Chinese development company readies plans in northern Nevada

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.