By Chicago News Staff
“It’s very possible that I could be the first presidential candidate to run and make money on it.” Donald Trump / Fortune, 2000.
Net loss keeps getting worse
Former Trump Organization executive Barbara Res remembers that when Trump opened his first Trump Tower in 1983, it was a true mark in American retail, bringing six stories of glamorous luxurious boutiques, including Cartier and Harry Winston, which beckoned luxury buyers strolling past a live pianist and a 60-foot indoor waterfall. “We got the highest rents ever, anywhere. Things are all different now,” Res said.
That difference includes profits. Forbes closely followed Trump’s business path since 2014, the year before he announced his presidential campaign, to 2017. During this time his net operating income dropped by whooping 27%, and continues to fall. According to Forbes calculation, his net worth has dropped from $4.5 billion in 2015 to $3.1 billion the last two years, knocking the president 138 spots lower on the Forbes 400 list.
In Chicago, values of Trump condos have crept downward, the opposite direction of the overall market. “People bought into the building based on the brand being synonymous with luxury,” says Cyndy Salgado, a real estate broker who once worked for the Trump Organization, selling condos in the Chicago tower. “Now many people feel that the brand represents divisiveness, embarrassment and questionable morals.”
In total, the shift in perception has erased an estimated $50 million from the value of Trump’s residential units in Chicago and New York. One of the reasons analysts point is because Trump’s brand has been always built with a focus on his persona. Therefore, what was used to be the brand of luxury, became the brand of question.
Overall, revenue at the president’s U.S. golf properties fell by an estimated 9% in 2017. It goes beyond politics—guests now endure metal detectors and bomb-sniffing dogs, which was captivating to some guests at first, but now it’s more exhausting and definitely not something you would go to a golf club for. Trump encounters similar scenario in luxury residential real estate as well. The president still holds roughly 500 condos, co-ops and mansions, all with their own complications, in terms of both hassles and branding. He has 37 units worth an estimated $215 million in midtown Manhattan. Prices for condos in Trump Tower have fallen every year since 2015, when Trump declared his candidacy, and are an estimated 33% below their highs. Similar trends are playing out a few blocks away at Trump Parc East, where prices are down 23%, and at Trump Park Avenue, where they have dropped 19%.
Such weakness seems to have infected the Trump brand across the board. After multiple bankruptcies, Trump turned his business toward real estate management and licensing, slapping his name on other people’s buildings, ties, steaks and even a urine test—allowing him to make money while others take all the financial risk. But partners at three Trump-branded hotels (Toronto, Panama, New York City’s SoHo) have taken the president’s name off their projects, which helps explain why politics has dragged that segment of the Trump hotel empire down about $30 million, by Forbes’ estimates. Meanwhile, many of his licensing customers, including Macy’s and the mattress-maker Serta, fled in the early days of his abrasive campaign—and the president’s company doesn’t seem to have landed a single new deal since. In 2015, Forbes valued Trump’s product-licensing operation at $23 million. It’s now down to a mere $3 million.
There are some bright points, too
Trump International Hotel
A few blocks from the White House, at the Trump International Hotel, Trump fans hobnob with cable news stars and Cabinet secretaries. The place turned a $2 million profit in the first four months of 2017, far exceeding the Trump Organization’s expectations. However, according to Federal Election Commission Data, a vast portion of that money comes from various GOP organizations, which have pumped more than $1.3 million into the hotel since it opened in fall 2016.
Despite what seems a violation of the Constitution’s emoluments clause, designed to keep presidents free from foreign financial interest, the governments of other nations are welcome too. Everyone from Kuwaiti officials to the prime minister of Malaysia has reportedly spent money there. And lobbyists working for Saudi Arabia disclosed that they ran up a $270,000 tab in just six months.
In terms of condo sales, Trump sold one in New York to a woman named Angela Chen, just a month after he took office. Chen paid $15.9 million, $1.8 million more than her downstairs neighbor shelled out for a similar apartment a year earlier. The deal sparked conflict-of-interest concerns because Chen is apparently the head of a business called Global Alliance Associates, which claims to use its network with the “highest levels of government officials” to help companies expand into China.
After Trump made Mar-a-Lago famous, the Club initiation fee has also skyrocketed, and is now at $200,000. According to Forbes estimate, Mar-a-Lago is now worth $160 million, which is $10 million more than before the White House Saga.
Those who believe that everything Trump touches turns to gold, might actually be right, at least to a certain extent. The phenomenon covers president’s penthouse in Trump Tower, which price has increased by $10 million after Trump took presidency, even despite the declining value of the rest of the building. Another ‘turn-gold’ example is Trump’s Boeing 757 he used for traveling to his campaign rallies. Some plane brokers now think it could be worth double the roughly $20 million it would cost if anyone else owned it.
Same goes for presidential campaign. In a quite surprising move Trump announced re-election campaign as soon as he won in the elections. For him it means that donations keep flowing, campaign offices keep renting out and bringing him even more profit. As a result, America’s first billionaire president turned over $900,000 of donations into revenue for himself, and the numbers keep adding up there.
United States of America, Inc.
“My father made a tremendous sacrifice when he left a company that he spent his entire life building to go into politics,” counters Eric Trump, who now co-manages the Trump Organization on behalf of the president, in a statement to Forbes. “Everything he does is for the good of the American people—he has zero involvement in the Trump Organization and quite frankly to suggest otherwise is outrageous.” (Eric Trump himself, however, told Forbes shortly after the inauguration that he would provide the president bottom-line updates “probably quarterly.”)
While Trump is bashing around criticizing Mexicans, Muslims, and even the pope himself, imposing tariffs on steel and aluminum prices, immigration sanctions, and even trying to cut off government grants to almost every major U.S. city for their refusal to stop being sanctuary, he might be going after a much bigger revenue profit, as some financial analysts suggest.
Take tariffs, for instance. Rapidly increasing rates for steel and aluminum are able to drive a lot of his competition out from the construction industry, where he, as the owner of a number of existing major retail and residential buildings, would absolutely win.
Same goes for immigration. Stiffening of immigration policies naturally leads to higher construction costs, since construction is one of the largest industries offering labor for those who don’t have official work authorization in the U.S.
Trump runs the country pretty much as he would run the company – rough, inflexible, but very profit-oriented. And even while losing money now, he will most likely gain it back very shortly, at his post-presidential future, and we, as the nation, would split the costs.