Trump’s real estate empire pays the price for his years in politics

• Following his foray into politics, former President Trump’s real estate empire lost money.
• Trump’s name was once synonymous with wealth and success, but this is no longer the case.
• Trump’s business also remains under the cloud of a criminal fraud investigation.

The rhetorical style and divisive politics of former US President Donald Trump, may have inspired fierce political loyalty, but they’ve undermined his business, built around the real estate development and licensing deals that have earned him millions.

The Trump name was once synonymous with wealth and success, an image that now clashes dramatically with a political brand rooted in the ire of his largely rural and working-class voter base. His presidency is now associated in the minds of many with his violent departure, as supporters stormed the United States Capitol on January 6.

Less property income

Revenues from some of his high-end properties have declined, office building vacancies have risen, and his lenders are warning that the company’s revenue may not be enough to cover its debt payments. This, according to Trump’s financial disclosures as President, Trump Organization records filed with government agencies, and reports from companies that track the finances of real estate companies.

Potential renters in New York are avoiding his buildings, a real estate broker said, to avoid being associated with Trump. Golf tournament organizers have removed events from his courses. Trump’s focus on political branding has increasingly overtaken his identity as a real estate mogul, says a veteran of the hotel industry.

Before entering politics

«Before his political career, the Trump name was all about luxury – casinos, golf courses,» said Scott Smith, a former hotel executive and professor of hospitality at the University of South Carolina. «When he entered politics, he took the Trump brand in a completely different direction.»

Trump’s business also remains under the cloud of a joint criminal fraud investigation by the Manhattan district attorney’s office and the New York attorney general. The company and its longtime CFO Allen Weisselberg have been charged with a scheme to evade payroll taxes, and investigators continue to look into whether Trump or his representatives committed fraud by misrepresenting finances in loan applications and tax returns.

A new social network

While his development business is struggling, Trump has announced his first major deal since leaving office, and it has nothing to do with real estate. On October 20, he said he will build a new social media platform aimed in part to provide him with a political forum after being banned by Facebook and Twitter, who said after the United States Capitol riots that Trump used their platforms to incite to violence.

That deal could prove lucrative for Trump regardless of whether the platform is successful. Investors rushed to buy shares in Digital World Acquisition Corp, the publicly traded blank check acquisition company that plans to merge with the recently announced Trump Media and Technology Group.

Good time for business

Shares of Digital World surged and are now worth around $2 billion. Trump’s new media company will have at least a 69% stake in the combined company, but Trump has not disclosed his level of ownership in Trump Media. Trump has also been raising money for his political operation, which reported it had $100 million on June 30, as he hints at a presidential race in 2024.

Eric Trump, the middle son of the former president and executive of the Trump Organization, said in an interview that the company is now in «a phenomenal place.» He cited a refinancing of a San Francisco office building loan that gave the Trump business about $162 million in cash, according to loan documents and a statement from Vornado Realty Trust (VNO.N), the majority owner of the company. «We have a huge amount of cash,» Eric Trump told Reuters.

There was no collapse, according to a spokesperson

In an email, a spokesman for Donald Trump denied that the business has slumped since he entered politics. «The real estate company is doing very well, and this is evident in Florida and elsewhere,» Liz Harrington said in an email statement. «Considering the coronavirus pandemic, in which the hotel industry was particularly affected, Mr. Trump’s company is doing phenomenally well.»

Financial records show that Trump’s real estate business has declined. Income from family properties, big in golf courses and hotels, took a beating during 2020 amid the coronavirus pandemic. Revenue at his Las Vegas hotel, for example, fell from $ 22.9 million in 2017 to $ 9.2 million during 2020 and the first 20 days of 2021, according to Trump’s financial disclosures.

Properties for sale

The former president is now making a second attempt to sell his lease on a high-profile property, the Trump International Hotel, located in a former federal building in Washington, DC, after failing to land a buyer at the initial asking price of $500 million.

Meanwhile, the company is paying the federal government $3 million annually in lease payments, according to documents released earlier this month by the House Oversight Committee of the United States Congress. Those records show that Trump’s Washington hotel lost more than $73 million since 2016.

A very toxic name

At Trump’s base of operations in New York, the Trump name has become increasingly toxic. One high-profile property, the Trump SoHo hotel in lower Manhattan, was renamed Dominick in 2017. In January, New York City canceled its leases on a golf course, two skating rinks in Central Park, and a carousel; Trump has sued the city for improper termination of the golf course lease.

At 40 Wall Street, the 72-story skyscraper that was among the former president’s proudest acquisitions, problems that began before the pandemic worsened, according to reports from firms that track real estate performance. After the January 6 riots at the US Capitol, some of Trump’s big tenants, including the Girl Scouts and a nonprofit called TB Alliance, said they were exploring whether they could get out of their contracts.

Current state of the organization

Occupancy was 84% ​​in March 2021, well below the average of about 89% for the downtown New York office market, according to Mike Brotschol, managing director of KBRA Analytics LLC. The rents it has been able to collect are lower as well: between $38 and $42 per square foot in a market where the average is close to $50, he said. Property finances have fallen into risky territory, reports say.

Trump obtained a loan of $160 million in 2015 to refinance 40 Wall Street, personally guaranteeing $26 million. Last year, the building was placed on an industry watch list for commercial mortgage-backed securities at risk of default, according to reports from KBRA and Trepp, which also monitor home loans.

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