China Oceanwide Holdings, the Beijing-based developer behind Oceanwide Plaza, one of the largest unfinished projects in downtown Los Angeles, has defaulted on an EB-5 loan related to the development, real deal Learned.
The company owed $157.4 million to a group of EB-5 lenders as of January, according to a default notice filed with Los Angeles County. According to the notice, the sale of Oceanwide Plaza can be arranged after August 8th.
Oceanwide Plaza is Oceanwide’s only remaining U.S. asset and has been unfinished since 2019. In a filing to the Hong Kong stock exchange, the company said more than $1.2 billion was needed to complete construction, on top of the $1.1 billion already spent.
Across the two towers, Oceanwide plans to build a Park Hyatt hotel and 500 apartments.
Oceanwide “failed to complete project construction in accordance with the loan agreement” and failed to obtain priority construction loans, the notice said.
The company also allowed a machinist’s lien to be filed against the project — a violation of the loan agreement — and failed to retain all-risk insurance for the development.
EB-5 investors and a limited partnership called LA Downtown Investment also said Oceanwide failed to pay at least $11.8 million in interest and $56 million in principal.
The EB-5 group registered a $325 million loan with Los Angeles County in 2015. However, Oceanwide’s contractors claimed in court records that EB-5 lenders could only raise $138 million for the project.
Los Angeles Superior Court Judge, February ruling EB-5 lenders are higher up the debt stack than unpaid contractors, meaning that in the event of a default, lenders will be paid first.
Oceanwide also disclosed that it had signed a letter of intent to sell Oceanwide Plaza to a “potential buyer”, without providing further details.
