There’s a must-read report at Bloomberg News about the Kushner family finances. Executive summary: You think you have money problems? Boy howdy, you do not want to be them.
Here’s the story: Back in 2007, the Kushners bought a big ugly building on Fifth Avenue, Manhattan — 666 Fifth Avenue, in fact — that they couldn’t afford.
A kingmaker in New Jersey Democratic politics, Kushner had been out of prison just three months for making illegal campaign contributions and, in a bizarre episode that the tabloids couldnâ€™t get enough of, hiring a prostitute to entrap his brother-in-law. He wanted a prestige Manhattan property to mark a fresh start for the family business, which would now be led, if mostly in appearance, by his eldest child, Jared Kushner, who frequently consulted his father. Charlie had recently been turned down for towers including the Seagram Building. He saw securing Tishmanâ€™s property as a way to plant his flag.
Over the weekend, the Kushners and their partners worked out a deal in which they would put down $50 millionâ€”a pittance.Â Barclays Bank PlcÂ andÂ UBS Group AGÂ funded $1.75 billion of the purchase, $535 million of it in short-term, high-interest loans. The terms were demanding, bordering on untenable. Nevertheless, after the deal closed in January 2007, the group celebrated with a party at one of the most expensive restaurants in New York, Per Se. Everyone there was given a pair of silver cufflinks fashioned in the embossed look of the buildingâ€™s exterior.
Note the date, 2007. Then came 2008. And the Kushners were stuck with this turkey.
At 1.5 million square feet, the 1950s building ranks nowhere near the largest of New York skyscrapers. Its low ceilings and closely built columns give it a dark, closed-off feelâ€”anathema in the era of light-filled open-plan offices.
â€œIf that building was beginning to look obsolete at the time of purchase, it is totally obsolete now,â€ saysÂ Jesse Keenan, a Harvard lecturer on architecture who wrote a 2013 report on the building for Kushner Cos. He notes that Manhattan is in the midst of its largest office-construction boom since the 1980s. The most prestigious occupantsâ€”hedge funds, private equity and law firmsâ€”are moving west to new buildings, shifting the center of gravity away from the Kushners.
Since the purchase there’s been some refinancing and some share selling, but the bottom line is that the Kushner company still holds half of a $1.2 billion mortgage, on which it hasnâ€™t paid a cent, and the full amount is due in February 2019. Â See, aren’t you glad you aren’t them?
And they’ve got this big turkey of a building that they probably couldn’t sell for that much. One guy they approached to help bail them out more or less said that the lot was worth more than the building.
Among other plans, the Kushners thought they might gut and renovate the building, turning it into luxury condominiums and high-end retail space. People who were asked to invest in this idea turned it down, saying that the potential return didn’t justify the cost. TheÂ New York luxury-retail market is already close to being saturated, apparently.
No American financiers would work with them, so the Kushners have been shopping abroad for someone to take some of the financial load off their hands. This was going nowhere, either, until Trump won the election. Suddenly, people would at least take meetings. The problem is that the thing is such an obvious money-loser that no honest investor wants to have anything to do with it. And those entities that might have other motives for dumping a ton of cash into a building owned by the president’s son-in-law have been frightened off by the scrutiny surrounding Kushner. Chinese and Saudi companies that nearly bought in earlier this year have backed out already.
On top of that, a lot of the Kushner family’s other projects aren’t doing much better, as CNN reported recently. Remember the time they got caught selling visas in China? That was to prop up another project, One Journal Square in Jersey City. Recently a Kushner family request forÂ a 30-year tax abatement and $30 million in city-issued bonds to keep the project alive was turned down byÂ Jersey City Mayor Steven Fulop.
Fulop is a Democrat, and his political rival says the mayor didn’t support the tax break because of the political risk he faced for aligning himself with the Kushners in the past.
“This pivot away was clearly based upon Fulop’s identification of a shift in the political winds and recognition that Trump and Kushner are toxic in Jersey City,” said Bill Matsikoudis, a Democrat, who is running against Fulop in the city’s mayoral race.
I haven’t heard that the One Journal Square building project is now dead, but I suspect it is.
No one seems to be asking the obvious question — why isn’t the allegedly wealthy Trump family bailing out the Kushners? One suspects that the answer is that the Trumps are leveraged up to their eyeballs already. I trust Mr. Mueller will sort that out eventually.
The other part of this touches on Jared’s many meetings with people he shouldn’t have met with. Keep in mind thatÂ Kushner has kept 90 percent of his real estate holdings. How nervous is he getting, do you think?
It was almost unquestionably this money hunt that led Kushner to meet with that chief of a Russian owned state bank during the transition â€“ a source of many of his current troubles.
What all of this amounts to is that while Kushner has been given oversight of numerous key foreign policy issues and problems, his â€˜familyâ€™ is simultaneously in a desperate hunt for money which basically has to come from abroad â€“ from a lot of the people he meets with in his White House job. Itâ€™s like having a Secretary of State desperate for help getting money from every foreign potentate he meets with. In fact, itâ€™s not â€˜likeâ€™ that. It sort of is that.
This is, um, not good. All I’m going to say further, for now, is that we seriously need a Constitutional amendment that says presidents and their White House advisers must make complete tax returns public before general elections and also sell or place in a genuine blind trust all businesses and investments before taking office. But that’s not going to help us now.