WeWork Abandons One Journal Square, Kushner’s Ambitious Jersey City Project

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wework abandons journal square jersey city project
One Journal Square | Credit: Kushner Companies

A Journal Square project, currently at the center of a media firestorm, is dealing with another previously unreported setback.

Over this past weekend, reports and images surfaced of Kushner Companies representatives in China pitching potential Chinese investors the option to buy into the company’s ambitious Journal Square project. The program, known as EB-5, allows foreigners who invest at least $500,000 in a specific project the ability to receive a two-year visa which in turn allows them to apply for permanent residency in the future.

The legal, although ironic tactic given the company’s connection to President Trump and his anti-immigration stance, has been dubbed “the ‘crack cocaine’ of real estate financing”, according to The Real Deal. Not only cheaper than bank financing, the program gives developers more flexibility when raising money for a project.

EB-5 financing is not exactly newsworthy in itself, other than the Kushners’ political connection, however, in the course of reporting on the oversees fundraising for One Journal Square, Bloomberg uncovered a major setback for the project – One Journal Square’s anchor tenant, co-working behemoth WeWork, has reportedly backed out of the deal.

Not only was WeWork the anchor tenant, but according to people familiar with the project, the co-working company was also set to be a partial owner. Originally, the plan was to develop the project through a partnership between Kushner Companies, The KABR Group, and WeWork. According to Bloomberg, “Kushner and KABR were each slated to own one-fourth of the WeWork tower, according to the request to the development authority. WeWork would own the remainder.”

The withdrawal of WeWork presents Kushner Cos and KABR with a serious funding shortfall. As part of the deal, WeWork secured $59 million in tax breaks from the New Jersey Economic Development Authority. With WeWork out of the deal, the remaining partners lose these funds and increases the owner equity required to $301 million versus the previously planned $71 million.

These higher equity requirements are likely what led Kushner Cos to China to raise funds for the project. However, this is not the first time the company has used the program. When developing the recently opened Trump Bay Street, Kushner Cos marketed that project overseas in a similar manner.

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1 COMMENT

  1. This is so sad. Every time something new is to come of the empty lot there’s a problem, or set back. It’s starting to raise the the question, is the lot even really worth it anymore? They should do better to restore journal square, and stop blocking land that could become valuable; and great again.

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