Contractor bails on Oceanwide’s LA megaproject after scoring $42M judgment

Chinese conglomerate faces mounting debt on numerous stalled projects

Los Angeles /
Sep.September 16, 2021 11:09 AM
1101 Flower Street in L.A. with  Tony Lombardo of Lendlease and Zhang Xifang of Oceanwide. Xifang reportedly resigned in July 2021. (Google Maps, Lendlease, Oceanwide)
1101 Flower Street in L.A. with  Tony Lombardo of Lendlease and Zhang Xifang of Oceanwide. Xifang reportedly resigned in July 2021. (Google Maps, Lendlease, Oceanwide)

Chinese real estate conglomerate Oceanwide Holdings has some explaining to do.

The developer has been ordered to appear before a federal court over the enforcement of a $42 million judgement in favor of Lendlease Construction, the general contractor on Oceanwide’s $1 billion mixed-use development in Downtown L.A. The virtual appearance is scheduled for Oct. 8th in the Central District of California, court filings show.

Meanwhile, Lendlease will exit the stalled project, a source familiar with the development said, leaving Oceanwide to find another contractor before it can resume construction.

One of the largest development projects in L.A., the so-called Oceanwide Plaza promised hundreds of condo units and a luxury hotel spanning three glass skyscrapers directly across from the Staples Center, plus a 150,000-square-foot open air mall.

But construction at the site halted abruptly in 2019 as contractors hit the developer with claims for more than $100 million in unpaid work. Undeterred, Oceanwide struck a $100 million agreement with Lendlease in March 2020 to resume construction, but missed scheduled payments just three months later.

A court-appointed arbitrator awarded $38 million to Lendlease late last year; its agreement with Oceanwide provided for expedited resolution should the developer miss payments. Oceanwide attempted to dismiss the judgment, arguing that Lendlease failed to maintain proper licensing during construction, but a judge denied that motion in June.

Now, Oceanwide must pay the original award plus interest and legal fees. The company did not respond to a request for comment. Lendlease acknowledged the court order in its favor but declined to comment further.

Oceanwide is attempting to sell trophy assets to finance its mounting debt, including a repeatedly stalled sale of its Oceanwide Center project in San Francisco and its Beijing headquarters, for which the developer is reportedly asking $3 billion.

The company’s debt-fueled expansion into international markets has caught the eyes of Chinese regulators, as $3.2 billion in payments owed to Oceanwide’s bondholders are scheduled to mature this year.

Oceanwide disclosed several high-profile resignations in July, including CEO Zhang Xifang and chief risk-control officer Chen Guoqi, the San Francisco Business Times reported.






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