Despite a recent wave of high-priced, high-profile retail deals, Jared Kushner’s 666 Fifth Avenue is proving no different than many other over-leveraged Manhattan buildings purchased at the height of the real estate market: it’s now running low on cash.
According to the Wall Street Journal, Kushner, who led his family’s record $1.8 billion purchase of the office and retail tower in early 2007, is negotiating with lenders to recapitalize the property in exchange for a modification of its $1.22 billion mortgage. The building is now around $3.5 million-per-month short on its debt service payments, and its reserve fund has dwindled to just $10 million, sources said.
Despite the widely-reported success of the building’s retail portion — Kushner sold a 49 percent controlling stake in the space in 2008 in a deal that valued it at $525 million, and Uniqlo and Zara have since signed on to pay record prices for their new flagships there — the property has been plagued by a decline in office rents and a vacancy rate that has risen to around 30 percent.
That wasn’t what Kushner was counting on when, in 2007, the building was bringing in $60.1 million in income — a figure that was only projected to rise. This year, the building’s income is expected to fall to about half that.
“The Kushners are ready and willing to invest more money into the property as soon as they can come to mutually satisfactory terms with the servicing agent,” a spokesman for Kushner said.
Meanwhile, Kushner’s father-in-law, billionaire developer Donald Trump, won’t be coming to the rescue, but he praised the young father-to-be, calling him “a very smart young man,” and predicting that “it will come out well for him and everybody.” [WSJ]