As New York Attorney General Letitia James sets her sights on Donald Trump's assets, particularly targeting the skyscraper at 40 Wall Street to satisfy a hefty legal fine, a newly reported property valuation poses an unexpected hurdle.
In February, Judge Arthur Engoron ruled in favor of James's lawsuit against Trump, sons Eric Trump and Donald Trump Jr., and The Trump Organization over allegations that the former president inflated the value of his properties and his own net worth by billions of dollars on financial statements provided to banks and insurers to make deals and secure loans. The former president was ordered to pay $454 million in penalties.
Trump on Monday posting a $175 million bond in the New York civil fraud case, preventing the state from seizing his assets while he appeals the ruling.
The Manhattan property, once a jewel in Trump's real estate crown, has seen its value plummet by roughly 48 percent, complicating James's potential seizure efforts. Amid an office market still reeling from the COVID-19 pandemic and looming financial obligations that could force Trump's hand, the future of 40 Wall Street is opaque, according to a valuation estimate by Forbes.
The drop in valuation casts a shadow over its once-luminous allure. The assessment found the property's current worth at $47 million, down from $90 million a year earlier. The sharp depreciation stems partly from the hike in ground lease payments set for 2033, a spike that threatens the viability of Trump's ownership.
According to the estimate, the property is also grappling with an occupancy dip, falling 18.6 percent from 2015 highs, mirroring the broader downturn in Manhattan's office spaces post-pandemic. The looming financial restructuring, which Forbes noted includes $120 million in debt due by 2025 and a ground lease poised to intensify financial pressure, puts the skyscraper in a precarious position.
Trump, facing millions in legal fines and saddled with the dwindling asset, could find himself in a conundrum that complicates any straightforward asset seizure by James.
This comes as Forbes issued its 2024 Billionaires list on Tuesday, ranking Trump as the 1,438th-richest person globally, with a net worth of $2.3 billion, accounting for all assets minus liabilities.
However, his real-time net worth, buoyed by assets like Truth Social, pegs him at $5.9 billion, positioning him as the 505th wealthiest globally.
At 40 Wall Street, the property's financial straits are compounded by a unique leasing arrangement. Trump does not own the land beneath the tower but instead pays rent to a family with long-standing ownership, Forbes said.
The arrangement, while beneficial in terms of operational rights, becomes a potential burden around the property's finances as the ground lease payments are set to surge from $2.8 million to $16.3 million in 2033. Such an increase could fundamentally alter the economic viability of Trump's control over the building, Forbes said, potentially pushing it toward a bankruptcy, which may be the best choice for the former president.
With the loan maturing in 2025, Forbes' staff outlined a scenario in which bankruptcy could allow Trump to potentially sidestep the full impact of his creditors' demands, given his personal guarantee on the loan is capped at $26 million.
The option to default would potentially leave the problem to bondholders of the loan, Forbes noted, but it would still offer Trump a way out.
Newsweek reached out to the Trump campaign by email for comment on Tuesday.
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Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
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