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Xinyuan Real Estate Co., Ltd. Message Board

  • doublej7844 doublej7844 Sep 18, 2012 11:30 AM Flag

    Found an article on the Nevada purchases

    By John Seelmeyer

    Jackie Zhang didn’t stay up late crunching the numbers before he decided that China’s Xinyuan Real Estate Co. Ltd. should pay $7.4 million for a portfolio of residential properties in northern Nevada.

    “I’m not a Wall Street guy. Sometimes you judge an opportunity by instinct,” says Zhang, the anything-but-reserved managing director of the commercial property department for the Beijing-based company.

    His instinct, later supported by close financial analysis, led Xinyuan to purchase a portfolio of 325 finished lots and 185 acres of raw land across northern Nevada.

    The properties, which had been owned by Wells Fargo Bank, extend from Wingfield Springs to Washoe Valley to Dayton.

    The acquisition, which closed during the second quarter, marks the first significant foray into U.S. markets by Xinyuan, a $1.4 billion (assets) company whose shares trade on the New York Stock Exchange.

    Zhang, a 34-year-old graduate of New York University, had been traveling the United States from San Diego to Washington, D.C., to Maine in search of residential development opportunities for Xinyuan.

    At the invitation of Tom Gurnee, a northern Nevadan who serves as chief financial officer of Xinyuan Real Estate, Zhang included Reno in a visit in the autumn of 2011.

    Leaving his downtown hotel room at 2 in the morning, Zhang saw vibrant nightlife, young people on the streets and busy restaurants — a big little city.

    In the subsequent couple of days, he also was struck by the openness of northern Nevada residents and the region’s clear skies and clean water.

    Side trips to Virginia City — its Chinatown rang a particular emotional chord with Zhang — and Lake Tahoe helped seal his commitment to the region.

    “I have to follow my heart,” Zhang says.

    What’s next for the company in northern Nevada?

    Lou Borrego, a longtime residential developer in the region who’s working closely with Xinyuan Real Estate, says some pieces of the northern Nevada land portfolio are likely to be sold to other developers.

    Zhang says the company expects to move relatively quickly to begin development of upscale homes in the Franktown area of Washoe Valley. Along with American buyers who want homes near Lake Tahoe, Xinyuan Real Estate will market the Washoe Valley properties to wealthy Chinese who want an American home. That’s a growing market, Zhang says, and buyers are likely to be attracted by northern Nevada’s proximity to the international gateways of San Francisco.

    Other potential buyers, he says, will include Chinese entrepreneurs who want to take advantage of the U.S. government’s EB-5 program, which provides visas to foreign investors who create new companies with at least 10 jobs.

    The company is looking for other residential land in northern Nevada to add to the portfolio it acquired earlier this year.

    While its first focus in U.S. development is likely to be the luxury residential market, Xinyuan was built in China as a builder of apartment complexes sold to middle-income consumers in second-tier cities.

    Zhang believes that residential development in northern Nevada potentially could draw big investments — maybe $100 million at a time — from Chinese investors.

    And he expects to be in the forefront of that deal-making. “I want to be the first Chinese mayor of Reno,” he laughs.

    Jackie Zhang didn’t stay up late crunching the numbers before he decided that China’s Xinyuan Real Estate Co. Ltd. should pay $7.4 million for a portfolio of residential properties in northern Nevada.

    “I’m not a Wall Street guy. Sometimes you judge an opportunity by instinct,” says Zhang, the anything-but-reserved managing director of the commercial property department for the Beijing-based company.

    His instinct, later supported by close financial analysis, led Xinyuan to purchase a portfolio of 325 finished lots and 185 acres of raw land across northern Nevada.

    The properties, which had been owned by Wells Fargo Bank, extend from Wingfield Springs to Washoe Valley to Dayton.

    The acquisition, which closed during the second quarter, marks the first significant foray into U.S. markets by Xinyuan, a $1.4 billion (assets) company whose shares trade on the New York Stock Exchange.

    Zhang, a 34-year-old graduate of New York University, had been traveling the United States from San Diego to Washington, D.C., to Maine in search of residential development opportunities for Xinyuan.

    At the invitation of Tom Gurnee, a northern Nevadan who serves as chief financial officer of Xinyuan Real Estate, Zhang included Reno in a visit in the autumn of 2011.

    Leaving his downtown hotel room at 2 in the morning, Zhang saw vibrant nightlife, young people on the streets and busy restaurants — a big little city.

    In the subsequent couple of days, he also was struck by the openness of northern Nevada residents and the region’s clear skies and clean water.

    Side trips to Virginia City — its Chinatown rang a particular emotional chord with Zhang — and Lake Tahoe helped seal his commitment to the region.

    “I have to follow my heart,” Zhang says.

    What’s next for the company in northern Nevada?

    Lou Borrego, a longtime residential developer in the region who’s working closely with Xinyuan Real Estate, says some pieces of the northern Nevada land portfolio are likely to be sold to other developers.

    Zhang says the company expects to move relatively quickly to begin development of upscale homes in the Franktown area of Washoe Valley. Along with American buyers who want homes near Lake Tahoe, Xinyuan Real Estate will market the Washoe Valley properties to wealthy Chinese who want an American home. That’s a growing market, Zhang says, and buyers are likely to be attracted by northern Nevada’s proximity to the international gateways of San Francisco.

    Other potential buyers, he says, will include Chinese entrepreneurs who want to take advantage of the U.S. government’s EB-5 program, which provides visas to foreign investors who create new companies with at least 10 jobs.

    The company is looking for other residential land in northern Nevada to add to the portfolio it acquired earlier this year.

    While its first focus in U.S. development is likely to be the luxury residential market, Xinyuan was built in China as a builder of apartment complexes sold to middle-income consumers in second-tier cities.

    Zhang believes that residential development in northern Nevada potentially could draw big investments — maybe $100 million at a time — from Chinese investors.

    And he expects to be in the forefront of that deal-making. “I want to be the first Chinese mayor of Reno,” he laughs.

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    • Great information, thanks.

      The average lot price is $ 22,769. Does anyone know the Reno market? How does that stacked up for ready-to-build lot?

    • Any chance we can cut down on the name calling and personal attacks type stuff?

      On the Sawy stuff, I'm glad he's here. This board has always suffered from a lack of balance between bulls and bears, and when a bear does have enough guts to declare himself, he becomes an automatic target for elimination.

      I think that's a mistake. Sure, the easiest path is to listen only to people who parrot back your exact same opinion, but if that's what you limit your input to, how can you ever learn anything new?

    • Thanks! Great find! Great insight into the CEO's mind.

    • Nice find, thanks!

      • 1 Reply to mscrouse2001
      • more assets in US make sense regarding increasing transparency and lowering risk (of company being in China and beyond the reach of US courts) for investors. Nice to see the detail - makes alot of sense to me. Purchase price appears to have deeply mitigated the risk associated with Nevada real estate in the retail market and in general.

    • I consider XIN's strategy of developing houses in the Reno area very risky. First, apparently, XIN intends to sell most house in the project to Chinese buyers. The reason is simple. Demand for housing in the Reno area from the US will be weak for the foreseen future. Chinese investors, on the other hand, have been spoiled by the Chinese real estate boom in the last decade. They believe real estate is the best investment idea no matter what. This mentality is very popular among Chinese RE investors.

      Second, the US may start to impose restriction to Chinese buyers. Chinese RE investors are notorious for pushing up RE prices. Currently, they serve the US need very well, i.e. the US currently wants to push up home prices to stimulate economy. However, before long, local residents will complain about the housing inflation in particular areas such as NYC, Bay area, etc. For political reason, the government will impose restrictions.

      • 1 Reply to sawyvalue
      • Thank you for your opinion, debbie downer. Yes, you have an issue with everything XIN tries to do. "US may start..." okay real estate expert. Let's just make up things out of the air and start with "may". "local residents will complain about housing inflation" thanks for all your expert analysis, you seem to have your head up your #$%$ further than anyone else on this board. Nice alias, too. You start out by trying to mock someone on this board, then follow up with the lie that you "really respected his opinion". You are a clown, through and through.

    • Sorry for the double post (no "double" pun intended)

 
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