Kushner Buys 666 Fifth Stake, Ending Rocky Vornado Partnership
The deal marks the beginning of a new chapter for Kushner Cos. and the 41-story building.
(Bloomberg) -- Kushner Cos. is buying Vornado Realty Trust out of 666 Fifth Ave., ending a rocky partnership and failed turnaround attempt for the aging and indebted office tower.
Vornado will realize net proceeds of $120 million from the sale, the New York-based company said in a statement Friday. It purchased its 49.5 percent stake in the building for $80 million and the assumption of half the property’s $1.2 billion mortgage in 2011.
The deal marks the beginning of a new chapter for Kushner Cos. and the 41-story building, which it purchased at a record-setting $1.8 billion at the height of the real estate boom in 2007. Drowning in debt payments, Kushner Cos. brought in Vornado to help right the ship. But the firms couldn’t agree about the future of the building, which was beset by low occupancy and debt payments that overwhelmed income. The building lost $25 million last year.
Kushner Cos. has said it will partner with a unit of Brookfield Asset Management Inc. in yet another attempt to turn around the property.
“They see a building being emptied, the owners about to lose it because the debt is going to mature,” Charlie Kushner, founder of Kushner Cos., said of Brookfield in an interview with The Real Deal published Friday. “All the bad things that have been written about this building, they saw it and understood the true positioning of what we’re trying to do here and they saw it as an opportunity to go ahead and make the asset equivalent to the location. Because right now, the asset is not equivalent to the location.”
Kushner remains in talks to sell the 49.5 percent stake to Brookfield, with an agreement not yet completed, said two people with knowledge of the discussions, who asked not to be identified because the talks are private.
The $1.2 billion mortgage on the property will be repaid in conjunction with the deal, Vornado said in its statement. Vornado will receive $58 million for the share of the debt it holds, the company said. Much of the debt is held in commercial mortgage-backed securities.
A spokeswoman for Kushner Cos. didn’t immediately respond to requests for comment. A representative for Brookfield declined to comment.
Ric Clark, chairman of Brookfield Property Partners LP, the real estate arm of Brookfield Asset Management, has previously said the building could be clad in floor-to-ceiling glass, calling Brookfield’s 5 Manhattan West a model. Many brokers have said the building is tired and in need of a radical makeover.
Jared Kushner, son of Charlie Kushner and son-in-law of President Donald Trump, stepped aside from managing his family company when he became a senior White House adviser. His family firm’s talks with international investors while he serves in government have drawn scrutiny.
--With assistance from David M. Levitt and David Kocieniewski.
To contact the reporters on this story: Caleb Melby in New York at cmelby@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net
To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Peter Jeffrey
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