Question of the Day - 13 February 2018

We’ve gotten this question several times over the past year, but never had enough information to answer it. Then, in mid-January, an investigative piece was published in Forbes that shed a lot of light on the subject.

It’s been fairly widely reported that Donald Trump’s net worth has dropped since he took office last year. At the same time, it appears that his businesses, particularly golf courses, are doing well in areas that supported his candidacy, though less well in areas that didn’t.

As far as Trump International Hotel here in Vegas is concerned, however, it’s a different story. According to Forbes, “The gleaming 64-story tower is a bright spot in the president’s portfolio.”

Between January 2016 and January 2017, 40 units sold in the building, “making it [Trump's] most active real estate property.” In total, the units, selling at an average of around $325,000 per, have earned Trump and Phil Ruffin, his 50-50 partner in the building, $13 million. And the Trump-Ruffin units have sold for an 11% premium over comparable condos that have changed hands on the secondary market.

Writer Matt Drange noted, “It’s unclear how much of an impact, if any, Trump’s ownership has had on sale values.” But for his in-depth piece, Drange and Forbes staff interviewed dozens of recent condo buyers — “corporate executives, small business owners, retired police officers, and former stock brokers, among others” — to determine if Trump's position had any influence on their decision to own in the building. “Some said that Trump’s name added to the allure, but none said they bought strictly because he was president.”

Rather, “Many recent buyers said they were incentivized when the Trump Organization waived the first year’s homeowners-association fees, which add up to between $6,000 and $9,000 per year, depending on the size of the unit. It also doesn’t hurt that studio units at Trump, which account for the majority of sales in the building, start at a significantly lower price point than competitors.”

One item of particular note in the story is that as of the publication date in mid-January, Trump and Ruffin owned a total of 351 units in the tower. Drange wrote, “It is widely believed in the Las Vegas real estate community that the pair will hold onto at least 300 of the units, the minimum required to open a casino in Nevada.” Ruffin has said that the best use of land he and Trump own adjacent to the building would be a casino.

The story was published a little before Steve Wynn bought up a large portion of the property around Trump Tower, so it’s unclear what effect a Wynn megaresort (if it happens, now that Wynn himself is ostensibly out of the picture) might have on the Trump Organization's future plans.