Kushner Companies has a whole bag of tricks it’s been keeping secret for its planned conversion of the office tower at 666 Fifth Avenue into a mixed-use luxury destination.
Bloomberg, citing investor documents, reported last week that the redevelopment would be valued at $7.2 billion when completed. But Kushner Companies believes that the number could even hit $12 billion, sources familiar with the plans confirmed to the Wall Street Journal Tuesday. The newspaper also reported that Anbang Insurance’s involvement in the project is far more tenuous than was stated in the Bloomberg report.
The rebuild plan, Kushner Companies confirmed to the Journal, includes tearing out the building’s steel frame and adding an additional 40 floors, a process that could take until 2025 to complete. Current zoning allows them to build a 1.45 million-square-foot tower as-of-right. The rendering for the plan designed by the late Zaha Hadid reveals a 1,400-foot skyscraper that seems more synonymous with the skylines of oil-rich states in the Middle East and Eastern Europe than contemporary Midtown.
To increase the building’s value and revenue potential, Kushner would devote 11 stories in the tower to a hotel and quadruple the retail space. The residential portion of the building would total 464,000 square feet, and Kushner Companies said they expect condos to sell for around $6,000 a square foot, a fair amount below the average at the other 1,400-foot-tall residential development, 432 Park, where 33 past sales have averaged $7,774 per square foot, according to StreetEasy. (A source told The Real Deal last week, however, that for the math to work under even the $7.2 billion plan, condos at 666 Fifth would have to sell north of $9,000 a square foot.)
Another planned for 666 Fifth is the name itself. Kushner Companies plans to take the opportunity to shed the building’s devil-tinged 666 address for a new one — 660 Fifth Avenue.
If the Kushners went full-tilt with the $12 billion plan, it would leave them with a 20-percent stake in the finished project, the company confirmed to the newspaper. Demolition could start as soon as 2019.
To do all of this, current office tenants would have to be bought out of their leases, $1.15 billion in outstanding debt would need to be refinanced and Vornado Realty Trust, which holds a stake in the building and owns most of the retail space, would need to be bought out. Anbang was reported earlier this month to be in talks with Kushner Companies to provide more than $1 billion in equity to the project. Anbang, however, has denied any such investment plans.
Though Senior White House Adviser Jared Kushner has resigned from Kushner Companies and announced the sale of his stake in 666 Fifth to a family-operated trust, his father Charlie is said to be the one currently courting investors. Despite the management shake-up, ethics experts worry that a deal with Anbang or another large Chinese investor would be a thinly-veiled attempt at buying influence with the Trump administration.
When talks with Anbang were first reported, The Real Deal picked apart the known details and cast doubt on the likelihood that a deal with Anbang would close. The $4 billion construction loan Anbang would reportedly seek would be unprecedented for a single U.S. real estate project. [WSJ] — Will Parker