RENO, Nev. (KRNV) -- Beijing, China based Xinyuan Real Estate Co. Ltd. purchased a portfolio of 325 finished lots and 185 acres of raw land across northern Nevada for $7.4 million, according to Lou Berrego of West Haven Development Group.
The properties, which had been owned by Wells Fargo Bank, extend from Wingfield Springs to Washoe Valley to Gardnerville, Berrego says.
The deal was closed in May 2012 and was the first U.S. market property purchase the company has ever made.
The company, along with Lou Berrego, looked at over 100 properties across the United States, including properties in Miami, Chicago, Orange County and New York. The first deal picked was the Reno area properties.
Since their first U.S. land transaction in May, they have bought additional properties in Orange County and New York.
Entering into the US, in my opinion, is a bad business decision. I like evaluating any business decision within the competition context. For XIN's financial resources and background, XIN has huge learning curve ahead in terms of building properties in the US. Not to mention the existing developers in the US. We have to ask how XIN could compete with the current players.
The motives behind the US property development are likely to be showing its legitimacy and seizing the Chinese property demand in the US. I consider the benefits from these two points are very limited. First, for most investors, XIN is not a complete fraud. It does have a valid business, i.e. building properties. What concerns people is whether XIN has overstated its earnings and cash. Even though XIN has a US presence, the accounting concern is still not addressed. Two, I am sure XIN can meet some Chinese demand in the US after all. However, by what price? XIN may have to accept much lower profit margin and ROI to operate in the US.
I suspect the Chairman very likely knows exactly what I mentioned here. For him, the Reno project is just symbiotic. No more US projects should we expect in the near future.
GV, I normally completely agree with you. When my China stocks announce plans to expand into other countries, I always groan.
My normal attitude is "how can 1.3 billion potential clients not seem like enough?" Plus, by moving into another country, they give up all their "home field" advantages: insider's knowledge of the language, culture and connections. All I could do was stand by and grumble while BIDU whizzed away tens of millions on projects in Egypt, Thailand and Japan.
But this one time, in this one case, when the fraud concern is the primary factor determining XIN's price, I think that buying big, honkin' buildings in the US that anybody can see and whose ownership records are verifiable, might be a good move for XIN in its effort to address the market's fraud perception.
think your memory is failing or you are a bit young.
Do you remember when the japanese bought America paying the most expensive prices many decades ago?
Do you know how much decline -in percentage- the sqm in Japan in the last three decades?
Well, invite you to think -by the XIN chairman- how old is the chinese culture and agree to buy when -and wherever- land prices are near the bottom.
Joke to think:
If we read some problems between Japan and China because of three islands don't care about.
Japan wants to buy in middle of three tectonic plates full of earthquakes.
While some chinese are just investing -and sending- some extra money outside China to avoid a bit their inflation like USA sending your fuqy USD to the rest of the world and now selling "tungstene gold" in WS.
Does anyone know who Lou Berrego is?
Also, I wonder about the reporter's accuracy on the OC and NY purchases. That line didn't make it into his TV report, and there's no mention of the sales at XIN's website: no press release, no banner headline, no nothin'.
XIN's PR department's no world beater, but it seems like even they would have announced something as significant as the purchase of US properties. Right?