SoftBank subsidiary issues loan to Kushner for Jersey City project
Fortress Investment Group extended the financing for One Journal Square project in October
UPDATED: Wednesday, Jan. 24 @ 11:02 a.m.: While under contract to be acquired by spendy Japanese investment machine SoftBank, Fortress Investment Group lent $57 million in pre-construction financing to Kushner Companies for its long-delayed development site at One Journal Square in Jersey City.
Barron’s reported that the loan was made in October 2017, after Kushner Companies had borrowed $22 million in short-term bridge financing from Santander Bank in 2016 and $22 million from Ladder Capital Finance — President Trump’s second-biggest lender — in 2014. Those earlier loans have both been repaid in full, according to Barron’s.
The news comes after The Real Deal reported Monday that Kushner Companies has officially abandoned plans to raise $150 million for the project through the EB-5 visa program, meaning the company needs to make up the gap with even more money from traditional lenders than it had originally planned. A full construction loan for the project is still needed and could total between $300 million and $500 million. Updated building plans for the two 56-story towers indicate the cost of construction totals about $800 million.
Masayoshi Son’s SoftBank has embarked on a U.S. real estate spending spree of late, investing billions into the likes of shared-office space unicorn WeWork and residential brokerage Compass. Much of the money comes from SoftBank’s so-called “Vision Fund,” which is packed with Saudi Arabian investment dollars. In December 2016, Son visited Trump Tower, where he told then president-elect Trump he planned to invest $50 billion into the United States.
SoftBank announced that it was acquiring Fortress in February 2017 for $3.3 billion. It completed the acquisition in late December. Fortress operates independently from SoftBank, the companies said when the deal closed. A Kushner spokesperson also told Barron’s that the firm has never done business with SoftBank, but has done many deals with Fortress, which is known for taking on distressed debt.
On Wednesday, Bloomberg reported that Jersey City Mayor Steven Fulop now supports the Journal Square project after having met with Charlie Kushner sometime time after Fulop’s re-election lat year.
Kushner Companies is under investigation by the U.S. Attorney and the Securities and Exchange Commission over how it used the EB-5 investor visa program. In May, the company was widely criticized for a Beijing presentation to prospective investors that made references to company scion Jared Kushner’s position in the White House. The company ended its EB-5 marketing activities for One Journal Square soon thereafter.
In Germany, Deutsche Bank, another major lender to Kushner Companies, is said to have turned over financial records related to Kushner accounts to regulators in that country, but Deutsche Bank has since contested the accuracy of this reporting. [Barrons] — Will Parker