Vornado Realty Trust has rejected Kushner Cos.'s plan for an extensive renovation of 666 Fifth Avenue in Manhattan, N.Y., to transform it into a luxury building, with the company telling brokers that the property will remain an office building and go through a "much more mundane renovation," Bloomberg News reported, citing three people familiar with the matter.
The move may pose a challenge to Kushner Cos.'s negotiations with lenders, which could result in the company losing control of the building. Vornado, a 49.5% stakeholder in the building, plans to hold off further investment in the asset unless it is reassured of the property's future.
A spokeswoman for Vornado did not comment outside of normal business hours on Sunday, Oct. 15, while a spokesman for Kushner Cos. told the news agency that no decision has yet been made, the Oct. 16 report noted.
Plans for the building's future have faced several challenges in 2017. In March, Anbang Insurance Group Co. Ltd. withdrew its plan to develop the asset alongside Kushner Cos., after both parties agreed to cancel their discussions. In April, Vornado revealed its intention to off-load its stake in the 1.4 million-square-foot office tower.
Kushner Cos. had also "tried and failed" to secure a $500 million loan from Qatari investor Sheikh Hamad bin Jassim Al Thani for the building in July, according to a previous Bloomberg report.
The building's $1.2 billion mortgage is due in February 2019, and it lost $14.5 million in 2016 and is estimated to lose $24 million in 2017 after an increase in the loan's interest rate, the report added.