Quote:
Chinese Developer Sells L.A. Luxury Tower at Steep Discount
A major Chinese developer on Tuesday disposed of the tallest rental apartment tower in downtown Los Angeles at a steep loss, the latest in a recent wave of Chinese investors unloading prized U.S. real-estate assets.
The U.S. subsidiary of China’s Greenland Holding Group sold the 59-story apartment skyscraper for $504 million, according to the buyer, privately held apartment owner Northland.
That sales amount was a record for a single rental property in Los Angeles, but it was still far less than Greenland had initially hoped to get for the building. Eighteen months ago, the asking price for the building was $695 million, which even at that price was less than what Greenland had paid in development costs, according to Northland.
In Los Angeles, the apartment building known as THEA at Metropolis was the fourth tower in Greenland’s mega-project in the city’s downtown. The firm began construction in 2014. The luxury real-estate sector was bouncing back after the recession, fueled in part by money from overseas. The project’s first three buildings included a hotel and two condominiums. The final tower was also meant to hold condos, but faced with a slowing luxury market, including a drought of international buyers, the Chinese developer in 2019 decided the last property would operate as rentals. Greenland finished building the rental tower the following year.
THEA totals 685 rental units. The average unit size is more than 1,000 square feet, and the average rent is about $4,500 a month. The units are over 90% occupied, according to Northland.
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^ If the devlpr had to pour more money into building the tower than they got back from the sale, that would explain why getting new projs off the ground is so difficult. I assume that Thea is generating monthly rental income for the owner, but how much that does or doesn't cover all the devlpt's fixed costs is a big question.
Most homeowners don't have as much equity in their own homes as they'd like, so I'm guessing owners of highrise projs are similar. Or that banks or investment funds continue to be owed money from homeowners until the mortgage is paid in full.
If highrise devlpt in dtla were an automatic gold mine, it probably would be easier getting projs like equity residential's apt tower at 4th & Hill St to break ground. I read that one reason why dt had so many parking lots for decades was because that was a more lucrative way for property owners to manage their land than doing something more useful or ambitious on it.