In yet another indication that foreign investors continue to be attracted to the Big Apple, the Bank of China has lent more than $250 million to refinance an office tower in Manhattan. Bank of China’s New York branch has recently been described by analysts in the field as “making an aggressive push in the U.S.” China is encouraging its banks to expand internationally in order to “diversify the country’s enormous foreign exchange reserves” and the country of China, which owns 70 percent of Bank of China, hopes that property values have fallen far enough in the U.S. that lending risks will be limited and that NYC office space will remain in demand.
Interestingly, back in August 2007 Bank of China was the second-largest borrower from the Federal Reserve during a window of discounted lending that was an attempt to stem the subprime mortgage crisis. Dale Zhu, head of the bank’s New York division treasury, says that the loans were “nothing special” and procured in order to deal with “some of the payments that should have come to us [not coming].” He described is as an emergency procedure, but could not remember what clients had failed to pay during that tumultuous time.
Does Bank of China’s presence in New York make you optimistic about the market?
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.