Here Is What A Trump ‘Fire Sale’ Would Look Like

Forbes

Selling buildings won’t be easy for the billionaire ex-president, but these golf courses and other trophy properties could provide fast cash.  Read the full story on Forbes: https://www.forbes.com/sites/kylemullins/2024/03/21/heres-what-a-trump-fire-sale-would-look-like/?sh=435099485c79  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Hi everybody. I'm Brittany Lewis with Forbes breaking news. Joining me now is my Forbes colleague money and politics reporter Kyle

00:07 Mullins. Kyle thank you so much for joining me. Always great to be here. Brittany. It has been a conversation we have now been

00:15 having for weeks. You and I have discussed before that former President Donald Trump owes over half a billion dollars in legal

00:21 penalties. Before we dive into the conversation here can you walk us through how the former president got here.

00:28 Absolutely. So as we've discussed before this is really the story of two different legal cases. The first legal case is one

00:35 brought by Eugene Carroll. She's a writer. She sued Trump for sexual abuse and defamation and won two verdicts against him in

00:42 the state of New York. And those verdicts totaled 88 over 88 million dollars in damages to him.

00:47 And those cases he was able to post a ninety one million dollar bond in that case. So while he is appealing those verdicts and

00:56 we will see where that goes. The second one is the much bigger one. That's the New York attorney general's case that was

01:02 brought against him for him and his companies and some of his family members for allegedly repeatedly lying about his assets

01:10 and generally puffing up his business expertise and his own net worth in order to obtain better terms on loans for example.

01:20 And that in that case the judge handed down a judgment earlier this year that said that he owed about over three hundred

01:27 fifty million dollars in damages plus one hundred million dollars in interest. That number is going up every single day until

01:34 he pays and he needs to post a bond in that case or pay up. He hasn't yet. His lawyers say that he doesn't have the cash in

01:41 court. He claims that he might. We'll see what happens on that case as well. But he needs to do so before he ends up appealing

01:47 the case. New York Attorney General Letitia James said she was prepared to see some of his assets if he couldn't come up with

01:55 the cash. Has she made good on her word yet. So she hasn't made good on her word yet. There seems to be they seem to be

02:02 respecting a sort of 30 day deadline allowing him giving him that amount of time to come up with the cash he needs in that

02:09 case. That 30 day deadline is this upcoming Monday March 25th. Pretty pretty soon. So because of that she has actually

02:19 started taking some preliminary steps that would be necessary in the event that she did choose to see some assets. We do

02:24 think that it would be easier for her to seize assets in the state of New York because that's where she has jurisdiction. She

02:29 could theoretically seize assets elsewhere but it would again just be easier in the state of New York. She filed the judgment

02:35 in the with the county clerk in Westchester County New York which is just north of New York City. Trump has two properties in

02:42 that county. And so filing the judgment there is the first step that could potentially be taken toward eventually

02:47 potentially seizing either his golf course there or his Seven Springs estate. If you live in New York you know that Trump has

02:55 quite a few properties here. But can you bring us up to speed here. Give us a general overview of his real estate portfolio.

03:03 Sure. Out of his roughly two point six billion dollar fortune real estate makes up just under two billion dollars of that

03:09 about one point nine billion. Most of it is concentrated or a large chunk of it is concentrated in New York. But we're talking

03:15 there's really three categories that we're talking about here. So the first is his commercial properties. That includes

03:20 office retail hotels all that kind of stuff. And that spans. He has properties in New York properties in San Francisco

03:27 properties in Chicago properties in Las Vegas. The second category is residential real estate. He's got homes in Florida

03:34 again homes in Las Vegas. He's got homes in California homes in New York of course including his is his penthouse and

03:41 Trump Tower. And then the third one is sort of resort and real estate resort and golf properties. He's got 10 golf courses

03:49 across the United States. He's got three more in Scotland and Ireland. And then he's got resorts like Mar-a-Lago resorts like

03:57 Doral in Miami. So all of these there's this wide range of different types of properties in this in this about two point

04:05 two billion dollar real estate portfolio. Leticia James New York's AG did say that she was like I said prepared to seize his

04:14 assets even said something to the effect of I look at 40 Wall Street each day. What do you think he could do to ensure that

04:20 his assets aren't seized. So he's really coming down to the wire here. And it's hard to say what he's going to be able to do

04:28 to ensure that his assets aren't seized. I will vote on the 40 Wall Street thing that my colleague Zach Everson had some

04:33 reporting out just earlier this week noting that 40 Wall Street is actually probably financially his weakest property. He might

04:40 actually be somewhat happy to get rid of it or at least declare bankruptcy on it.

04:45 Regardless what could he do to seize to ensure that his properties are not seized. Potentially he could try to sell them

04:51 himself. And that's that was what my coverage focused on this week was what would a fire sale of Trump's properties actually

04:57 look like. Let's talk about that because his attorney said that a fire sale of assets you're reporting would result in quote

05:05 massive irrecoverable losses. What would a fire sale look like and what is that.

05:13 Yeah. So I mean the basic idea behind a fire sale is you're trying to get rid of things as quickly as possible to get cash as

05:19 quickly as possible. And his attorneys refer to this as irrecoverable losses because if he were to sell something at a fire sale

05:29 rate typically what you're doing is you're trading speed for money. So you're getting speed in terms of selling the property

05:36 very quickly. But you might be losing. You might not be able to sell it for as much as you want to be able to otherwise. And

05:42 what they're the argument that they're making in those legal documents is essentially that if he's forced to sell his

05:48 properties extremely quickly in order to meet this appellate deadline say he sells a 50 million dollar property for 30 million

05:55 dollars. He uses the 30 million dollars cash uses that to meet his necessary legal deadlines. And then he later wins on

06:03 appeal. There's no way he can get his property back because he had to sell it in order to meet that meet that deadline. So

06:11 that's the basic argument that they're making in those in those court documents. And you found for Forbes that his best assets

06:17 to offload would either be his golf resorts or his homes not in New York. Talk about why. Yeah. So you know I talked about

06:26 these categories of different types of assets that he has earlier. Golf courses have a couple of different benefits. The

06:32 first thing is that they're not usually. First of all none of his U.S. golf courses have any mortgages on them and mortgages

06:37 could potentially slow down any sale. The second thing is that these types of purchases are not usually heavily

06:44 leveraged. So theoretically so people who buy golf courses are used to doing so basically with cash or mostly with cash.

06:51 And you know if they have to go find a loan for it that could also slow down the transaction. And remember what matters

06:56 right now is speed. The third thing is that you know another thing that could potentially slow down these transactions is

07:03 people when they buy an asset. Typically they want to do due diligence on it. If you're buying a home you're going to

07:08 want to have it inspected to make sure there's no mold in the walls. If you're buying a business you're going to want to

07:12 see all the numbers and you're going to want to make sure that the golf courses for example well maintained and the

07:17 cards all work and that kind of thing. So in that situation that's that's another thing that can slow down these these

07:25 purchases. But if golf courses are sometimes bought by their members golf clubs are often sometimes bought by their

07:32 members. And so members know the property well. They might be willing to forego some of that paperwork that an outside

07:38 buyer might be willing to go for. With all of that said I talked to one expert in golf courses who told me that sort of

07:47 the minimum for a golf course purchase is still something like 30 days which is just not enough time. He would he would

07:53 really have to speed up that timeline in order to dump something before. You said that his homes not in New York would be

07:58 the best to dump. Why not his home in the Empire State then.

08:02 So New York just has a little bit more of a we'll say a lengthy legal process when it comes to selling properties. You

08:12 could still turn around a sale in New York you know but it's likely going to take you know even a super fast sale is

08:19 probably going to take weeks instead of days. There are just yeah there are more legal barriers involved. There's also not

08:25 a standard contract that is used in New York for property sales. Each one has to be drawn up individually whereas in a

08:31 lot of other states you have sort of standard sale contracts that are able to able to quickly be reproduced and replicated.

08:37 So that that that is something that would take more time in the state of New York. He also has some commercial properties

08:43 including office spaces. Can you talk to us a little bit about the difficulties he would have selling those.

08:50 Absolutely. The commercial properties are really really difficult for him to unload especially those office properties.

08:56 The office market is just horrendous right now. I had one source tell me that lenders are running for the hills when it

09:03 comes to office properties. They just do not want to touch these. So you know already we're looking at things that maybe

09:09 had he sold them 10 years ago would be worth X amount and they're worth 30 or 40 percent below that. And that's a fair

09:16 market rate. That's not even counting the fire sale rate right because we're going to be talking about discounting things

09:21 in order to exchange that for speed. And then the other issue with with with office spaces is that they are much more

09:28 complex properties. I you know I mentioned that people want to see the paperwork. These these two types of transactions

09:34 especially in code of complex ones tend to take months if not years. You're going to want people to be able to come into

09:40 the office space see it understand what they're buying you know get comfortable with it you know build a relationship

09:48 with them. That's how you sell an office space for a good price. Trump doesn't have time to do any of that. So selling off

09:55 some of his office assets in New York just does not seem like a very good idea unless again we're talking about somebody

09:59 who knows the property really well and will be willing to bail him out which is just highly highly unlikely in that in the

10:05 event of office space. When you think about Donald Trump as a person most Americans have very strong feelings towards

10:11 him. Either way he is a very polarizing figure. Does that do politics come into play here.

10:17 Well it's do come into play a little bit. I talked to one real estate broker in New York who told me that he pointed to a

10:27 recent article in New York Times that showed that condo prices in New York in buildings with the Trump name on them.

10:34 They're selling for a discount compared to buildings without the Trump name on them. And that didn't used to be true.

10:40 Before he was president condos in Trump branded buildings actually sold for more than the average condo in New York City.

10:47 So you know New York City is a deep blue city. It's full of people who you know did not vote for Donald Trump in the last

10:55 election. The vast majority of them. And so you know there's some speculation that you know if you're seen as the person

11:03 who's bailing out Donald Trump that could be socially disadvantageous for you. On the other hand you know I talked to some

11:09 folks in Florida who told me that would not be an issue there. Florida is a you know it's a former swing state now trending

11:15 red. You know he won it by three points in 2020 which in Florida I'm speaking as a native Floridian. That's a veritable

11:25 landslide in the state of Florida. You know he would have less problems probably finding politically friendly folks to

11:34 potentially look at his properties especially because what he's selling there is residences. And so you might there might be a

11:40 little bit less politics tied up in that. I want to read a sentence from your Forbes piece and then get you to elaborate on it.

11:46 You wrote this quote ultimately conversation after conversation returns back to the strangeness of the whole situation. Why is

11:54 that. Yeah I talked to half a dozen real estate experts about you know in reporting out this piece in various different types

12:02 of real estate. And every single one of my conversations just kept coming back to the fact that this is a super weird

12:08 hypothetical situation. They have no idea how Donald Trump is going to figure out a financial way out of this. Turning around

12:18 a fire sale on even a home in in mere days is is something that is really really difficult to do. Let alone a golf course. Let

12:27 alone an office building. These are very very difficult assets to try to turn around in days. It's difficult to sell anything in

12:33 days. You can't sell a car in days. So they just kept coming back to this over and over saying like look we're trying to give

12:41 you the best advice we can based on our expertise in these in these sectors. But this is a really weird situation. And on top of

12:47 everything else we're talking about a former president currently running for president. I just add a whole other layer of

12:53 complications on top of everything else. This is the word is overused but this is an unprecedented situation. It's an

13:01 unprecedented situation. The experts say they don't know how Donald Trump is going to do it but he has to do it. Which brings

13:07 me to my final question. What is the next deadline. When does he need to have this cash.

13:13 Donald Trump needs the money by Monday March 25th. That's this upcoming Monday. We don't know what he's going to be able to do

13:20 to turn these to turn these kinds of things around. He his lawyers again have said in legal filings that they have not been

13:26 able to find insurance companies willing to work with him to post a bond either partial or full bonds because they're skeptical

13:32 of his real estate assets as collateral for those bonds. And he can't put up the cash. He doesn't. As far as we can tell he

13:38 doesn't have the cash. He claimed on True Social the other day that he does have the cash. That seems unlikely. But you know

13:46 theoretically he could have come across something somewhere at some point.

13:49 We're not sure where this is going to go next. The only way to find out is to wait and watch or you know he could be granted

13:57 relief by the appellate court. I think that might be the most likely way he gets out of this at this point.

14:02 Kyle a lot remains to be seen but I know one thing's for certain as this situation develops you will come back on hopefully

14:09 and break it down with me. Kyle Mullins thank you so much for joining me. Always happy to be here. Brittany.

14:14 Thank you.

14:15 Thank you.

14:16 Thank you.

14:17 Thank you.

14:18 Thank you.

14:19 Thank you.

14:20 Thank you.

14:20 [BLANK_AUDIO]

Category

Transcript

Recommended