Oceanwide Center sale in San Francisco delayed 3 more months
Due-diligence deadline pushed back to year’s end
Stop me if you’ve heard this one before: Chinese developer Oceanwide Holdings has pushed back the deadline for the sale of its flagship San Francisco mixed-use project by three months, citing coronavirus-related delays.
Due diligence for the sale of Oceanwide Center was to be completed by today, Sept. 30, under the developer’s prior agreement with buyer Hony Capital. But the parties have consented to postpone that deadline to Dec. 31, Oceanwide disclosed Tuesday on the Shenzhen Stock Exchange.
“The scope and duration of the impact of the novel coronavirus on the United States, where the property is located, has far exceeded predictions,” the announcement read. Except for the deadline, all other terms of the prior framework remain in effect.
Oceanwide first announced in January that it was selling Oceanwide Center at a loss, but the coronavirus outbreak in China interfered with those plans. The original buyer backed out and Beijing-based private equity firm Hony stepped in. As the epicenter of the pandemic shifted from China to Italy to the U.S., the parties agreed to postpone the due-diligence deadline from June to September.
The originally announced sale price of $1 billion would have represented a $276 million loss for Oceanwide. The restructured deal includes a $700 million payment upon closing and up to $500 million three years later, depending on the development’s financial performance.
The developer is the same firm behind the Downtown Los Angeles megaproject Oceanwide Plaza, a $1 billion-plus condominium, hotel and retail project which has been stalled for about a year, as well as 80 South Street in Lower Manhattan, whose status is also uncertain.
Separately, Oceanwide received a bit of good news in connection with another long-delayed deal: its $2.7 billion acquisition of U.S. insurer Genworth Financial, which was first announced in 2016.
Genworth confirmed last month that “Oceanwide has provided satisfactory information regarding its funding plan for the purchase price consideration,” and that it would not exercise an option to terminate the deal.
Cross-border real estate investment has been slowed dramatically by the pandemic, with travel restrictions and social distancing measures posing new problems for due diligence in particular. Nonetheless, some foreign investors have still been finding creative ways to work around these restrictions and get deals done.