Citi Says Kushner Cos. Loan Was 'Completely Appropriate'--Update

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 [e-mail]

(END) Dow Jones Newswires

March 21, 2018 18:27 ET (22:27 GMT)

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