Kushner’s previous crises — and his reactions
new york — Jared Kushner had barely survived a fight to save his family’s real estate empire.
Taking charge of the business after his father went to prison, Kushner, 25 at the time, paid $1.8 billion in 2007 for the nation’s most expensive office building. Then the market went south, the debts piled up, and Kushner spent years pushing banks to renegotiate the loans.
But after one disgruntled lender had tried to block him, Kushner had an unusual weapon at his disposal: He owned a newspaper.
Kushner, who had purchased the New York Observer in 2006, walked into his editor’s office and suggested a story exposing potentially embarrassing details about the uncooperative lender.
“I could tell he was angry at the guy,” said the editor, Elizabeth Spiers, who resigned in 2012. Only after months of dead-end reporting did Kushner finally stop asking for the story, she said. That followed a separate incident in which Kushner wanted a “hit job” on another foe, a second Observer editor told The
Kushner’s career in the cutthroat world of New York real estate shows how he dealt with his worst business crisis, averting catastrophe through connections, savvy negotiation and hardball tactics that left enemies in his wake. Kushner was not reluctant to strike back against those he said had crossed him.
Now, as a powerful senior White House adviser, Kushner faces a new crisis that risks not only his own reputation but ultimately, the success of his father-in-law President Trump, who has entrusted him with responsibilities including Middle East diplomacy and reinventing the federal government.
A federal investigation has focused on Kushner’s secret meetings with Russians during and after Trump’s 2016 campaign. The Post reported Friday that Kushner discussed with the Russian ambassador the possibility of establishing back-channel communications with the Kremlin, according to U.S. officials briefed on intelligence reports.
Kushner’s attorneys have said he will cooperate with the federal investigation and answer questions from a special counsel examining allegations of Russian interference in the 2016 campaign, a probe that could also examine financial connections Trump advisers may have had with Russia. Kushner declined to comment.
Kushner’s allies said his experience in New York’s aggressive business culture prepared him to manage crises and tackle any problem Trump gives him to solve.
But running a real estate company, where business deals and corporate rivalries stem from the singular goal of turning the biggest profits, is far different from navigating the vast federal government or mastering the tricky politics of Washington and complexities of overseas diplomacy.
Trump has relied on Kushner as the president makes his own transition from the business world. And just as Trump has struggled to adapt, Kushner is adjusting with the lessons of the past decade in mind, saying privately that he sees a parallel between his old and new careers, believing both are blood sports.
Kushner’s real estate career began with a family trauma. His father, Charles, a major Democratic Party donor whose company then focused on modest apartment buildings in New Jersey, was convicted in 2005 of federal tax evasion, witness tampering and making illegal campaign donations, including some in Jared Kushner’s name.
The prosecutor was then-U.S. Attorney Chris Christie, who said the elder Kushner had not taken responsibility for his “vile and heinous acts.” (Christie’s prosecution scarred the family, Kushner associates told The Post. The wound reopened during the Trump campaign, when White House officials said the younger Kushner helped quash consideration of Christie for an administration role). Christie did not respond to a request for comment.
Jared Kushner was studying law at New York University as the case generated wide attention because of its scandalous details. Charles Kushner had arranged to secretly videotape his brother-inlaw meeting with a prostitute, allegedly hoping to coerce relatives to stop cooperating with federal authorities. The judge called it an act of vengeance.
Kushner told New York magazine in 2009 that his father arranged for the sex tape as a warning to warring family members who he said were trying to hurt him.
“Was it the right thing to do? At the end of the day, it was a function of saying, ‘You’re trying to make my life miserable. Well, I’m doing the same,’ ” Kushner said.
With his father incarcerated in Alabama, barred from making business deals, Jared Kushner, the eldest son, took over the empire. It had 1,000 employees and owned more than 25,000 apartments. The family’s reputation was in tatters.
“A lot of their friends and business colleagues just disappeared,” said Arthur J. Mirante II, a business consultant who advised the Kushners.
Kushner went to Alabama every week to consult his father. He came up with two risky moves. In 2006, he bought an unprofitable newspaper, the New York Observer, for a reported $10 million. The newspaper, a broadsheet printed on pink paper, aggressively covered New York business and politics. It had been especially hard on real estate titan Donald Trump, calling him the “prince of swine,” according to former columnist Michael Thomas.
Kushner’s newspaper ownership gave him entree to the city’s powerful. Kushner by then had relocated the company to Manhattan, and he added to his allure by announcing in January 2007 a deal that shocked many real estate analysts.
He agreed to pay $1.8 billion for a 41-story office building at 666 Fifth Ave., only blocks from Trump Tower, the highest price paid at the time for a U.S. office building. Kushner called it “a great acquisition,” but some real estate veterans saw it as an act of hubris. Income projections suggested that Kushner had vastly overpaid — and that was months before the Great Recession further softened the market.
Within three years, Kushner’s project was drowning. A 2010 appraisal placed its value at $820 million, about half of what he paid, and well below his debt to banks, according to financial records. As the recession set in, office rents plunged, and his building’s occupancy rate dropped from nearly full to 77 percent in 2011, according to lending documents.
Bankers turned to LNR, a Florida firm that handles distressed real estate debt as a precursor to possible foreclosure. LNR represented the banks in their effort to collect Kushner’s obligations.
That created extraordinary pressure on Kushner to negotiate with LNR to reduce his debt burden. But that, in turn, meant some banks and investors might be paid less than expected. A battle began between Kushner and the companies that helped finance his risky purchase. LNR declined to comment.
One of the biggest debt holders was Colony Capital, which owned $72.2 million, according to analysts’ estimates. The comWashington pany was run by Thomas J. Barrack Jr., a Trump friend. Barrack had worked for an oil baron who sold the iconic Plaza Hotel to Trump for $410 million, which Trump later acknowledged was too high, eventually forcing him to put the property into bankruptcy. The two men nonetheless remained close; Barrack had a speaking role at the Republican National Convention and headed Trump’s inaugural committee.
Kushner mentioned to his wife, Ivanka Trump — whom he married in 2009 — that Barrack was going after him on the debt. She told him that her father was close to Barrack, and so Donald Trump introduced Kushner to Barrack, according to a person with knowledge of the matter.
Barrack was concerned, but Kushner argued that lowering his obligation was better than foreclosure. “I’m asking you to make more money for yourself than you’ll make otherwise,” Kushner told Barrack, according to the person familiar with the conversation. Barrack did not respond to a request for comment.
company run by another Trump associate, Steven Roth, chief executive and chairman of office giant Vornado Realty Trust, bought 49.5 percent of the project and helped run it. Roth is partners with Trump on other buildings and was chosen by the president to run a committee that will recommend how to spend federal money on infrastructure projects. Both Vornado and Roth declined to comment.
At the same time, one of Kushner’s most severe challenges was dealing with a New York company called AREA Property Partners, which held $105.4 million of Kushner’s debt, according to industry estimates based on lending documents. Its chief executive, Richard Mack, objected to Kushner’s debt-relief requests. Mack declined to comment.
Ultimately, Kushner made a deal with LNR to ease his debt burden and allow him to retain majority control. The agreement allowed Kushner to pay off some loans immediately, lowered his payment rate and extended the deadline on the bulk of the debt for two years, to February 2019. The initial $1.2 billion mortgage was split in two, with $115 million of what he owed subjugated by Kushner’s position so that banks may ultimately have to write it off, according to financial filings.
Such restructurings are not unusual for owners facing extensive real estate debt. But Kushner’s negotiations to protect his family’s investment left some hard feelings. A lender involved in the negotiations, who spoke on the condition of anonymity because he was discussing private conversations, told The Post he was upset because Kushner did little to protect his lenders. The lender said the various renegotiations could cost banks and investors hundreds of millions of dollars compared with what was originally expected.
“They could have taken steps to mitigate the damage,” the lender said.
But Kushner viewed it as a hardball business deal and showed that he was a tough negotiator, according to an individual familiar with his perspective.
Sources familiar with the arrangement said the Kushner family got back most of its $500 million investment.
Kushner divested himself of his interest in 666 Fifth Ave. when he joined the administration, although he kept stakes in about 90 percent of his real estate holdings, valued between $132 million and $407 million. He resigned from the family business and pledged a clear ethical divide. But ethics experts say his remaining business ties — many in partnerships and LLCs that cannot be easily traced — call for fuller disclosure.
His admirers in real estate say Kushner has never made deals in traditional ways, although he is quick to seek counsel.
Sandeep Mathrani, the chief executive of shopping mall giant General Growth Properties, said he has been periodically offering Kushner advice since the young developer asked to meet with him almost a decade ago.
“I think Jared got into the real estate business to redeem the reputation of the Kushner family, and I think he has definitely done that in the New York circles,” Mathrani said.
“Jared was always hungry for creative new ideas and not saying ‘This is the way we’ve done things for generations.’ Which is cool because a lot of people in real estate families, that’s how they behave,” said Asher Abehsera, a Kushner partner in a high-end project under development in the Dumbo section of Brooklyn.
Kushner had never shied away from hardball tactics, and as a newspaper owner, he had a media vehicle to spread negative information.
One editor of the Observer, who spoke on the condition of anonymity because he was discussing a private conversation, said Kushner wanted a negative story on a banker who was at odds with the family business. The editor recalled Kushner saying: “We have to do a hit job on this guy. He is a bad guy.”
“I said, ‘Jared, first off, never use the phrase ‘hit job.’ We can’t use that term. And second, there’s no story here,” the editor said.
A similar episode occurred with Spiers, the former editor who said Kushner offered a tip that cast Mack, the lender from AREA Property Partners, in a bad light.
Mainstream media organizations generally try to maintain editorial independence from their owners, so Spiers was concerned that Kushner was hoping to use the newspaper to punish an antagonist.
Spiers said Kushner urged her to pursue the tip, which included information about Mack’s business affairs. Spiers, who previously had founded the website Gawker, told The Post she had already determined that KushA ner seemed to want to use the newspaper to advance his business interests.
“Jared didn’t buy the paper because he was interested in journalism. He bought the paper because it was a mechanism to gain influence in New York,” Spiers said. “He was angry at the media because he thought the media was partly responsible for his father going to jail.”
She said she told Kushner that “you realize if we did this story, if anything is wrong, even by accident, he has a malice precondition, and Jared didn’t know what I was talking about.” A public official who sues for libel must show that the publication had “actual malice” against the subject of the story.
Spiers gave the tip to two reporters, but they could not substantiate it. Kushner insisted on meeting with the reporters twice and brought in a source to speak with them, according to Foster Kamer, one of the reporters. Still, it could not be confirmed.
Kamer said that Kushner had put him in an improper position.
“To Jared, it was such a benign thing, and to myself, it was just one of the most deeply offensive . . . things that had ever happened to me professionally,” Kamer said.
In the end, the reporters and Spiers convinced Kushner that the tip did not check out, and no story was published.
“I think it took a year off my life to pursue that story,” Spiers said. “Every meeting I had with him, he asked, ‘So how’s that story coming?’ ”
Kushner was asked in March 2016 at a forum how he managed conflicts between his real estate business and the Observer. He brushed off the question.
“If you don’t want conflicts, just go into your apartment and lock the door, don’t go to work, don’t do anything,” he said. “But as it comes up, you trust people to do the right things, and we found that we really haven’t had any issues.”
An associate defended Kushner by saying the newspaper owner spent less than 1 percent of his time on the Observer and was not involved in daily operations. As Kushner gave less attention to his newspaper, he hired a close friend, Ken Kurson, to become editor in 2013.
Kurson, who announced this past week that he was stepping down from his Observer job, said in an interview that those “who poke fun at the enormous portfolio” Kushner has at the White House fail to appreciate what he has gone through during the past decade — and what he means to Trump.
“It overlooks, first of all, the complexity and depth of what he has achieved in his business career,” Kurson said of Kushner. “It overlooks the major factor of how leaders select their teams. It is trust.”
People walk near the 666 Fifth Ave. skyscraper in Manhattan. Jared Kushner agreed to pay $1.8 billion for the 41-story office building in 2007, calling it “a great acquisition.”
Kushner and his wife, Ivanka Trump, greet others before Vice President Pence’s speech during an event celebrating military families in the Eisenhower Executive Office Building in Washington on May 9.
Kushner, owner of the New York Observer, attends the city’s premiere for the film “The Hunting Party” in 2007.