Citi Says Kushner Cos. Loan Was 'Completely Appropriate'--Update
March 21 2018 - 6:42PM
Dow Jones News
By Telis Demos
Citigroup Inc. said in a letter sent Tuesday to lawmakers that a
loan made to Kushner Cos. shortly after the bank's chief executive
met with Jared Kushner last year was "completely appropriate."
Kushner Cos. also disclosed Wednesday that it had recently
received a separate $200 million loan from the bank.
The bank has faced questions about its dealings with Kushner
Cos. following a White House meeting between its chief executive
and Mr. Kushner.
On March 3, 2017, Citi Chief Executive Michael Corbat met with
Mr. Kushner, President Donald Trump's son-in-law and a senior
adviser to the president. On March 31 of that year, Kushner Cos.,
which is controlled by members of Mr. Kushner's family, and two
partner firms closed on a $325 million mortgage for a Brooklyn
property with Citigroup, according to the bank.
Sen. Elizabeth Warren (D., Mass.) and other lawmakers requested
more information about the meeting from the bank after it was
reported on by The New York Times last month.
Responding to that request, Citigroup's letter said "the Kushner
family has been a client of Citi for decades." It added the bank
started exploring the March loan in late 2016 before Mr. Corbat and
Mr. Kushner met.
Mr. Corbat "was unaware of the transaction" until the article
was published, and the loan didn't require his approval, the bank
said. The letter was signed by Citigroup General Counsel Rohan
Weerasinghe.
"This transaction was done in the normal course of Citi's
commercial real estate lending business, received the necessary
credit and risk approvals without input from Mr. Corbat, and was
unrelated to any discussions with Mr. Kushner," the bank wrote.
Mr. Corbat requested the meeting with Mr. Kushner with the
purpose of discussing U.S. trade policy and the North American Free
Trade Agreement, the bank said. Citigroup has a large subsidiary in
Mexico.
"Nothing related to the [Brooklyn] loan or any other personal
business with Mr. Kushner or the Kushner Companies was discussed at
that meeting, " Citigroup said.
The bank also said that Mr. Kushner himself "played no role in
the loan origination or negotiation process" with Citigroup.
Mr. Kushner owns passive interests representing a 6.5% stake in
the Brooklyn property, part of Kushner Cos.'s overall 47.5% stake,
Citigroup said in the letter.
A spokeswoman for Kushner Cos. declined to comment on the
letter. A spokesman for Mr. Kushner declined to comment.
In its letter, Citigroup also disclosed that it had "recently
completed" another loan on a Kushner Cos. property, one in which
the real-estate company has a 12.5% stake. This includes a 2% stake
that Mr. Kushner owns via a trust.
That property is a Jersey City, N.J., development known as Trump
Bay Street, and the loan was for $200 million, according to a
spokeswoman for Kushner Cos.
To finance the property, Kushner Cos. had used an
investment-for-immigration program known as EB-5. This offers green
cards to aspiring immigrants who invest at least $500,000 in
certain U.S. businesses. The company had been looking for a loan
that could be used in part to repay those investors.
On Wednesday, a company spokeswoman said Kushner Cos. had paid
back its EB-5 investors in Trump Bay Street using the $200 million
Citigroup loan.
Kushner Cos.'s use of the EB-5 program has been the subject of
federal investigations by the Brooklyn U.S. attorney's office and
the Securities and Exchange Commission, The Wall Street Journal has
reported. The company said recently that it has stopped using EB-5
financing for its projects.
Negotiations for the Citigroup loan for the New Jersey property,
which closed within the past month, took place months after the
meeting between Messrs. Corbat and Kushner, a person familiar with
the deal said.
Kushner Cos. spokeswoman Christine Taylor said the company "had
many options for financing of the building but chose Citi with whom
we have done many successful projects in the past."
Erica Orden contributed to this article.
Write to Telis Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
March 21, 2018 18:27 ET (22:27 GMT)
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