Tenants Shocked to Learn Their 'Slumlord' Is Jared Kushner Kushner Companies makes life hard for thousands of renters in multiple states
By Michael Harthorne, Newser Staff Posted May 23, 2017 5:27 PM CDT
(Newser) – They nickel and dime down-on-their-luck tenants for small fees and hound former tenants for unpaid rent. They drag their heels on fixing plumbing or cleaning up black mold. They post late-rent notices in public areas where neighbors can see them. One woman calls them "slumlords." And they—various real-estate management outfits—are owned by Kushner Companies. Yes, that Kushner. "And I thought he was the good one," one tenant says of Jared Kushner, White House adviser and President Trump's son-in-law. ProPublica reports the company, of which Kushner was CEO until getting his new White House gig, [ https://www.propublica.org/article/the-beleaguered-tenants-of-kushnerville? ] has a history of making life exceedingly difficult for tenants at the thousands of apartments and townhomes it owns in multiple states.
Kushner Companies pursued a single mother of three for nearly $5,000 for years because she broke her lease—after she got signed permission from the on-site manager to do so. The company eventually garnished her wages and emptied her bank account. It went after another tenant for more than $5,000 even while she sat in hospice dying of pancreatic cancer. That tenant had moved out more than two years before Kushner Companies bought the housing complex where she had lived. “I guess you can do it ... but I don’t think it’s cool," says an attorney specializing in tenant-landlord litigation. That's to say nothing of the months that pass while necessary repairs—like mice infestations or broken refrigerators—go ignored. Read the full story here for Kushner Companies' response.
- - - - - - - The Beleaguered Tenants of ‘Kushnerville’
Tenants in more than a dozen Baltimore-area rental complexes complain about a property owner who they say leaves their homes in disrepair, humiliates late-paying renters and often sues them when they try to move out.
Few of them know that their landlord is the president’s son-in-law.
by Alec MacGillis ProPublica, May 23, 2017, 5 a.m.
This story was co-published with The New York Times Magazine.
The Townhouse on High Seas Court in the Cove Village development, in the Baltimore suburb of Essex, was not exactly the Cape Cod retreat that its address implied: It was a small unit looking onto a parking lot, the windows of its two bedrooms so high and narrow that a child would have had to stand on a chair to see out of them. But to Kamiia Warren, who moved into the townhouse in 2004, it was a refuge, and a far cry from the East Baltimore neighborhood where she grew up. “I mean, there were bunny rabbits all hopping around,” she told me recently.
In the townhouse next door lived an older woman with whom Warren became friendly, even doing her grocery shopping once in a while. But over the course of a few months, the woman started acting strangely. She began accosting Warren’s visitors. She shouted through the walls during the day. And at night she banged on the wall, right where Warren kept the bassinet in which her third child slept, waking him up.
Warren sent a letter reporting the problem to the complex’s property manager, a company called Sawyer Realty Holdings. When there was no response, she decided to move out. In January 2010, she submitted the requisite form giving two months’ notice that she was transferring her Section 8 voucher — the federal low-income subsidy that helped her pay the rent — elsewhere. The complex’s on-site manager signed the form a week later, checking the line that read “The tenant gave notice in accordance with the lease.”
So Warren was startled in January 2013, three years later, when she received a summons from a private process server informing her that she was being sued for $3,014.08 by the owner of Cove Village. The lawsuit, filed in Maryland District Court, was doubly bewildering. It claimed she owed the money for having left in advance of her lease’s expiration, though she had received written permission to leave. And the company suing her was not Sawyer, but one whose name she didn’t recognize: JK2 Westminster LLC.
Warren was raising three children alone while taking classes for a bachelor’s degree in health care administration, and she disregarded the summons at first. But JK2 Westminster’s lawyers persisted; two more summonses followed. In April 2014, she appeared without a lawyer at a district court hearing. She told the judge about the approval for her move, but she did not have a copy of the form the manager had signed. The judge ruled against Warren, awarding JK2 Westminster the full sum it was seeking, plus court costs, attorney’s fees and interest that brought the judgment to nearly $5,000. There was no way Warren, who was working as a home health aide, was going to be able to pay such a sum. “I was so desperate,” she said.
If the case was confounding to Warren, it was not unique. Hundreds like it have been filed over the last five years by JK2 Westminster and affiliated businesses in the state of Maryland alone, where the company owns some 8,000 apartments and townhouses. Nor was JK2 Westminster quite as anonymous as its opaque name suggested. It was a subsidiary of a large New York real-estate firm called Kushner Companies, which was led by a young man whose initials happened to be J.K.: Jared Kushner.
When Americans were introduced last year to Ivanka Trump’s husband and the nation’s prospective son-in-law in chief, it was as the preternaturally poised, Harvard-educated scion of a real-estate empire whose glittering ambitions resembled Donald Trump’s own. In 2007, Kushner Companies, run at the time by Jared and his father, Charles, bought the aluminum-clad skyscraper at 666 Fifth Avenue for a record-breaking $1.8 billion; they are now seeking partners for a $12 billion plan to replace it with a glass tower that would be 40 stories taller. In 2013 they acquired 17 buildings in Manhattan’s East Village for about $130 million, and three years later they spent $715 million on a cluster of buildings owned by the Jehovah’s Witnesses on prime land in Brooklyn’s fast-developing Dumbo district.
But the Kushners’ empire, like Trump’s, was underwritten by years of dealing in much more modestly ambitioned properties. Jared’s grandfather Joseph Kushner, a Holocaust survivor from Belarus, over his lifetime built a small construction company in New Jersey into a real-estate venture that owned and managed some 4,000 low-rise units concentrated in the suburbs of Newark. After taking over the business, Charles expanded Kushner Companies’ holdings to commercial and industrial spaces, but the company’s bread and butter remained the North Jersey apartment complexes bequeathed to him by his father.
In the mid-2000s, the company began to sell off the more than 25,000 multifamily rental units it owned, culminating in a 2007 sale of nearly 17,000 units for $1.9 billion. The sale — near the peak of the housing boom, just months before the crash — was impeccably timed, but it also reflected a shift in the attentions of what would soon be a three-generation real-estate dynasty. Charles, a major Democratic Party donor, had returned late the previous year from a brief stint in federal prison after pleading guilty to 18 counts of tax evasion, witness tampering and illegal campaign donations. Back at the helm of the company, he began to shift its focus from New Jersey to New York City — and prepared to pass the reins to his son Jared, who had just received a degree in law and business from New York University.
But amid the high-profile Manhattan and Brooklyn purchases, in 2011, Kushner Companies, with Jared now more firmly in command, pulled together a deal that looked much more like something from the firm’s humble past than from its high-rolling present. That June, the company and its equity partners bought 4,681 units of what are known in real-estate jargon as “distress-ridden, Class B” apartment complexes: units whose prices fell somewhere in the middle of the market, typically of a certain age and wear, whose owners were in financial difficulty. The properties were spread across 12 sites in Toledo, Ohio; Pittsburgh; and other Rust Belt cities still reeling from the Great Recession. Kushner had to settle more than 200 debts held against the complexes before the deal could go through; at one complex, in Pittsburgh, circumstances had become so dire that some residents had been left without heat and power because the previous owner couldn’t pay the bills. Prudential, which was foreclosing on the portfolio, sold it for only $72 million — half the value of the mortgages on the properties.
In the following months, Kushner Companies bought another 1,700 multifamily units in similar markets, according to the trade publication Multifamily Executive. Unlike the company’s big New York investments, the complexes were not acquired with an eye toward appreciation — these were not growing markets, after all — but toward producing a steady cash flow. “Our goal is to keep buying and incrementally growing — they’re good markets where you can get yield,” Jared Kushner told Multifamily Executive in October 2011, predicting that the net income for the year’s purchases would be $14 million within a year. The complexes buttressed the Kushner portfolio in another way, he said: They would serve as a hedge against an upswing in inflation he believed was looming on the horizon.
A year later, in August 2012, a Kushner-led investment group bought 5,500 multifamily units in the Baltimore area with $371 million in financing from Freddie Mac, the government-backed mortgage lender — another considerable bargain. Two years later, Kushner Companies picked up three more complexes in the Baltimore area for $37.9 million. Today, Westminster Management, Kushner Companies’ property-management arm, lists 34 complexes under its control in Maryland, Ohio and New Jersey, with a total of close to 20,000 units.
Kushner’s largest concentration of multifamily units is in the Baltimore area, where the company controls 15 complexes in all — which, if you assume three residents per unit, could be home to more than 20,000 people. All but two of the complexes are in suburban Baltimore County, but they are only “suburban” in the most literal sense. They sit along arterial shopping strips or highways, yet they are easy to miss — the Highland Village complex, for example, is beside the Baltimore-Washington Parkway, but the tall sound barriers dividing it from the six-lane highway render its more than 1,000 units invisible to the thousands traveling that route every day.
The complexes date mostly from the 1960s and ’70s, when white flight from the city was creating a huge demand for affordable housing in Baltimore County. They were meant to exude middle-class respectability — unglamorous but safe and pleasant enough, a renter’s Levittown. Since then, however, they have slipped socioeconomically, along with the middle class itself, into the vast gray area of the modern precariat — home to casino workers, distribution-warehouse pickers, Uber drivers, students at for-profit colleges. Although most of the tenants I met in a series of recent visits to the complexes pay their own rent, ranging from about $800 to $1,300, some of them receive Section 8 assistance, as Kamiia Warren did; Baltimore County has no public housing for a population of more than 825,000, so these and similar complexes have become the de facto substitute.
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