‘Billionaire Bunker’: Ivanka Trump and Jared Kushner buy $30m lot on high-security Miami island
Jared Kushner's Company Reportedly Moves To Evict Hundreds As
Pandemic Rages
An apartment management company co-owned by White House senior adviser Jared Kushner has taken action in court to evict hundreds of tenants whose finances have taken a hit from COVID -19, The Washington Post reported Thursday.
Westminster Management has moved against largely low- and middle-income tenants in the
Baltimore area, many of them Black, whose apartments are managed by the
company, according to the Post.
A state moratorium protects
tenants against evictions as people struggle with loss of jobs during the
pandemic. A federal moratorium for government-supported housing, which includes
some run by Westminster, also offers tenant protections during the crisis.
But Westminster, which manages
some 20,000 apartments, and other management companies are eager to get started
on the process against tenants with past-due rent.
One resident of a
Westminster-managed apartment Tashika Booker, told the Post she lost her job
working for an online education company because of the pandemic. She said she’s
struggling to pay rent as she seeks other work.
Westminster, part of the Kushner
family’s Kushner Cos., said in a statement that Westminster’s actions are fully
compliant with state and federal eviction bans.
Jared Kushner said he gave up
managing Kushner Cos. when his father-in-law, President Donald
Trump, made him a senior White House
adviser. But he maintained his ownership in the company. He earned $1.69 million from his
stake in Westminster last year,
according to his financial filings.
Westminster is currently fighting
a lawsuit by Maryland Attorney General Brian Frosh, which accuses the company
of violations concerning tacked-on fees and poor housing conditions.
We allege this company cheated
tenants before, during and after their tenancy, violating the Consumer
Protection Act thousands of times. https://t.co/6anZeddYgm
— Brian Frosh (@BrianFrosh) October 23, 2019
Months before the suit was filed,
Trump slammed the Baltimore congressional district represented by the late
Democratic Rep. Elijah Cummings’ (D-Md.)
as a “disgusting, rat and rodent
infested mess.”
Kushner properties in the area at the time had racked up hundreds of building
code violations. An earlier lawsuit described one Kushner apartment as having a
leaking bedroom ceiling, maggots in the living room carpet and raw sewage spewing form the kitchen sink.
Jared Kushner-Owned Company Fined
As Negligent Property Owner In Baltimore County https://t.co/XSZqxPzcyG
— Baltimore County
(@BaltCoGov) November 2, 2017
As for the suit filed by Frosh,
Kushner Cos. managers have denied the charges, and claim the court action is
politically motivated.
Kushner last month dismissively
blamed Black Americans for their hardships, saying that they must “want to be
successful.”
Jared Kushner on the Black
community: "President Trump's policies are the policies that can help
people break out of the problems that they're complaining about, but he can't
want them to be successful more than that they want to be
successful." pic.twitter.com/SX9vWiAfag
— Aaron Rupar (@atrupar) October 26, 2020
Ivanka Trump, Jared Kushner purchase $30 million Indian Creek plot — report
Ivanka Trump, Jared Kushner purchase $30 million Indian Creek plot — report
Jared Kushner and Ivanka Trump appear to be moving to Miami-Dade.
The daughter and son-in-law of President Donald Trump have purchased a plot of land in tony Indian Creek Village. The news was first reported by the New York Post’s Page Six, which said the acquisition is “believed to be” of a 1.8-acre, 80,000-square-foot plot most recently owned by Julio Iglesias and listed at $31.8 million.
Jill Eber, founding partner with luxury residential brokerage firm The Jills Zeder Group, an affiliate of Coldwell Banker Residential Real Estate and the listing agent for the land alongside Jill Hertzberg, declined to comment. A White House spokeswoman did not immediately respond to an emailed request for comment.
The move would continue a galloping trend of new out-of-market tenants and businesses arriving in South Florida amid the COVID-19 pandemic. Sunday, Bloomberg reported Goldman Sachs was now considering opening an outpost in the region. In October, global investment group Blackstone announced it was opening a technology office in Miami-Dade.
Kushner’s father, real estate mogul Charles Kushner, purchased a $4 million penthouse in Bal Harbour in 2017.
In 2017, Iglesias listed his four empty Indian Creek waterfront lots for $150 million.
And Ivanka’s father, President Donald Trump, last year declared himself a Florida resident, listing his permanent residence as Mar-a-Lago in Palm Beach County, the place he presumably will move to when he leaves office on Jan. 20 after being defeated by President-elect Biden in the Nov. 3 election.
THINGS ALWAYS GO WELL FOR THE TRUMP – KUSHNER CRIME FAMILY OF
LOOTERS, LIARS AND CHEATS.
She compared the situation to press reports
that businesses and associates connected to Jared Kushner and his family were
approved to receive millions from the Paycheck Protection Program.
U.S. taxpayers could be responsible for paying
back much of the nearly $850 million in Freddie Mac financing if Kushner
Companies defaults and its properties drop significantly in value
The Kushners’ Freddie Mac Loan Wasn’t Just Massive. It Came
With Unusually Good Terms, Too.
Despite a history of underperforming properties, Kushner
Companies received a near-record sum from a government-backed lender. Should it
default, taxpayers could be forced to foot much of the bill. The agency says
politics played no role.
by Heather Vogell
ProPublica is a nonprofit newsroom that investigates abuses
of power. Sign up to receive our biggest stories as soon as they’re published.
After the news broke in May of last year that
government-sponsored lending agency Freddie Mac had agreed to back $786 million
in loans to the Kushner Companies, political opponents asked whether the family
real estate firm formerly led by the president’s son-in-law and top adviser,
Jared Kushner, had received special treatment.
“We are especially concerned about this transaction because
of Kushner Companies’ history of seeking to engage in deals that raise
conflicts of interest issues with Mr. Kushner,” Sens. Elizabeth Warren,
D-Mass., and Tom Carper, D-Del., wrote to Freddie Mac’s CEO in June 2019.
The loans helped Kushner Companies scoop up thousands of
apartments in Maryland and Virginia, the business’s biggest purchase in a
decade. The deal, first reported by Bloomberg, also ranked among Freddie Mac’s
largest ever. At the time, the details of its terms weren’t disclosed. Freddie
Mac officials didn’t comment publicly then. Kushner’s lawyer said Jared was no
longer involved in decision-making at the company. (He does continue to receive
millions from the family business, according to his financial disclosures,
including from some properties with Freddie Mac-backed loans.)
Freddie Mac packaged the 16 loans into bonds in August 2019
and sold them to investors. But Kushner Companies hadn’t finished its buying
spree. Within the next two months, records show, Freddie Mac backed another two
loans to the Kushners for an additional $63.5 million, allowing the company to
add two more apartment complexes to its portfolio.
A new analysis by ProPublica shows Kushner Companies received
unusually favorable loan terms for the 18 mortgages it obtained with Freddie
Mac’s backing. The loans allowed the Kushner family company to make lower
monthly payments and borrow more money than was typical for similar loans, 2019
Freddie Mac data shows. The terms increase the risk to the agency and to
investors who buy bonds with the Kushner mortgages in them.
Listen to the Episode
Moreover, Freddie Mac’s estimates of the Kushner properties’
profitability — a core element of any decision to back a loan — have already
proven to be overly optimistic. All 16 properties in the firm’s biggest loan
package delivered smaller profits in 2019 than Freddie Mac expected, despite
the then-booming economy. The loan for the largest property lagged Freddie
Mac’s profit prediction by 31% last year.
U.S. taxpayers could be responsible for paying back much of
the nearly $850 million in Freddie Mac financing if Kushner Companies defaults
and its properties drop significantly in value. Freddie Mac said that’s unlikely.
But during the last real estate crash, taxpayers had to bail out the agency and
its larger sibling, Fannie Mae, to the tune of $190 billion as the agencies
plunged into the government equivalent of bankruptcy. (The agencies ultimately repaid
the money and more.)
The involvement of Jared’s sister Nicole Kushner Meyer adds
to questions about whether the family sought to exploit its political
influence. Meyer, who shares her brother’s slight build, porcelain features and
dark chestnut hair, lobbied Freddie Mac in person on behalf of Kushner
Companies in February last year, a timeline of the deal obtained by ProPublica
shows. She has previously drawn criticism for invoking her brother’s name while
doing Kushner Companies’ business.
In a statement, Freddie Mac said it does “not consider the
political affiliations of borrowers or their family members.” It called
ProPublica’s analysis “random, arbitrary and incomplete” and asserted that the
Kushner loans “fit squarely within our publicly-available credit and
underwriting standards. The terms and performance of every one of these loans
is transparent and available on our website, and all the loans are current and
have been consistently paid.”
A spokesperson for Kushner Companies did not respond to calls
and emails seeking comment. Emails to the White House seeking Jared Kushner’s
comment were not returned.
There’s no evidence the Trump administration played a role in
any of the decisions, and Freddie Mac operates independently. But Freddie Mac
embarked on approving the loans at the moment that its government overseer, the
Federal Housing Finance Agency, or FHFA, was changing from leadership by an
Obama administration appointee to one from the Trump administration, Mark
Calabria, Vice President Mike Pence’s former chief economist. Calabria, who was
confirmed in April 2019, has called for an end to the “conservatorship,” the
close financial control that his agency has exerted over Freddie Mac and Fannie
Mae since the 2008 crisis.
The potential for improper influence exists even if the Trump
administration didn’t advocate for the Kushners, said Kathleen Clark, a law
professor at Washington University specializing in government and legal ethics.
She compared the situation to press reports that businesses and associates
connected to Jared Kushner and his family were approved to receive millions
from the Paycheck Protection Program. Officials could have acted because they
were seeking to curry favor with the Kushners or feared retribution if they
didn’t, according to Clark. And if Kushner Companies had wanted to avoid any
appearance of undue influence, she added, it should have sent only nonfamily
executives to meet with Freddie Mac. “I’d leave it to the professionals,” Clark
said. “I’d keep family members away from it.”
The Freddie Mac data shows that Kushner
Companies secured advantageous terms on multiple points. All 18 loans, for
example, allow Kushner Companies to pay only interest for the full 10-year
term, thus deferring all principal payments to a balloon payment at the end.
That lowers the monthly payments but increases the possibility that the balance
won’t be paid back in full.
“That’s as risky as you get,” said Ryan Ledwith, a professor
at New York University’s Schack Institute of Real Estate, of 10-year
interest-only loans. “It’s a long period of time, and you’re not getting any
amortization to reduce your risk over time. You’re betting the market is going
to get better all by itself 10 years from now.”
Interest-only mortgages, which notoriously helped fuel the
2008 economic crisis, represent a small percentage of Freddie Mac loans. Only
6% of the 3,600 loans funded by the agency last year were interest-only for a
decade or more, according to a database of its core mortgage transactions.
Kushner Companies also loaded more debt on the properties
than is usual for similar loans, with the loan value for the 16-loan deal
climbing to 69% of the properties’ worth. That compares with an average 59%,
according to data for loans with similar terms and property types that Freddie
Mac sold to investors in 2019, and is just below the 70% debt-to-value ceiling
Freddie Mac sets for loans in its category. “What we generally have seen from
Freddie and Fannie,” said Andrew Little, a principal with real estate investment
bank John B. Levy & Company, “is they will do 10 years of interest-only on
lower-leveraged deals.”
Loans right at the ceiling are “not very common,” Little
said, adding that “you don’t see deals this size that commonly.”
Meanwhile Freddie Mac and its lending partner overestimated
the profits for the buildings in the Kushners’ 16-loan package by 12% during
the underwriting process, according to the agency’s data. Such analysis is
supposed to provide a conservative, accurate picture of revenue and expenses, which
should be relatively predictable in the case of an apartment building.
But the level of income anticipated failed to materialize in
2019, financial reports show. The most dramatic overstatement came with the
largest loan in the deal, $120 million for Bonnie Ridge Apartments, a
960-apartment complex in a suburban part of Baltimore. In that case, realized
profits last year were 31% below what Freddie Mac had expected.
“That’s definitely a significant amount,” said John Griffin,
a University of Texas professor who specializes in forensic finance and has
studied mortgage underwriting. He co-authored a recent paper highlighting as
worrisome loans in which projected profits exceeded actual profits by 5%. “It’s
a problem when underwritten income is inflated or overstated,” he said. “That
is a key metric that determines the safety of the loan.”
Griffin’s paper found that 28% of all loans examined had
projected profits that were 5% or more greater than what the properties
actually earned in their first year. Some instances of underperformance could
be caused by bad luck, the paper acknowledged, but “such situations should be
relatively rare.” Yet in the case of Freddie Mac’s estimates in the Kushner
deal, 13 of the original 16 loans met or exceeded the 5% threshold — many by a
considerable amount.
Freddie Mac’s Profit Projections for Kushner Properties
Turned Out to Be Optimistic
The agency’s underwriting analysis, central to any decision
to back a loan, is meant to be conservative. But Freddie Mac’s expectations for
the Kushner properties’ 2019 profits ended up being 12% too high. Individual
loans whose underwritten profits were at least 5% higher than actual profits —
the threshold University of Texas professor John Griffin deemed “material,” or
significant, in a paper he co-authored — are highlighted in red.
Source: Freddie Mac data. Note: Realized profits are for
2019.
Freddie Mac said it followed normal underwriting guidelines
in assessing the Kushner buildings, including securing an independent appraisal
and looking at historical property performance. It said investors who examined
the riskiest portion of the debt also expressed no concerns.
If the underwriting had been on target, and reflected lower
expectations, the loans would still have been within Freddie Mac’s credit
parameters, data shows. But the resulting analysis would have suggested the
Kushner Companies has a smaller cushion to sustain its loan payments. It could
also have affected the interest rate the company pays. Thinner margins
accompanied by relatively high rates of debt provide less wiggle room if the
properties, or the economy, run into trouble. As Kushner Companies has seen
before, that wiggle room can disappear quickly.
________________________________________
Freddie Mac’s main business has historically been buying
bundles of home loans from the lenders that originated them, then selling them
to investors as securities. The arrangement takes the debt off banks’ balance
sheets, freeing them to make more loans. Freddie Mac and Fannie Mae are privately
owned, but they have been financially backstopped by the federal government and
are required to meet goals for lending on affordable housing.
Single-home loans are still Freddie Mac’s primary business,
but since the 2008 economic crisis, the agency has greatly expanded its
financing of apartment complexes.
Apartment complexes have been the specialty of the Kushner
family, whose real estate holdings have spanned the mid-Atlantic and Midwest in
recent years, with thousands of units scattered across suburbia. The company
sold off 17,500 apartments in 2007, after the family’s patriarch, Jared’s
father, Charles Kushner, returned from prison for convictions on illegal
campaign contributions, tax evasion and witness tampering.
After Jared became CEO in 2008, the company turned its
ambitions to high-profile commercial properties in New York City, a foray that
turned sour. In 2018, the company gave up control of its marquee $1.8 billion
building and headquarters, 666 Fifth Avenue, after being unable to keep up with
its loans. Another piece of prime Kushner Companies Manhattan real estate,
retail space in the old New York Times building near Times Square, was headed
for a potential default in 2019, and foreclosure. (The New York Times reported
in August that the foreclosure action was put off at the last minute, so
negotiations with a lender could continue.)
Kushner Companies eventually resumed its residential focus
and began bulking up its apartment portfolio. In the eight years before Trump
entered the White House, the company and its partners secured a total of $581
million in Freddie Mac financing, according to data from the firm Real Capital
Analytics first published by Bloomberg. By the end of 2018, Kushner Companies
had amassed 21,000 apartment units.
Some of those loans didn’t fare well. They included a series
of supplemental loans, or second mortgages, taken out on properties in Maryland
that Kushner Companies owned in partnership with others (the size of the
Kushner share was not clear). Landlords often use such second loans as a way to
extract large amounts of cash from their holdings.
A lender had originated 10 such loans to Kushner Companies
and its partners in 2015, and Freddie Mac planned to sell them to investors, or
securitize them, once the properties demonstrated income consistently high
enough to cover the debt payments. For four of the properties, however, profits
dipped in 2016, and two more were in little better shape. Freddie Mac still
hadn’t securitized the six loans, for $40 million, by inauguration day in 2017.
Mortgage industry experts say poor profits at underlying
properties can lead Freddie Mac to delay selling off the loans as bonds,
fearing they will be rejected by investors. By the time Freddie Mac offloaded
the last of Kushner’s second mortgages in April 2017, they had racked up
above-average lag times between their origination and securitization, compared
with other loans in their debt packages, data shows. (Freddie Mac said the wait
time was normal.)
Within 10 months of the sale of the loans to investors, one
of the complexes landed on the servicer’s watchlist for mortgages at a
heightened risk for default. Another soon followed, and another the year after
that. All 10 complexes, which were built in the early 1970s or earlier,
exhibited upkeep issues alarming enough to earn a flag in Freddie Mac data for
“deferred maintenance” problems. (A Freddie Mac spokesman said the issues
identified were almost all related to exterior asphalt and concrete, with one
instance of an exterior drainage system in need of repair.)
Read More
The Beleaguered Tenants of ‘Kushnerville’
Tenants in more than a dozen Baltimore-area rental complexes
complain about a property owner who they say leaves their homes in disrepair,
humiliates late-paying renters and often sues them when they try to move out.
Few of them know that their landlord is the president’s son-in-law.
Rent Is Still Due in Kushnerville
Government stimulus checks and a temporary ban on evictions
are tiding over the suddenly jobless residents of housing complexes owned by
Jared Kushner’s company. But what will happen when both soon run out?
At one property, a representative of Kushner Companies and
its partners blamed residents of the nearby neighborhoods, who are primarily
Black and low-income, for its declining profits and a rash of evictions: “The
main driver is the client base in the area,” the servicer reported the borrower
as saying, Freddie Mac records show.
Kushner Companies had other problems, too. In
2017, ProPublica reporter Alec MacGillis documented the company’s practice of
charging aggressive, and what some tenants’ lawyers called illegal, fees to
occupants of some of those complexes. Tenants also claimed Kushner Companies’
property management arm, Westminster Properties, at times neglected basic
repairs and allowed the property condition to deteriorate, including raw sewage
flowing out of one kitchen sink.
The complaints spurred a lawsuit filed in October 2019 by the
attorney general of Maryland, Brian Frosh. Frosh accused the management company
and its partners of charging “illegitimate fees” and having “rented apartments
and townhomes to consumers that are distressed, shoddily maintained, and have
conditions that can adversely impact consumers’ health and well being.”
(Westminster has defended its conduct in legal filings for the suit, which
remains active.)
________________________________________
Kushner Companies first approached Freddie Mac in August 2018
through Berkadia Commercial Mortgage, then abandoned its application without
explanation in mid-October of that year. Berkadia did not return messages
seeking comment.
In February 2019, Berkadia approached Freddie Mac again and
informed the agency that Kushner Companies wanted to move forward. It’s not
clear what explains the renewed interest. But two things had changed in the
interim. The rates on 10-year Treasury bonds had dropped, a circumstance that
typically fuels borrowing and the securitized lending that Freddie provides.
And the Obama appointee in charge of the FHFA was gone, leaving an interim
Trump appointee in place.
Six days after rekindling its interest, Nicole Kushner Meyer
and two Kushner Companies executives, President Laurent Morali and Chief
Operating Officer Peter Febo, met with Freddie Mac officials, along with
representatives of Berkadia and an advisory firm, documents show. The records
don’t say which Freddie Mac officials attended. The meeting covered the
“business plan for assets, track record and general overview of the Kushner
Companies.” Meyer followed up, documents say, sending multiple emails to a
senior Freddie Mac official, who was not identified.
Meyer has been serving as a principal at Kushner Companies
since 2015, according to her LinkedIn profile. She caused a stir in 2017, when
she invoked her brother on a trip to China to pitch potential investors for a
Kushner Companies development in Jersey City, New Jersey. The company was
seeking investors to participate in a government program known as EB-5, which
grants visas to foreigners who make high-dollar investments intended to create
jobs in struggling areas.
Freddie Mac said Meyer did not mention Kushner by name during
the meeting. The agency also said no one connected to the White House asked
that the deal be done.
But the political sensitivity was obvious to Freddie Mac,
whose officials emailed each other in the weeks after the meeting, expressing a
desire to minimize press coverage of the deal, according to a person with
knowledge of the situation. They also took the unusual step of notifying FHFA,
their regulator, of the transaction, the timeline shows. Freddie Mac and FHFA
both declined to say why Freddie made the notification except to say that it
was necessary as part of the agency’s conservatorship. (One source suggested
deals above a certain dollar amount require such notification.)
In March, Kushner Companies was able to move fast to lock in
a favorable interest rate, documents show. It submitted a financing
application, which is needed to request a lock on a component of its interest
rate. Freddie Mac’s website says that single loans are eligible for such a
procedure, but that groups of loans must obtain additional approval. The day
after Kushner Companies submitted its application, documents show, Freddie
locked the rate for all 16 mortgages.
Through a spokesman, Freddie Mac said that such locks are an
important part of its business model, and that timing is at the borrower’s
discretion.
Kushner Companies’ full-term interest-only loan proved
exceptional in another way: Freddie Mac had granted Lone Star Funds, a private
equity firm managing $85 billion in global investments, interest-only terms for
only the first three years of its seven-year mortgages when it had acquired the
same apartment complexes in 2015. As a result, Lone Star had been able to
borrow more money. But it soon faced a sharp hike in its monthly payments, when
it added principal to interest.
(Freddie Mac said full-term, interest-only loans are more
common when the pool of mortgages examined is restricted to larger,
conventional loans. Nonpublic data shows they made up roughly 20% of such loans
over the last three years, the agency said.)
Freddie Mac completed its due diligence for the Kushner
Companies deal and on May 22 of last year, Kushner Companies and its partner,
Torchlight Investors, took ownership of the 16 properties, with $785,803,000 in
loans pledged. Torchlight did not respond to questions.
The properties were largely in the Washington, D.C., and
Baltimore suburbs. Their average construction date was 1980, almost a decade
older than the other properties Freddie approved for similar loans in 2019.
From a profit standpoint, the 16 properties were a mixed bag.
Appraisers pegged their value as having increased 2% overall in the previous
four years. Four of the properties lost value, according to the analysis.
The Kushners also benefited from another provision that
increased the deal’s risk. Groups of loans are often cross-collateralized,
meaning that if one defaults, the lender can seek to seize others to recoup
their losses. The strategy provides an extra hedge against risk for the lender.
The Lone Star properties were cross-collateralized under their previous loan.
But not those for Kushner Companies. (A Freddie Mac spokesman said
cross-collateralization is not required and each of the company’s loans met
credit parameters without it.)
Another curious phenomenon emerged in the disclosures for the
new loans: The reported profits for seven of the Kushner buildings in 2017 were
higher than those listed for the same buildings and same year in prior loan
documents. For some properties, the difference was slight. But for others, it
was more substantial. At one Kushner complex, for example, the Apartments at
Cambridge Court in suburban Baltimore, the 2017 net operating income was nearly
6% higher in the new loan filing than it had been for the same year in an old
disclosure.
In May, ProPublica reported a pattern of similar
discrepancies in bonds that hold mortgages across the commercial real estate
industry. And the paper by Griffin, the University of Texas finance professor,
and his colleague Alex Priest also found a pattern of such profit alterations,
suggesting multiple institutions are manipulating historical financials to
downplay risk and bolster more aggressive lending.
Financial data on how the 18 Kushner properties are faring in
this year’s economic slump is not yet available.