The Real Deal New York

Kushner Companies no longer seeking $150M in EB-5 for Jersey City project

Charlie Kushner and visa partner USIF "mutually decided" to stop raising money for One Journal Square following roadshow incident
By Will Parker | January 22, 2018 04:22PM

Charles Kushner and a rendering for One Journal Square

Though widely believed to still be seeking $150 million through an immigrant visa program for its Jersey City skyscraper project, Kushner Companies ceased raising money through the EB-5 visa program eight months ago, according to multiple people familiar with the decision at the time.

The company was sharply criticized in May after the sister of White House senior adviser Jared Kushner, Nicole Kushner Meyer, gave a presentation in Beijing aimed at Chinese nationals interested in the EB-5 investor visa, which rewards foreign real estate investors with U.S. citizenship if they put $500,000 or more into job-creating projects. The presentation alluded to Jared’s role in the White House and the Kushner family’s connections to Donald Trump, raising ethics concerns and setting off an international controversy. A Chinese company hired to promote the investments, Qiaowai, even told prospective investors that Kushner’s connections to the White House made the project foolproof, the New York Times reported.

After the incident, Kushner Companies pulled out of another scheduled roadshow event, but never publicly said that it had entirely abandoned its $150 million raise through the EB-5 program. The money was sought to fund about 15 percent of the total construction costs at One Journal Square in Jersey City, where the company has planned two 56-story towers that would hold 1,512 units when complete. It’s developing the project with partner KABR Group.

When reached for comment, Nicholas Mastroianni of the U.S. Immigration Fund, the EB-5 regional center owner that launched the One Journal Square offering with Kushner Companies, said “Charlie [Kushner] and I mutually agreed that the project would seek conventional financing and not EB-5.” He cited the continuous wave of negative publicity following the Beijing presentation that would have made a successful raise difficult for both companies. The offering had been active for less than a week before both sides agreed to end it, Mastroianni said. No EB-5 investments were made, he said.

In a statement, a representative for Kushner Companies confirmed it stopped seeking EB-5 financing.

The news that Kushner Companies will not have EB-5 in its financing arsenal comes as it is still in need of a larger construction loan for the Jersey City project, where it filed new construction plans in September.

Bloomberg previously reported on the company’s larger financing issues, as it unsuccessfully searched the globe for investors willing to put up the billions needed to overhaul the office tower at 666 Fifth Avenue. The tower has an occupancy rate of just 70 percent, though previous news reports indicated Kushner Companies wasn’t seeking new office tenants as it planned to convert the property. The firm’s $1.2 billion loan on the property will come due in approximately 13 months.

Meanwhile, both the United States Attorney’s office in Brooklyn and an office of the Securities and Exchange Commission in Texas have opened investigations into Kushner Companies’ use of the EB-5 program. The company previously raised $50 million through EB-5 for a rental tower called Trump Bay Street, which opened in 2016.

In an interview Monday with the Washington Post, Charlie said, “All I know is that we are not at all concerned, and we are cooperating.”

“I try not to focus in my life on the haters but it’s just, I have never seen anything like this,” he told the paper.

Despite Kushner Companies ending its EB-5 fundraising in May, USIF and Qiaowai, the Chinese investment promoter, still had marketing materials for the project on their websites as recently as July, CNN reported.