China-funded home building on San Francisco Bay falls apart
In December we flagged a story written by the Wall Street Journal about big-money real estate projects in the Bay Area. The financiers? The China Development Bank (CDB). One concern? A condition of CDB’s loan was the use of a state-owned Chinese company as the general contractor on the project.
But it now looks like the deal has fallen through.
A $1.7 billion deal between Lennar Corp. and a pair of Chinese government entities to construct 12,500 homes on the former Hunters Point Naval Shipyard in San Francisco and a string of high-rises on Treasure Island has collapsed.
Sources familiar with the deal - an effort more than a year in the making and involving the China Development Bank and Chinese Railway Construction Corp. - tell us it fell apart largely over demands by the Chinese for more control over the developments than Lennar was willing to give.
So what happened?
For starters, under Beijing's recently installed new leadership, the Chinese continually sought assurances of a better return on their investment. That meant that if certain performance measures weren't met, they could take greater control of the project.
"They kept moving the goalpost," said one source, who declined to speak for the record.
The locals also had their doubts - not about the Chinese bank's financing, but about using Chinese Railway Construction Corp. as the general contractor, because the company wasn't familiar with San Francisco's local hiring requirements.
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