Trump's deals in Florida: From foreclosures to slow sales
Image: Patrick Welsh for Forbes
Donald Trump has long considered Florida, especially Palm Beach, where he has his Mar-a-Lago resort, his second home. But the ‘Sunshine State’ hasn’t always been kind to him. In 2006, he and billionaire condo king Jorge Perez began selling a 23-storey apartment building near Mar-a-Lago, but the project was abandoned a year later because of slow sales. Another Perez-Trump deal, the 200-unit Hollywood oceanfront tower, was foreclosed in 2010 after selling less than 15 percent of its units. (The building eventually opened, still Trump-branded, but without Perez.)
Trump Sunny Isles, a three-tower residential complex outside Miami, has also struggled. Trump partnered with Perez again and another developer named Gil Dezer to build the project, which targeted wealthy Latin Americans. “You go down to South America, and you offer the guy, ‘Hey, you want to live in the building named Trump, or do you want to live in a building named Wind or Rain or Stone?’” Dezer says. “It’s what the purpose of the [Trump] brand is.”
Unfortunately, the last two towers of the development opened in the middle of the financial crisis, and Perez bailed on them. Dezer stuck it out but had to cut the price on the condos and was later sued for shoddy construction. Dezer, who ultimately did well by the deal, says these sort of lawsuits are “typical” and he has been trying to settle with the owners for years.
Dezer and Perez have sharply contrasting views on Trump’s immigration policies. Dezer, the son of an Israeli immigrant, supports Trump’s proposed Mexican wall and isn’t concerned about the Trump brand turning off prospective customers, saying, “These wealthy Latin Americans come into the country legally. They shouldn’t be concerned.”
Perez, who was born in Argentina to Cuban parents, says he spoke to Trump about the wall shortly before the election and asked, “When you build your 30-foot wall, which side should I be on?” Trump just laughed, Perez says. After the inauguration, Trump asked Perez to help build it. Perez, a lifelong Democrat, declined. —Chloe Sorvino and Jennifer WangAccidental partners: Trump and Vornado’s Steven Roth
For many years, Trump was partners with a group of Hong Kong investors. Among other things, the group owned two magnificent office towers: 1290 Avenue of the Americas in New York City and 555 California Street in San Francisco, the second-tallest building in town. For nearly a decade, Trump feuded with his partners over the sale of another jointly owned property, a New York residential complex called Riverside South. The Chinese wanted to sell. Trump did not. Since the Chinese were the majority shareholders, the sale went ahead, but Trump persuaded them to also sell out their interest in the office towers. The buyer? Vornado Realty Trust, which is co-owned by Steve Roth, one of New York’s largest property owners and a longtime friend (and competitor) of The Donald. In a sweetheart deal, Vornado ended up with a 70 percent stake at a price of $775 per square foot at a time when comparable buildings went for $1,200. Trump still owns the other 30 percent. —Samantha Sharf
Inside the bankruptcy of the Puerto Rican golf course Trump managed
When the Trump International Golf Club in Rio Grande, Puerto Rico, filed for bankruptcy in July 2015—just a month after Donald Trump launched his presidential campaign—Trump’s family did everything they could to distance themselves from the failed project. “This has absolutely nothing to do with Trump. This is a separate owner. We purely manage the golf course,” Eric Trump told Bloomberg at the time. Owned by the late construction magnate Arturo Diaz Jr and his family, the property featured two 18-hole golf courses and a giant 46,000-square-foot clubhouse. It had also been struggling for years. Diaz brought in Trump to turn around the golf course in 2008. The Trump Organization claimed it had a plan “to attract customers and control operating expenses”. But over the next five years, club membership barely budged, inching up to just 63 paying members. Only four of them owned Trump-branded real estate adjacent to the courses. All the while, the course’s expenses increased by 22 percent, including Trump’s management fees, which were about 4.5 percent of annual revenues, or more than $600,000 by the end of 2012. Ultimately, with about $78 million in debt and only $9 million in assets, the golf club sold for $2 million. —CSThe immigrants who funded a Trump building in Jersey City
The Donald has complained bitterly about immigrants and the American immigration system, but there’s a Trump building in Jersey City built with funds secured through a controversial government immigration programme that allows wealthy foreigners to attain visas—and possibly citizenship—by investing in American real estate projects.
The Jersey City project, Trump Bay Street, was erected by Trump’s son-in-law, Jared Kushner, along with real estate developers KABR Group. Before they agreed to licence the Trump name and affix it to their building in 2014, Kushner and KABR secured $50 million in funding from about 100 investors from China, South Korea and Vietnam. In turn, those funders used their investment to apply to the federal government’s EB-5 visa programme. Under the programme, a foreigner who makes a $500,000 investment in a project that will create at least ten jobs can apply for a green card and earn legal US residency in two years or so, a much quicker pace than many other visa programmes. —CSMeet Louis Cappelli, the realtor behind the Trump condos in New York
Thirty miles north of midtown Manhattan sits another Trump Tower—in suburban White Plains, New York. Trump Tower at City Center is one of four Trump-branded condo projects in the greater New York City area built by Louis Cappelli, a developer based in White Plains. Like Trump, Cappelli inherited a family business from his father, Luca Cappelli Jr, a Bronx native who founded a construction firm in 1959. Louis took over in the 1980s and later expanded into real estate, displaying a taste for splashy projects in revitalised downtown areas like Stamford, Connecticut. —JW
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(This story appears in the 28 April, 2017 issue of Forbes India. To visit our Archives, click here.)