Lennar Corp., the third-largest U.S. homebuilder by revenue, has signed a memorandum of understanding for a $1 billion loan from China Development Bank Corp. to fund projects in San Francisco, said four people with direct knowledge of the matter.
The loan being discussed would be extended in the next five years on the condition China Railway Construction Corp. is awarded a contract of at least $1.5 billion to build roads and bridges for the two projects at Hunters Point shipyard, Candlestick Point and on Treasure Island, said three of the people, who asked not to be identified as the talks are private. The final terms of the loan agreement, which may be signed by November, are subject to change, the three people said.
The loan will help fund a $13 billion plan to redevelop the two locations, which were previously U.S. Navy sites, the people said. Hunters Point sales are set to begin by late 2012 with homes starting at $525,000 while more than 8,000 homes could eventually also be built on Treasure Island and adjoining Yerba Buena Island, according to FivePoint Communities Inc., which oversees the projects and in which Lennar is an investor.
Marshall Ames, a spokesman for Lennar in Miami, Florida, declined to comment. Emile Haddad, FivePoint’s chief executive officer, and Kofi Bonner, head of Lennar’s San Francisco developments, didn’t reply to phone messages seeking comment.
Beijing-based China Development Bank has already completed its due diligence on the loan, three of the people said.
China Railway Construction has also signed a memorandum of understanding with Miami-based Lennar on the projects and recruited China National Technical Import and Export Corp. to provide technical assistance, the people said. A final contract for the construction work may be signed by November, they said.
The Wall Street Journal reported earlier that Lennar was in talks with China Development Bank for a loan of about $1.7 billion for the projects in San Francisco.
Calls to the office of Feng Qihua, spokeswoman for China Development Bank in Beijing, and China Railway Constructions press department weren’t answered.
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