No longer will Kushner Companies executives have to be reminded every time they set foot in their headquarters about the risky decision that plagued the firm for years.
The real estate company is moving its headquarters out of 666 Fifth Avenue and into the top floor of the GM Building, where it will sublease 20,500 square feet of space for 10 years from the Brazilian bank Itau Unibanco Holding, according to the Wall Street Journal.
Kushner bought 666 Fifth Avenue in 2007, just as the real estate bubble was bursting, for a then-record $1.8 billion and moved its base from New Jersey. The purchase became notorious after the financial crisis hit, and Kushner struggled for years to extricate itself from the crushing debt it took on to make the pricey acquisition.
“The 666 Fifth deal is now seen as emblematic of the heady, overleveraged plays made during the height of the market in 2007,” The Real Deal wrote 10 years later. “Purchase prices were based largely on predictions of future income that assumed a dramatic increase in rents, while actual cash flows took a backseat.”
An appraisal that proved to be wildly optimistic had paved the way for the purchase. The family-owned firm eventually pursued a plan to convert the dated office property into a luxury tower and hotel complex, but had a hard time finding investors to buy into it.
Kushner uses about 15,000 square feet in the Fifth Avenue tower. Its new, larger space in the GM Building will cost the company about $100 per square foot, which is roughly half of what Itau is paying. [WSJ] — Eddie Small