The investment woes for Kushner Companies at 229 W 43rd Street, New York, NY 10036, first surfaced back in 2018. Just three years after acquiring the six-floor retail section of this Times Square property for a substantial $296 million, cracks began to appear in their plan.
Initial hopes were pinned on a deal with celebrity chef Todd English and Outstanding Hospitality Management to establish a bustling food hall. However, this promising venture ultimately fell apart, setting the stage for further complications. Soon after, distress signals emerged from two prominent tourist attractions housed within the 229 W 43rd Street location.
229 West 43rd Street Times Square Retail Auction
The operator of the National Geographic Experience entered into a contentious rent dispute with Kushner Companies in August 2018. Simultaneously, reports from Bloomberg revealed that at least six contractors had initiated legal action against the owners of Gulliver’s Gate, another retail tenant at 229 W 43rd Street, citing unpaid dues. These two tenants collectively represented nearly half of the anticipated rental income for the property.
While National Geographic downplayed their issue as a “garden-variety landlord-tenant dispute,” the underlying financial strain became undeniable. By the following year, in 2019, lease defaults at 229 W 43rd Street necessitated a restructuring of Kushner’s significant $285 million Commercial Mortgage-Backed Securities (CMBS) loan tied to the property.
The subsequent arrival of the Covid-19 pandemic in 2020 further exacerbated the situation for 229 W 43rd Street. Then, starting in March 2022, the Federal Reserve initiated a series of historic interest rate hikes, effectively shutting down avenues for refinancing struggling properties like this Times Square retail space.
Kushner Companies’ attempts to salvage their 229 W 43rd Street investment proved unsuccessful. Now, the saga is set to culminate in an auction of the retail site on May 29th. This was reported by Crain’s New York, referencing a notice from the bond-rating firm KBRA, marking the end of Kushner’s unfortunate chapter at 229 W 43rd Street, New York.
A minor consolation for Kushner Companies might be that their acquisition was limited to the retail portion. They avoided ownership of the office spaces above, which famously served as the headquarters of the New York Times for decades before the newspaper’s relocation to Eighth Avenue.
The office space became the responsibility of Columbia Property Trust. Their attempt to revitalize the office occupancy by leasing 110,000 square feet to BuzzFeed in 2022, a media company facing its own challenges, appears to be a gamble that has not paid off. BuzzFeed’s stock value has since plummeted, trading at a mere 39 cents a share.
Ultimately, the upcoming auction of the retail space at 229 W 43rd Street offers little comfort to the lenders and investors holding the debt, which amounted to $370 million back in 2016. Charles Kushner, the patriarch of Kushner Companies, has declined to comment on the unfolding situation at 229 W 43rd Street, New York, NY 10036.
