(Bloomberg) -- China's Anbang Insurance Group Co. and a company owned by the family of President Donald Trump's son-in-law Jared Kushner have ended talks to redevelop a Manhattan office tower, a deal that had drawn scrutiny from lawmakers citing ethics concerns.
“Kushner Companies is no longer in discussions with Anbang about 666 5th Avenue's potential redevelopment, and our firms have mutually agreed to end talks regarding the property,” according to a statement emailed by a Kushner spokesman, who declined to comment further. “Kushner Companies remains in active, advanced negotiations around 666 5th Avenue with a number of potential investors.”
A spokesman for Anbang declined to comment. The news was reported earlier by the New York Post.
Anbang had discussed investing more than $400 million as part of a $4 billion transaction with Kushner Cos. that may have included terms that some real estate experts considered unusually favorable for the Kushners, Bloomberg reported earlier this month. Anbang had said “there is no investment” in the building a day after Bloomberg's report, while not disputing the details of the financing proposal.
Losing Money
The property, co-owned by Kushner Cos., has been losing money for three years and faces increasing loan fees this year, which may explain why the Kushner family was negotiating with Anbang on new financing. The proposed deal would have refinanced the debt, while forgiving the majority of a second tier of loans known as a "hope note," where much of the interest on the debt has accrued, according to the refinancing agreement.
Five Democratic lawmakers raised ethics concerns about the Chinese firm's potential investment after the news emerged. The lawmakers asked the White House in a March 24 letter to explain whether Kushner was involved in any talks about the possible partnership with Anbang and also asked for additional details on Kushner's divestment from his family's company.
“This deal, if executed, would appear to present a clear conflict of interest,” the lawmakers wrote to Stefan Passantino, White House deputy counsel. Anbang has “close ties to the Chinese state,” they added.
The death of the deal comes at a time when Kushner is under increased scrutiny by government authorities. Senate investigators plan to question him as part of its investigations into ties between the Russian government and President Donald Trump's 2016 campaign, the panel said Monday.
To contact the reporters on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net, Keri Geiger in New York at kgeiger4@bloomberg.net.
To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Sree Vidya Bhaktavatsalam, Robert Olsen
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