While Kushner and Vornado have shared interest in the building's success, that means different things to each firm. Roth has recently renewed his focus on operating Manhattan office properties, after spinning off Vornado's Washington properties and retail malls. Vornado's stable of large, profitable office buildings produces plenty of cash to purchase under-performing ones to modernize and fill with new tenants.
Kushner Cos.' portfolio is less valuable and it has many expensive redevelopment projects ahead.
Company president Laurent Morali told Bloomberg only six weeks ago that there were a number of potential investors in the grand redevelopment plan. He said he didn't consider it prohibitively expensive, as many have, but rather "ambitious and creative." Modernizing and re-leasing the building, as now seems the more likely path, was only a contingency plan.
The firms' differences now appear to be on a collision course, and any refinancing negotiation would not occur on equal footing. The process would be expensive, requiring funds for replenishing reserves to pay interest on the debt, as well as money to update the tower.
Vornado, which bought its half of the tower for $80 million and half the debt in 2011, has access to capital of its own, as well as a slate of institutional partners. Kushner Cos. added $30 million at the time, but that was from selling air-rights to a nearby property -- meaning the cash came out of the building, not their coffers. While the company has expanded its roster of partners and lenders during the past decade, it has found funds more difficult to come by since Jared Kushner joined the White House.
The 2011 refinancing was a complex affair, involving several lenders. A sequel would be similarly grueling, and outcomes therefore difficult to predict. But the existing power imbalance could result in the Kushners' losing control of the building, three people said.
Jared Kushner's ascension to the White House raised concerns that he might use his position improperly to bail his family out even though he had divested his stake in 666 Fifth and other properties out of conflict-of-interest concerns. The success of Trump's campaign drew investors into discussions, an August investigation by Bloomberg found. But heightened scrutiny and financial assumptions for the project that most found to be unrealistic resulted in no takers.
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