I’ve been connecting the dots between Kushner’s $1.8 billion crisis called 666 5th Ave., the Russian sale of Rosneft to Qatar, and his dealings with Qatar, Apollo, and Brookfield.
New news: Brookfield, the Canadian real estate giant with links to Qatar and UAE, lacked the cash to complete its implausibly generous purchase of 666 5th Ave. Guess who is providing the cash?
Apollo Global Management, the firm with Qatar ties that gave the Kushners a massive $184 million loan in Nov. 2017, months after the Saudis and UAE lifted a dangerous blockade from Qatar. Story here. They are assisting Kushner’s deal with over $300 million in a mezzanine loan.
Much more on this below. First, some background.
I’ve written this outline of the Kushner connections for Slate, on Cohen for Slate, and I have a long timeline with public sourced links here.
Here is a brief timeline:
Russia’s sale of Rosneft Gas is the key event in the Steele Dossier’s quid pro quo allegation. On June 2016, Russians allegedly offer Trump associates a massive payout derived from the commissions on Russia’s sale of 19.5% of state energy giant Rosneft ($11 billion), in return for lifting sanctions.
Dec. 1st, 2016, a month after the election: Flynn and Kushner seek to create secret backchannel with Kislyak to the Kremlin in contact with Russian officials.
Dec. 8th, 2016: Russia sells a 19.5% stake in Rosneft in a concealed deal, eventually revealed to be with Qatar (and Glencore). Immediately after the deal, a Qatari diplomat allegedly met with Cohen and Flynn at Trump Tower.
In January 2017, the Dossier is published. In the next few months, Kushner sought money directly from Qatar to bail out his real estate problem, but Qatar declines. It is possible that Qatar was backing off of the deal, wary of its exposure from the Dossier. In April 2017, Kushner reportedly escalated a Gulf state crisis against Qatar with a blockade and a risk of regional war.
Nov. 2017: the Qatar-backed Apollo Group delivered $184 million to Kushner, and a real estate fund linked to Qatar is in negotiations to bail out Kushner’s $1.8 billion disaster at 666 5th Ave.
May 2018: Kushners have a deal with Brookfield to purchase 666 5th Ave. Qatar is the largest outside investor in Brookfield, often with subdeals in which Qatar takes on more control and risk. Brookfield has ties to UAE. The terms of the deal are implausibly favorable, considering that there was no market for the 666 Albatross. Some analysis for why it’s so generous to Kushner here and here.
I’ve discussed Brookfield’s links to Qatar and UAE here. Wendy Siegelman has detailed how BPY structures some deals to give Qatar more control and risk.
Here is the new reporting I’m pulling together:
First, Brookfield’s 666 deal is being financed by $300 million from Apollo.
Second, Apollo has apparent ties to UAE (Abu Dhabi), as well as Qatar:
Apollo chief says sold nine percent of firm to Abu Dhabi. Reuters, November 7, 2007: “In November 2007, Apollo was able to realize additional value from the sale of a 9% ownership interest in its management company to the Abu Dhabi Investment Authority(ADIA).
Third, here is reporting from August 2017 on the financial ties between Apollo and Qatar in Manhattan real estate deals:
Qatar’s sovereign wealth is quietly backing Michael Stern and Kevin Maloney’s supertall condo development at 111 West 57th Street, The Real Deal has learned. The wealthy Middle Eastern country’s investment arm, the Qatar Investment Authority, holds $161.5 million in mezzanine debt on the under-construction luxury project.
The QIA investment comes to light as the developers are locked in a high-stakes legal dispute with their equity partner, Ambase Corporation. But the investment itself dates back to 2015: In June of that year, the developers landed a $400 million senior construction loan from AIG and a $325 million mezzanine loan from Apollo Commercial Real Estate Finance, a real estate investment trust managed by private equity firm Apollo Global Management. In the fourth quarter of 2015, the Apollo-controlled REIT sold off a $50 million portion of the mezzanine loan to other Apollo debt funds and a $200 million portion to an Apollo fund managing QIA’s money, keeping $75 million on its own books, according to sources familiar with the moves and public records. The deal made QIA the second-biggest investor in the project behind AIG…
The mezzanine loan is out of balance, and the developers are trying to raise additional capital to pay for what sources said were cost overruns.
QIA’s involvement in the tower underscores Qatar’s emergence as a major New York real estate investor. The sovereign wealth fund also owns a stake in Brookfield Property Partners’ Manhattan West project and last year bought $622 million worth of shares in Empire State Realty Trust. Meanwhile a former QIA head, Sheikh Hamad Bin Jassim Bin Jaber al-Thani, is an investor in Harry Macklowe’s condo conversion project One Wall Street and the retail portion of 432 Park Avenue. The billionaire, known as HBJ, also reportedly came close to investing $500 million in Kushner Companies’ planned redevelopment of 666 Fifth Avenue.
In 2015, QIA said it planned to invest $35 billion in the U.S. over the next five years. Qatar is now in the midst of a diplomatic crisis with its neighbors in the Gulf, including Saudi Arabia and the United Arab Emirates, that could threaten the health of its economy.
Fourth, here is a Bloomberg story on Qatar backing Apollo in 2015:
Qatar’s sovereign wealth fund, which plans to invest $35 billion in the U.S. in the next five years, is backing a commercial real estate investment trust run by a subsidiary of Leon Black’s Apollo Global Management LLC.
The Qatar Investment Authority bought 8.82 million common shares of Apollo Commercial Real Estate Finance Inc. on Sept. 18, according to documents filed on Monday with the U.S. Securities and Exchange Commission. The REIT announced on Sept. 21 that it sold these shares at $17 each for a total of $150 million, and that it raised another $198 million from the same unidentified investor through preferred stock sales.
Fifth, here is a 2015 SEC filing showing Apollo’s purchase agreement with Qatar Investment Authority, and a related article in Reuters.
Sixth, here is a $5.6 billion deal from summer 2018 involving Apollo and Qatar:
PSP Investments Credit USA LLC and an affiliate of Qatar Investment Authority will also provide part of the debt financing.
Seventh: Senator Blumenthal called for an investigation last March of Kushner and Apollo:
Mr. Kushner reportedly met repeatedly with Mr. Joshua Harris, of Apollo Global Management and an outside adviser on the Trump Administration’s multi-billion dollar effort to privatize public infrastructure. The true nature and content of those discussions are not public. But they unquestionably present the appearance of unethical conduct, given the subsequent $184 million loan facilitated by the Apollo Group Management to Mr. Kushner’s family real estate firm. The timely loan provided funds sourced from the government of Qatar. The financial transaction reportedly enabled Kushner Companies to withdraw equity to meet other debt obligations and maintain ownership of the 225 W. Randolph St. office building in Chicago, when a prior loan from another lender was about to expire and they had previously been unable to sell the property.
Eighth: One key here is the hidden option for BPY to buy the real estate.
BPY is paying $1.3 for just the 99-year lease. What about the ownership of the actual land? How much would they have to pay to exercise that option? If that’s a large number, the deal is even more implausibly generous.
What’s in it for Brookfield?
In addition to Qatar and UAE being behind-the-scenes question marks, Brookfield owns 100% Westinghouse, which has a major investment in nuclear maintenance and nuclear plant retirement contracts…
What could Brookfield and Westinghouse possibly want from friends in government?
But I’m concerned about a stick. Does anyone have leverage over Brookfield? Financially, civilly, or criminally?