New York City’s recent decision to terminate the contracts with Donald Trump’s organization reflects the rejection that his figure arouses in large part of that country.
UNITED STATES (El Financiero) – The same day that a new political trial against Donald Trump took place in Washington, his tower’s lobby at 40 Wall Street in New York was almost silent.
But in the dark, golden elevators, trouble was brewing in one of the billionaire’s most valuable properties. Inside a law office, two partners had clashed over whether to continue paying rent to a landlord who encouraged the deadly riots on Capitol Hill. On the 24th floor, a nonprofit organization fighting tuberculosis was exploring options for leaving the building, while on the 7th floor, Girl Scouts were figuring out how to break their lease.
And in the basement, the old bank vault doors weighing more than 10 tons were wide open. In a club room that Trump renovated, the news was being broadcast on a giant TV to an empty couch audience just as Congress was voting against it. This is how Trump’s empire lived out the last days of his presidency.
The Trump Organization, led by his sons Eric and Donald Jr., was struggling with the devastating consequences of the COVID-19 pandemic even before his father incited an attack on Congress. Efforts to sell their hotel in Washington were shelved. Their office buildings were losing value amidst excess space in Manhattan. Their golf courses were already facing the reality that younger generations are not as interested.
Trump was worth about $3 billion when he became President of the United States. According to the Bloomberg Billionaire Index, despite high stock prices and his tax cuts, he will leave the post about $500 million poorer.
His buildings are loaded with more than $1 billion in debt, most of which will mature in the next three years and more than a third of which is personally guaranteed. Refinancing would mean finding lenders and corporations willing to work with the only president in US history with two lawsuits against him.
“Nothing like this has ever happened before,” said Barbara Res, who was an executive at Trump’s company for years. “Will he come back? My gut says yes, because it always does, but it won’t come back the same.
Trump has already survived corporate bankruptcies, hard times in Atlantic City, and unsuccessful launches of Trump Steaks, Trump Vodka, and even one airline. The man who made ‘America First’ his slogan may now seek partnerships and licensing agreements abroad.
Even so, Deutsche Bank, his longtime financier, will no longer support him. Signature Bank, where his daughter Ivanka once served on the board, is closing its accounts. Cushman & Wakefield, a 40 Wall Street broker, is cutting ties, and PGA of America is staying out of it.
The biggest successes of Trump’s fortune are in New York, the heart of his empire, where the Queens-born developer became a reality TV star before entering politics.
Outside the Trump Tower, East 56th Street remains blocked off, a parking lot for a dozen black SUVs with government plates. The building is closed to visitors because of the pandemic, so Trump’s bar, cafeteria, and ice cream shop are closed.
It’s not like there are tourists who want to buy ice cream. Fifth Avenue is almost deserted. Empty storefronts are multiplying, and some boutiques are now operating for appointments only. Rentals have fallen 32 percent from 2018 high, according to the New York Real Estate Board.
Trump’s cavernous space on East 57th Street is currently sublet to the iconic Tiffany’s jewelry store, but a new tenant will soon be needed. Above that, 148 square meters of ‘Trump extravagance’ is becoming cheaper.
Apartment 55B, with blue lapis lazuli floors and medallion ceilings, is on sale for $2.9 million, about $2.5 million less than four years ago. It is not an outlier. Prices in the skyscraper have dropped by a third since Trump took office, according to StreetEasy data.
And even before the attack on the Capitol, his company was offering concessions to some tenants on 40 Wall Street, according to lender records. The $137 million in property debt was added to lenders’ watch lists in November after net income fell below what underwriters expected when the debt was issued in 2015.
Rejected by ‘his’ city
“I don’t think his name is going to generate a premium these days,” said Warren A. Estis, founding partner of the real estate law firm Rosenberg & Estis and owner of a penthouse on the 86th floor of the Trump World Tower near the United Nations. Still, Estis said he had not heard rumors from his condo board about removing Trump’s name from the building.
New York City itself doesn’t want anything to do with Trump. Officials plan to end more than $17 million in contracts with the president’s family business, including a carousel and two ice skating rinks in Central Park and a golf course in the Bronx.
“New York City has no legal right to terminate our contracts, and if they choose to do so, they will owe the Trump Organization more than $30 million,” the company said in a statement. “This is nothing more than political discrimination, an attempt to violate the First Amendment, and we plan to fight back vigorously,” it added.
While police officers kept the public out of the Trump Tower, including its Trump Store, there was also bad news for fans who went online to buy Trump beer glasses for $55 or a Trump candle for $80. Shopify refuses to service the website, leaving customers with a warning that their connection is not private and that “attackers may be trying to steal your information.
Not long ago, the big question looming over Trump’s return to the business world was whether the reality television expressor would make a foray into the conservative media, where product promotions and licensing agreements are rife. Now the conversation in financial circles is centered on whether he can defend his existing empire. You will have to convince lenders that it is worth taking risks and prove to developers that your name retains enough cachet.
“The presidency and Donald’s racist, sexist and xenophobic language have tarnished the brand to such an extent that it is worthless,” said Michael Cohen, his former lawyer now a critic.
Will ‘Trump TV’ arrive?
Eric Trump played down such claims in an interview with the Associated Press this week, blaming the ‘culture of cancellation’ for recent attacks on the family empire that he said posed no threat to the company’s finances. His father, he said, still has armies of fanatics.
“You have a man who would be followed to the ends of the earth by millions of Americans,” he said.
One conservative media executive who is still optimistic about Trump’s prospects for creating a subscription video service admitted that recent events might limit potential platforms, advertisers, and partners.
During his presidency, Trump pledged that his businesses would not sign new agreements in foreign countries but continued to raise revenue from licensing deals in Turkey, the Philippines, and India. His administration developed close ties in the United Arab Emirates, where he had previously done business, and Saudi Arabia, where his company considered projects before promoting the presidency.
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