Chinese construction lending -- with strings attached

A Chinese bank funding two huge Lennar Corp. housing developments has attached a condition to the loan, according to an article in the Wall Street Journal: Lennar must work with a Chinese state-owned contractor.

The two redevelopment projects, Treasure Island and Hunter’s Point Shipyard in San Francisco, could add as many as 20,000 new housing units to the city, as well as offices and a sporting venue. But Lennar’s $1.7 billion loan from China Development Bank came with a stipulation, the newspaper reported. Lennar has been meeting with China Railroad Construction Corp (CRCC), the newspaper reported. It’s unclear what role the CRCC might play, and whether Lennar is obligated to do business with a Chinese supplier, contractor or some other entity. CCRC recently opened an office in San Mateo, Calif.

Any Chinese contractor working on a San Francisco project would be required to use local, unionized labor for construction, however. A joint venture with a U.S. construction management firm, or an outright acquisition, could possibly satisfy that requirement, the article reported.