666 Fifth Avenue, via Vornado
Anbang Insurance Group, the Chinese company who bought the Waldorf Astoria in late 2014 for nearly $2 billion, is now making headlines for another high-profile real estate transaction, this time against a controversial political backdrop. Bloomberg reports that Anbang is considering a stake in Vornado and Kushner Companies’ office tower 666 Fifth Avenue, a deal that Jared Kushner reportedly set into motion before resigning as CEO of his family’s company to serve as a presidential advisor to his father-in-law. If the deal goes through, not only will the Kushners profit some $400 million, but they’ll receive an equity stake in the new partnership, which will refinance $1.5 billion in existing mortgage debt. The deal values the tower at $2.85 billion, and if Anbang’s receives its proposed $4 billion construction loan to turn the top floors into condos, it will be the largest such loan for a single property in NYC history.
Kushner Companies bought 666 Fifth Avenue in 2007 for a then-record price of $1.8 billion, overseen by a 26-year-old Jared. Shortly thereafter, the company moved its headquarters in but faced with the financial crisis they were on the brink of defaulting on the loans that financed the purchase. So, Jared sold a 49.5 percent stake in the 41-story tower to Vornado Realty Trust for $85 million; Vornado then took over the retail space the following year.
Under the new deal, Kushner will keep a 20 percent stake, but Vornado will “exit a troubled asset with a 10-fold payout on its stake in the building’s offices and a doubling of its investment in its stores,” the report explains. Documents sent to prospective foreign investors seeking residency through the controversial EB-5 program, a federal initiative that is supposed to be geared towards economically distressed neighborhoods (it’s currently up for renewal), claim the redevelopment would be worth $7.2 billion, per Bloomberg. The Real Deal notes that it’s not clear how the figure was derived, adding that the building, the most valuable office tower in the U.S., is valued at $3.4 billion.
Addressing conflict-of-interest claims, a spokesperson for Kushner Companies said Jared sold his ownership stake in 666 Fifth Avenue, and a White House spokesperson said he would recuse himself from “any matter where his impartiality could be reasonably questioned,” including a determination on EB-5, which in this case is seeking $850 million in funds for the condo conversion.
There are other ethical issues, however. First, Anbang is closely tied to the Chinese government, which has in the past raised security issues about U.S. investment. In the case of the Waldorf, the company faced a federal review, which could now carry over to China as well, as they’ve been getting stricter on overseas investment. Plus, there are fears of Chinese espionage, which ultimately led President Obama to forego staying at the Waldorf.
Editor’s note: This story has been updated to reflect that Anbang is only considering an investement at 666 Fifth Avenue
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