Jared Kushner, Donald Trump's son-in-law and top adviser, wakes up each morning to a growing problem that will not go away. His family's real estate business, Kushner Cos., owes hundreds of millions of dollars on a 41-story office building on Fifth Avenue. It has failed to secure foreign investors, despite an extensive search, and its resources are more limited than generally understood. As a result, the company faces significant challenges.
Over the past two years, executives and family members have sought substantial overseas investment from previously undisclosed places: South Korea's sovereign-wealth fund, France's richest man, Israeli banks and insurance companies, and exploratory talks with a Saudi developer, according to former and current executives. These were in addition to previously reported attempts to raise money in China and Qatar.
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It was 2006—the height of the real-estate market boom—when Kushner Cos. agreed to buy 666 Fifth Avenue for $1.8 billion, then a record for a Manhattan building. All of it was borrowed except for $50 million. The company still holds half of a $1.2 billion mortgage, on which it hasn't paid a cent. The full amount is due in February 2019.
The strain has become increasingly evident across their holdings. One person familiar with the company's finances describes the tower, with its low ceilings and outdated floor plan, as the Jenga puzzle piece that could set the empire teetering.
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As 2015 drew to a close, there were no serious offers, and many in the company figured the plans were all but dead. Then Donald Trump began his meteoric political rise, and Jared Kushner was right on his coattails. Discussions heated up. Sheikh Hamad bin Jassim Al Thani, the Qatari businessman who had once run that nation's sovereign-wealth fund, had earlier declined to even take a meeting with the Kushner Cos. executives, according to people familiar with the talks. In 2016, Al Thani agreed to invest $500 million from the private fund he runs, contingent on investment from others, which failed to materialize.
Also in 2016, Charlie and Jared met in New York with executives from the government-controlled South Korean sovereign fund asking for an investment in 666 Fifth. The Korea Investment Corporation didn't invest, people familiar with the talks said.
The Kushners opened discussions with Anbang, the Chinese insurance giant with such close ties to the ruling party that the federal government has forbidden it from buying near a U.S. military base. During months of talks—before and after the election—Jared Kushner negotiated a proposal for Anbang to put billions into the building and allow the family firm to take away $400 million in cash. After details of that plan were made public in March, Anbang walked away amid a crackdown on foreign investments by Chinese regulators.
Representatives of Kushners Cos. also discussed the project with an executive working for Fawaz Alhokair, a Saudi billionaire whose company has vast holdings in shopping malls, hotels and real estate overseas. Alhokair made a splash in the U.S. when he paid $87.7 million for a Park Avenue penthouse. Alhokair's company considered a possible investment in late 2015, according to Simon Marshall, who was CEO of Alhokair until this year.
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Federal investigators know that Kushner met with then-Russian Ambassador Sergey Kislyak in Trump Tower last December and later met with Sergey Gorkov, head of the Kremlin-controlled VEB bank in two meetings that he didn't, at first, disclose publicly or on his application for his national-security clearance. After those meetings became public, Kushner and the White House said the contacts were made in his role as a Trump adviser and didn't involve discussion of his family business. But VEB and a spokesman for Russian President Vladimir Putin described the meetings quite differently, noted Adam Schiff of California, the top Democrat on the House Intelligence Committee. They said that Kushner was there in his capacity as head of his family's real estate business. Investigators say they are studying those accounts with keen interest.
”I think it is part of a pattern of outreach to Russian financial interests, which are essentially Vladimir Putin and his oligarch circle, by Trump family members," said Senator Richard Blumenthal of Connecticut, a Democrat on the Senate Judiciary Committee. ”The financial dealings are important because we know that the Russian playbook is to engage and compromise foreign leaders." He added, ”Whether this meeting and contact are significant remains to be understood."
