Google Street View of 666 Fifth Avenue
Kushner Cos. said this week it is in talks to buy the remaining 49.5 percent stake in 666 Fifth Avenue from Vornado Realty Trust, furthering the drama at the 41-story Midtown Manhattan office building, according to the Wall Street Journal. The tower has remained one of Kushner Cos. most financially troubled projects. In addition to its debt and high rates of vacancy, the building has been mired in controversy, mostly due to Jared Kushner’s role as a senior adviser and son-in-law to President Donald Trump. While Jared divested in the property to avoid conflicts of interest, investors have been reluctant from entering a deal with Kushner Cos.
Kushner Cos. first picked up the property in 2007 for $1.8 billion, the most expensive transaction in the U.S. at the time. Soon after the country was hit by the 2008 economic recession and ever since, financial problems have continued. Currently, the occupancy rate hovers around 70 percent and the building’s net operating income has dropped to $41 million from $61 million in 2007.
Last March, partners Vornado and Kushner revealed plans to redevelop the property in order to salvage its capacity to bring in money. The plan, which was estimated to cost between $7.5 billion and $12 billion, would convert the tower into an 80-story office tower, adding hotel rooms and luxury housing designed by late architect Zaha Hadid.
At the time the Chinese insurer, Anbang Insurance Group, was negotiating with Kushner to invest in the property’s redevelopment. Anbang, who has ties to the Chinese government, backed out of the deal in March. And just on Friday, Chinese regulators took over Anbang because the debt-laden company violated regulations and was unable to stay afloat.
Earlier this month, Roth said he wanted to sell the company’s stake in 666 Fifth Ave, which first purchased its share in 2011. “We would rather exit than stick it out,” he said during a quarterly earnings call. The WSJ reports a deal could be reached over the next few months.
If Kushner purchases the remaining stake, the company would have to refinance its debt. The partners could also decide to put the entire building up for sale, or Vornado could choose to sell its stake to an outside third party.
- Kushner Companies’ plan for extensive renovations at 666 Fifth Avenue rejected by Vornado
- Problems at 666 Fifth Avenue tower linked to Jared Kushner’s White House role
- Chinese company Anbang backs out of 666 Fifth Avenue deal with Kushner Cos.
Neighborhoods : Midtown East