Gemdale, Lincoln Put SF Office JV on the Block for Record Price

Mingtiandi, Sunday, January 28, 2018


Chinese developers from Greenland to Wanda may be choking on their overseas property projects, but Shenzhen-based rival Gemdale could be in line for a big payday as it puts a newly completed, fully-leased San Francisco office building on the market.

Gemdale USA and its US partner, developer Lincoln Property Co, have reportedly put 500 Pine Street on sale with a guidance price of $75 million, according to an account in The Registry, citing sources familiar with the deal. The price of $1,335 per square foot for the 56,179 square foot (5,219 square meter) building would set a new record for an office property in the California city. (An earlier account in the San Francisco Business Times pegs the total price at $80 million, citing real estate information provider CoStar.)

Completed last year, the four-story building in San Francisco’s North Financial District is fully leased to fintech startup Blend and pharmacy chain CVS. Gemdale did not reply to inquiries from Mingtiandi regarding further details on the transaction by the time of publication.

Low-Key Gemdale Builds US Portfolio

This recent transaction takes place just one block south of where Dallas-based Lincoln Property and its state-owned mainland partner built the 350 Bush Street office tower, which opened last year. That 19-storey, 372,000 square foot (34,560 square metre) building is fully leased to tenants including Amazon.com’s live streaming platform Twitch.

The cross-border duo formed a joint venture to develop both office projects in 2014, marking Gemdale’s first foray into the US market. The value of Gemdale’s investment in the redevelopment project at 500 Pine Street, then a long-vacant lot, is unknown.

Shanghai-listed Gemdale has since built a US portfolio totaling eight other properties across San Francisco, Los Angeles, San Jose, New York, and Boston.

The Chinese builder’s investments include 45 Broad Street, a supertall residential and office tower being built by New York developer Madison Equities which is slated to be the second-tallest skyscraper in downtown Manhattan. Gemdale paid almost $70 million for an 81.3 percent stake in the 84-storey, $442 million project in 2016.

Just this week, Gemdale USA reportedly added to its California portfolio by paying $45.9 million, or more than $353,000 per unit, to purchase The Madison at Town Center apartments in Valencia, a community in Los Angeles County.

Chinese Rivals Stumble Overseas 

A successful sale of the redeveloped building at 500 Pine Street would contrast with the recent struggles of other Chinese developers to get high-profile projects off the ground in California and elsewhere. Last September, a mainland consortium led by state-owned Greenland Group was reported to be walking away from the Landing at Oyster Point, a 42-acre waterfront office and biotech site in South San Francisco. The partners had picked up the $2 billion waterfront mega-project for a reported $171 million in 2016.

Then in November, a unit of Shanghai-based Greenland was said to have withdrawn from negotiations for a 1.9 million square foot (176,516 square meter) mixed-use project in North Hollywood, California before paying a required deposit, leaving Dallas-based partner Trammell Crow to move ahead on plans for the project independently.

Mainland mall builder Dalian Wanda Group has suffered setbacks of its own on the US west coast, with its local development partner Athens Group reportedly bailing on the $1.2 billion luxury condo-and-hotel complex One Beverly Hills last October.

The Beijing-based conglomerate announced this week it was selling its flagship property projects in Australia – a deal that could surpass $1.5 billion – amid a global retreat from its overseas portfolio. The week before, Wanda offloaded its billion-dollar London project One Nine Elms for £59 million ($81.5 million) just under four years after buying the site for £88.8 million.

Hainan-based conglomerate HNA Group is also said to be retreating from its sprawling overseas property portfolio under intense financial pressure and regulatory scrutiny following a $40 billion deal binge.

By Greg Isaacson