- Lendlease is departing the $1 billion Oceanwide Plaza project in Los Angeles, leaving the future of the mixed-use development in question. Chinese development company Oceanwide Holdings missed payments to Lendlease just three months after the contractor agreed to a $100 million deal to restart construction in March 2020, according to The Real Deal.
- While the circumstances surrounding the missed payments were not disclosed, court documents indicate that Oceanwide officials must appear in court on Oct. 8 after a $42 million judgment in favor of Lendlease, The Real Deal reported. The Australia-based contractor declined to provide comment to Construction Dive about the litigation and its reported departure.
- In addition to finding another contractor, Oceanwide is also facing issues at home with Chinese regulators, according to The Real Deal. The website reported that the company is trying to sell its headquarters in Beijing and another of its beleaguered U.S. projects, the $1.6 billion Oceanwide Center in San Francisco.
Construction at Oceanwide Plaza stopped in 2019 under a cloud of late payments and approximately $100 million in mechanic’s liens. The contractors filing liens included Standard Drywall for $29.4 million, according to Levelset. At the time, Oceanwide admitted its problems with maintaining sufficient capital and said it was committed to finishing the project.
As problems mount in Los Angeles, Oceanwide’s San Francisco project also faces issues. Plans for the mixed-use development include 265 residences, about 1 million square feet of office space, a 169-key Waldorf Astoria hotel and a public plaza with a five-story-tall public square.
In Nov. 2020, Oceanwide Holdings was forced to stop construction on the second tower of its San Francisco project due to the COVID-19 pandemic. A year earlier, it stopped work on the smaller of the project's two towers.
An 'attractive site'
With both debt and equity constrained from China, Oceanwide could consider selling the Los Angeles project. If Oceanwide were to sell, Derek Wyatt, a managing director at RCLCO, said that the partially finished project could attract bidders at the right price. But it won’t be a fit for everyone.
"There are some developers and some groups that are interested in projects as they get closer to the completion of construction," Wyatt said. "There are other groups that you want to have a little bit more say in the programming on the site."
While there still may be some flexibility in uses, a lot of the future uses have been determined. "I think, to a certain extent, that might limit who those potential buyers could be," Wyatt said. "Nonetheless, I think it will certainly get interest from a variety of groups."
Like many things in real estate, the appeal of the site lies in its location. It sits in the South Park area of Los Angeles, which is near Staples Center, L.A. Live and the Los Angeles Convention Center.
"A little over 20 years ago or so, those developments really helped to jumpstart the renaissance and revitalization of downtown LA," Wyatt said. "Clearly, the Oceanwide site is a very attractive site for development. And, and there's definitely a strong opportunity there for it to attract residents and potentially hotel guests when it is eventually complete."