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In the last year, Kushner Cos.' redevelopment plan for 666 Fifth Ave. has been on ever-shakier ground, and its partner might be finally stepping in.
Vornado purchased 49.5% of 666 Fifth Ave. in 2011 after the Great Recession strained Kushner's financing for its 2007 purchase. As Kushner publicly proceeded with its intentions for a $7.5B overhaul of the outdated office building into an ambitious mixed-use, Vornado stood by — until now, Bloomberg reports.
Vornado Chairman and CEO Steve Roth reportedly told brokers to plan for 666 Fifth Ave. to be renovated for continuing office usage, rather than the combination of residential, hotel and multistory retail blocks in the Kushners' plan. Though a Kushner spokesman denied any firm change in direction, a conflict between the two owners of the building could result in the Kushners being forced out of the property that was supposed to legitimize their presence in the upper echelon of New York real estate.
The entirety of the $1.2B mortgage on 666 Fifth Ave. is due in February 2019, and financing deals with Chinese investor Anbang Insurance Group and a Qatari capital source have fallen through in the past year. Jared Kushner has divested himself of 666 Fifth Ave., but his position in the Trump administration, once seen as a recruitment tool for foreign investors, has caused a chilling effect due to increased scrutiny over any such deals, according to Bloomberg.
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Roth reportedly does not plan to further assist Kushner Cos. in meeting its mortgage obligations, and stands to take full control of 666 Fifth Ave. should the Kushners default. After spinning off its Washington, D.C., interests in a merger with The JBG Cos., Vornado seems to have a strong financial base from which to put capital into 666 Fifth Ave., according to Bloomberg, unlike Kushner.
Due to its redevelopment plans and the availability of more modern office space, 666 Fifth Ave. has dropped to 70% occupied, which provides another challenge to Kushner Cos. in getting its plan financed.
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