Brookfield Asset Management and Vornado bailed out Kushner Cos. from looming debt on its 666 Fifth Ave. tower in New York City last August.
ALEXANDRIA, VA—The Kushner Companies has significantly expanded its multifamily portfolio with the $1.1-billion purchase of a portfolio of more than 6,000 apartments in Maryland and Virginia, according to multiple press reports.
The purchase of the portfolio from Lone Star Funds was first reported on Friday by the Wall Street Journal. The purhase transaction is the largest for the Kushner firm, which is now headed by White House senior advisor Jared Kushner's father Charles Kushner, in more than a decade when it acquired 666 Fifth Ave. in Manhattan for $1.8 billion.
The last high-profile transaction of late involving Kushner Cos. was also valued at approximately $1.1 billion when Brookfield Asset Management and Vornado bailed out Kushner Cos. from looming debt on the 666 Fifth Ave. tower in New York City last August.
In that deal, Brookfield Asset Management purchased a 99-year, 100% leasehold interest in the 1.5 million square-foot Midtown Manhattan office building. At the time, the New York Times reported Brookfield paid approximately $1.1 billion in upfront rent, and that Charles Kushner negotiated to pay lenders substantially less than what was owed on the building. The newspaper previously reported the property had a $1.4-billion mortgage with accrued interest due in February 2019.
The transaction with Lone Star Funds increases Kushner's multifamily portfolio to approximately 22,000. Laurent Morali, president of Kushner Cos., told the Wall Street Journal that it has another 6,000 multifamily units in its acquisition pipeline and that it plans to borrow approximately 70% of the cost of the Lone Star portfolio deal.
The portfolio purchased from Lone Star totals 6,030 apartments and are located in the Baltimore suburbs of Cockeysville, Owings Mills and Columbia, and in the Virginia/DC suburbs of Alexandria, Fairfax and Reston, according to a Bloomberg report.
Last April, Kushner Cos. acquired Prospect Place, a 360-unit, two-building multi-housing property in Hackensack, NJ. that industry observers valued at approximately $100 million.
The Kushner Co. has been the subject of several lawsuits and probes regarding multifamily properties it owns in Maryland and New York. In 2017, after a lawsuit was filed in connection with some of its Baltimore properties, the Maryland Attorney General's Office began an investigation into the rental practices of Kushner, according to a report in the Baltimore Sun. Kushner executives stated that the firm was in compliance with all state and local laws.
In July 2018, Gov. Andrew M. Cuomo's tenant protection unit began a probe into allegations that the Kushner Cos. illegally harassed tenants. The allegations were raised in a lawsuit filed earlier that month in a New York state court against Kushner Cos., by current and former tenants of Austin Nichols House at 184 Kent Ave in Williamsburg, Brooklyn.
Gov. Cuomo's administration announced at the time it was investigating whether Kushner Cos. violated New York's housing laws and regulations.
A Kushner Cos. media spokesperson denied wrongdoing and told GlobeSt.com at the time that the tenants' lawsuit “was totally without merit and that the firm intended to defend itself vigorously.”
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
