Two anonymous office buildings have provided Donald Trump with massive windfalls in the past. Forbes money in politics reporter Kyle Mullins joins Brittany Lewis on "Forbes Newsroom" to discuss why the former president shouldn’t count on them for cash now.
READ MORE: https://www.forbes.com/sites/kylemullins/2024/05/10/why-trumps-most-valuable-towers-would-be-so-hard-to-sell/?sh=fa67336c3d4e
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READ MORE: https://www.forbes.com/sites/kylemullins/2024/05/10/why-trumps-most-valuable-towers-would-be-so-hard-to-sell/?sh=fa67336c3d4e
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NewsTranscript
00:00So Trump has a minority stake in these buildings. You're reporting that the majority stake is
00:04Vornado, the CEO of that being Stephen Roth. Can you talk about him? Who is he and what is
00:11his relationship to Donald Trump? Yep. Stephen Roth is, like you said,
00:15the CEO of Vornado Realty Trust. He's also a billionaire, though not quite as wealthy as
00:20former President Trump. He's worth a little over a billion dollars, Stephen. And he's got a
00:26reputation as a very savvy businessman. He's known to jump in on deals when he can take
00:35advantage of it. And additionally, he's been doing business with Trump for a very long time.
00:42So in addition to these two buildings, he's had other economic ventures with them in the past.
00:49He's also served as one of Trump's economic advisors in somewhat of an informal capacity
00:54after Trump entered politics. As Forbes has been reporting, Trump had a cash crunch in the past,
01:00could have a cash crunch in the future, depending how his legal issues
01:04shape out. Is there any indication that Vornado could buy Trump out of his minority stake?
01:11So Vornado has a couple of issues here. They have cash on hand, about 1.3 billion,
01:15which would be more than enough to buy out Trump shares after debt. But unfortunately,
01:20a lot of that cash is actually spoken for. One of the analysts I talked to told me that,
01:24they've got a lot of debt maturing in the next couple of years. They're probably going to need
01:26to service that debt. They've also got big spending plans in some of their other properties.
01:31They own property largely in New York, but across the country. And they've got spending in Chicago,
01:36and especially in the Penn District in Manhattan, that they're really trying to plow cash into,
01:41do lots of renovations, lots of construction to get those properties up to where they want them
01:45to be. So it's a little tough to say whether or not they would jump at the chance to spend a
01:51bunch of money, that they kind of have earmarks for other stuff on buying out Trump's stakes in
01:56these buildings. With all of that said, I also talked to several analysts here. They all told me
02:02that Roth has this reputation as a savvy businessman. One compared him to a shark,
02:06and when he smells blood in the water, he's going to strike. And that might be illustrative. If
02:15Trump is flailing, looking for a buyer, kind of last minute, he's only got a limited amount of
02:19time to raise the cash that he needs potentially, maybe Roth makes him an offer. So you're saying
02:26that there's not blood in the water yet, but there could be down the road. It's hard to say,
02:32you know, with everything when it comes to Donald Trump's finances, it's highly unpredictable
02:37between finances and legal trouble, neither of which are particularly predictable.
02:42But, you know, this is definitely an exercise in hypotheticals.
02:47If Roth and Vornado pass, are there any other potential buyers here?
02:53So if you're looking for outside buyers, again, they're going to run into some of the same issues.
02:57The office market's just not super strong right now. There's not a lot of people who are looking
03:01to invest a bunch of money in a big office building. And because it's a minority partnership,
03:07most people don't want to buy into most investors don't really want to buy into a building if they
03:12don't have the chance to improve the economics on that building a little bit. And so because of
03:18that, you know, these are kind of less attractive stakes. That said, you could see, you know,
03:23a big pension fund, you know, from, you know, Korean pension fund or something maybe comes in
03:28and and buys into it, buys into stake, but they're probably going to be looking for a reduced cost.
03:32Ultimately, everything's going to be dictated by cost.
03:35Do you see a world in which this buyer pool would grow?
03:38Yeah, absolutely. If Trump is, again, looking to sell really quickly, you know, a fire sale of
03:44sorts, that's going to drive the price that he can, you know, ask for for these stakes down
03:50and that could expand the buyer pool.
03:52You pointed out in your reporting that a bright spot for Trump are his shares in Truth Social.
03:57How much are they worth?
04:00As of early May, we had them about five point six billion dollars.
04:03Now, those are publicly traded, so they're going up and down, you know,
04:07with the stock market every single day. They've been on a bit of a roller coaster lately. They,
04:11you know, jumped very high right after they went public,
04:14took a huge dive and have had a pretty remarkable recovery recently.
04:17And that's really boosted the former president's net worth.
04:19He's up to over seven billion at this point.
04:21We know that his shares are tied up in a lockup agreement,
04:24but would he be able to access that before the appeals court hears his case?
04:30It all depends on when the appeals court hears his case.
04:32The earliest that they could hear it is September.
04:35That's around the same time that his lockup agreement,
04:37which carries about six months after the stock went public in March, expires.
04:42So if they hear it very early, they recognize maybe it's a really important case and they
04:46want to get their ruling done quickly. Maybe he does, you know, face a bit of a
04:51crunch there because, you know, he can't access those shares until after the,
04:55you know, the ruling is handed down.
04:57That said, if there's any sort of delays and courts are not exactly known for moving quickly,
05:01you know, I think it's probably likely he's going to be able to access at least
05:04some of these shares before a ruling is handed down.
05:07Kyle Mullins, per usual, thanks for the conversation and your reporting.