My father, Joseph, a Holocaust survivor, worked in construction in New York after World War II and went on to become a developer and owner of houses and garden apartments. I trained as a lawyer but soon followed in my father’s footsteps, seeing an opportunity for faster growth by buying apartments in addition to building them. In 1985, we partnered to start a new business, Kushner Companies, but shortly after we bought our first property, my father died from a stroke. I was devastated but carried on with the business.
Over the next decade, I bought and built more than 20,000 apartments in the Northeast. I also expanded the company into other businesses, such as banking, insurance, sports and energy.
In 2007, the Kushner Companies bought 666 Fifth Ave. in New York City for a then-record $1.8 billion. The thesis of the purchase: The parts of the 1.5 million-square-foot building were worth more than the whole, and splitting it into retail and office components would create value of more than $2.5 billion.
But then came the collapse of Lehman Brothers in 2008. Amid the global recession that followed, the New York real estate market soured. The projected office rents for 666 Fifth Ave. were cut in half.
That was a setback, but we had structured our debt in a way that enabled us to sell off half of the building’s Fifth Avenue retail component to pay down debt; the 2008 sale brought in $525 million. We kept a 51 percent stake in the retail, which was sold for a total of $1.03 billion in two pieces, in 2011 and 2012, allowing us to recoup most of our initial investment. To restructure the debt on the office component, we brought in Vornado Realty Trust in 2011 as a 49.5 percent partner in improving the building and reducing vacancies. Last year, we completed a $1.3 billion, 99-year land lease to Brookfield Asset Management, with significant financial upside for our company.
Before the Brookfield deal, critics and media reports suggested that the Kushner Companies itself was somehow jeopardized by 666 Fifth Ave. — and that the company had been forced to seek illicit or inappropriate foreign investors. Both narratives are false.
First, 666 Fifth Ave. was not a big financial loser. Even before we recouped most of the initial investment, the property represented a small portion of the company’s overall holdings; the Kushner Companies’ health was fine. Second, trophy assets in New York often appeal to foreign investors — that’s a legal and appropriate stream of funding.
Critics of our 666 Fifth Ave. purchase often focus their attacks on my son Jared Kushner, who became chief executive in 2008. That criticism is also baseless. You wouldn’t know it from the way his nine-year stewardship of the company has been portrayed, but before he resigned to join the Trump administration in 2017, Jared led major property acquisitions worth more than $5 billion, and the company grew from about 50 employees to more than 700. We now have more than $7 billion of assets under management. In the past month under Laurent Morali’s leadership, we announced a $550 million development project in Miami and the $1.1 billion purchase of a portfolio of about 6,000 apartments in Maryland and Virginia.
When he left the company, Jared took several steps to preclude conflicts of interest. At the recommendation of his legal counsel, in consultation with the Office of Government Ethics, he divested from more than 80 partnerships, including 666 Fifth Ave., at a substantial financial sacrifice. We walled off Jared from receiving information on the company, and he resigned as the controlling partner in more than 100 entities. This was all done out of an abundance of caution.
Jared’s service to the country has brought unprecedented scrutiny of the Kushner Companies from the media and government investigators. We are happy to assist with all inquiries, but I must note that we are already voluntarily adhering to the strictest standards to avoid even the appearance of conflicts. As a result, we have passed up many business opportunities that we normally would have pursued. That might not be as alluring as some of the crazy stuff I read about my family and our business. But it happens to be the truth.