By JESSE DRUCKER and CHARLES V. BAGLI
June 5, 2017
The real estate company owned by the family of Jared Kushner, son-in-law and senior adviser to President Trump, is seeking $250 million to pay off its partners and lenders in a Jersey City apartment tower financed by Chinese investors through a program criticized as offering United States visas for sale.
The family business, Kushner Companies, spent about $225 million to build the luxury high-rise building, called Trump Bay Street. The 53-story tower, which opened last year, features such amenities as a poker room and an outdoor swimming pool with views of Manhattan.
The project was financed with some $190 million in loans, including $50 million through what is known as the EB-5 visa program. That program gives foreign investors preferential treatment in obtaining permanent residency, in exchange for investments of at least $500,000 in American development projects.
Kushner Companies must repay a $140 million construction loan from CIT Group, which is due in September. It also wants to pay off its EB-5 loans, which are entirely from Chinese investors, although they are not due for several years.
A company spokesman confirmed that it was seeking a $250 million loan.
In preparation for his role as a White House adviser, Jared Kushner divested some of his stakes in the family business and other investments. He also resigned his position as chief executive of Kushner Companies, as well as the management positions he held in the hundreds of entities the company uses to own its projects. But he has retained economic interests in most of the company’s projects, including the Jersey City building, at 65 Bay Street, according to his government ethics disclosure.
A White House official has said Mr. Kushner shed his interests in projects expected to require large transactions with parties that had not yet been identified. It is unclear why he did not divest his stake in the Trump-branded Jersey City building, with the hoped-for refinancing appearing to present similar issues.
His stake in various Kushner family projects, with some other investments, could exceed $600 million, according to the government ethics filing, which lists a trust that owns a company called 65 Bay L.L.C., which has an indirect ownership in the building.
The money sought by the Kushners would allow them to repay their lenders and partners and keep about $30 million in cash. The tower was built with only about $30 million in equity from the Kushners and their partners, according to a 2015 presentation by the firm that helped the Kushners secure EB-5 visa funding.
Trump Bay Street is now valued at $340 million to $360 million, with more than half the apartments rented, according to a deal summary circulated to prospective lenders in recent weeks.
On projects like the one in Jersey City, longer-term financing — with lower interest rates — is typically not available until the building reaches at least 50 percent occupancy, which this building now has.
“We have received overwhelming interest, at our ask, from the pool of lenders that has been tapped,” Laurent Morali, the president of Kushner Companies, said in a statement. “This is a very successful rental building, which is in high demand in the lending community.”
Kushner Companies’ refinancing plans were reported earlier by Bloomberg News.
In addition to CIT and the EB-5 lenders, the Kushners’ partners in the building include Gaia, an Israeli company linked to the wealthy Steinmetz family, whose best-known member, Beny Steinmetz, is the subject of a Justice Department bribery investigation.
Mr. Kushner did divest his stake in the company’s troubled headquarters building at 666 5th Avenue, which carries $1.4 billion in debt, according to financial data published by Vornado Realty Trust, a partner in the deal.
Talks over a possible $4 billion investment in that property with Anbang Insurance Group — a Chinese conglomerate with political connections to Beijing — ended in March after Democratic lawmakers wrote to the White House Counsel’s Office and the Treasury secretary, expressing concern that the possible deal could breach federal ethics rules. Mr. Kushner’s broad White House portfolio has included relations with China.
The Kushner family’s use of the EB-5 visa program created an uproar last month when Jared Kushner’s sister, Nicole Meyer, spoke about her brother during a marketing trip in Beijing as part of an effort to raise another $150 million in visa funding for a separate Jersey City project. Kushner Companies said later that Kushner family members would no longer participate in such roadshows in China.