The Real Deal New York

Kushner pushed for hit piece on Richard Mack after two clashed over 666 Fifth deal: sources

Developer and Observer publisher pressed his reporters to pursue "Big Dick Mack" story

July 08, 2016 05:20PM
By Katherine Clarke

3.30

Jared Kushner, Elizabeth Spiers and Richard Mack

Jared Kushner strong-armed his reporters into pursuing a controversial story about fellow real estate investor Richard Mack, after the two feuded over a deal involving Kushner’s trophy office property at 666 Fifth Avenue, sources told The Real Deal.

On Thursday, Vanity Fair published a profile of Kushner, the CEO of Kushner Companies TRData LogoTINY and the publisher of the New York Observer. The piece revealed that sometime between 2011 and 2012, Kushner ordered a hit piece on Mack, now co-founder of Mack Real Estate Group and formerly a top executive at AREA Property Partners.

Elizabeth Spiers, editor-in-chief of the Observer at the time, corroborated Vanity Fair’s account late Thursday on her own website. Spiers said Kushner supplied a damning tip on Mack that he assured her would check out. When it didn’t, he allegedly insisted that the paper continue to investigate, swapping out reporters and fuming that the staff was “not trying hard enough” to confirm the tip.

Kushner was irate that the story, known colloquially in the Observer newsroom as the “Big Dick Mack” story, went nowhere, multiple sources told TRD.

Mack declined to comment to TRD on why there was bad blood between the two developers, but several sources said the animosity stemmed from a dispute over 666 Fifth Avenue, which Kushner purchased in 2007 for the highly ambitious sum of $1.8 billion.

Kushner was massively over-leveraged on the acquisition — the property was nearly $3.5 million-a-month short on its debt service, with only $10 million reportedly remaining in a reserve fund used to service its $1.22 billion mortgage — and was in danger of losing the tower. At the time, AREA was actively acquiring a portion of the tower’s debt at a big discount, alongside Starwood Capital, Colony Capital and Paramount Group. Kushner was negotiating with lenders to recapitalize the property, but sources said Mack objected to his strategy. Kushner eventually rescued the building in 2012 by bringing Vornado Realty Trust on board and striking a deal with lenders to reduce the principal payment, extend the loan, and defer some interest payments.

Kushner declined to comment for this story. But sources close to the developer told TRD the tip came from a disgruntled partner of Mack’s who later got cold feet when the reporters dug in.

Spiers, who left the Observer in 2012, noted in her blog post that it wasn’t the first time Kushner had interfered in the newspaper’s editorial operations.

“There were many, many occasions where Jared would go down the road of trying to kill a story–call me, ask me to take it down, try to stop reporting, etc,” she wrote.

In the case of the “Big Dick Mack” story, Kushner was adamant there were leads to pursue, even after Daniel Geiger, the reporter Spiers had assigned, came up blank, Spiers wrote.

Spiers, Geiger and Foster Kamer, another reporter who Spiers put to work on the tip, all declined to describe the story Kushner was pushing. Though one source described the nature of the tip to TRD, the information couldn’t be independently corroborated.

A shy, self-effacing developer, Kushner has recently been thrust into the limelight due to the influence he wields over his father-in-law Donald Trump’s presidential campaign.

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