One of the biggest real estate development projects in downtown Los Angeles has suddenly stopped, potentially as a result of the project’s Chinese financing drying up – or an FBI investigation. The LA Times reports that Oceanwide Plaza, a $1 billion condominium/hotel/retail complex across the street from the Staples Center that is expected to be a key part of a revamped Figueroa Street, has stopped construction this month.
The property is being built by Oceanwide Holdings, a Beijing based publicly traded conglomerate that reported revenue of $2.37 billion in 2017. In a statement on Thursday, the company said that the delayis due to a re-capitalization of the project and that work should resume next month.
Obviously, the fact that this is a Chinese-financed project has raised concerns that the construction halt more likely has something to do with Chinese government policies restricting the flow of money out of the country. These capital constraints that were put in place in 2016 sent shockwaves through numerous parts the real estate market in the United States and Canada, as Chinese citizens have looked for a way to get their money out of the country.
At the same time, the FBI is also conducting a corruption probe at LA City Hall that is looking at possible kickbacks involving foreign real estate developers. According to the LA Times, “Federal agents have inquired about Oceanwide and other downtown development projects with foreign investors as they seek evidence of possible crimes including bribery, extortion, money laundering and kickbacks that could involve L.A. city officials and development executives.”
The company responded that “Oceanwide has no comment regarding any investigation-related matters. In an effort to prioritize construction activity, and while we restructure capital for the project, interior construction at Oceanwide Plaza is temporarily on hold.”
The development was already underway and was expected to be finished this year. The three towers were set to house more than 500 luxury condos and are supposed to be 55 stories high. As they stand now, partially completed, they are now sitting open, exposed to the elements.
The general manager of the city Department of Building and Safety, Frank Bush said: “They said they were stopping work on the project at this time, and had no further explanation. It doesn’t have anything to do with any corrections we’ve given them or anything like that. It wasn’t at our direction.”