The Wall Street Journal has a hilarious story today using Donald Trump’s lawsuit against The New York Times editor Timothy O’Brien to get a damaging look inside Trumpville.
O’Brien wrote a book four years ago saying Trump was worth just a couple hundred million dollars rather than the billions Trump claims, and the Donald sued for “defamation.”
Trump, surprisingly, is actually pushing the case forward and has been deposed. Surprising because… well, see below. My friend Alex Frangos, a Journal real estate reporter, somehow got a hold of the deposition and—let’s just say this—O’Brien doesn’t have much to worry about.
The deposed Trump is a huckster laid bare: A web of spin, delusions, and outright BS—and he admits it.
Mr. Trump was asked whether he has ever exaggerated in statements about his properties. “I think everybody does,” he said in the deposition. “Who wouldn’t?”
A follow-up question: Does that mean he inflates the value of his properties in general, nonfinancial public statements? “Not beyond reason,” he said in the testimony.
For example, in a November 2007 Wall Street Journal interview cited by Mr. Ceresney, Mr. Trump said he had sold out units at an eponymous condo-hotel project in Hawaii. “The building is largely owned by me,” he said in the interview. But in the deposition, Mr. Ceresney produced the licensing agreement for the project. Mr. Trump wasn’t a major equity holder in the project, it showed, a fact Mr. Trump didn’t dispute.
“Because this is such a strong licensing agreement that I consider it to be a form of ownership,” Mr. Trump said. “I’d rather have this than own the building,” he said. Moments later he said: “I would say that it could be interpreted to be a form of ownership in the building.”
Uh, no, Donny.
The deposition reveals he told his bankers and New Jersey casino authorities in 2004 and 2005 that he was worth approximately $3.6 billion. In 2005, Deutsche Bank evaluated his net worth as part of underwriting a $640 million construction loan it made to Mr. Trump’s Chicago condo and hotel project. The bank said his worth was $788 million, according to information presented by the author’s lawyers present during Mr. Trump’s deposition.
The only real question left is is Trump in on the shtick or does he actually believe what he’s saying? Let’s hope for his sake it’s the former.
There’s so much material here that this story could really have been much longer, but the Journal packs some more of it into a good sidebar.
Mr. Trump told The Wall Street Journal in November 2007 that he sold all 1,282 units at his Las Vegas condo project that he owns with casino and hand-truck magnate Phil Ruffin. There were $1.3 billion in proceeds coming from that project, he told The Journal and other news outlets, including CNBC.
In the deposition one month later, he said he had deposits for around 900 units.
At the condo and hotel project in Las Vegas, Mr. Trump had told reporters on several occasions that the project sold for $1,300 a square foot on average.
At the deposition, the lawyer, Mr. Ceresney, asks if that sales figure is true.
“For some units it is, yes. We got some — we sold — we got 1,300 — I averaged on some units $1,300 a foot,” Mr. Trump said.
Mr. Ceresney then asked: “Do you understand the concept of an average, Mr. Trump?
And the kicker to me follows a revelation that his signature Trump Tower on Fifth Avenue in Manhattan lost $600,000 in 2006. Having covered real estate for several years, I can tell you this is just astounding:
Asked if he knows how to calculate operating income, he said: “I don’t do that. I really don’t.”
Net operating income is a key metric for valuing commercial real estate. It’s hardly rocket science to calculate, either. Embarrassing.
Nice scoop by the Journal.
Ends today: If you'd like to help CJR and win a chance at one of
10 free print subscriptions, take a brief survey for us here.