Kushners’ China Deal Flop Was Part of Much Bigger Hunt for Cash

Jared Kushner, Donald Trump’s son-in-law and top adviser, wakes up each morning to a growing problem that will not go away. His family’s real estate business, Kushner Cos., owes hundreds of millions of dollars on a 41-story office building on Fifth Avenue. It has failed to secure foreign investors, despite an extensive search, and its resources are more limited than generally understood. As a result, the company faces significant challenges.

Over the past two years, executives and family members have sought substantial overseas investment from previously undisclosed places: South Korea’s sovereign-wealth fund, France’s richest man, Israeli banks and insurance companies, and exploratory talks with a Saudi developer, according to former and current executives. These were in addition to previously reported attempts to raise money in China and Qatar.

The family, once one of the largest landlords on the East Coast, sold thousands of apartments to finance its purchase of the tower in 2007 and has borrowed extensively for other purchases. They are walking away from a Brooklyn hotel once considered central to their plans for an office hub. From other properties, they are extracting cash, including tens of millions in borrowed funds from the recently acquired former New York Times building. What’s more, their partner in the Fifth Avenue building, Vornado Realty Trust, headed by Steve Roth, has stood aside, allowing the Kushners to pursue financing on their own.

Kushner Cos. says it will prevail. Laurent Morali, the president, said the company has a variety of contingency plans for the building and its broader portfolio will allow it to sustain any setback. He said he is encouraged by the interest of several potential investors, but declined to name them.

“Reports that portray it as a distressed situation are just not accurate for the building or for the company,” Morali said in an interview on the 15th floor of the building, 666 Fifth Avenue.

But there are challenges all around. The mortgage on their tower is due in 18 months. This has led to concerns that Kushner could use—or has perhaps already used—his official position to prop up the family business despite having divested to close relatives his ownership in many projects to conform with government ethics requirements. Federal investigators are examining Kushner’s finances and business dealings, along with those of other Trump associates, as they probe possible collusion between the Kremlin and the Trump campaign. Kushner has already testified twice before closed congressional committees and denies mixing family business with his official role.

This article, which describes new details of the company’s troubled finances and its overseas fundraising efforts, is based on a review of thousands of pages of financial documents and interviews with more than two dozen executives, business partners, real estate agents, deal participants and analysts. They spoke on condition of anonymity to discuss private deals. Some feared legal reprisals or other retaliation from one of the country’s most powerful families.

The portrait that emerges is that of a real estate company established by a pair of penniless Holocaust survivors, its extraordinary expansion by their children, the rise of a grandson to a top White House role and a big bet that has complicated its financial future.