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Jared Kushner implicated in Qatari bailout

When news emerged that Qatar may have unwittingly helped bail out a New York skyscraper owned by the family of Jared Kushner, Donald Trump’s son-in-law, eyebrows were raised in Doha.

Kushner, a senior White House adviser, was a close ally of Saudi Crown Prince Mohammed bin Salman – a key architect of a regional boycott against Qatar, which Riyadh accuses of sponsoring terrorism. Doha denies the charge.

Brookfield, a global property investor in which the Qatari government has placed investments, struck a deal last year that rescued the Kushner Companies’ 666 Fifth Avenue tower in Manhattan from financial straits.

The bailout, in which Doha played no part and first learned about in the media, has prompted a rethink of how the gas-rich kingdom invests money abroad via its giant sovereign wealth fund, two sources with knowledge of the matter told Reuters.

The country has decided that the Qatar Investment Authority (QIA) will aim to avoid putting money in funds or other investment vehicles it does not have full control over, according to the sources, who are familiar with the QIA’s strategy.

“Qatar started looking into how its name got involved into the deal and found out it was because of a fund it co-owned,” said one of the sources. “So QIA ultimately triggered a strategy revamp.”

The QIA declined to comment.

Canada’s Brookfield Asset Management Inc bailed out 666 Fifth Avenue via its real estate unit Brookfield Property Partners, in which the QIA acquired a 9 percent stake five years ago. Both parent and unit declined to comment.

The QIA’s strategic shift was made late last year, according to the sources. It offers a rare insight into the thinking of one of the world’s most secretive sovereign wealth funds.

The revamp could have significant implications for the global investment scene because the QIA is one of the world’s largest state investors, with more than $320 billion under management.

The wealth fund has poured money into the West over the past decade, including rescuing British and Swiss banks during the 2008 financial crisis and investing in landmarks like New York’s Plaza Hotel and the Savoy Hotel and Harrods store in London.

QATARI BOYCOTT

Kushner was chief executive of Kushner Companies when it acquired 666 Fifth Avenue in 2007 for $1.8 billion, a record at the time for a Manhattan office building. It has been a drag on his family’s real estate company ever since.

The debt-laden skyscraper was bailed out by Brookfield last August, when it took a 99-year lease on the property, paying the rent for 99 years upfront. Financial terms were not disclosed.

The QIA bought a 9 percent stake in Brookfield Property Partners, which is known as BPY and is listed in Toronto and New York, for $1.8 billion in 2014.

BPY has about $87 billion in assets, part of more than $330 billion managed by its parent Brookfield. The stake purchase by QIA was in line with its strategy to boost investments in prime U.S. property. The investment gave QIA no seat on the board of BPY.

The Qatari wealth fund was not involved in the 666 Fifth Avenue deal, a source close to Brookfield Asset Management told Reuters. There was no requirement for Brookfield to inform the QIA beforehand.

The rescue rankled with Doha, according to the two sources familiar with the QIA’s strategy, because Kushner – married to U.S. President Trump’s daughter Ivanka – had long been one of the key supporters in Washington of the Saudi crown prince, who is the king’s favorite son and heir to the throne.

Prince Mohammed was a prime mover in leading regional states to severing links with its neighbor Qatar and embargoing the small nation since mid-2017. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain accuse Qatar of sponsoring terrorism. Doha denies the allegation and says the other countries simply want to strip it of its sovereignty.

“There is no upside in investing through funds for someone like QIA. Qatar wants full visibility into where its money goes,” said the second source familiar with the QIA’s strategy.

The QIA will not wind down existing investments with Brookfield or others, but will rather no longer invest in similar deals, according to the two sources.

The source close to Brookfield said relations with QIA were still strong.

STILL GOING BIG

The QIA’s strategic revamp also followed a reshuffle at the top of the fund last November when its long-serving chief, Sheikh Abdullah bin Mohamed bin Saud al-Thani, was replaced by its former head of risk management, Mansour Ibrahim al-Mahmoud. Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani was named QIA chairman.

Qatar, whose wealth comes from the world’s largest exports of liquefied gas, does not provide data on how much money it places with external fund managers.

“What we have seen lately is that it has have not been placing much,” said a Western fund manager who regularly sources money from wealth funds. “Either they are investing themselves or they are just sitting on a lot of cash.”

The Qatar shift in its approach reflects a wider trend among sovereign wealth funds to reduce reliance on external investment managers, in an attempt to keep tighter control over their money.

The Abu Dhabi Investment Authority, for example, said last year that 55 percent of its assets were managed by external managers in 2017, down from 60 percent the year before.

Yet, even if the QIA is being more cautious in its choice of investment vehicles, there is little indication that its appetite for big international acquisitions has diminished.

In December, new QIA chief Mahmoud told Reuters the fund was focusing on “classic” investments in the West such as real estate and financial institutions, and would also accelerate investment in technology and healthcare.

“The instructions from the top are to go out and do big deals,” said a Western banker who has held talks with Qatari officials.

He said QIA’s dealmaking had not stopped even during the height of the Gulf embargo, which initially forced the fund to put in about half of the $43 billion injected by public-sector firms into Qatari banks to mitigate the impact of outflows.

With oil and gas prices growing over the past two years, Qatar has not departed from what it is best known for – snapping up big-names properties.

In 2017, QIA pledged to ramp up its investments in Britain to 35 billion pounds ($45 billion) from 30 billion. Since then, it has spent about 1.7 billion pounds on real estate and another 1.1 billion on infrastructure in the country.

In recent months, Qatar has bought New York’s Plaza and London’s Grosvenor House hotels.

Additional reporting by Eric Knecht; Writing by Dmitry Zhdannikov; Editing by Prav

Source: Reuters

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2 comments

  1. Angel NicGillicuddy

    Anybody, everybody, who has been using the hoardable money
    Device of evil
    Will have done wrongs.
    The more they ( we ) use it
    The more wrong the actions.
    The un-hoardable money
    Is the ONLY other form of money.
    It will transform
    The wrong doers.
    U.S. Dollars with Demurrage
    ( NOT negative interest).
    – Angel NicGillicuddy
    I forgive myself.
    – The Beast

  2. Angel NicGillicuddy

    When the “CASH mob”
    ( and I’m not talking about all of us in the “game”. I’m talking about the ones with massive hoards of CASH who manipulate our market conditions.
    I respect MBS and Trump and Jared
    and all who are slowly making the changes for a better way. )
    When the secret CASH Mob
    begins to smell talk ( Air Magic )
    of un-hoardable money on the horizon,
    the only thing left to do is buy land.
    Land can be hoarded ( just like hoardable money ).
    A much smarter way of handling the land predicament
    is to have it RENTED from “The Peoples’ Land Trust” to the highest bidder,
    with that rent money going toward infrastructure and services for everyone in the country.
    Private property should remain in place,
    but not including the Land,
    which God have to ALL The
    Children.
    Only the property which a man ( or a woman or anybody ) has created with their own work
    Belongs to man ( or woman or the person ).
    Nobody is to blame here though,
    because the rules that are in place
    are the problem.
    We can change that.
    And there will not need to be any force or enforcement used at all.
    Join when you want.
    Children especially need to know:
    The old worn out traditional ways of
    Hoardable money and
    Hoardable Land ( land ownership )
    Must be corrected.
    Then each can choose for themselves.
    No enforcement will be necessary.
    Any smart business person
    can deal with the new ways.
    Much easier in fact.
    I believe Jerod would agree.
    He is just having to pay the consequences
    Of our global
    outdated and defective economic system.
    Jared is like ANY person or company
    who has been in business
    using hoardable money loans
    For more than a generation.
    Interest creeps up on you.
    I believe in Jared and
    The whole Trump Administration.
    Their aim is much more noble
    than the mainstream news outlets
    could ever
    Handle.
    But in the end
    Everyone will be fine,
    Even the secret CASH mob
    who are totally under The Spell
    of hoardable money.
    UN-FUND THE DARK FORCES
    by making the switch to
    Un-hoardable Money.
    And then make sure The Children
    Never lose their Land again,
    By RENTING the Land ( Land only,
    not buildings or other structures )
    from The Peoples’ Land Trust.
    Cheers
    To The New Renaissance

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