Jared Kushner may no longer be able to access the top level of classified information to benefit his personal business, but according to the New York Times, that doesn’t mean his personal business isn’t a top priority.
Joshua Harris, a founder of Apollo Global Management, was advising Trump administration officials on infrastructure policy. During that period, he met on multiple occasions with Jared Kushner, President Trump’s son-in-law and senior adviser, said three people familiar with the meetings. Among other things, the two men discussed a possible White House job for Mr. Harris.
The job never materialized, but in November, Apollo lent $184 million to Mr. Kushner’s family real estate firm, Kushner Companies.
Apollo Global Management is one of the original leveraged-buyout companies—a company that swoops down on companies “in distress” to grab controlling interest at discount prices. They’ve raised multiple funds, each packed with several billion dollars from big money investors, to scarf up everything from movie theaters to home furnishings. They also happen to own Redbox, Twinkies, and Chuck E. Cheese, all of them picked up when their original companies were in a bind.
Apollo has three major divisions—the private equity funds, which make money by going after companies down on their luck; the security firm that invests in hedge funds and in the kind of complex instruments that caused the 2008 market collapse; and a real estate group which primarily purchases hotels and resort properties. Any of the three groups might logically have some interest in Kushner’s company. The loan appears to have originated from the real estate group.
But at first glance, none of the groups at Apollo Global Managment would seem to have anything to do with anything that could be called infrastructure. They don’t do road construction, railways, or heavy engineering. The closest they get to shipping is a cruise line. So it seems extremely odd that Harris would be making regular visits to the White House to discuss a topic that would appear to be completely out of his area of expertise.
Except that what Trump and Harris were discussing might have been a completely different topic, namely how the Apollo group could get into infrastructure—a deal that would make the loan given to Kushner a small investment.
Even a company with billions in assets doesn’t hand out $184 million loans every day.
Even by the standards of Apollo, one of the world’s largest private equity firms, the previously unreported transaction with the Kushners was a big deal: It was triple the size of the average property loan made by Apollo’s real estate lending arm, securities filings show.
Not only is this a huge loan by any standard, but it comes at a time when Jared Kushner has put his family business into a very tough spot.
The Kushner Companies purchased the building in January 2007, paying $1.8 billion, a record in Manhattan. The Kushners put up $500 million and borrowed the rest from banks and partner Vornado Realty Trust, a publicly traded company run by Steve Roth. This meant a $1.2 billion mortgage—a super jumbo—with interest-only payments for the first several years. It was considered a vast overpayment, one of the most puzzling deals ever made in New York, even before the market crashed. When it did, the rents at 666, meant to cover interest payments and building costs, plummeted or else vanished. To this day, the tower is 30 percent vacant.
With that massive mortgage hanging over the company and every deal to keep the business afloat failing, it seems more than just unusual for a company like Apollo to drop in and hand out a fresh $184 million. But then, the idea that Harris was hanging around the White House to talk infrastructure is also hard to understand, even if it didn’t include handing Jared an over-sized check.
However, there’s an aspect to Trump’s infrastructure plan that makes it all come into focus.
The Trump administration is pushing federal officials to sell off, privatize or otherwise dispose of a broad array of government assets, from Reagan National Airport and the George Washington Memorial Parkway along the Potomac River to properties held by federal agencies across the country.
Apollo is a giant fund for picking up assets at low prices. Trump’s infrastructure plan is focused far more on selling off assets than it is on building anything at all. With that in mind, it makes perfect sense for Harris to talk to Trump about infrastructure. Because infrastructure discussions weren’t necessarily about building new roads, or bridges, or airports. They could just as easily be talking about how Apollo can get the inside track on buying up the existing roads, bridges, and airports.
And if the price of having first dibs on America’s national assets is a loan to Jared Kushner, they can more than make that back when they can take their fee from every passenger and every vehicle on their new assets. Which could include some surprising items that Trump wants to put up for sale.
The Washington Aqueduct, which supplies drinking water in the District and in Northern Virginia, is on the list.
Power transmission assets from the Tennessee Valley Authority; the Southwestern Power Administration, which sells power in Arkansas, Kansas, Louisiana, Missouri, Oklahoma, and Texas; the Western Area Power Administration; and the Bonneville Power Administration covering the Pacific Northwest, were also cited for potential targets for a sale.
Water. Power. Transportation.
That is one big Twinkie.