Dalian Wanda Group is facing a fresh set of overseas headaches, this time in Southern California, as its US partner bails on a $1.2 billion development project in Beverly Hills and the company’s top executive in Hollywood steps down.
Athens Group, Wanda’s development partner for the luxury condo-and-hotel complex One Beverly Hills, has exited the project early, according to a Bloomberg report. Although neither party commented on the reasons for the breakup, a Wanda executive in Beverly Hills confirmed that Athens had dropped out and said the Beijing-based conglomerate would take the project forward itself.
The news comes just before apartment sales are slated to begin for the large-scale development in Los Angeles County. Wanda received city approval on September 14 to open a condo sales showroom for the project, which features a 134-room boutique hotel and 193 luxury residential units across two towers.
Wanda Breaks Up with Beverly Hills Partner
Wanda’s partnership with Phoenix-based Athens was announced in June 2015. The developer of luxury hotels, resorts and other properties, which brought the One Beverly Hills project to Wanda, was slated to work together with the Beijing-based conglomerate on modifying the entitlements to include a Wanda hotel, in addition to developing and constructing the complex and marketing the condos.
The US firm, which was originally planning to work with Wanda through the project’s scheduled opening in 2020, said it has already provided services to Wanda through May. The site’s former Robinson’s-May department store has been demolished but construction work has not yet begun.
The property-and-entertainment group controlled by Wang Jianlin bought the prime site between Santa Monica and Wilshire boulevards in 2014, marking Wanda’s first foray into Hollywood and a milestone for the group’s then-escalating overseas investment binge.
The latest California setback parallels Wanda’s frustrations in London, where it has struggled to develop the $900 million One Nine Elms project after two previous contractors walked away. Wanda’s Vista Tower mega-project in Chicago is faring better, as Magellan Development, the group’s partner, says the $1 billion condo-and-hotel skyscraper is being built on schedule.
Can Wang Still Make It Big in Tinseltown?
Besides its balky partners, China’s largest mall builder is also facing internal challenges in La La Land, as Jack Gao, who served as senior vice president of the group’s cultural industry arm, resigned this week, according to The Hollywood Reporter. Gao, who played a key role in overseeing Wanda’s global investments, also took over as interim chief executive at Wanda-owned Legendary Entertainment following the departure of its founder Thomas Tull in January.
Wanda purchased Legendary, the Hollywood production firm behind such films as The Dark Knight and Jurassic World, in 2016 in what the Chinese company trumpeted as a $3.5 billion investment. The deal followed Wanda’s acquisition of US theatre chain AMC for $800 million in 2012, as Wang vowed to become a major player in the movie business.
Those Hollywood dreams appear to be on the endangered list, after the AMC and Legendary deals were among six overseas entertainment projects that the Chinese government singled out for special sanctions amid a review of Wanda’s debt-fulled foreign acquisitions.
Gao will be replaced as Legendary’s interim boss by Zeng Maojun (John Zeng), president of Wanda Film Holding, according to reports. The departing exec, who was born in China and became a naturalised US citizen, also served on the boards of entertainment-related firms that Wanda scooped up, including AMC and British yacht maker Sunseeker International – which has also been targetted by Chinese regulators.
Wanda’s ambitions to diversify away from mall-building into entertainment and tourism have recently suffered another blow closer to home, with a pair of golf courses in Wanda’s Changbaishan International Resort in northeastern China having been declared illegal by municipal authorities, it was reported this week.