Struggling under huge debt, many Chinese real estate giants are selling assets in the U.S. to pay off their debts.
According to Bloomberg, China Oceanwide Holdings has found a buyer for a stalled complex in Los Angeles.
After spending $3.5 billion on projects in the U.S., Oceanwide is trying to get out of foreign debt. Before Oceanwide found a partner to buy back a $1.2 billion project in Los Angeles, its creditors took control of its other property in San Francisco.
Oceanwide is a major Chinese company that has been pioneering the investment wave of hundreds of billions of dollars in assets outside China.
In a similar way, China’s HNA Group and Greenland Holding Group are also trying to sell real estate projects in the U.S. to pay off debt.
According to real estate information firm CoStar Group, HNA Group and a partner sold the 1180 Sixth Avenue building in Manhattan to Northwood Investors for $305 million. HNA Group also sold 245 Park Avenue shares to SL Green Realty Corp. HNA Group paid $2.2 billion for the tower.
Chinese investors are mostly interested in office buildings, land for building, and old hotels in the United States. In particular, it should be mentioned that in 2015, the famous Waldorf Astoria hotel in New York was bought by China’s Anbang insurance group for $1.95 billion. The price of the deal is the most ever paid for a hotel in the United States.
Doug Harmon is the chairman of capital markets at brokerage Cushman & Wakefield. He said, “They seemed to have unlimited money and a huge appetite for special trophy assets.”
But this investment trend started to go away when the regime took steps to tighten the flow of money out of the country.
When China’s real estate market was in trouble, some companies went into debt because they abused financial leverage.
According to MSCI Real Assets, Chinese companies have sold a net $23.6 billion worth of commercial real estate in the U.S. since the beginning of 2019. This is a reversal from the period from 2013 to 2018, when they bought a net $52 billion worth of U.S. real estate.