Chinese conglomerate Oceanwide Holdings Co is reportedly selling one of its larger overseas projects for around $1 billion. The ambitious undertaking by the Shenzhen Stock Exchange-listed corporation involves the development of a property it owns in San Francisco, California; a project that would have included the city's second-tallest office tower.
The company's project, tentatively called the Oceanwide Center, was designed to feature dozens of commercial office and condo spaces. Hotelier Waldorf Astoria also planned to put up one of its hotels within the project site.
According to the company's filing with the Shenzhen Stock Exchange on Wednesday, construction and cost on the project had apparently become unsustainable due to a number of "huge challenges." These challenges have led to the company's decision to sell off the project at a substantial loss.
Oceanwide Holdings further elaborated that the $1 billion price tag on the project would result in a loss of about $276 million for the company. In its filing, the company named a unit of SPF Capital International as a potential buyer. The filing further revealed that the company would be receiving 4.4 billion yuan, or roughly $635 million, as initial payment. This will then be followed by installments that will be based on the actual returns of the project in the next three years. No other details regarding the deal were provided in its filing.
Work on the Oceanwide Center officially came to a halt in October last year. This was right after subcontractors filed lawsuits and the company faced increased scrutiny from the Chinese government, which was trying to crack down on further capital leaving China.
Oceanwide has been a relatively big player in the United States following a string of acquisitions in mid-2018, where it spent an estimated $1.1 billion. The disposal of the Oceanside Center project would be its first retreat from the country.
The Chinese firm clarified in its filing that disposal of the project would significantly improve its cash flow and eliminate a good portion of its overseas business risks.
Analysts at S&P Global Ratings predicted in a note published on Thursday that Oceanwide could very well sell more of its overseas assets given that it debts. Debts owed by the company maturing this year are estimated to be more than $5.8 billion. Apart from its project in San Francisco, Ocean currently has ongoing projects in New York and Hawaii. One of the company's larger undertakings is its project in 80 South Street in lower Manhattan, which has also been stalled due to issues with demolishing existing structures in its property.