The gilded Trump name may no longer sell New York real estate. But, 5,000 miles away, investors are raising millions in a bet that the former US president’s brand retains its international cachet.
In South America, they’re resurrecting a project left for dead: a Trump tower in Punta del Este, the Uruguay resort city known as a playground for the region’s elite and US celebrities such as Facebook’s Mark Zuckerberg and designer Ralph Lauren.
In 2012, with much fanfare, Donald Trump unveiled the tower, with sweeping views of the Atlantic and a heliport. Apartments once sold for more than US$1.8 million.
The tower’s Argentine developer has since ran out of money, construction stopped in October 2019 and the project is undergoing a restructuring.
Now, a group of apartment owners, bond holders, suppliers and other investors is backing a rescue plan.
In a promising sign for Trump, most of the current owners want to keep Trump’s name emblazoned in massive gold letters on the front of the tower, according to Rolando Rozenblum, one of the apartment owners pushing for the deal.
In New York, Trump’s home town, residents of some of his luxury buildings have removed his name.
“The Trump name is still a valid global real-estate brand,” said Rozenblum, chief executive officer of International College, a private school in Punta del Este. “It offers a kind of importance that a project with this level of quality deserves.”
A South American revival would come at a welcome moment for the Trump Organization, the former president’s real-estate company.
Four years of divisive controversies followed by the pandemic have taken a toll on Trump’s businesses. He is facing a trial in the US Senate from his second House of Representatives impeachment after lawmakers said he incited an attack on the US Capitol last month.
During his presidency, Trump’s net worth tumbled US$500 million, to US$2.5 billion, according to the Bloomberg Billionaires Index.
Revenue from his Washington and Las Vegas hotels fell by more than half since he took office, federal financial filings show. In the United Kingdom and Ireland, revenue at his golf courses, such as Trump Turnberry in Scotland, dropped by roughly two-thirds.
The website of the Trump Organization, which didn’t respond to requests for comment, lists the Uruguay tower as its only project in Latin America. Owners of a hotel in Panama removed the Trump name in 2018 and replaced his company as manager after a bitter legal dispute.
In Brazil, his company exited a hotel project in late 2016 after federal prosecutors opened a criminal probe of investments by local pension funds. The Trump Organization cited delays and strategic differences, and no one at the company was implicated in the investigation.
As is now common for the company, the Trump Organization didn’t build or develop the tower in Uruguay; it merely leased the Trump name.
Its former developer, Buenos Aires-based YY Development Group once billed the project as “the most exclusive tower in South America.”
With its casinos, designer boutiques and sheltered yacht harbour, its home of Punta del Este is certainly Trump’s kind of place. The tower overlooks Playa Brava beach, with its miles of sandy beaches and famed sculpture of fingers sticking out of the sand.
But the project was ill-timed. Argentina, home to three quarters of the tower’s apartment buyers, suffered through recession and a currency crisis. At the same time, the project didn’t qualify for local tax breaks, putting it at a disadvantage to competing luxury buildings.
Today, the 25-story cylindrical building, flanked by a crane, stands a bit more than half finished. Tall weeds carpet the tower’s parking lot and a pathway to a shuttered showroom in the building.
The sun slowly bleaches a giant billboard featuring a faded picture of Eric Trump, one of the former president’s sons and a senior executive in the company.
YY Development CEO Juan José Cugliandolo didn’t respond to an email seeking comment. The phone number listed on the firm’s website was out of service.
If a court approves a restructuring later this month, construction could resume as soon as April, Rozenblum said.
To complete the project, a trust representing owners will have to raise US$30 million by selling apartments and collecting payments on units already sold, he said. That sum will add to the US$70 million already spent on construction.
The Trump Organization showed “flexibility” with its licensing terms, according to Rozenblum. He declined to be more specific, citing a non-disclosure agreement.
Rozenblum bought a 3,343 square-foot, three-bedroom ocean-view apartment as a year-round home for his family.
Jorge Garber, an Argentine construction executive who will supervise the building, said the last of the apartments should be completed 16 months after the work restarts.
Garber, who bought an apartment in the tower as a summer home, said the pools and other attractions will follow not long after.
“In two years, we’d have to have the tower and all of the amenities finished,” he said.
by Ken Parks, Bloomberg