The Real Deal New York

Brookfield in advanced talks to bail Kushner Companies out at 666 Fifth: report

Canadian firm would invest hundreds of millions to renovate flailing tower, take over leasing
May 17, 2018 01:15PM

Ric Clark, Charles Kushner and 666 Fifth Avenue

Brookfield Property Partners is in advanced talks with Kushner Companies to partner up on 666 Fifth Avenue.

Financial terms of the deal were not disclosed, but the arrangement would see Brookfield take over leasing and operations of the 41-story tower and spend hundreds of millions to overhaul the building, executives briefed on the pending deal told the New York Times.

The renovation would include replacing the distinctive aluminum façade with floor-to-ceiling windows, renovating the lobby and installing new elevators.

The deal would allow Kushner Companies to buy out Vornado Realty Trust’s 49.5 percent stake in the tower. Kushner Companies would also pay Vornado $120 million to pay down an $80 million high-interest loan the real estate investment trust provided for the office tower in 2012.

The transaction is likely to fall under scrutiny, however, as the Qatari Investment Authority is Brookfield’s second-largest shareholder and former Kushner Companies CEO Jared Kushner is involved in Middle East policy for the White House.

Kushner Companies bought the tower for a record $1.8 billion in 2007. The building is about 30 percent vacant and only throws off enough revenue to cover roughly half of its mortgage payment. The property has a $1.2 billion loan coming due in February.

The owners had been intentionally keeping a portion of the building vacant because they were mulling a proposal to partially tear down the building and replace it with a $4 billion condo-retail-and-hotel development designed by late architect Zaha Hadid. But the company earlier this month said that proposal is no longer being considered.

Jared Kushner and his father, current company head Charlie Kushner, had negotiated throughout 2015 and 2016 with Qatari prime minister Sheikh Hamad Bin Jassim Bin Jaber al-Thani, who agreed to invest $500 million in the property. The deal was contingent on Kushner being able to land additional financing from other sources, and fell apart when the family company failed to lock in additional financing.

In his role as senior White House Advisor, Jared Kushner was later at the forefront of the effort that has led to a blockade of Qatar, raising questions over whether Kushner was acting to punish the country over the soured deal.

Recent reports have also revealed that President Trump’s personal attorney, Michael Cohen, solicited a payment of at least $1 million from the Qatar government in 2016 for access to the White House.  [NYT]Rich Bockmann