When Kushner Cos. bought 666 Fifth Ave. for a record-setting $1.8 billion, it made a down payment of $50 million. When it added a partner years later, that company put down $80 million.
Now Brookfield Asset Management Inc. is offering to buy a stake in the troubled New York City office tower and put up as much as $700 million -- in cash.
That figure, which emerged on Friday, is a standout in Manhattan real estate, where empires are typically built on debt. Though Kushner has owned a majority stake in the property, Brookfield will probably demand more than 50 percent or other concessions for its giant equity infusion, according to five people familiar with the building’s finances.
Representatives for Kushner Cos. and Brookfield declined to comment.
The marquee property in the Kushner Cos. portfolio, 666 Fifth Avenue is weighed down by a $1.2 billion mortgage. It also needs hundreds of millions of dollars in renovations. Attempts to find other investors who would take a back seat to the Kushners in a redevelopment deal have come up short over the last couple of years.
Saving Face
Months-long negotiations with Brookfield are progressing, though the final terms aren’t set. The companies are now discussing more than $1.5 billion of financing, including as much as $1 billion of debt. That eclipses current appraisals on the property, which top out at $1.3 billion.
Kushner Cos., owned by family members of Jared Kushner, the son-in-law of President Donald Trump, wants to maintain a stake in the property, which was its first big splash on the Manhattan real estate scene. But without a new partner and financing, it runs the risk of having lenders seize the property when the mortgage comes due in February.
As a first step in its latest refinancing plan, Kushner Cos. said this month it would buy out its partner, Vornado Realty Trust, which owns 49.5 percent.
Deep Pockets
Brookfield, one of the world’s largest investment firms, certainly has the funds for the deal. Under the latest discussions, Brookfield would put up $500 million to $700 million in equity, though it’s not clear what structure would be used to make the deal worthwhile to its shareholders.
“I’m not going to say it’s chump change, but it’s not going to change anyone’s lifestyle over at Brookfield,” said Lawrence Longua, a retired real estate professor at New York University’s Schack Institute of Real Estate and now an adjunct instructor at Fordham University’s new real estate institute.