Ever since the Beijing-based conglomerate China Oceanwide Holdings acquired two sites in New York’s South Street Seaport from Howard Hughes Corp. in the Financial District in 2016 for $390 million, the site’s future has remained as opaque as the company itself. Oceanwide apparently planned to build a mixed-use supertall as high as 1,436 feet at 80 South Street (which includes the second site it purchased from Howard Hughes at 163 Front Street).
In February 2016, China Oceanwide secured approval from the City Planning Commission for the transfer of an additional 426,940 square feet of air rights to the site for a combined total of 1,067,350 square feet, including 512,300 square feet for residential units. In May 2017, the company submitted plans to demolish the existing buildings at the site.
However, since then there has been a remarkable lack of activity. No demolition work has been carried out at either of the two sites purchased from Howard Hughes and no plans have been submitted to the city’s Department of Buildings. Despite this complete lack of activity since 2016, an announcement to shareholders by China Oceanwide on August 30th , 2018 covering the preceding six months stated with regard to 80 South that “the conceptual design of the project has been completed and the schematic design is currently in progress” without providing any further details.
The lack of activity at 80 South might not seem particularly significant if it were an isolated case. But China Oceanwide has been on a massive real estate buying spree, fueled by a seemingly limitless access to credit made possible perhaps in part by the conglomerate’s opaque structure (it has more than 100 subsidiaries) and good political connections. 80 South is just one of a number of Oceanwide’s real estate development mega projects in the U.S. which have been stalled for years.
For example, the company purchased the site for its planned Oceanwide tower in San Francisco for $300 million in 2016. Estimates peg this development as the most expensive construction project in San Francisco with an estimated cost of $1.6 billion. Oceanwide began construction towards the end of 2016 but a Curbed article from early 2018 called the project “little more than a dream, a smile, and a pile of construction equipment.”
The same picture can be seen with Oceanwide’s land purchases on the west side of Oahu, where the company acquired 26.3 acres of land in 2016 for $280 million with plans to build a 1,324-unit Atlantis Resort. However, in June 2018 the company reported it was still in “the early design and planning process” for its first Hawaii development and the vice president of its Hawaii subsidiary was quoted as saying he had “no idea of the specific timeline” of when construction will begin.
The writing seems to be on the wall that the good times are coming to an end for China Oceanwide. The S&P has a CCC+ rating on the conglomerate’s principal operating entity and described its capital structure as unsustainable. The company’s recent purchase of the financial services company Genworth appears to be a short-term play to extract as much capital as possible in an attempt to remain solvent.