It’s been over a month since Chinese developer Oceanwide Holdings announced a deal to sell its flagship San Francisco development for $1 billion, but it could take another month for the deal to officially close — and the new coronavirus outbreak is to blame.
Oceanwide and the buyer, an affiliate of Beijing-based asset manager SPF Group, have agreed to postpone the completion of due diligence and the delivery of Oceanwide Center by a month amid a coronavirus-related slowdown, the company announced Thursday.
“Due to the impact of the COVID-19 epidemic, due diligence work on this transaction has been somewhat delayed,” a filing with the Shenzhen Stock Exchange states. “Through amicable negotiation, both parties signed a First Amendment to the Sale Agreement on Feb. 26, 2020 to adjust the due diligence and delivery period.”
The due diligence deadline has been pushed back from Feb. 19 to Mar. 25, and the delivery deadline has been pushed back from Mar. 5 to Mar. 31, according to the disclosure. The buyer has deposited $20 million into a joint account as part of the deal.
Following Oceanwide’s Jan. 23 announcement of the deal, the company’s shareholders voted to approve the transaction at a meeting on Feb. 19, SZSE filings show. That meeting itself had been postponed by a week due to coronavirus concerns, and shareholders were encouraged to attend remotely rather than commute to Beijing.
The COVID-19 epidemic has delivered another blow for Oceanwide’s U.S. ambitions, as the firm’s major developments have already been hampered for years by capital controls and the U.S.-China trade war. The company is reportedly seeking to sell Oceanwide Plaza in Los Angeles and a development site in New York’s Seaport district as well.
And back in China, Oceanwide’s main ongoing development project is located in the Central Business District of Wuhan, which is at the epicenter of the outbreak.
Oceanwide has said it expects to take a $276 million loss on the sale of Oceanwide Center, which is set to include San Francisco’s second-tallest building after the nearby Salesforce Tower. The firm’s then-CEO, Han Xiaosheng, stepped down on the same day the sale was announced.
On Wednesday, the Centers for Disease Control and Prevention confirmed the first case of “community spread” of COVID-19 in the U.S., in Solano County northeast of San Francisco. On Thursday, Inman reported that a Bay Area condo buyer had a coronavirus contingency clause added to the contract because the seller is on lockdown in Wuhan.
With major clusters of coronavirus cases developing in Italy, Iran and South Korea, some U.S. real estate firms have also started to feel an impact. Hotels and malls, in particular, are facing the consequences of a decline in tourism.