Trump son-in-law family firm set to make US$400 million in Chinese office tower deal
In 2007, Jared Kushner purchased a building on Fifth Avenue in Manhattan for a then-record $1.8 billion. Then the Great Recession hit, and the property has been struggling financially ever since. In 2012, Kushner had to sell the more lucrative retail spaces at the base of the building, for $707 million. Today Kushner Companies still owes over $1.15 billion on the remaining office section, including one mortgage for over $250 million. (Note that Jared Kushner says he sold his stake in this particular building to family members, ostensibly to eliminate the conflict of interest from being his father-in-law’s senior advisor.)
Anbang Insurance Group is a prominent Chinese company “whose murky links to the Chinese power structure have raised national security concerns over its US investments.”
“The company’s ties to the Chinese government are sufficiently unclear that former President Barack Obama declined to stay at the Waldorf after Anbang bought it because of fears of espionage.”
One of Anbang’s U.S. investments is set to benefit the Kushners in a big way. Anbang and other undisclosed lenders are bailing out the struggling Fifth Avenue building, under the following remarkable terms:
For the purpose of refinancing debt, the property is being valued at $2.85 billion, “the most ever for a single Manhattan building.”
The $250+ million mortgage is being settled for $50 million, without further explanation.
Kushner Companies will receive $500 million in cash, $400 million from Anbang and $100 million from other investors.
Anberg will take out a $4+ billion construction loan to convert the property’s higher floors into luxury residential units; the completed project will be valued at $7.2 billion.
Kushner Companies and Anberg will become partners, and Kushner Cos will get a 20% stake in the entire building, including those more lucrative retail spaces and the new luxury residential units.
“The planned US$4 billion transaction includes terms that some real estate experts consider unusually favourable for the Kushners. ... ‘At the very least, this raises serious questions about the appearance of a conflict that arises from the possibility that the Kushners are getting a sweetheart deal,’ said Larry Noble, general counsel at the Campaign Legal Centre. ‘A classic way you influence people is by financially helping their family.’”
Ya think?
