WS Communities on Local Opportunities in 2018

LOS ANGELES, CA / ACCESSWIRE / May 5, 2018 / The golden age of Chinese investment in Los Angeles real estate has turned out to be a fast-moving summer shower of yuan that has quickly dried up. This sector of the market looked wildly promising when Dalian Wanda’s $420 million purchase of a Beverly Hills development site and Greenland’s massive $1 billion Downtown L.A. Metropolis project were announced. But today’s outlook is a lot less encouraging, with less yuan filling investor pockets.

The major reason for the shift in fortunes is new restrictions on China’s capital outflow. Campaigns launched in spring to eliminate financial recklessness and graft have severely restricted Chinese investment in U.S. real estate. There has been a year-over-year decline of Chinese dollars in the U.S. commercial real estate market to just $7.3 billion in 2017, compared with $16.2 billion in 2016, according to Cushman & Wakefield, representing a 55 percent plunge.

Los Angeles County, in particular, saw a 25 percent decline in Chinese real estate investment over this same time period, says The Real Deal, reporting just $491 million in 2017. That figure is a shadow of the impressive $1 billion in Chinese commercial property investments reported in 2014.

Chinese investors are now hanging “for sale” signs on properties it formerly considered trophies, including two New York City office towers, with original selling price tags of $2.21 billion and $305 million. CEFC China Energy is following suit, placing 100 properties valued at $3.2 billion on the sale block. Greenland USA, the U.S. arm of Greenland Group, turned heads when launching its massive $150 million Metropolis project in 2014. But word is now out they are seeking to unload one of the project’s three residential towers.

But the silver lining to this advance and retreat approach taken by the Chinese is the fact that assets are now in play that otherwise would be unavailable. Local developers previously too poor to make bids are now presented with an enticing opportunity to get back into the game.

Wanda Scales Back

Dalian Wanda’s withdrawal from One Beverly Hills presented a major game changer in the Los Angeles commercial real estate market.

Since the Athens Group departed the $1.2 billion luxury condo and hotel complex project, Wanda has been seeking a buyer. According to Los Angeles Times, Wanda secured the plot in 2014 for $420 million. Wanda is also unloading four additional overseas properties, including Chicago and London, with a $5 billion asking price for the lot. Some are speculating another Chinese firm will scoop up the One Beverly Hills project.

But the market that has taken the steepest nosedive since China rebelled against overspending in foreign markets is the hotel market. In 2017, Cushman & Wakefield reported a 90 percent decrease in hotel acquisitions by Chinese investment companies. Only one hotel transaction in 2017 involved a Chinese company, Han’s Holding Group, which spent $115 million for Downtown’s DoubleTree by Hilton

Anbang Insurance Group, which purchased Strategic Hotels & Resorts properties in Santa Monica, Laguna Beach, Laguna Niguel and San Francisco, for $6.5 billion in 2016, has recently been assumed by the China Insurance Regulatory Commission while allegations of fraud are being investigated. Anbang has not responded to inquiries as to whether any of its Strategic Properties is up for grabs.

WS COMMUNITIES

WS Communities is a real estate development firm that specializes in the acquisition, entitlement, and development of multifamily and mixed-use properties in Southern California. WS Communities’ projects include luxury and affordable residential units with ground floor retail and office spaces located in Santa Monica and Los Angeles, California.

SCOTT WALTER – CEO & PRESIDENT

Scott Walter is an 18-year real estate development and investment veteran and was previously responsible for acquisitions and development at NMS Properties, Inc, as their Executive Vice President. Prior to joining NMS, Mr. Walter spent 11 years with Legacy Partners Residential, Inc. as Vice President of Development & Acquisitions, where he led the acquisition and development of all communities in the Southern California, Nevada, and Arizona markets, and was responsible for all facets of residential operations, acquisitions, development, construction and property management. Before his tenure at Legacy Partners Residential, Inc., Mr. Walter was an Associate with Curtis-Rosenthal, Inc., a real estate consulting and appraisal firm. Mr. Walter holds a Bachelor of Arts degree with an emphasis in Real Estate and Finance from Loyola Marymount University and is a member of the Urban Land Institute (ULI) and the National Multifamily Housing Council (NMHC).

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