The saga of 666 Fifth Avenue—Kushner Companies’ flagship property, and an increasingly heavy albatross for the firm—drags on.
Last Friday, Vornado Realty Trust’s Steven Roth announced there was a “handshake” deal to sell its 49.5 percent stake in the Midtown office tower back to Kushner Companies. And today, the New York Times published an interview with family patriarch Charles Kushner, head of the company since former CEO Jared Kusher left for the White House, that reveals the level of uncertainty remaining over the sale—and the building itself.
Tension between Kushner Companies and Vornado over the skyscraper, which has a staggering $1.4 billion mortgage that’s nearly due, dates back to October 2017. Reports surfaced that the two were at odds over the building’s future; Kushner wanted to replace the current tower with a luxury condo and hotel (designed by Zaha Hadid), while Vornado preferred to keep it as an office tower.
There’s also been a very public, three-year hunt for an investor to take over part of the building’s $1.4 billion mortgage. But Jared Kushner’s role in the White House hindered the search; a potential deal with Anbang Insurance Group, a Chinese financial conglomerate, fell through after increased scrutiny given Jared’s involvement in the negotiations before he went to the White House.
Charles Kushner told the Times that “we’re finalizing a contract, which we’re negotiating now,” in regards to the deal with Vornado. Still, it’s unclear how much the Kushners will be paying and where the money is coming from.
The building’s future is also in question for a number of reasons, not least of which is the fact that it’s now 30 percent vacant. “We don’t know what we’re going to do,” Charles told the Times. “We’re weighing our options.” He did confirm that Jared’s proposal to demolish the tower and build a 80-story skyscraper was definitely off the table.
Some insiders say Kushner plans to upgrade the office space at the base of the building and might convert the top floors into luxury condos. But any renovation plans will pose challenges, given that they “could cost hundreds of millions of dollars, at a time when most analysts say the building may not be worth as much as its mortgage,” as the Times puts it. It is also unclear how Kushner will pay off Vornado, which could get as much as $89 million in the sale.
The Kushners purchased the building in 2007 for $1.8 billion, and the clock is now ticking on its billion-dollar loan, due next February. According to a financial report, revenue from the building only covers half of the annual payments. While the Kushners could refinance, getting a new mortgage at a lower interest rate than the current 6.3 percent, experts believe they’ll only be able to finance about 80 percent of the building’s value, roughly $1.12 billion.