Trump's "Boy Wonder" Kushner Faces Foreclosure Auction on Times Square Building

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The auction-- which fast-tracks the foreclosure timeline -- is being pursued by one of the property's mezzanine lenders, Paramount Group, under the entity 229 WEST FUND VIII LP. Paramount had provided a $70 million mezzanine loan as part of larger refinancing in 2016. The 251,000-square-foot asset will be sold at a "as is, where is" basis -- all cash ...

Kushner made a splash with its $296 million purchase of the condo in the fall 2015, receiving a $470 million appraisal not long after closing the acquisition and then subsequently locking in a $370 million debt package a year later to refinance the asset (Kushner bought it from Africa Israel USA, a U.S. subsidiary of Israeli investment firm Africa Israel Investments, at a 7.53 percent cap rate, according to data from CoStar Group.) That package included a $285 million commercial mortgage-backed securities (CMBS) loan from Deutsche Bank as well as Paramount's $70 million mezzanine loan and a separate $15 million mezz loan from SL Green Realty Corp., as CO previously reported...

In the middle of an unpredictable and volatile retail market last year that spilled into the early part of this year, that $285 million CMBS loan was sent to its special servicer KeyBank last December due to income struggles caused by tenancy financial troubles. Its transfer came after Kushner failed to fund "a shortfall on the loan's debt service payments and required reserves," according to a previous statement from Kroll Bond Rating Agency (KBRA) that was reported by CO. The loan itself -- which had been previously watchlisted in Sept. 2017 -- is split among four CMBS conduit transactions, including the JPMDB 2017-C5, the CD 2016-CD2, the CD 2017-CD3 and the CGCMT 2017-P7. At the time of the transfer, Kushner had also defaulted on the building's junior mezzanine debt and was in negotiations with that lender, according to KBRA.

Not long after Kushner's purchase, tenancy issues began to set in, muddying its cash flow outlook. In the first two years, the landlord had unfruitful experiences with two different celebrity chefs. Guy Fieri's Guy's American Kitchen closed in 2017 after a 5-year-long stint at the location. And the landlord had also gotten embroiled in a lawsuit in early 2018 over leased space and rent payments with chef Todd English's operating company Outstanding Hospitality Management. English had been selected to oversee a food hall there that never came to fruition.

These misses, coupled with eventual troubles with two of its largest tenants -- experiential attractions in Gulliver's Gate and National Geographic's Ocean Odyssey -- culminated in the special servicing transfer of the $285 million senior mortgage earlier this year.