Jared Kushner gets a bailout

The Kushner family has owned the property at 666 Fifth Avenue in Manhattan since 2007, when a young Jared Kushner overpaid for the property, paying a surprising $1.8 billion. The financial crisis and Great Recession ensued, and the property cursed Kushner like the number of the beast its address mimicked. Seeking an exit or deleveraging, Kushner sold a major piece of the property, including the retail spaces, to Vornado Realty Trust.

A balloon payment on the mortgage of $1.2 billion comes due in February 2019. With the building aging and retail space not being in high demand, many questioned how the payment could be made by Kushner. When Kushner moved to the White House to be part of the administration of his father-in-law, Donald J. Trump, Kushner purported to transfer the property to a trust managed by his brother and mother.

In an SEC filing by Vornado dated April 6, 2018, available on the SEC website, Vornado’s Chairman stated:

666 Fifth Avenue

I have telegraphed our intention to exit the 666 Fifth Avenue office partnership. I believe we now have a handshake to sell our interest to our partner at a price which will repay our investment plus a mezzanine type return. The existing loan will be repaid including payment to us of the portion of the debt that we hold.

The handshake partner has not been disclosed, but it would permit Kushner to regain possession of the entire building. The handshake agreement raises significant questions about the identity of lender. Previously, Kushner’s father had attempted to obtain a $1 billion loan to refinance the 666 property with Qatar and, when that failed, the administration supported Saudi Arabia’s economic blockade of Qatar. The identity of the “handshake” lender must be disclosed and investigated, raising potential national security concerns and potential “pay to play” politics by a foreign state.

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