Canada’s Brookfield Asset Management said on Friday it acquired a 99-year lease on a flagship New York office tower controlled by the family of Jared Kushner, the son-in-law of U.S. President Donald Trump, capping a long saga to refinance the building.
Brookfield said it gained a leasehold on the office portion of 666 Fifth Avenue, a marquee property whose $1.8 billion sale to Kushner Companies in 2006 was the highest price paid for a New York office building at the time.
Financial terms of the transaction were not disclosed.
Toronto-based Brookfield said in a statement that its unit, Brookfield Properties, will operate the 1.5 million square foot (139,000 square meter) building. It plans a major redevelopment of the tower, which occupies an entire block of Fifth Avenue just north of St. Patrick’s Cathedral.
The tower has the potential to be one of New York’s best-known and most successful office properties, Brookfield said, adding that it was “well placed to capitalize on the opportunity.”
Upgrades and renovation will cost between $600 million and $700 million, a source with knowledge of the plans said.
Brookfield declined to comment further on the transaction. A Kushner spokeswoman declined to comment.
Brookfield owns and operates more than 275 office buildings around the world, with about $160 billion in real estate assets under management.
Proceeds from the transaction would give the Kushner family enough to pay off more than $1.1 billion of debt on the building and buy out its partner, Vornado Realty Trust, according to the Wall Street Journal, which broke news about the deal on Friday.
Vornado said in June it had agreed to sell its 49.5 stake in the office portion of the tower back to Kushner Companies for proceeds of $120 million and that with the sale of its interests, the existing mortgage loan on 666 Fifth Avenue would be repaid.
Vornado also said it would continue to own its portion of the building’s prized retail frontage on Fifth Avenue, which it bought in 2012 for $707.8 million from the Carlyle Group.
Vornado acquired its office stake in 2011 when it helped recapitalize the tower with $70 million after the debt entered receivership, a sign of Kushner difficulties financing the building.
Vornado has made close to a 10 percent return over the life of its investment, said Alex Goldfarb, an analyst with Sandler O’Neill + Partners.
Kushner Companies said a year ago it was reassessing how to finance the tower’s redevelopment after talks that had begun several years earlier failed.
Jared, who is married to Trump’s daughter Ivanka, sold his interests in the company to a family trust in 2017.