A Chicago developer said construction of the 98-story Vista Tower, which will be the third-tallest building in the city once completed, is unaffected despite major changes to the Chinese company that is backing the condominium and hotel project.
Magellan Development Group's $1 billion East Wacker Drive skyscraper is one of several commercial real estate properties caught up in a Chinese government crackdown on high-leverage investments overseas.
Billionaire Wang Jianlin's Dalian Wanda Group, Magellan's equity investor in the Chicago tower, is in the midst of a major company restructuring as the result of heavy pressure from the Chinese government over its investments in the U.S. and other countries.
On Wednesday, Wanda Hotel Development Co. — which is publicly traded in Hong Kong — disclosed that it is selling stakes in real estate projects including the Chicago tower to a privately held company controlled by Wang's family. That company is called Dalian Wanda Commercial Properties Co.
While the sale simply amounts to shifting ownership stakes from one Wanda Group affiliate to another, it could signal more changes are ahead. Mingtiandi, a newsletter and website that covers the Asian commercial real estate market, said it could be a step toward Wanda eventually selling ownership stakes of properties in cities including Chicago, London and Sydney.
But Magellan President David Carlins said he's had no discussions about a potential sale from Wanda Group.
"We have not heard anything about (a sale), and there would have to be conversations about that, because it would require our consent," Carlins said.
Wanda Group representatives did not immediately respond to a request for comment.
Carlins said Wanda Group, which continues to have two employees based in Magellan's Chicago office, has given no indication of potential changes to the project. He said Wanda has already made its undisclosed equity investment, and the partners have a Chicago-record $700 million construction loan in hand from Chinese lender Ping An Bank.
"We don't think it affects the project," Carlins said. "Their equity is invested in the deal, and we have the construction loan. They're actively involved like they have been. There hasn't been a single change in personnel or responsiveness."
The developers have presold about 35 percent of the Jeanne Gang-designed tower's planned 406 condos, Carlins said. That means they likely have commitments worth hundreds of millions of dollars, more than two years ahead of the building's expected fall 2019 opening.
The tower along the Chicago River also will include a 191-room Wanda Vista hotel, which will be operated by Wanda's hotel management arm.
Headlines about Wanda Group's woes have led some Chicagoans to worry about a sequel to the Chicago Spire — the planned 150-story tower on a nearby site where construction stalled a decade ago, leaving a deep hole along Lake Shore Drive as the only reminder of the ambitious, Santiago Calatrava-designed project.
Key differences are that Vista Tower is already financed, and it now stands about 10 stories high. Potential buyers are reassured by continued, visible progress on construction, Carlins said.
"People ask questions because they're curious, and the project gets a lot of headlines," Carlins said. "But I think they have peace of mind when they see that construction is continuing, and knowing we have the construction loan.
"So far, we haven't seen any impact from it. It's been a nonissue to date."