More than a year after Chinese developer Xinyuan Real Estate dismantled its local New York City team and brought on another firm to oversee its developments, the company’s lone Manhattan project has hit a snag.
Xinyuan’s Hudson Garden condominium in Hell’s Kitchen is behind schedule. And Kuafu Properties, the developer Xinyuan tapped last year to helm its projects, has renegotiated the development’s construction loan, sources told The Real Deal.
Kuafu negotiated an extension through 2021 with Bank OZK, which reduced the $108 million it committed to the project by $20 million, sources told TRD. Kuafu now has a term sheet with Mack Real Estate Credit Strategies to provide a $20 million mezzanine loan to make up the difference. The loan is expected to close later this month.
When asked to comment on the project’s delays and the refinancing, a spokesperson for Xinyuan wrote in an email that that the developer executed a construction contract last month, and “expects construction work will proceed as planned.”
Representatives for Kuafu, Bank OZK and Mack Real Estate Credit Strategies declined to comment. A team at HFF led by Chris Peck negotiated the new financing with Mack, and also declined to comment.
The refinancing is a breath of new life into the 92-unit condo project at 615 10th Avenue, which has a projected sellout of $165 million.
But it’s not necessarily out of the woods.
Retailer Target in 2016 signed a lease to anchor 29,000 square feet of retail at the base of the building. One source familiar with the project said Target can walk away from the lease if Xinyuan does not deliver the space by the end of this year, and questioned whether the developer could meet the deadline.
Xinyuan paid $57.5 million to buy the development site in 2015 – a time when Chinese developers were jumping into the market with both feet. But the company hit some snags – including cost overruns on its Oosten condo project in Williamsburg – and in late 2017 the company stripped down its New York development team, known as XIN Development.
Xin teamed up with Shang Dai’s Kuafu to form a joint venture to oversee the company’s pipeline of projects, which also includes the condo conversion of the landmarked RKO Keith’s theater in Flushing.