Wednesday 26 June 2019

Property upswing builds up Trump net worth to $3bn

But US president still not in Bloomberg's list of 500 richest people

Much of Trump’s own valuation of his net worth stems from what he calls his brand value, which he says is as high as $4bn
Much of Trump’s own valuation of his net worth stems from what he calls his brand value, which he says is as high as $4bn

Shahien Nasiripour and Caleb Melby

Property boss turned US President Donald Trump's net worth rose to $3bn (€2.65bn), a 5pc gain over the past year, thanks to a jump in the value of an office-building deal he once sued to prevent.

The increase in Trump's wealth reverses two years of declines and brings his net worth back to 2016 levels, according to figures compiled by Bloomberg.

It comes despite setbacks at his family company, including the cancellation of two new hotel chains and reduced business at his Mar-a-Lago resort in Florida and seven golf courses.

Trump's higher net worth shows how reliant his wealth has become on Steven Roth, a friend who leads Vornado Realty Trust.

Trump's 30pc stake in two Vornado properties - 1290 Avenue of the Americas, a 2.1-million-square-foot tower in midtown Manhattan, and 555 California Street, a 1.8-million-square-foot office complex known as the Bank of America Centre in San Francisco's financial district - accounts for a quarter of his fortune. His partnership with Vornado, which owns the remaining 70pc, resulted from a chain of real estate transactions that Trump once sued to block.

Accepting the deal has proven lucrative. Over the past year, Trump's stake in the two properties has surged to $765m, a 33pc increase from the previous year, thanks to falling office capitalisation rates and a boost in net income. A drop in marketwide capitalisation rates, which track property prices against the net income they produce, can indicate increasing demand, raising valuations.

Trump's stake in the Vornado buildings eclipses the combined value of his golf courses and resorts to become his biggest source of wealth. The value of the golf courses and clubs fell 19pc to $525m.

Trump's financial disclosures, which provide revenues and the value of assets in broad ranges and aren't definitive figures, offer a glimpse into his personal wealth. He manages his fortune through dozens of businesses that collectively form the Trump Organisation. Before he took office, Trump placed his holdings in a revocable trust that's for his exclusive benefit and is overseen by his two adult sons and longtime Trump Organisation bookkeeper Allen Weisselberg.

The value of the Trump International Hotel in Washington, which has become a hangout for Republicans and favour-seekers, was little changed. Revenue rose 1pc to $41m, according to the president's financial disclosure. But the value of the hotel fell 5pc to $95m as multiples for comparable properties declined.

Trump's office buildings, though, continued to appreciate. Trump Tower, which has experienced lower demand for its Fifth Avenue office and residential units, is now worth $445m, 27pc more than last year. In addition to falling capitalisation rates, it had higher net operating income in 2018 than the previous year and is on one of New York's most valuable strips of land.

The value of 40 Wall Street, Trump's office tower in Manhattan's financial district, increased by 13pc to $480m.

Office buildings have been among the biggest beneficiaries of the increase in asset prices that followed Trump's 2016 election. Years of easy financing and low supply boosted the value of buildings in sought-after cities throughout the country. Trump's office properties, including his stakes in the Vornado buildings, appreciated by $340m over the past year.

Those gains offset declines in other parts of his portfolio. In addition to his golf courses, the value of Trump's leasehold at 6 East 57th Street in Manhattan fell 9pc to $420m as retail properties in the borough saw higher capitalisation rates resulting from consumers' increasing preference to shop online.

And Trump's luxury residential building at 502 Park Avenue, where his estranged longtime fixer Michael Cohen lived before he began serving a three-year prison term last month, is now worth $140m, down 13pc from a year earlier.

Trump owes his lenders at least $550m, according to his disclosures, property records and commercial mortgage data. The amount is roughly flat from a year earlier, after taking into account estimated loan payments and a new mortgage for a home in Florida that he purchased from his sister, retired federal appeals court Judge Maryanne Trump Barry.

The president owes Frankfurt-based Deutsche Bank AG about $300m for loans related to his Washington hotel, a Chicago tower and Florida golf resort Doral, financial disclosures and property records show. The new loan, for $11m, is from Coral Gables, Florida-based Professional Bank. It carries a 4.5pc interest rate and matures in 2048.

Trump's $3bn fortune doesn't qualify him for Bloomberg's list of the world's 500 richest people, which bottoms out at about $4bn. The collective wealth of that group has jumped 12pc to $5.39tn this year, according to the Bloomberg Billionaires Index. The president's own estimates of his net worth often are higher than independent appraisals. They're also elastic. When Trump announced his candidacy in 2015, his campaign said he was worth $8.7bn. A Bloomberg assessment that year that pegged his wealth at $2.9bn prompted him to dismiss the appraisal as "stupid". He then said he was worth more than $10bn. Much of Trump's own valuation of his net worth stems from what he calls his brand value, which he has said is as high as $4bn, according to unaudited financial statements he has prepared for prospective business partners.

Trump's net worth could be higher than estimated if he owns assets or has received payments that aren't publicly known, or if he sells properties at values above market averages. It could be lower if he has undisclosed debts or partners, or if some companies for which full financial information is unavailable are less profitable than estimated.

The president's decision to maintain his business while in public office broke with decades of tradition and prompted lawsuits alleging he's violating the U.S. Constitution by selling services to governments.

It also has invited his critics to accuse him of profiting from the presidency, a charge he rejected in October when he told Fox News Channel that being president has cost him billions of dollars. (Bloomberg)

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