2018-08-04 — bloomberg.com
Rather than pay the rent on an annual basis for the so-called leasehold, Brookfield will give Kushner Cos. an upfront sum that will allow the company to pay off outstanding debt on the building, according to people with knowledge of the matter who asked not to be identified because the details are private.
The Toronto-based investor is prepared to inject up to $700 million in equity and will essentially take control of the building unencumbered with a 100 percent leasehold, the people said. A Brookfield representative declined to comment.
The building lost $25 million last year and has almost always been unprofitable. As a first step in its latest restructuring plan, Kushner Cos. said in June it would buy out Vornado. Vornado continues to own the retail portion of the property.
The cash infusion from Brookfield comes just in time, with a $1.2 billion mortgage on the property coming due in February.
The company intends to update the aging property with lighter and airier offices that would command higher rents, the people familiar with the matter said. The update would be similar to those Brookfield has made to properties including Manhattan's old Daily News Building, they said, adding that the Kushner Cos. would not participate in gains from the work until Brookfield earns a return on its investment.
Wonder if this results in a softening of the administrations recent "anti-Canadian" stance...
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