CHICAGO | St. Regis Chicago (Vista) | 1,191 FT | 101 FLOORS

[LouisVanDerWright]

Originally Posted by the urban politician

This thing is safe because Wanda, through one of his entities, still has a contractual obligation to it. No matter what the Chinese Government says, he cannot simply walk away without facing huge financial retribution.

This, in the modern globalist capitalist system even the Chinese Government is powerless to shirk obligations. If Wanda we're to be forced put by their own government here, Magellan would inevitably be made whole. There are enough Wanda assets overseas already that Magellan would just end up liening another property of theirs that is under US sovereignty. If Wanda tried to bail on one project, it's likely their whole overseas portfolio would snowball into a giant legal mess likely resulting in all that money the Chinese Government is trying to bring home being permanently destroyed in a multi year legal battles between all of their partners.

The only way they can force Wanda to bring the bacon back home is to coerce them into an orderly retrenchment of their overseas holdings. That appears to be exactly what has happened after they grabbed the CEO at the airport. He was probably headed for the exit thinking "well shit, I already have $5 billion overseas, better to lose 80% of my wealth in China and keep 20% in the US than to have 100% of my wealth and live as a prisoner in my own business." I have a feeling that a lot of the Chinese elites are feeling this way right now as the government keeps getting more aggressive as the inevitable Chinese correction looms.

[left of center]

^ When that asset bubble pops, its going to be a doozy for the Chinese economy. Additionally, China's incoming demographic crisis (population peak in 10 years then steady decline) will heavily burden any future wealth creation. The population is graying at a rate comparable to Europe and Japan, but without the benefit of being nearly as wealthy. Its little wonder these Chinese oligarchs are making a mad dash for the exits.

[F1 Tommy]

Originally Posted by left of center

^ When that asset bubble pops, its going to be a doozy for the Chinese economy.

When that bubble pops, it is going to be doozy for the whole world, not just China. I hope China comes to their senses and moderates somewhat on their position.

[LouisVanDerWright]

Unfortunately moderation is no longer an option for China. Debt continues to expand there at extreme rates.

[VKChaz]

Originally Posted by sentinel

I dunno, I'm doubtful that would be the driving factor. Nouveau riche Chinese from the mainland who travel abroad and specifically to the United States are perhaps more apt to indulge in Western luxury goods, even for 5 star hotels. If they wanted to stay at a Wanda hotel, better to stay at one in Shenzhen than Chicago. The Langham, Ritz Carlton, Four Seasons, Waldorf would probably be at the top of that list for Chicago from Chinese travelers with money.

I was thinking more about the added marketing benefit of Chinese hotel properties in a city. For example, if every major Chinese hotel company with properties in the US had a Chicago location, presumably that would lead to more visits to Chicago than if they didn't. But I don't how much of a factor it is.

[harryc]

Nov 17

[10023]

Originally Posted by LouisVanDerWright

This, in the modern globalist capitalist system even the Chinese Government is powerless to shirk obligations.

You say this like you believe it to be a bad thing.

[10023]

Originally Posted by left of center

^ When that asset bubble pops, its going to be a doozy for the Chinese economy. Additionally, China's incoming demographic crisis (population peak in 10 years then steady decline) will heavily burden any future wealth creation. The population is graying at a rate comparable to Europe and Japan, but without the benefit of being nearly as wealthy. Its little wonder these Chinese oligarchs are making a mad dash for the exits.

China’s population decline will be a good thing. If only it had started sooner, when the country was less developed. There is a difference between population decline in a still-urbanizing country, and population decline in a fully mature economy like Japan or Western Europe. China still has people migrating from rural areas to its cities, and transitioning from a subsistence lifestyle to the modern economy. That means that its modern workforce can continue to grow even as its overall population declines.

I also think population decline is going to be less of an economic issue going forward, because robots. It will probably actually be the thing that addresses wealth inequality, because human labor will become more scarce, and therefore more valuable.

[10023]

Originally Posted by VKChaz

I was thinking more about the added marketing benefit of Chinese hotel properties in a city. For example, if every major Chinese hotel company with properties in the US had a Chicago location, presumably that would lead to more visits to Chicago than if they didn't. But I don't how much of a factor it is.

There is probably some impact from marketing (Chinese people enrolled in the points programs of Chinese hotel chains get the same email deals that you or I get from Starwood, IHG, etc), and then maybe a real cost savings if they’re able to book a stay in Chicago using points. But I don’t know how significant that would be to overall numbers.

[marothisu]

I don't think the hotel branding matters. In reality, the most important thing is the richest man in China, who happens to be the richest man in Asia, is building a tower in Chicago. That's really what people over there care about - not the brand of the hotel. I've told my girlfriend's parents and some of her family about it and some other people I know from China - none of them cared about the hotel portion. They more cared that he was just building something in the US in general. The Wanda Hotels are not well known to the average Chinese person. The malls (plazas) are - I've been to one. It was full of places to eat and actually not that many retail stores, and that is because of the prevalence now of online retail in China. In the realm of malls, it was actually pretty good because it was just full of good food.

[KWillChicago]

^^^
But wouldnt that kind of tarnish his name for future development in cities? Obviously they got the money to start other projects but when another company buys it begore completion couldn't it sort of block financings in other cities in the u.s.? I am way out of my element donnie but if wanda, mandarin oriental, and Shangri la all failed in chicago, will developers still consider asian brand names if they keep failing. And yes I'm aware that money talks more than brand names.

[Domer2019]

Originally Posted by KWillChicago

^^^
But wouldnt that kind of tarnish his name for future development in cities? Obviously they got the money to start other projects but when another company buys it begore completion couldn't it sort of block financings in other cities in the u.s.? I am way out of my element donnie but if wanda, mandarin oriental, and Shangri la all failed in chicago, will developers still consider asian brand names if they keep failing. And yes I'm aware that money talks more than brand names.

With Wanda, it's not like they're defaulting. They're going to be delivering a finished product to the market. When they sell, I don't know if Magellan would have a stake, and if they don't, then it would be Wanda taking a hit on their ROI if they want it off the books fast, and the creditors and developers would still eat their cake. Maybe just different contract terms/compensation for future projects, but then you'd have to think that anything going through at this stage has more of a blessing from the government.

[the urban politician]

THe truth is, this is very revealing about the protectionism of the Chinese Government. I mean, how strange is it that they can tell their citizenry where they can and cannot invest their money? Seems strange to this westerner

[marothisu]

Originally Posted by Domer2019

With Wanda, it's not like they're defaulting. They're going to be delivering a finished product to the market. When they sell, I don't know if Magellan would have a stake, and if they don't, then it would be Wanda taking a hit on their ROI if they want it off the books fast, and the creditors and developers would still eat their cake. Maybe just different contract terms/compensation for future projects, but then you'd have to think that anything going through at this stage has more of a blessing from the government.

Agreed. This is much different than starting a project and going like "oh shit, we don't have the financing anymore." They'll finish this thing - and sell it for one reason or another (probably due to Chinese gov't pressure). If it does anything, it'll make very rich people in China think twice about dumping a lot of money into a variety of projects outside of China - not necessarily just the US.

The head of Wanda has come into pressure from the Chinese government, and they're probably scaring him in some ways which is probably why he's trying to get rid of $5B of his portfolio. It is weird, I agree but right now that's the way it is in China and we can't do anything about it.

It won't do anything really to the smaller Chinese investors IMO except make them think twice about investing BILLIONS within a small handful of years outside of China. He has invested billions of dollars into the US and Europe. Most Chinese investors are spending no more than a few hundred million at a time for large projects. Dalian Wanda is quite a bit different - it's comparing a guy who's invested over $6B into Europe and US versus some guy investing say $200M. Not even close to the same thing. The $200M guy won't come into the same pressure if that balloons up to say $600M.

Real Estate development in China is also quite a bit different than the US considering the government owns all the land. They put together plans for the usages and then basically get a developer or two to do it for them. I was trying to ask my girlfriend's dad how things are done over there and he kind of hinted at this. Interestingly when we were in Hong Kong a few weeks ago, we saw a ton of buildings in bad condition and they weren't getting torn down anytime soon even though they were in terrible condition because they were privately owned. Her dad was critical of Hong Kong feeling bad for all the people who had to live like that (he grew up like this in the 1950s through 1970s and said it was bad) - he said in China if that was the case in a large city, the government would just tear the buildings down and build something better over it LOL.

[kolchak]

Originally Posted by KWillChicago

I am way out of my element donnie but if wanda, mandarin oriental, and Shangri la all failed in chicago, will developers still consider asian brand names if they keep failing. And yes I'm aware that money talks more than brand names.

That was kinda my thought when I posted about Chicago's "track record." But the more I look the more I think this may be the nail in the coffin. Shangri-La has no US presence. After the asset sell off neither will Wanda. Mandarin Oriental (the most likely Chicago candidate) has six hotels in the US - but none on the entire West Coast (Las Vegas is closest.) Chicago does have The Peninsula - which is an Asian brand started there. That may be enough to fill demand here for the Asian market.

The last true full service new four star hotel to open in Chicago was the independent Elysian - that hotel faild and was taken over by Hilton Hotels and converted to the watered down Waldorf Astoria brand.

Question: Would the amenities be curtailed to save money if the whole thing is planning on being sold? Could they will now offer the hotel as a 'raw' component and not outfit it with five star amenities during the initial build phase until they have an actual tenant?

And on that thought would they actually look at VE'ing this thing in other ways before they sell since it won't end up being the shining symbol of Chinese prowess, Wanda's brand and Wang Jianlin's ego that it was planned to be? Why not speed up construction where possible to get it on the market faster?

[the urban politician]

Well, in the case of Wanda you can only blame the Chinese Government. They could’ve allowed him to build a new hotel brand but instead they are pulling this crap.

[kolchak]

And the Elysian itself was also VE'd if I remember correctly during its construction. I believe that building's mansard roof turned out not to be what was promised.

[LouisVanDerWright]

Originally Posted by marothisu

The head of Wanda has come into pressure from the Chinese government, and they're probably scaring him in some ways which is probably why he's trying to get rid of $5B of his portfolio. It is weird, I agree but right now that's the way it is in China and we can't do anything about it.

Scaring him in ways like arresting him at the airport when he is trying to leave the country?

[KWillChicago]

I'm not into politics even though I'm pretty sure it has to do with majority of these contracts throughout the world...i also dont want to start a ten page argument but... How much do you folks think trumps visit might have encouraged/discouraged china to develope over here in the states. I dont want to start a battle between members but it's kinda crazy how much architecture can divide and yet bring cultures together.

[KWillChicago]

On that note. Whos going to plan the first annual SSP get together? I'll buy a round.