How Jared And Charles Kushner Are Trying To Pay Off 666 Fifth's Mountainous Debt
Kushner Cos.' struggles to finance its purchase of an ambitious redevelopment plan for 666 Fifth Ave. have been well-publicized, but they go far deeper than your standard hunt for funding.
While failed deals with the Qatari Hamad bin Jassim al-Thani and Chinese Anbang Insurance Group are already known, a new Bloomberg report details other attempts by Charles and Jared Kushner, one nominally retired and the other a senior adviser to President Donald Trump, to find partners in order to pay off a $1.1B loan that will mature in February 2019.
The Kushners also courted Israeli firm Gaia Real Estate Investments, a partner in previous deals in New York, but could not reach an agreement on 666 Fifth. France's richest man, Bernard Arnault, and South Korea's government-backed Korea Investment Corp. also walked away from negotiations. Saudi billionaire Fawaz Alkohair declined to be involved in the planned five-story retail portion, claiming the numbers did not make sense.
When Kushner Cos. purchased 666 Fifth Ave. in 2006, the $1.8B price tag was symptomatic of the overheated market before the Great Recession, but only $50M came in cash from the company. The rest came in the form of debt, and Kushner has since sold off equity in other projects to bolster its cash reserves without paying off any of the $1.1B mortgage.
The former New York Times building and Trump Bay Street in New Jersey have both taken on more debt to finance the company, and it is selling its equity in the 30-story hotel at 90 Sands St. in Brooklyn to RFR Realty. The two companies remain partners in other buildings planned to be part of the tech hub in the area.
Vornado owns 49.5% of 666 Fifth Ave., but has taken no part in rounding up financing for the redevelopment. Bloomberg reports that Vornado CEO Stephen Roth disagrees with the nearly $8B redevelopment plan and stands to take over sole ownership if the Kushners need to further restructure their debt.
Without redevelopment, 666 Fifth Ave. is a 1950s era office building with low ceilings and restrictive floor plates, out of step with open plans favored by the glut of new construction in Manhattan, much of it far west of Fifth Avenue. The building's lack of value as is, and the stunning cost of the planned renovation, leave Kushner Cos. between a rock and a hard place with a billion-dollar bill coming due in less than two years.
