The Real Deal New York

Kushner Cos. picks up $1.1B suburban multifamily portfolio

Deal for 6K rental units in Maryland and Virginia is biggest transaction for company since 666 Fifth
February 22, 2019 10:40AM

Lone Star Funds CEO John Patrick Grayken and Charlie Kushner (Credit: Getty Images)

Kushner Companies has made its largest acquisition since it paid a record $1.8 billion for 666 Fifth Avenue more than a decade ago.

Kushner Cos. paid $1.1 billion to buy a portfolio of 6,000 rental apartments in Maryland and Virginia from the private-equity firm Lone Star Funds, the Wall Street Journal reported.

The deal comes less than a year after Brookfield Asset Management bailed Kushner out of its troubled investment at 666 Fifth Avenue, purchasing a 99-year lease of the office portion of the building valuing the property at $1.25 billion.

Kushner Cos. said the firm is focused on rebuilding the suburban multifamily portfolio that helped build the family’s fortune.

“Multifamily is the DNA of our company,” Laurent Morali, president of Kushner Cos., told the Journal.

Kushner Cos. at one point owned as many as 30,000 multifamily units, but sold roughly half the apartment portfolio in 2007. The Lone Star acquisition brings the company’s holdings to about 22,000 units, and Morali said Kushner has another 6,000 units in the pipeline.

The company plans to borrow roughly 70 percent of the $1.1 billion acquisition cost, and Kushner executives said they had no plans to use the federal EB-5 program.

The firm found itself in hot water in 2017 when Kushner executive Nicole Kushner Meyer – sister of White House advisor Jared Kushner – mentioned her brother’s name while promoting a project in Jersey City to EB-5 investors.

Kushner Cos. has also had trouble when it comes to negotiating financing with politically sensitive companies. Anbang Insurance – which is controlled by the Chinese government – backed out of a deal to recapitalize the office building at 666 Fifth Avenue once details of the negotiations became public. [WSJ] – Rich Bockmann