Jared Kushner Selling Stake in Firm That Pursued Federal Tax Break

WASHINGTON — President Trump’s son-in-law and adviser Jared Kushner is selling his stake in Cadre, a New York-based real estate start-up that has sought to profit from a special tax break included in the package Mr. Trump signed into law in late 2017.

In selling his stake, Mr. Kushner also took advantage of a special federal program that would allow him to defer paying income taxes on any gain on his investment in Cadre, which he helped found in 2014.

As of last year, the venture had moved in at least four cities — including Los Angeles and Nashville — to invest in real estate projects in so-called opportunity zones, which were created by the Treasury Department in 2018 under a provision of the 2017 tax law that was intended to encourage new investment in low-income neighborhoods.

But a spokesman for Mr. Kushner said he was selling the stake in Cadre, valued on his financial disclosure form at between $25 million and $50 million, because his involvement with the firm was complicating efforts to bring in new investors — potentially including money from abroad — given Mr. Kushner’s White House work on international affairs.

Mr. Kushner has had a broad portfolio of responsibilities, including helping to negotiate a peace accord in the Middle East, a trade agreement between the United States and China and a deal with Canada and Mexico in 2018 to replace the North American Free Trade Agreement.

Potential future investors in Cadre could include entities owned in part by so-called sovereign funds, which are large pools of money set up by foreign governments such as Saudi Arabia and China and which have tens of billions of dollars invested in real estate projects around the world, including in the United States.

Since he joined the White House, there have been repeated questions about potential conflicts presented by assets owned by Mr. Kushner and his wife, Ivanka Trump, who reported an income in 2018 of up to $135 million. Those earnings were based on a range of investments including partial ownership of his family-run real estate business, Kushner Companies, and a stake in the Trump International Hotel in Washington.

In 2017, for example, Mr. Kushner sold off his ownership stake in a prominent Manhattan office building known as 666 Fifth Avenue before Kushner Companies struck a deal with Brookfield Asset Management for a roughly $1 billion bailout of the troubled property. Brookfield’s property arm is partly owned by the Qatari government. Maintaining ownership in that stake could have created the appearance that Mr. Kushner was benefiting, even if indirectly, from that Qatari investment.

Cadre was founded in 2014, before Mr. Trump ran for president, when Mr. Kushner joined with his younger brother, Josh Kushner, and a friend of Josh Kushner’s from Harvard, Ryan Williams, to set up the company. Cadre now has a collection of prominent financial backers including George Soros, Mark Cuban, Goldman Sachs and the Ford Foundation.

Mr. Williams, 32, is the chief executive of the company. Since Mr. Trump was elected president, he has tried to distance himself from questions related to the White House.

Cadre’s business model is built around a platform that has allowed more than 20,000 investors to send money that the company then uses to invest in real estate projects. In the last two years, Cadre returned more than $100 million to investors after it sold apartment buildings in the Salt Lake City, Chicago and Atlanta areas that it had purchased only a few years ago.

But Mr. Kushner’s investment in Cadre has repeatedly drawn questions. He initially failed to list it in a financial disclosure report he filed with the federal government after being named as a White House official.

That form was repeatedly revised in 2017, as Mr. Kushner corrected oversights and errors in his filing. At one point, language was added to the document that made clear that there was concern his work at the White House on matters related to financial markets could potentially create a conflict.

Mr. Kushner, the revised form signed in 2017 said, “has been and will continue to be recused from particular matters in the broker-dealer, real estate and online financial services sectors to the extent they would have a direct and predictable effect on Cadre.”

A spokesman for Mr. Kushner said Thursday that he believed that no such conflict ever emerged, and that Mr. Kushner had not played any role in the management of Cadre since he joined the White House.

His decision to sell his holdings now — first reported last week by Bloomberg — was driven by a desire to avoid complicating decisions about investors for the company, his spokesman said.

“Jared does not want to inhibit Cadre’s future business decisions,” the spokesman said in a statement to The Times.

It is unclear how much money Cadre has invested in opportunity zones since the program was created in 2017 or what effect any such investments have had on the value of Mr. Kushner’s stake.

But marketing materials and filings with the Securities and Exchange Commission showed that the firm was eyeing opportunity zone investments in Dallas, Los Angeles, Nashville and Savannah, Ga. The company boasted that it was targeting neighborhoods in those cities, which were already expected to grow larger and wealthier, even though the opportunity zone program was created to help lift poor neighborhoods out of poverty.

Ivanka Trump helped promote the opportunity zone program, declaring the White House’s support for the new tax breaks at an event in 2018.

“We are very, very excited about the potential,” she said. “The whole White House obviously is behind the effort. The whole administration.”

The spokesman for Mr. Kushner would not say how much Mr. Kushner would profit from the sale of his stake in Cadre. But Mr. Kushner insisted that his shares be sold directly to other Cadre owners, instead of on the open market, to avoid any attempt by an outsider to influence him by overpaying for the stake, the spokesman said.

Mr. Kushner’s financial disclosure form in 2017 listed his Cadre stake as being worth between $5 million and $25 million, and his most recent disclosure listed the value as somewhere between $25 and $50 million. So it is not possible to know how much it actually increased in value, as it could have been as little as a few dollars or as much as $45 million.

But Mr. Kushner did get what is known as a certificate of divestiture from the Office of Government Ethics, which allows him to sell the asset without having to pay any capital gains taxes.

A certificate of divestiture — which requires proceeds to be immediately placed in diversified mutual funds or Treasury bonds — is intended to allow federal officials to sell investments that might present a conflict of interest without a financial penalty from having to immediately pay the capital gains tax.

Any taxes owed could be avoided permanently if Mr. Kushner transfers the new investments he made with the proceeds of the Cadre sale to his heirs, without ever selling them.

Jesse Drucker contributed reporting.

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