A consortium of offshore lenders has secured a place at the front of line for payment in case the China-based developers of Downtown L.A.’s three-tower, half-finished and graffiti-scarred Oceanwide Plaza finds a buyer.
An issue that has gotten the contractors worked up is that LA Downtown Investment, the entity that solicited construction funding from Chinese EB-5 investors, recorded a deed of trust for $325 million on the project in 2015, even though they were only able to raise $138 million.
Los Angeles County Superior Court recently granted a request by LA Downtown Investment, a group of investors drawn to China Oceanwide Holding’s project, to get first crack to satisfy a $325 million deed of trust it holds on the project, Bisnow reported. The would-be condominium, hotel and retail project covers nearly a full city block across from the Los Angeles Convention Center and the Crypto.com arena.
Australia-based Lendlease and Webcor, both contractors on the project, were placed after the lender by the court
It’s not clear whether the deed of trust reflects the total due to LA Downtown Investors. Contractors on the project, including Lendlease and Webcor, claim they are owed a total of $210 million.
Lendlease said it will consider a legal appeal of the Superior Court decision, which came as part of an involuntary Chapter 11 bankruptcy case.
“The bankruptcy court is going to try and move pretty quickly to transition this property to a new owner,” Greenberg Traurig shareholder Eric Rowen, who was on the firm’s team representing LA Downtown Investors in the lien priority case, told Bisnow.
A speedy deal would run counter to efforts to market the property, which would require a price in the $1.5 billion range to account for outstanding claims and the cost of completing the project, which has seen no significant work in several years.
The Real Deal last year pegged the market value of the property at $434 million and the cost of finishing the project at more than $800 million.
“I’ve got to tell you, putting together a billion-five in today’s environment is not exactly easy,” Mark Tarczynski of Colliers, who is working to sell the property, told Bisnow. “I’ve been estimating four weeks [to close a sale] for the last three months. At this point, it’s just kind of useless to estimate. It’ll happen this year, and I’m hoping it will happen before the close of Q2.”
China Oceanwide Holdings has over the past several years lost control or made distress sales of various ambitious projects in U.S. markets including New York, San Francisco and Honolulu.
— Jerry Sullivan