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The Kushners' New York City Buildings Are Mostly Owned By Others


joined Normandy Real Estate Partners to buy a 40-percent stake in two Manhattan office properties three years ago, most reports of the purchase gave Kushner top billing. "Kushner, Normandy pick up downtown tech haven," declared the New York Post.


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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world For Customers Bloomberg Anywhere Remote LoginSoftware UpdatesManage Contracts and Orders Support Americas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000 Home Kushners’ New York City Buildings Are Mostly Owned By Others Source: Google Maps By Caleb MelbyCaleb Melby and David KocieniewskiDavid Kocieniewski December 19, 2017 When Kushner Cosjoined Normandy Real Estate Partners to buy a 40-percent stake in two Manhattan office properties three years ago, most reports of the purchase gave Kushner top billing. "Kushner, Normandy pick up downtown tech haven," declared the New York PostForbes estimated Kushner’s stake in the buildings at 80-90 Maiden Lane to be $75 million, indicating about one-third of the property. Early this year, the pair sold half their stake to Meadow Partners in a deal that hasn’t been previously reportedThe property tours and e-mail exchanges finalizing the transaction involved no Kushner representativesThe reason is simple: The Kushners actually owned less than 2 percent of the buildings. A public appearance of big stakes, often at odds with a more modest reality, turns out to be typical of the Kushner portfolio, according to a Bloomberg analysis based on loan documents, agency ratings, deeds filed with New York and interviews with eight people familiar with the deals who asked not to be identified discussing private transactions. Kushner Coshas a stake in more than 60 buildings in New York City, including Greenwich Village apartments and tony Brooklyn officesIn 60 percent of the properties, the Kushners own less than half of each, the analysis showsIn nearly half, they own less than 20 percentIn some high-profile cases, such as Brooklyn’s Watchtower Building, their ownership is in the single digits. Who Owns Kushner CosProperties SVG Version: 6.00 Build 0) --> 100% Kushner Cos. ~50% <50% ~5% Buildings that Kushner Cosown 100% (No known partner) Less than 20% Around 50% About 5% Less than 5% Williamsburg Apartments Brooklyn HeightsApartments Puck Building Former NYT Building(First 6 floors) East VillageWalk-ups 666 Fifth Ave. Brooklyn HeightsCommercial Block C-III GAIA KUSHNER OTHER West Village Apartments East VillageWalk-ups BrooklynResidential Upper East SideResidential 175 Pearl St Gowanus Lot WatchtowerBuilding 85 Jay St 80-90Maiden Lane Less than 50% East VillageApartments <20% <5% SVG Version: 6.00 Build 0) --> Less than 20% Around 50% About 5% Less than 5% Williamsburg Apartments Brooklyn HeightsApartments Puck Building Former NYT Building(First 6 floors) East VillageWalk-ups 666 Fifth Ave. Brooklyn HeightsCommercial Block C-III GAIA KUSHNER OTHER West Village Apartments East VillageWalk-ups BrooklynResidential Upper East SideResidential 175 Pearl St Gowanus Lot WatchtowerBuilding 85 Jay St 80-90 Maiden Ln Less than 50% East VillageApartments 100% Kushner Cos. ~50% <50% <20% ≤5% Buildings that Kushner Cosown 100% (No known partner) SVG Version: 6.00 Build 0) --> Buildings that Kushner Cosown 100%(No known partner) Williamsburg Apartments Brooklyn HeightsApartments PuckBuilding Former NYT Building(First 6 floors) East VillageWalk-ups 666 Fifth Ave. Brooklyn HeightsCommercial Block C-III GAIA KUSHNER OTHER WestVillage EastVillage Brooklyn UpperEast Side 175 Pearl St Gowanus Lot WatchtowerBuilding 85 Jay St 80-90Maiden Lane East VillageApartments About 50% Less than 50% Less than 20% About 5% Less than 5% Up to 100%Kushner Cos. ~50% or less Less than 20% ≤5% SVG Version: 6.00 Build 0) --> 100% Kushner Cos. ~50% <50% Williamsburg Apartments BrooklynHeightsApartments PuckBuilding Former NYT Building(First 6 floors) East VillageWalk-ups 666 Fifth Ave. Brooklyn HeightsCommercial Block C-III GAIA KUSHNER OTHER WestVillage EastVillage BrooklynResidential UpperEast Side 175 Pearl St Gowanus Lot WatchtowerBuilding 85 Jay St 80-90Maiden Lane East VillageApartments <20% About 50% Less than 50% Less than 20% About 5% Less than 5% 5% or less Buildings that Kushner Cosown 100%(No known partner) There’s nothing unusual about being a minority partner that manages or develops properties for othersBut Kushner Cosoften projects a different image. On its website, for example, the company lists 80 and 90 Maiden Lane as a “key asset” despite its tiny, non-controlling shareIn public statements, it sometimes conflates its own stakes with those of its partnersA release from last year describes the firm as having done $7 billion in acquisitions since 2007, a figure that can only be reached by including their partners’ fundsA similar release describes “reach” of more than “20,000 multifamily apartments, as well as 12 million square feet of office.” Those figures require compilation of properties where Kushner Cos.’ ownership is marginal. Bloomberg shared its data with Kushner CosPresident Laurent Morali two weeks agoHe declined to comment. Ownership isn’t the only way to make money in real estateFor companies that act as a general partner, as Kushner Cosoften does, management and other fees are common, as are clauses that allow operators to capture outsize gains if they exceed investment targets. Still, the story of Kushner Cos.’ New York City expansion seems to be one of soaring ambition, international deal-making, and savvy public relationsIn some ways, it is a Trumpian tale: a young man arrives in Manhattan and, with a little “truthful hyperbole,” as Trump once phrased his style, crafts a success that is larger than lifeIn the gap between image and reality, however, lurks a frequent reliance on investors and an ongoing risk of political influence. Jared Kushner and Ivanka Trump Photographer: T.JKirkpatrick / Bloomberg When Jared Kushner ascended to the White House, he presented a dazzling image: nattily dressed, publisher of a New York newspaper aimed at chummy high-flyers, husband to Ivanka Trump, and pupil to men of means like Fox News boss Rupert Murdoch. Much of that allure grew from his high visibility in a real estate empire that was not as grand as advertisedThe public image helped attract investors, who count on the expertise of Kushner Costo make complex transactions a success. For several of them, Kushner’s swelling profile, coupled with discretion, was an asset—granting them access to New York’s soaring real estate market while shielding them from the spotlight that comes with big purchases. The finding that the company is most often a junior owner heightens concern over conflicts-of-interest a year after Kushner entered the White HouseAs his family has hunted for investors overseas in countries as far-flung as China and Saudi Arabia, many inside and outside of government worry about the potential for quid-pro-quos—public policy driven by private businessIn the partnerships where the Kushner Coshave minor stakes, there’s pressure to make returns for the investors who put up most of the money. Kushner Cossays there is no interplay between politics and its businessJared Kushner has divested from some assets and says he has no involvement in the business any more, although ethics experts say his divestment to close family members is still cause for concern. "Jared Kushner had a very significant role in the company,” said Virginia Canter, a former ethics adviser to the International Monetary Fund who is now the executive branch ethics counsel with Citizens for Responsibility and Ethics in Washington“He apparently did many of these deals and built relationships with these investorsThat may give him a sense of responsibility that you really can’t just severAnd we don’t know what their priorities areThe investors may have their own agenda which could act as influences on him in an official capacity." The Kushners began their march into New York a decade ago with a record-setting purchase, paying $1.8 billion for 666 Fifth Avenue, a Manhattan office tower along the world’s most expensive shopping corridorThey sold two-thirds of an apartment portfolio cobbled together over two decades to finance it (many of the remaining units were co-owned with others). Jared Kushner described the move as “part of our strategic shift,” saying his father had started without much capital and built a great company, adding, “Now we’re looking to take his company to the next level.” The financial crisis hit, and it became apparent that the Kushners had overpaid for 666 FifthFour years later, drowning in debt payments, they forked over half their ownership to stave off a bankruptcyThe deal allowed them to save face as 50.5 percent owners of their new crown jewel. Kushner Cos.' East Village apartments Photographer: Victor JBlue / Bloomberg Staying afloat had meant making huge interest payments but, rather than economizing, the company went on a buying spree, purchasing several walk-up apartments the following yearKushner Cos. made waves as the biggest buyer of apartment properties below 96th Street with fewer than 100 unitsKushner, already a minor celebrity, now had his comings and goings tracked in tabloids and even trade publications like Real Estate Weekly, which dubbed him the “East Village buildings baron.” But the vast majority of the money behind the purchases didn’t belong to Kushner or his familyRather, it came from an obscure Israel-based company called Gaia Investments Corpand related entitiesGaia has almost no public profile in New York real estateIts principals have held roles in enterprises owned by the diamond-trading Steinmetz family, with close ties to Raz Steinmetz, the nephew of billionaire Beny Steinmetz. A 2015 deal for 16 apartment buildings had a similar structureAgain, the Kushners were publicly credited with the acquisition, and again, most of the money belonged to someone elseThe investors in this case, not previously reported, were C-III Capital Partners, a Texas-based asset manager run by Andrew Farkas, who also invested in Cadre, the real-estate startup co-founded by Jared and his brother Joshua Kushner. From 2012 to 2015, Kushner Cospurchased more than 40 Manhattan apartment buildings that they still ownIn at least 80 percent of them, they’re minority partners to well-heeled investors. In a way, this approach mirrors the way the Kushners operated in the pastBefore moving to New York, they were known to "club" some deals, bringing in rich New Jersey friends to help them fund purchasesThose included the Gellert family, headed by patriarch George Gellert, a food importer and close friend of Charles Kushner. “We’ve done many billions of dollars of business together, and everything is always on a handshake,” Charlie Kushner said of Gellert in a Cornell University profile“He’s never read a legal document I’ve given him, and it’s the same with me.” The clubbing continued as the Kushners made their way into New YorkGellert is a co-guarantor of the Kushners’ debts at 666 Fifth Avenue, loan documents showThe informal nature of clubbing further complicates attempts to understand the Kushners’ ownership of their New York propertiesEven stakes that are nominally owned by Kushner Cosaren’t necessarily owned by the Kushner family. In determining the ownership stakes of Kushner Cosfor this article, Bloomberg left out those more informal partnership interestsIf included, the numbers in some cases would be even starker. When Kushner CosBought New York City Properties Map shows Kushner Cosproperties in Manhattan and Brooklyn Source: Bloomberg reporting There are some New York properties that the Kushners own outrightBloomberg found no outside partners at properties including the downtown Puck Building as well as the first six floors of the former New York Times Building, a portfolio of five residential properties bought from Brooklyn Law School, and a rent-regulated apartment building in Brooklyn’s Williamsburg neighborhoodThey’re roughly equal partners with Aby Rosen’s RFR in four Brooklyn office buildings. Not included in that list is the family’s most iconic purchase since 666 Fifth: The Watchtower BuildingThe former headquarters of the Jehovah’s Witnesses in Brooklyn sold for an eye-popping $340 million and is slated to become tech-centric offices after a renovationIt’s about 95 percent owned by the Kushners’ partner CIM Group, a fiercely private Los Angeles-based fund managerThe two companies also bought a nearby parking lot for $345 million a year ago with plans to build a 21-story luxury property thereThere, CIM is again far and away the dominant owner.

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