The Real Deal New York

Halstead sues Oosten’s Chinese developer after being terminated

Xinyuan tapped Kuafu to manage its NYC projects last year
By E.B. Solomont | June 14, 2018 02:42PM

Halstead President Steven Kliegerman and Oosten at 421 Kent Avenue in Brooklyn (Credit: Halstead)

Halstead Property Development Marketing is suing the Chinese developer of Williamsburg’s Oosten condominium alleging it’s owed nearly $1.3 million after getting booted from the project.

According to the suit, Halstead was hired by Xinyuan Real Estate in 2013 to market the 216-unit luxury development, the firm’s first solo project in the U.S. In October — amid a major shakeup of Xinyuan’s New York team — Halstead was terminated without cause from the project. At the time, Xinyuan owed Halstead nearly $1.3 million related to salaries, benefits and marketing expenses, which Halstead said it is still owed.

Xinyuan did not immediately return calls seeking comment. In an email, HPDM’s president, Stephen Kliegerman, said the complaint speaks for itself and declined to comment further.

Xinyuan bought the Williamsburg development site, located at 421 Kent Avenue, for $54 million in 2012, in the heady days of Chinese investment in real estate. At the time, it was heralded as the first developer from mainland China to tackle a solo project in New York City.

But things haven’t gone as planned.

Amid rumors of cost overruns, Xinyuan filed a $10 million claim against the project’s designer, Wank Adams Slavin Associates, in 2015. Last year, Xinyuan was hit with a $20 million suit by a former general contractor, Wonder Works Construction, alleging it was improperly terminated. At least one dissatisfied buyer also filed a lawsuit alleging the developer didn’t deliver on its promises.

Late last year, Xinyuan shifted its New York strategy, letting go of key executives at its U.S. development arm, known as XIN Development.  In December, XIN turned over management of its three New York City projects to Kuafu Properties, a five-year-old development firm backed by Chinese private equity. Under the joint venture agreement, Xinyuan retained ownership of the projects and Kuafu was tasked with providing professional services on construction management and marketing. The projects are managed through a joint venture known as Xin Fu Development, in which Xinyuan holds a majority stake.

According to filings with the New York state Attorney General’s office, the Oosten has a total projected sellout of $372 million.

As of September 2017, 49 of the 216 units remained to be sold, according to the lawsuit.

XIN and Kuafu recently tapped Douglas Elliman’s Sabrina Saltiel and Noble Black to market the remaining units at the Oosten.

Saltiel said they are partnering with the Silk Realty Group — Kuafu’s in-house sales division — to sell the 38 units, which range in price from $1.5 million to $7 million. Dubbed the “Oosten Reserve,” most of the units hadn’t previously been marketed, Saltiel said. “They’re larger, they have loft spaces,” she said. “Some of them are the most beautiful units in the building.”