Boston Properties Seeks to Boot Oceanwide From SF office

Boston Properties wants to boot a troubled Chinese developer that allegedly failed to pay nearly $80,000 in rent from its Financial District office in San Francisco.

The Boston-based landlord has filed suit to terminate a 13,000-square-foot lease held by an affiliate of Hong-Kong based Oceanwide Holdings at 3 Embarcadero Center, the San Francisco Business Times reported.

The affiliate, Oceanwide International Investment, is an arm of Oceanwide Holdings, now known as Tonghai International Group, headquartered in Hong Kong.

Boston Properties is suing to recover nearly $80,000 in unpaid rent, plus daily payments of $2,651 starting Feb. 1 until a judgment is entered in the case. The lease at the 31-story Downtown San Francisco skyscraper expires in September.

Tonghai first breached its lease in July when it fell behind on a $77,264 payment, according to the lawsuit.

The landlord then agreed to amend the lease in September to require a $73,500 security deposit that could be applied to future missed rent payments, with the condition that the deposit is restored within five days, according to the complaint.

The Boston Properties’ lawsuit alleges Tonghai in December once again fell behind on rent.

And while the deposit was applied, the lawsuit states the tenant failed to pay the difference between the rent paid and the deposit, which was still owed. Tonghai also didn’t restore the security deposit, and then missed its rent payment for January, the complaint states.

On Jan. 4, Tonghai was served with a three-day notice to pay or vacate the space, to which it did not respond, the lawsuit alleges.

Oceanwide, once a significant developer in San Francisco and Los Angeles, has hit major headwinds.

Work on its signature San Francisco project — the unbuilt, two-tower Oceanwide Center at 50 First Street — started in 2017 but stalled in 2020. The property was listed for sale in 2019, but has failed to find a buyer.

The dormant construction site, across from Salesforce Tower, was seized by creditors last January.

The project is entitled for 1.2 million square feet of office uses, a 169-room hotel and more than 250 homes. At one point, Boston Properties was in talks with the developer to form a partnership to restart the project, but those discussions did not result in an agreement.

The project’s general contractors jumped ship in late 2021, then sued the developer. Claims for unpaid work from subcontractors now top $150 million.

— Dana Bartholomew