Plot Thickens in Story of Oceanwide Plaza

Oceanwide Plaza’s latest $470 million offer is encountering pushback in bankruptcy court, and more details are emerging on an all-cash offer behind the scenes that The Real Deal previously reported on.

The all-cash offer is via a foreign investment group. The overseas investor has an agreement with Sean Burton’s Cityview that it would be a fee-based developer, according to a person familiar with the matter. The Los Angeles company would develop it and work with the city. It may help that Burton has a relationship with Mayor Karen Bass. Either way, Cityview would not be a part owner. 

But, let’s go back to the beginning. 

More than a decade after breaking ground, and more than a billion dollars later, the development of the now notorious three-tower complex downtown, Los Angeles’ graffitied towers, stalled when its owner ran out of money. The development was abandoned and has been stuck in bankruptcy court.

In October 2016, about two years after purchasing the land, Chinese conglomerate Oceanwide Holdings unveiled plans for the three skyscrapers: a five-star Park Hyatt hotel, luxe residences, retail spots and restaurants. It would bring a new level of sophistication to L.A.’s entertainment district, the developer said at the time. The mega-project is one of three the firm had in the country that it lost control of. 

The scheduled completion date was 2019, the same year the development that stretches from Figueroa to Flower streets came to a halt. The Beijing company said it needed to restructure capital, and contractors slapped it with claims for more than $100 million in unpaid work. Its owner attempted to shop the development and refinance it. Neither came to fruition despite multiple negotiations. 

Lendlease, the original general contractor, a couple months before the pandemic, had agreed to resume construction, but Oceanwide missed scheduled payments. Then, the pandemic happened, which only made matters worse — and Lendlease made its contractor exit.

Fast-forward to February 2024, when Lendlease filed a petition for the involuntary Chapter 11 bankruptcy of Oceanwide Holdings to force a sale of the development and pay creditors who were owed hundreds of millions of dollars. That was around the same time of the viral graffiti takeover. The largest creditors were Lendlease and Los Angeles Downtown Investment, EB-5 visa investors. 

Since the project stalled and was dragged into bankruptcy, there’s been talk of a stalking horse bidder; a $10 million lifeline from Steve Gozini’s BH Properties; interest from Related, Brookfield and Shvo; a billion dollar loan from JPMorgan and more. 

The latest news came straight from the horse’s mouth (court documents) earlier this year. It was an offer to purchase the unfinished development. Dr. Kali Chaudhuri’s KPC Group, which came into the mix through its purchase of LADI’s claim, and Lendlease offered $470 million — $400 million of that price tag is a credit bid, and the other $70 million is cash to pay back bankruptcy costs. 

KPC Group was founded and is chaired by Chaudhuri, a surgeon turned real estate developer, who has a controversial reputation in California medicine. Chaudhuri is developing a $300 million hotel next to SoFi Stadium. 

Press releases were sent out, and headlines celebrated the ill-famed Oceanwide Plaza finding a buyer. But a month later, things looked less certain. The confirmation hearing scheduled for early-April was pushed to mid-May after the bankruptcy judge granted the City of Los Angeles’ continuance request. It was a plea for more time. There were oppositions, too.

Downtown Los Angeles’ event of the century — the 2028 Summer Olympics — is in two years, and more time to approve an offer means more time before actually completing the development. It’s unclear how long it will take, but it’s been more than a decade thus far, and it’ll probably cost about $1 billion more if estimates are correct.

In the press release parading a deal, Mayor Karen Bass’ office said: “We’re encouraged to see the next step in the sale process moving forward through the bankruptcy court. The City of Los Angeles is eager to see an expeditious close on the Oceanwide Plaza site to new ownership following the April 9, 2026 hearing.

“Our priority remains ensuring the site is refreshed and activated in Olympic-ready condition ahead of the 2028 Olympic and Paralympic Games,” Bass’ office added.

The Los Angeles mayoral race is happening now, and the Oceanwide saga is unfolding in the background. Bass faces challenges from a former ally, City Council Member Nithya Raman, and disparager Spencer Pratt, a reality television star. People blame downtown’s problems on politicians, and Oceanwide Plaza has become an emblem of all that’s wrong downtown: a homelessness crisis, crime, commercial vacancies and more. 

The city claimed to need more time to complete its evaluation and diligence process, attorneys for the City of Los Angeles wrote. That occurred after having a conversation with the proposed purchaser. The city said it needs to review and assess KPC and Lendlease’s ability to close the deal, secure financing and complete the development, the court documents read. The city’s attorneys said it has identified issues with the purchase agreement that requires landing entitlements and financing without much further clarification.

The Los Angeles County Treasurer and Tax Collector’s concern has to do with delinquent property taxes to the tune of $40 million — and the United States Trustee’s concern has to do with bankruptcy code and precedent. 

In prior statements to TRD, Oceanwide’s chief restructuring officer said: “A transaction of this scale requires that every detail is properly addressed before moving forward. The fundamentals haven’t changed. Oceanwide remains confident that the sale of Oceanwide Plaza to [the joint venture] is the best path forward for creditors and the City of Los Angeles.” 

The lead counsel said: “This continuance is a procedural step, not a change in direction. The debtor, the purchaser and the key parties remain aligned and committed to moving this plan forward and beginning a new chapter for this property and for Downtown L.A.

“We are actively working with all parties to resolve the limited objections that were filed and are confident we can address them ahead of the next hearing,” the lead counsel added. “We expect to be in a position to confirm the plan on May 19.”

If the bankruptcy court confirms the plan — despite chatter that Chaudhuri hasn’t found fresh financing or that there is another all-cash offer on the table connected to a respected developer — there’s still a lot that could happen before anyone can claim Oceanwide Plaza is saved.

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