Greenland sells Metropolis apartment tower for $500M

A Chinese developer has sold the tallest apartment tower in Downtown Los Angeles for $504 million – nearly $200 million less than the cost of development.

A U.S. subsidiary of China’s Greenland Holding Group sold the 59-story Thea at Metropolis at 1000 West 8th Street, the Wall Street Journal reported. The buyer was Northland, based near Boston.

The $504 million price paid for the two-year-old, 684-unit tower set a record for a single rental property in Los Angeles, but was far less than the developer had sought.

The initial asking price was $695 million 18 months ago, which was less than what Greenland had paid in development costs, according to Northland.

The loss for Greenland is the latest among Chinese investors, which have jettisoned prized U.S. real estate assets.

After nearly two years of soaring rents and property values, the multifamily market has cooled.

Higher interest rates and three months of sliding rents nationally have weighed on the apartment market, while the L.A. market faces unique challenges, said Matthew Gottesdiener, Northland’s chief executive.

California rent regulations and the ability of renters to move away from Downtown Los Angeles because of remote work have dampened values further, he said.

Chinese firms have sold a net $23.6 billion of U.S. commercial properties since 2019, according to MSCI Real Assets. Greenland USA, based in Shanghai, has been an active seller.

The firm sold two apartment buildings in Brooklyn for $315 million earlier this year. It also listed its 350-room hotel at the Metropolis, according to The Real Deal.

The Thea apartment tower and Hotel Indigo make up two of four towers at Greenland’s Metropolis development at West 8th and Francisco streets. The other two towers, opened in 2017 and 2018, include 822 condos. In July, the company began hunting buyers for the 350-room hotel.

A typical apartment at the Thea is more than 1,000 square feet, with an average rent of $4,500 a month. The units are more than 90 percent occupied, according to Northland.

The rental tower was initially meant to hold condos. But faced with a slowing luxury market, including a dearth of international buyers, the Chinese developer in 2019 decided to market it as rental apartments. It was completed in 2020.

Greenland, half owned by the Shanghai Municipal Government, spent more than $1 billion on the entire Metropolis development.

Greenland has struggled with debts and a depressed housing market in China, which some U.S. real estate executives say might have led it to raise cash by selling U.S. assets. Greenland said it was likely to default on an outstanding $362 million bond balance, citing declining sales in China.

Northland said it raised most of the capital for the Thea purchase from the recent sale of an apartment complex in Tucson. The purchase of the L.A. highrise was financed with a 10-year loan from Fannie Mae, at an interest rate just over 5 percent, according to the company.

— Dana Bartholomew

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