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Hullabaloo


Monday, July 02, 2018

 
More Jared and 666

by digby



Over at Salon today, Jesse Korbluth discusses some of the rumors surrounding Anthony Kennedy's son and his relationship to Trump and zeroes in on something I haven't seen anywhere else:

But as Stephanie Ruhle of MSNBC has reported, Justin Kennedy left Deutsche Bank long before the money laundering and had no direct connection to the bank's loans to Trump. The more interesting fact is where Justin Kennedy went next -- he became the co-CEO of LNR Property. And that brings us straight to the most immediately vulnerable member of the Trump family, Jared Kushner.

From the New York Times, in 2012:

The Kushners' purchase in 2007 of 666 Fifth Avenue for a record price of $1.8 billion is considered a classic example of reckless underwriting. The transaction was so highly leveraged that the cash flow from rents amounted to only 65 percent of the debt service.

As many real estate specialists predicted, the deal ran into trouble. Instead of rising, rents declined as the recession took hold, and new leases were scarce. In 2010, the loan was transferred to a special servicer on the assumption that a default would occur once reserve funds being used to subsidize the shortfall were bled dry.

Instead of foreclosing on the 39-story building, which stretches from 52nd Street to 53rd Street, the lenders agreed last month to reduce the principal and defer some of the interest payments on the interest-only loan and extend its maturity for two years, until February 2019.

Vornado has taken an ownership stake in several troubled Manhattan properties. But the 666 Fifth deal raised some eyebrows because Vornado is also a part-owner of the special servicer on the loan, LNR Partners, of Miami Beach.

The plot thickens. As Bernstein and Rusk note:


-- There was a direct business relationship between LNR and Kushner Companies at the time Justin Kennedy and Jared Kushner were both CEOs. Even the future President was aware of the deal and commented on its respective merits.

-- In 2011, the year in which some of these negotiations took place, Justin Kennedy for the first time was ranked on the New York Observer’s 100 Most Powerful People in New York Real Estate at #36. Donald Trump clocked in at #12. At that time, The New York Observer was owned by Jared Kushner.
The 666 Fifth Avenue deal is generally regarded as the all-time stinker in New York commercial real estate. What did LNR see as the upside? Better question: Was there any upside? As we know, 666 Fifth Avenue went badly for the Kushners, so badly that they were scrambling for a partner. Where might one be?

The Intercept reported earlier this year that Charles Kushner, Jared's father, had discussed a financing deal for 666 Fifth Avenue with Qatari finance minister Ali Sharif Al Emadi in April 2017. A month after that deal cratered, a group of Middle Eastern countries, with Jared Kushner’s backing, led a diplomatic assault that culminated in a blockade of Qatar. NBC News reported that Qatari government officials visiting the U.S. “considered turning over to Mueller what they believe is evidence of efforts by their country’s Persian Gulf neighbors in coordination with Kushner to hurt their country.”

Back in March 2017, when Bernstein and Rusk published their Medium article, they ended on a hopeful note:

We know what the Justice’s son may have done for Mr. Kushner, but what did the President’s children do for Justin Kennedy? How have they been nice to him? Evidently Justice Kennedy knows, and this may have had an impact on his opinion of the Trumps in general and the President in particular. This is perhaps a significant cause of concern for those who hope that Justice Kennedy will try and hold out until after Trump is replaced by a Democrat. Time will tell.

Well, time has told. Kennedy didn’t hold out. Although there’s clearly more to this story than an 81-year-old justice who was ready to retire, I’m thinking Anthony Kennedy’s farewell gift to Trump isn’t just right-wing control of the Supreme Court for the rest of most of our lives. For once, it may not be about the money. The real prize here may be a gold-plated Get Out of Jail Free card.

It could very well be.

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