An unassuming industrial building in the heart of the Irvine Business Complex appears to be playing a part in an international trade caper that purportedly stretches from China to New Jersey to a desert in Mexico.
It’s a story nearly seven years in the making.
The 2323 Main St. building—an industrial facility at the intersection of Von Karman Avenue and Main Street in Irvine about a mile from John Wayne Airport—has been a source of intrigue for commercial real-estate watchers since it last sold in 2009.
Numerous brokers have said the 260,850-square-foot building has sat largely unoccupied since the sale, despite its prominent location at one of Irvine’s busiest intersections and a remarkably tight local market for industrial space.
Attempts to contact the property’s owner—identified only as a wealthy foreign investor with offices in Orange County—proved fruitless, even for potential tenants, brokers said.
The building is in use now—that much became clear over several days late last month, when a line of trucks began queuing up to unload shipments at the property. A bulk of the trucks bore the name of Wan Hai Lines, a Taiwan-based shipping firm with a presence at the Port of Long Beach.
The building was nearly full within several days with stacks of what appeared to be aluminum sheets and aluminum pallets.
The inventory and the building’s owners have ties to China Zhongwang Holdings Ltd., a large aluminum company that’s controlled by one of China’s wealthiest individuals, Liu Zhongtian, the Business Journal learned.
Lui is hardly a household name in the U.S., although Forbes lists his family on the China version of its rich ranking, with an estimated fortune of $3.2 billion.
His China Zhongwang, meanwhile, has gotten its share of international press coverage recently—in August, a U.S. affiliate of the company said it would buy Cleveland-based aluminum maker Aleris Corp. for about $2.3 billion in one of the largest deals of its type in the U.S.
Not all news has been positive.
A team of Wall Street Journal reporters recently produced a lengthy report that suggested China Zhongwang and its affiliates had embarked on “a brazen scheme” to “game the global trade system.”
A number of allegations are being reviewed by the U.S. commerce department—an investigation that took on dramatic overtones with indicators that the company at one point stockpiled nearly 6% of the world’s inventory of aluminum at a remote factory in Mexico.
The Mexican desert location at its peak held enough aluminum to make 77 billion beer cans, according to the Wall Street Journal report.
A good portion of that inventory was alleged to have been sent off to the U.S. at a cut-rate price, with tariffs avoided “by disguising the metal as shipping pallets and then remelting them for other uses,” the Wall Street Journal reported in a follow-up story to its initial piece.
China Zhongwang has denied the allegations of illegal trade practices laid out in the stories.
Only one U.S. facility, a warehouse in New Jersey, has thus far been identified as holding the Chinese company’s aluminum shipping pallets, which are much heavier than typical pallets and as a result are more expensive to use for traditional shipping needs.
The metal was moved from that facility around the time of last month’s Wall Street Journal article, though no new location was provided.
It’s not known whether the pallets that arrived recently at the Irvine facility and appeared to be made from aluninum came from the New Jersey location or a different source.
Scuderia Ties
A few company signs were posted at the front of the property shortly after its 2009 sale, giving it the outward appearance of being occupied.
One of those names was Scuderia Development, which state records show as being based in Newport Beach, although company literature says Irvine is its headquarters.
Real estate sources familiar with the 2009 transaction said an affiliate of Scuderia was the buyer. A price was never disclosed.
The property was sold by a venture between Houston-based developer Hines Interests LP and Newport Beach-based real estate investment bank Buchanan Street Partners.
Scuderia Development was formed by Eric P. (Po-Chi) Shen, a Singapore native who the Wall Street Journal reported was friends with Liu Zhongtian’s son, “who lived in Southern California, where the Liu family owns several houses.”
Scuderia also was involved in the purchase of logistics properties in Ontario and Fontana that total more than 1.6 million square feet, according to the company’s marketing material.
Scuderia also proposed building a nearly 3-million-square-foot aluminum manufacturing facility in Barstow, a $1.5 billion plant about 110 miles from Irvine that never got off the ground.
Shen’s companies touted financial backing by the elder Liu when proposing the aluminum-related factory development in the U.S. and another $200 million facility in Mexico, according to news reports.
Scuderia’s marketing materials said that the Irvine property, running about 10 acres, was slated for a mixed-use development featuring 500,000 square feet of offices and a full-service hotel.
No plans for the redevelopment project were ever filed with the city of Irvine, however, according to city records.
Instead, the largely vacant building was essentially used as a storage facility for Shen’s collection of rare cars, real estate sources tell the Business Journal. Shen’s buying habits also extended to expensive homes, diamonds and a Gulfstream jet, the Wall Street Journal reported in its feature last month.
Scuderia’s name came off the building at some point in the past few years, around the same time that Shen had a falling out with the Liu family as a result of financial troubles at another aluminum business he headed in Mexico, according to the Wall Street Journal report.
A number of Shen’s assets, including “a luxurious home in Newport Beach,” were handed over to the Liu family a few years ago, according to the report. It is not known whether the Irvine industrial building was among the assets that changed hands.
Attempts to reach Shen and Scuderia Development last week were unsuccessful.
Sources familiar with the Main Street building said that aluminum could have been stored there at other times prior to last month’s big delivery, although there have been no reports of shipping trucks arriving in such large numbers as those observed last month.
