Judge denies Kushner’s attempt to force $186M multifamily deal

Seller balked after Kushner, unable to inspect properties during Covid lockdown, sought to delay closing

Kushner's Laurent Morali and FREIT's Robert Hekemian (Morali via Sasha Maslov, Hekemian)
Kushner's Laurent Morali and FREIT's Robert Hekemian (Morali via Sasha Maslov, Hekemian)

Kushner Companies’ purchase of a $186 million suburban apartment portfolio is officially dead after a New Jersey judge allowed the seller to back out, denying Kushner’s attempt to force the deal’s closure.

Court documents suggest the pandemic was largely to blame for the sale’s collapse.

In January 2020, two months before Covid arrived on the East Coast, a Kushner affiliate agreed to pay nearly $267 million for a 1,000-unit portfolio of seven properties across northern New Jersey and Middletown, New York, from First Realty Investment Trust of New Jersey. At the time, The Real Deal reported that the transaction was expected to close in the following six months.

FREIT later pulled one of those properties from the deal, reducing the portfolio to 732 units and cutting its price to $186 million, according to court documents.

As part of the agreement, Kushner agreed to inspect the properties before the sale closed. But before it got the chance, New York and New Jersey declared states of emergency, preventing FREIT from making the properties available for inspection, documents show.

Kushner wanted to wait until it could inspect the properties, but FREIT considered the delay a breach of contract and declined to delay the closing date, the Kushner affiliate alleged in a lawsuit filed in May.

On April 30, 2020, FREIT told Kushner the deal was off, SEC filings show.

Sign Up for the undefined Newsletter

As part of the agreement, Kushner had put up a $15 million deposit, which could go to FREIT as “liquidated damages” in the event that Kushner defaulted on the deal. When FREIT claimed that Kushner had failed to close, it held on to that $15 million in escrow.

Kushner sued a month later, claiming it was FREIT that breached the contract by terminating the deal. The firm asked the court to order FREIT to follow through with the deal, or at the very least return the deposit.

FREIT argued that Kushner’s court filing could complicate any future sale or financing of the properties and filed counterclaims denying that its termination of the sale was wrongful and asking the court to authorize the release of the $15 million from escrow.

Last Friday, the REIT got its wish — mostly.

A New Jersey Superior Court judge dismissed Kushner’s allegations that FREIT had breached its contract and tossed Kushner’s claims for compensatory relief, terminating the deal and leaving FREIT in possession of the portfolio.

For Kushner, there was one silver lining. The judge ruled that the firm could recoup its $15 million deposit.

Neither Kushner nor FREIT could immediately be reached for comment.

Read more

Jared Kushner and Ivanka Trump with Arte Surfside (Getty, Arte)
Residential
South Florida
Ivanka Trump, Jared Kushner to rent luxury condo in Miami’s Surfside
252 East 57th Street and 196 Orchard Street with Samantha Sheeber and Tal Alexander
Popular
New York
Closing in the time of Covid-19: “We’re pulling out all the stops”
Recommended For You