The Trump conglomerate was famous not so long ago, for its extensive luxurious holdings- an embodiment of wealth and power. However, things seem to have changed ever since Trump came into power as the Republican President. His real estate empire has begun to weaken despite considerable efforts being made to overcome this bad patch. In this article, we will dive deep into Trump’s economic problems that have been created by Trump himself.
The 40 Wall Street Address
His penchant for controversial politics did bring Trump closer to his followers, primarily in the rural and working-class, yet it also brought financial trouble for him. For instance, some of his high-end properties are now awaiting tenants. Ruth Colp-Haber is a consultant who has, over the years, placed seven clients in the 72-story Trump Tower. She says, “Most New York tenants don’t want anything to do with it, and it has been for five years now.
It’s the biggest deal going on, but they won’t be looking at it”. Things are looking bleak as the building is no longer attracting tenants and those currently housed there wish to leave. Girl Scouts and TP alliance are two of the tenants at the 40 Wall Street address. Both are exploring options to get out of their leases early.
The occupancy rate for this property was 84% in March 2021, which is below the average occupancy rate of 89% in New York’s downtown office market, as observed by KBRA Analytics LLC. The rents that Trump is charging are also lower than the market average, $38 – $42/as opposed to $50.
Trump got a $ 160 million loan in 2015 to refinance 40 Wall Street. However, according to the KBRA report, the debt service coverage ratio, a statistic monitored by banks, dropped to a number indicating that the building’s cash flow cannot cover debt payments.
In an email statement, Harrington, a spokesperson for the Trump Group, emphasized that the depreciation was due to “the disastrous policies of Bill de Blasio”. De Blasio is the Mayor of New York City and Harrington blames him for the overall downturn in the city’s office market. Furthermore, Harrington says, “Despite all of these serious headwinds, Mr. Trump has very little debt to value and the business is doing very well”.
The Doral Golf Course
A consultant at the Doral golf course said that his business was being affected by Trump’s policies, as early as the year 2017. He had requested a tax reduction at a public hearing.
“It’s not about the property, it’s about the brand,” consultant Jessica Vachiratevanurak said during a December 2017 hearing with the Miami-Dade Value Adjustment Board in a video recording reviewed by Reuters. She cited a meeting she attended where top executives of the Trump Organization described “serious ramifications” for her golf business, such as tournaments and other events being canceled by organizations wishing to avoid the Trump brand.
The resort’s earnings dropped from $92 M to $75 M within just two years (2015-2017). For last year, the revenue was recorded as $44 M.
The Doral Complex, along with two hotels is financed by loans of $ 340 M from Deutsche Bank AG. However, an inside source at the bank revealed that the bank will no longer continue to be associated with Trump after the loans get matured.
When asked about the resort, Trump’s spokeswoman said, “This is wrong because Doral is doing very well,” and when asked about Deutsche Bank’s refusal for financing, she replied, ” So what?”
The Future for Trump
Although the Trump Group is in denial of the risky financial situation created by Trump’s politics, it is surely a reality. Steps have been taken to strengthen the conglomerate in the form of more loans. After the approval of such few loans, Eric Trump stated that the company is now in “a phenomenal situation.
We are sitting on a huge sum of money”. Loans are not the only way to secure Trump’s position. Therefore, the first big deal that Trump announced after his regime ended was not related to the real estate industry at all. Instead, he unveiled plans for launching a new social media platform under the banner of the newly-formed Trump Media and Technology Group on October 20th.
This announcement saw shares of the new company soaring to $ 2 M. After all the turmoil, one thing that can be said is that although the times have changed, the Trump Group will surely not go down without a fight.