Extell Development to build the 95-storey Central Park Tower, a $3 billion project on Manhattan’s Billionaire’s Row that is planned to be the tallest residential tower in the western hemisphere.

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