The Real Deal New York

The Kushner empire is under threat

The developer scoured the world to find investors for troubled 666 Fifth. No one would bite.
August 31, 2017 01:10PM

666 Fifth Avenue and Jared Kushner (Photo illustration by Lexi Pilgrim for The Real Deal)

Kushner Companies’ real estate kingdom is under threat from a ticking debt clock on the firm’s flagship asset and an ever-shrinking pool of investors willing to consider rescuing it. Meanwhile, the firm is retreating from one of its biggest Brooklyn bets and continues to face government scrutiny into the business dealings of its former CEO and current White House adviser, Jared Kushner.

The firm has sought capital from the likes of France’s richest man, a major Chinese insurer, South Korea’s sovereign-wealth fund and an Israeli billionaire family to redevelop 666 Fifth Avenue, its 41-story, 1.5 million-square-foot tower that put the company on the Manhattan map. None of those talks came together, according to a new investigation by Bloomberg. The building’s mortgage is due in 18 months.

“Reports that portray it as a distressed situation are just not accurate for the building or for the company,” the firm’s president, Laurent Morali
told the publication.

Morali, whose company paid a record $1.8 billion for the tower in 2007, maintains that 666 Fifth is “just one small piece of the portfolio.”

But Kushner Companies is also dialing back its bets in other parts of the portfolio. Many of the Kushner Companies’ holdings are hardly owned by the Kushners at all, including the company’s Gowanus development project, in which SL Green Realty holds a 95-percent stake. On Wednesday, RFR Realty announced it had taken a 100-percent interest in 90 Sands Street, one of the Dumbo properties that it was partnering with Kushner Companies on.

Steve Roth, whose Vornado Realty Trust must be bought out of its stake in 666 Fifth so Kushner Companies can convert it into a luxury supertall, reportedly said in a recent meeting that the building “would be worth a lot more if it was just dirt.”

Meanwhile, the company and its former CEO Jared Kushner are the subjects of separate federal investigations.

Kushner Companies’ struggles to get investors to take them seriously pre-date the Russia intrigue from the Trump campaign, however. As Bloomberg reported Thursday, before the campaign even started, Jared Kushner couldn’t get many to pay attention to him. Once Trump began to ascend politically, Jared advanced talks with the Chinese insurance company Anbang and Sheikh Hamad bin Jassim Al Thani of Qatar. Those deals, however, never got done.

All the while, the company was expanding its debt across its New York portfolio by taking out new mortgages. And back at 666 Fifth Avenue, debt payments have totaled more than net income almost every year since Kushner acquired the tower a decade ago. [Bloomberg] — Will Parker