[Epoch Times, June 2, 2022](Reported by Cai Rong, New York Times reporter) Greenland America is the general developer of the Atlantic Plaza/Pacific Park project in New York City.Shanghai Greenland“Holdings” suddenly exploded at the end of May, and its credit rating has changed from investment grade to junk level. “Shanghai Greenland” faces the risk of defaulting on its debt and may giveBrooklynUnfinished construction projects bring a dark cloud.
2014, ShanghaiGreenland GroupIt is also one of the world’s top 500 companies, entering New York real estate as a real estate “global leader”, investing in real estate$6.3 billionto buildBrooklynThe Atlantic Plaza/Pacific Park project, hailed as New York’s largest in 30 yearsreal estateComprehensive project with infinite scenery. In less than 10 years, the debt is going to build up, which can be said to be changing.
On May 27, Greenland Holdings asked to extend the repayment period of its US$488 million bond due in June by one year, the first state-owned real estate company in China to explode. Monday (May 30),Standard & Poor’sGlobal Ratings downgraded the greenfield rating from B- to CC, which is one level lower than the threshold for garbage classification, commonly known asJunk Bond.Moody’sAlso downgraded Greenland Holdings to Caa2 from B2, which means that injunk levelcontinue to decrease.
The S&P report cited a number of reasons for the downgrade, including due to the Shanghai blockade, difficulties selling assets in China, and Greenland’s limited cash on hand to repay debt, with $2.4 billion in bonds maturing next year, the company “very bad.” prone to not paying its senior notes when they mature.”The Moody’s report also said: As Chinareal estateDifficult market operations and financing conditions, escalating liquidity pressures on Greenland Holdings, and huge debt maturities to repay.
according toBloombergGreenland’s bond price recently fell from 92 cents to a low of 41 cents on the dollar due to the extension request, according to the report. S&P said it could downgrade Greenland’s credit rating to “selective default” if the loan extension is approved.
The impact of the downgrade on Greenland’s U.S. subsidiary and its holdings is unclear.
“Going to the sky, entering the earth, going to the sea” green space
Greenland GroupBorn in 1992, its predecessor was funded by the Shanghai Municipal Commission of Agriculture and the Construction Committee.Shanghai GreenlandThe head office is mainly engaged in real estate development projects. Later, through the “mixed reform of state-owned enterprises” led by the Shanghai State-owned Assets Supervision and Administration Commission, the shareholders became more diversified, but the status of “state-owned enterprises” was still not lost.
In recent years, Greenland has been busy with “going to the sky, entering the ground, and going to the sea”. “Going to the sky” refers to building skyscrapers and super high-rise buildings, “going to the ground” is subway construction, and “going to the sea” is to set foot in overseas markets. And proposed to focus on real estate, large infrastructure, large consumption, large finance, scientific and technological innovation &health etc.the “one main and three major” strategy of coordinated business development.
Greenland Group’s official website describes it as “promoting its overseas expansion at full speed” and has set foot in 13 cities in 9 countries and 4 continents.
According to the article “Greenland 36 billion to build the largest complex for investment immigrants in New York” on Sohu.com, the Atlantic Plaza project in New York City for American investment immigrants (EB5 project) is an important step for Greenland Group to “enter the United States and realize its international strategic layout”.
Greenland’s overseas strategy is driven by the CCP’s “One Belt, One Road” and “Chinese Enterprises Going Global” strategy.The article “Shanghai State-owned Assets and State-owned Enterprises Accelerates ‘Going Overseas’ to Build International Competitiveness” on the official website of the Chinese Consulate in New York shows that green space is the realization of the real estate industry“Global layout”One of the most important strategic state-owned enterprises.
Current Mayor Adams met with Greenland executives in 2014 when he was mayor of Brooklyn. An article on the Atlantic Square Report blog said China’s business culture values government support for private projects. For example, Greenland’s partners”forest cityWhen developers and the New York City regional center began recruiting Chinese investors to provide low-cost financing for the Atlantic Plaza project through the EB-5 program in 2010, a regional center representative told New York State Economic Development officials: Support for the EB-5 program is critical. “
This oversight blog by journalist Norman Oder, has been paying close attention to the project, and he has learned about some behind-the-scenes operations under the Freedom of Information Act (FOIL). . This isn’t the first time a Brooklyn borough mayor has given strong support”forest city“The Chinese enterprise, in 2010, the former district mayor Markowitz (Markowitz) said in a video produced by the “Forest City” company, “Brooklyn is 1000% standing behind Atlantic Plaza (project). “
Regarding Forest City, Markowitz said: “I can assure you, they have an incredible reputation. They are a great company to work with, and they work closely with the government. Most importantly: they make Promises, and they keep their promises.”
New York’s largest urban complex
The project jointly developed by Greenland USA and Forest City is located at the Manhattan end of Brooklyn, spanning a few blocks south of Atlantic Avenue and next to Barclays Stadium, home of the NBA basketball team. It will be the largest city in New York. A complex, a super community including 14 luxury apartments, commercial office areas, 30,000 square meters of open parks and a school.
In 2014, Greenland acquired a 70% stake in the project from Forest City Ratner. Two years later, Greenland Group raised its stake from 70% to 95%. The project was initially slowed down by community lawsuits, and with the impact of the pandemic, large-scale development has yet to be completed.
A spokesperson for Greenland’s Forest City Partners told real estate magazine The Real Deal that they are “continuing to deliver on their obligations at Brooklyn’s Pacific Park, incredible progress is being made, and major milestones are on the horizon.” “This summer , we will start working on the platform that will support the next phase of the project.”
To raise money, Greenland recently sold two apartment buildings within the complex (38 6th Avenue and 535 Carlton Avenue) to investment firm Avanath Capital Management for $315 million.
Greenland is one of many Chinese real estate companies struggling to pay down debt after the Chinese government introduced policies to curb excessive borrowing. Some Chinese developers in the US, such as Evergrande, have defaulted on their debts. The outside world thought that the pressure on Greenland was less, because Greenland was backed by the Shanghai State-owned Assets Supervision and Administration Commission and supported by the Shanghai government. However, Greenfield’s recent troubles suggest that’s not the case.
Fed: China real estate turmoil poses risk to U.S.
Real estate developers dominate China’s international high-yield bond market, accounting for about 80% of the market’s $197 billion in total outstanding debt, according to Goldman Sachs Group Inc. data for 2021. In short, Chinese real estate companies are China’s largest borrowers in international financial markets. How does this affect the United States?
The latest update released by the Federal Reserve on May 9 this yearFinancial Stability Reportlabelled the pressure on Chinese developers as a “potential risk to the U.S. economy.”
The report notes that the debt crisis in China’s real estate sector could spill over to the US: “In China, the real estate sector has high levels of debt, with sales activity and prices falling sharply last year. If this downturn intensifies, its impact on the Chinese market and financial institutions will be severe. Impact may be amplified by further outbreaks of COVID-19 cases, new regulatory restrictions (including further moves to curb the tech sector), or by lockdowns or other economic disruptions due to geopolitically motivated or any pullback in trade or investment in other countries , the risk is worrying.
“Given the size of China’s economy and financial system and its extensive trade ties with the rest of the world, financial stress in China could stress global financial markets through worsening risks and disruptions in economic activity, potentially affecting the United States.”
Editor in charge: Chen Minqi#