By Herbert Lash
NEW YORK (Reuters) – Kushner Companies, the real estate firm headed by President Donald Trump’s son-in-law until recently, said on Wednesday it ended talks to redevelop its flagship New York office tower with China’s Anbang Insurance Group [ANBANG.UL].
Talks had centered on Anbang providing as much as half of $2.5 billion in equity for the planned redevelopment of 666 Fifth Avenue in Midtown Manhattan, a media report said last week.
The failed talks are the latest twist in a story that initially involved Jared Kushner, who is married to Trump’s daughter Ivanka, before he sold his interest in Kushner Cos to a family trust at the beginning of the year.
Three Democratic lawmakers questioned the White House earlier this month over its handling of potential conflicts of interest by Kushner, given his role as a top adviser to Trump.
“Kushner Companies is no longer in discussions with Anbang about 666 Fifth Avenue’s potential redevelopment, and our firms have mutually agreed to end talks regarding the property,” a spokesman said in a statement.
An Anbang representative declined to comment.
The Kushner spokesman said advanced talks are ongoing with other investors to redevelop the 39-story building, valued for its proximity to St. Patrick’s Cathedral and Rockefeller Center.
Any plan could be hampered by the cost of buying out tenants with long-term leases or Spanish retailer Zara’s store on the corner of 52nd Street.
Zara is controlled by Amancio Ortega, the world’s fourth-richest man according to Forbes magazine, who has no intention to sell, said a broker who represented the billionaire when one of his companies paid $324 million for the locale in 2011.
“He never sells, he has rarely sold anything in his portfolio and this is particularly valuable for them,” said Borja Sierra, a broker for Savills Plc <SVS.L> when asked about Ortega’s plans for the prime real estate.
“They’re super happy with the property,” Sierra told Reuters when reached in Barcelona. “It’s not a negotiating position.”
Some tenants in the office portion of the building have more than 10 years left on their leases, and getting them to leave is unlikely to be cheap.
A case study of Kushner’s purchase in 2006 of 666 Fifth Avenue by Columbia University’s Center for Urban Real Estate said it cost $47 million to buy out former occupants Brooks Brothers and almost $12 million to buy out Hickey Freeman.
The study said it took four years to buy out the National Basketball Association from its space in the building.
Any deal must also be agreed to by Vornado Realty Trust, which owns the remaining store frontage and 49.5 percent of the building’s office portion.
The Kushner plan calls for stripping the building down to its steel columns and adding about 40 floors, the Wall Street Journal reported last week. The project was designed by Zaha Hadid, a Pritzker Prize award winner for architecture, before she died last year.
News of Kushner and Anbang ending talks was first reported by the New York Post.
(Reporting by Herbert Lash, additional reporting by Joy Wiltermuth of IFR; Editing by Phil Berlowitz, Daniel Bases and Matthew Lewis)