A company owned by the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser, stands to receive more than $400 million from a prominent Chinese company that is investing in the Kushners’ marquee Manhattan office tower at 666 Fifth Ave.
The planned $4-billion transaction includes terms that some real estate experts consider unusually favourable for the Kushners. It provides them with both a sizable cash payout from Anbang Insurance Group for a property that has struggled financially and an equity stake in a new partnership.
The details of the agreement, which is being circulated to attract additional investors, were shared with Bloomberg. It would make business partners of Kushner Cos. and Anbang, whose murky links to the Chinese power structure have raised national security concerns over its U.S. investments. In the process, an existing mortgage owed by the Kushners will be slashed to about a fifth of its current amount.
The document offers a rare look at a major deal by a close Trump associate and family member. It’s unclear whether the deal could prompt federal review, as occurred when Anbang bought other properties, like the Waldorf Astoria Hotel in Manhattan. Anbang could also face review by the Chinese government, which has been clamping down on overseas investments and which has a range of pending issues with the Trump administration.
Controversial Visa Program
The proposed partnership is seeking additional participants through a controversial federal program known as EB-5, which is intended for economically distressed neighbourhoods and provides residency permits to major foreign investors.
The deal would value the 41-story tower at $2.85 billion, the most ever for a single Manhattan building: $1.6 billion for the office section and $1.25 billion for the retail section. The new partnership will refinance $1.15 billion in existing mortgage debt.
“This is a huge, huge exit strategy for an office building,” said Joshua Stein, a New York real estate lawyer. “It does sound like a home run of a transaction for Kushner and his group.”
Scott A. Singer, president of the Singer & Bassuk Organization, said the terms struck him as “aggressive but not absurd,” based on the net income and square footage metrics he was shown by Bloomberg. He said they were along the lines of what might be expected for a trophy asset at a prime location.
Conflict of Interest?
Kushner Cos. declined to discuss details of the plan or name the potential lenders or investors it is courting, saying the deal is not finalised. A company spokesman, James Yolles, said that Jared Kushner sold his ownership stake in 666 Fifth to family members so the transaction poses no conflict of interest with his White House role.
“Kushner Companies has taken significant steps to avoid potential conflicts and will continue to do so,” Yolles said in a written statement.
Asked for comment, a White House spokeswoman said Kushner will recuse himself from any matter where his impartiality could be reasonably questioned, including an examination of the EB-5 program. Anbang declined comment.
Some government ethics experts argue that the Kushner family and business are so close-knit that the steps Jared Kushner has taken do not go far enough. Also at issue: as-of-yet undisclosed lenders who are financing the project and the forgiveness of a portion of a $250 million loan which will allow the debt to be cleared for one-fifth of its value. Continue to read