The Manhattan tower co-owned by the family of Jared Kushner, President Trump's son-in-law, has been losing money for three years and faces increasing loan fees in 2017, which may explain why the family has been negotiating with Chinese insurance behemoth Anbang on new financing.
The fees, at the building located at and known as 666 Fifth Avenue, kicked in last month and escalate with each payment until the loan is repaid, a 2011 refinancing agreement shows. December brings another hurdle: Interest paid on the bulk of about $1.1 billion of loans jumps to 6.35 percent, more than double what it was after the debt was refinanced in 2011.
And as the city's biggest office construction boom in a quarter-century creates a glut of supply, the property's occupancy rates are falling. Seventy percent of the building was filled as of September, filings by LNR Partners, the loan managers, show. This is well below 91 percent for the New York metro area reported at year's end by Reis, the market-data firm, said Bloomberg Intelligence analyst Jeffrey Langbaum.
"It is an understatement to say this building is not doing well," said Joshua Stein, a New York real estate lawyer, after reviewing its financials and the refinancing agreement. "People forget that not all real estate investments succeed. But people also forget that failing real estate investments are sometimes successfully turned around."
Details of talks with Anbang Insurance Group Co. were first reported by Bloomberg last week. Some ethicists expressed concern about whether the Chinese company was seeking improper influence in the White House. Anbang issued a statement saying it has no investment in the building. The proposed deal would require additional investors and it isn't clear whether any have joined. Kushner Cos. said through a spokesman that it remains "in advanced, ongoing discussions around 666 5th Avenue." Queries to several Anbang spokesmen about the state of the negotiations weren't answered.