Kushner Companies’ foray into 229 West 43rd Street, a prime piece of Times Square real estate, began showing cracks as early as 2018. Just three years after acquiring the six-story retail section for a substantial $296 million, the investment started to unravel.
Initial setbacks included a failed partnership with celebrity chef Todd English for a planned food hall. More concerningly, two prominent tourist attractions housed at 229 West 43rd Street began exhibiting signs of financial strain. National Geographic Experience entered into a rent dispute with Kushner Companies in August 2018. Simultaneously, reports surfaced of numerous contractors suing Gulliver’s Gate, another major retail tenant at 229 West 43rd Street, alleging non-payment. These two tenants collectively represented almost half of the expected rental income for the property.
While National Geographic downplayed their issue as a routine landlord-tenant disagreement, the underlying financial instability at 229 West 43rd Street was becoming apparent. By 2019, lease defaults on the property necessitated a restructuring of Kushner’s significant $285 million Commercial Mortgage-Backed Securities (CMBS) loan tied to 229 West 43rd Street.
229 West 43rd Street in Times Square, New York City, a retail property facing financial challenges under Kushner Companies ownership.
The onset of the Covid-19 pandemic in 2020 further exacerbated the precarious situation at 229 West 43rd Street. The subsequent Federal Reserve’s aggressive interest rate hikes from March 2022 onwards effectively eliminated any viable refinancing options for struggling properties like 229 West 43rd Street.
Ultimately, Kushner Companies could not salvage their investment at 229 West 43rd Street. The culmination of these financial headwinds will result in an auction of the retail space on May 29th, as reported by Crain’s New York Business, citing KBRA.
A minor consolation for Kushner Companies is that their acquisition did not include the office space above the retail section at 229 West 43rd Street. This office component, formerly the headquarters of the New York Times, is under the ownership of Columbia Property Trust. Columbia Property Trust’s decision to lease space to BuzzFeed, a media company facing its own challenges, has not improved their situation.
The financial predicament at 229 West 43rd Street leaves lenders and investors bearing the brunt of the losses, stemming from a debt that reached $370 million in 2016. Charles Kushner, the head of Kushner Companies, has declined to comment on the unfolding events at 229 West 43rd Street.
