10/9/2020
 

Just a few workers on site sweeping and tidying things up today. From what I can see, there are no imminent signs of vertical construction anytime soon, with the possible exception of the yellow bracing components across several stacks on the deck. I'm not sure if those are components that were removed from the completed basement level concrete pours (which are about to be hauled off), or if they were recently delivered to be used for the future upper deck pours... hopefully the latter.

http://www.mediafire.com/convkey/dee...0hobu1s2zg.jpg

Update from a few minutes later... they are pulling the yellow bracing components out of the hole from the lower basement levels (see the crane pulling a stack out in the picture below)... so these aren't recently delivered.

http://www.mediafire.com/convkey/fca...9x96weapzg.jpg

That's so depressing, this whole thing was such a tease

Is it apparent to anyone, as it is not to me, where the elevator core will go? If so, I would look there for evidence of new rebar or other concrete work.

From the San Francisco Business Times
 

Exclusive: Oceanwide pauses construction on second tower due to pandemic

By Laura Waxmann – Staff Reporter, San Francisco Business Times
Oct 29, 2020, 10:02am PDT Updated 14 minutes ago

Beijing-based Oceanwide Holdings has temporarily paused construction of its troubled $1.6 billion Oceanwide Center project in downtown San Francisco as a result of the Covid-19 pandemic.

The developer confirmed the news in a statement to the Business Times on Wednesday.

“While Oceanwide continues to be committed to building this landmark project, due to unforeseen circumstances resulting from the Covid-19 pandemic, we have decided to temporarily suspend vertical construction activities,” the representative said in an email on Wednesday “At present, we are pleased to share that the ground floor concrete structure has been successfully completed, concluding construction of the foundation structures. We are hopeful the that full vertical construction will resume within 2-3 months.”

The two-tower, 2 million-square foot development is slated to rise at First and Mission streets near Salesforce tower. It would become the city's second-tallest skyscraper after Salesforce Tower.

Oceanwide halted construction one year ago on the shorter of the two towers, citing economic conditions, and the project has been plagued by problems. It currently is under contract, but that sale has been delayed twice because of the pandemic.

While construction has largely continued throughout the pandemic, the construction site was void of workers and activity this week.

As I reported previously, the pending $1.2 billion sale of Oceanwide Center to Hony Capital — the Beijing-based private equity firm that agreed to buy the development site this spring — has been subject to a series of pandemic-induced delays, with the most recent extension on the deadline to close granted in September. The deal is now expected to close on Dec. 31.

Oceanwide Holdings and the project's general contractor — a joint venture between Swinerton and Webcor Builders —is facing a lawsuit seeking $17.9 million by a subcontractor hired to perform foundation work. Malcolm Drilling Company, which filed the lawsuit in September, alleges that reference documents it received in 2016 regarding subsurface conditions at the site did not reflect actual conditions, causing it to work an additional 332 days beyond the time frame laid out in its contract.

Others have also filed claims for unpaid work. Including Malcolm Drilling, at least three subcontractors have filed mechanic's liens against the project worth $30 million.

https://www.bizjournals.com/sanfranc...NOMlJ6Z0FGWiJ9

I just saw this too in the BT. Here are my thoughts. Yes, Covid is an issue but I think the bigger issue is lack of funds. Lawsuits by the sub contractors for not being paid is a glaring issue.

I find it humorous that Oceanswide still thinks it will build out this project. They are trying hard to off load the project. The other Chinese firm trying to purchase seems to be having the same issues, IMO. I do not see this project moving forward in any form until a new developer is found with deep pockets.

Yes--those are my thoughts exactly.

It's reassuring that at least one US-based REIT, Alexandria, has the foresight to move forward with a downtown SF project, but Alexandria is rather specialized in focusing on medical lab/research properties. Most of the pure office and mixed REITs are still trying to raise cash by offloading downtown office projects.

The Chinese, on the other hand, are putting more and more restrictions on sending capital overseas, especially to the US. I don't think a new Chinese buyer is realistic at this point.

I'm hoping when we get more clarity about the future of COVID, perhaps once one or more vaccines are approved, and the WFH phenomenon reverses (I believe it will), one of the US companies will step up. An anchor tenant would improve the chances of that immensely but they are still enamored of the WFH concept. Probably even Salesforce.

Well that sucks.

Let's hope somewhere down the road someone comes along to build this magnificent tower.

uuuugggghhhh....

I wanted this one bad. I'm goin' back to bed...

Exclusive: Swinerton, Webcor quit Oceanwide Center as buyers eye imperiled project

https://www.bizjournals.com/sanfranc...Pos=0#cxrecs_s

"Swinerton and Webor have informed San Francisco officials that they are no longer the general contracting joint venture behind Oceanwide Center, citing lack of payment for several months in city documents obtained by the Business Times.

News of their withdrawal comes as several groups are working to assemble financing to buy the 2 million-square-foot mixed-use project under construction in San Francisco, according to sources.

The efforts come in the wake of the project's Chinese owner, Oceanwide Holdings, announcing Dec. 31 that it was not able meet or extend a year-end deadline to close a deal with Hony Capital to buy the 2 million-square-foot office, hotel and residential development near Salesforce Tower.

Swinerton and Webcor's resignation from the project came shortly after Thanksgiving, just months after Oceanwide halted construction on the entire project in September. In an email, a project manager requested that the city's Building Inspection Department remove the joint venture from three active site permits associated with the project as the general contractor. A replacement general contractor has not been proposed, the project manager said in the email.

“We will continue to work closely with our District Building Inspector over the next few months as we safely demobilize and secure the project site,” the project manager wrote.

The joint venture declined to comment Wednesday. Oceanwide Holdings did not immediately return a message seeking comment.

It is unclear how the loss of the project's general contractor will impact a future sale of the project. At least one of the unidentified groups currently working on an offer for the project is local, sources told me, speaking anonymously because they were not authorized to share the information. It is unclear whether any official offers have been made for the stalled project, once hailed as San Francisco’s most coveted development project.

The sale of the partially completed construction site is perhaps the best exit scenario for Oceanwide Holdings USA Corp., the U.S. unit of Beijing-based conglomerate, Oceanwide Holdings Co. Ltd., that is officially listed as the project's ownerOceanwide bought the project for $296 million in 2015 and started construction in December, 2016, as part of a major U.S. real estate play that also includes a high-profile project in Los Angeles. But the project quickly ran into delays as costs soared and the Chinese government cracked down on capital ouflows.

All those delays might now work to the advantage of a buyer. Jeremy Thornton, a mortgage and structured financing expert for Colliers International, said a new owner would be able to resume the project and deliver it well after the pandemic is expected to have ended.

“The thinking is, ‘Get a deal now,’” Thornton told me. “There is obviously still a significant amount of risk. There is a lot of money that needs to go into development. If they can pick it up at a decent discount, by the time the project is completed the market will be ready for it.”

If Oceanwide is unable to come to terms and close a deal to sell the project, most likely at a significant discount, real estate experts tell me they expect the U.S. Oceanwide unit — and potentially other subsidiaries of the company involved in financing the project —

“It sounds like they’ve been down a couple paths and they haven't worked, which may make bankruptcy, receivership or some insolvency-type proceeding more likely,” said Ben Young, a partner in Jeffer Mangels Butler & Mitchell LLP’s bankruptcy group.

“Bankruptcy allows the owner to protect themselves from a forced sale of the property by one of its creditors so that they can control the disposition and maybe get more money for it rather than selling it in a distressed kind of way,” Young said.

Oceanwide Center, expected to cost $1.6 billion to build, was designed to feature two towers. The taller, at 910 feet, was to become the city’s second tallest skyscraper, with 1.2 million square feet of office space and 109 residential units. The 600-foot tower was planned to house a 169-room Waldorf Astoria hotel and 155 residential units.

Construction crews were originally supposed to be putting the finishing touches on Oceanwide Center this year, but the expected completion date was delayed, most recently when Oceanwide halted work on the shorter tower in late 2019 and the taller tower in mid-2020. The last estimated completion date available cited publicly 2023.

Real estate insiders say any new deal to buy the project and move it into vertical construction will almost certainly involve a new mix of product types to better match current market conditions. The pandemic has shaken the hotel industry to its core, with a return to 2019 levels not expected until late 2024. Office employees continue to work from home, and high-rise condominium sales and rents have suffered.

Prior to its deal with Hony to sell for $1.2 billion, Oceanwide Holdings said it had a deal with another potential buyer, SPF Capital International Limited, also based in Beijing. A records request last year revealed that SPF in March asked the city about making changes to the project, including dropping the hotel component in favor of more residential units. Hilton not respond to an inquiry about whether plans for the Waldorf Astoria on site still stand.

Oceanwide Holdings and the Swinerton-Webcor joint venture are facing mechanic’s liens for unpaid work valued at upward of $40 million from its subcontractors. Mechanic's liens grant the lien holder an involuntary security interest in the real property, often representing a red flag for potential buyers.

“Since the lien is filed against the property itself, as opposed to the owner, the lien holder will typically retain interest in the property, even after the property is transferred,” said Alex Benarroche, legal associate with Levelset, a money management and payment startup for contractors based in New Orleans. “So finding a purchaser willing to assume that debt will prove difficult.”

Several subcontractors have already filed enforcement actions against the development team in court. If a claimant is successful and the owner or general contractor cannot make good on the debt, Benarroche said foreclosure proceedings can be initiated.

Even with its construction contract terminated, the joint venture could be first in line to foreclose on the property depending on the financing structure for the project, said Young, the JMBM attorney.

"The general contractor would have a right to a mechanic's lien — someone would be entitled to assert that lien and foreclose on behalf of the general if it came to that. Whether that would be Webcor or Swinerton you can't know without reviewing the agreement," said Young. "They are still owed money, have a receivable and are entitled to collect what they are owed."

Sources familiar with the project’s financing structure say the bulk of it is equity raised from investors who purchased corporate bonds issued by Oceanwide Holdings that are not collateralized by the property — perhaps the only good news for the project.

“In most large development projects — and especially in this particular case with the issues that Oceanwide is having with the development — you would have a lender really turning the screws right now on you, threatening foreclosure and pulling the property back,” said Thornton, the Colliers financing specialist.

Oceanwide Holdings most recently blamed the pandemic for derailing the project’s construction and planned sales, but that notion has prompted skepticism among some in the city's real estate community.

“Few real estate deals get postponed because of Covid — they get postponed because the deal is not as sweet or they get postponed because due diligence turns out to show various problems,” said Martin Orlick, a real estate attorney with JMBM. “They may have found out that the (future) rent was not what it was represented to be — that’s just a guess, but it's possible. And it's very possible that whatever deal the seller thought they’d had with the potential hotel tenant, that they have fallen out. Then there could be issues with the buyer’s ability to get funding.”

Public records show that Oceanwide Holdings has continued to pay annual property taxes — currently valued at over $1 million — on the property. It has also paid a total of $44.9 million in impact fees and is due to pay $93.4 million more in fees once vertical construction begins. By way of its community benefit agreement, Oceanwide has also committed to paying a total of $650 million in Mello-Roos taxes over a 30-year period, which I am told it has been paying.

“It could be a hole in the ground for the next 10 years and they keep paying taxes on it,”real estate attorney Pamela Duffy.

Building permits, which were granted to the project in 2017 and 2018, have expiration dates, but developers can request an extension, Planning Department spokesperson Candace Sohoo said.

According to a spokesperson for DBI, Oceanwide's three building permits expire in December 2022, January 2023 and June 2023.

Mayor London Breed’s office said the city was committed to supporting Oceanwide Center’s development.

"We know how important the development of this site is for the future of the Transbay area and our downtown,” said Breed spokesperson Jeff Cretan. “As we look ahead and plan for our economic recovery, we need sites like this one developed to attract businesses and provide more housing in our city.”

He calling the failed deal with Hony a “setback,” he added, “We are hopeful it's only temporary.”

“We have heard there is other interest in this site, and as a city, we will do what we can to move a project at this site forward,” he said.

Well that's not shocking at all,

I'm going to guess the new buyer will build something like a 500 foot box here?

At least it's not their LA project that will remain uncompleted on the skyline forever.

I don't think so. Not only are sites entitled for building as tall as this one rare as hen's teeth in SF (basically, there aren't any others) but all the foundation and below ground work is done for a 900 ft building. Any buyer would be foolish not to complete it according to the original design envelope if not the original uses.

Salesforce Tower needs a sibling and I was hoping this would rise up this year :(

Me too, especially being a Norman Foster fan.

But I'll be able to wait in hopes it gets built as designed...

Yes it would be very sad if this design was lost.

It will be interesting to see who the local group is. IMO, it is a good thing that a Chinese group stays away from this project. Too much uncertainty in that part of the World.

The Chinese government has actively been discouraging and/or prohibiting further investment in the USA by Chinese firms.

Yep, that's the only real danger here.

As pedestrian pointed out, with all of the legal entitlements in place for this piece of land in development-phobic San Francisco, something big will eventually rise here, one way or another.

Whether or not the current knock-out foster design gets built, well, time will only answer that question.

in case anyone feels a reminder is helpful, this is the current state of the larger tower

https://live.staticflickr.com/65535/...781c9be1_b.jpg

this is looking southish from First St toward what someday might be the location of the shorter tower in the distance

https://live.staticflickr.com/65535/...d4164bd4_b.jpg

edit: I just realized Smashing Alligator's pics are still at the top of this page, and offer a better vantage/overview