Creditors foreclose on stalled $1.6 billion San Francisco Oceanwide Center project

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Creditors have foreclosed on China Oceanwide Holdings’ unfinished San Francisco mixed-use project, which had served as collateral for about HK$2.5 billion ($320 million) in notes that Oceanwide failed to repay.

Mingtandi Asia Real Estate Intelligence reports that Oceanwide’s offshore units 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, according to a filing with the Shenzhen Stock Exchange. Both sets of notes have expired with the principal unpaid.

“The Beijing-based group had put up its Oceanwide Center in downtown San Francisco — one of several struggling projects in key US cities — as a security for the borrowing,” the published report says. “Once the asset is taken over, the creditors’ options include possession, sale, replacement or disposal, as well as possible litigation against Oceanwide.”

“The company is currently actively discussing with the above-mentioned two holders of notes to seek solutions,” Oceanwide said in the late October filing.

The $1.6 billion Oceanwide Center project, was planned as twin towers of 54 and 61 storeys, 1 million sq. ft. of office space, 265 residences and a 169-room Waldorf Astoria hotel. The developer broke ground in San Francisco’s Transbay district in 2016 and the buildings were originally scheduled to be completed this year.

However, the San Francisco Chronicle reported in October 2019 that construction had been halted on the shorter of the two towers amid rising construction costs. Construction on the second, taller tower was also halted in 2020 because of COVID-19 and has not resumed. Oceanwide’s attempts to sell the property, including a tentative $1.2 billion deal with Chinese private equity firm Hony Capital in 2020, have failed.

LevelSet.com reported in July that three different contractors are allegedly owed a total of $48,052,006 the Oceanside work at 50 First St. and 526 Mission St.

Construction lien affidavits indicate the largest lien was filed by Malcolm Drilling, Inc., against Swinerton/Webcor Joint Venture pursuant to California statutes governing mechanics liens. “On May 5, 2020, Malcolm Drilling placed a lien that was valued at $18,986,973 against the Ocean Center property,” the published report says. “Two months later on July 2nd, the general contractor placed a second lien against the property, valued at $9,839,898.”

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