James Grant – 1987 – Sell Donald Trump by Grant’s Interest Rate Observer

Crash or no crash, the personal stock of Donald J. Trump, the New York real-estate celebrity, is up. Up is Trump’s favorite direction. He proposes to build the world’s tallest building. For flying, he owns a Super Puma jet helicopter and a Boeing 727. For weekend cruising, it’s the yacht Nabila, which belonged to the previously opulent Adnan Khashoggi. On land, he rides in limousines. A new “Trump” line of superstretch limo produced by a Bronx manufacturer was named for—who else?

Donald Trump, 41 years old, by all accounts is nearly perfect. He is “six feet-something tall” (People) and photogenic. He is the owner of Trump Tower, which, among real-estate people, is mentioned in the same breath as another one-time family business, Rockefeller Center. Trump himself calls it, “the best piece of real estate in the world, in the most incredible city in the world.” He has called the Mayor of New York a “moron”—and lived to tell the tale. When New York City government bungled the job of restoring the Wollman ice-skating rink, Trump stepped in to finish it, on time and within budget. He and his wife Ivana, a former model and skier and a current socialite and business-woman, have three children. If one of the children should happen to call the office, that child is put right through—no questions asked. “In 10 years,” says Ivana, “Donald is going to be 51 years old. How many casinos can you own? How many buildings can you build? Eventually, Donald’s going to look at some other business. Maybe it’s politics. Maybe it’s something else. I never say never.”

Although the mayor and Trump get on like Iran and Iraq, the developer has managed to ingratiate himself with national political leaders. He has taken out full-page advertisements. in The New York Times (at about $35,000 a page) to advance his views on foreign policy. He has flown to Moscow. “I like the people, and the people like me,” he says, sounding a little proprietary about the people. He won’t be running for President this year, though: “It’s so hard to just drop everything to do something like that.”

Although Trump contends that he doesn’t like “doing press,” he is chronically landing on the cover of magazines. Business Week, the New York Times Magazine and People have done him. New York almost canonized him. Trump has done himself, too, in Trump: The Art of the Deal, newly published by Random House. “I don’t do it for money,” Chapter One leads off. “I’ve got enough, much more than I’ll ever need. I do it to do it. Deals are my art form.” Elsewhere Trump contends, “The point is that you can’t be too greedy.” Also he writes, “I like thinking big. I always have.” It is an affecting story of an often misunderstood business genius. The book has gone to a 25% discount from the $19.95 list price at Waldenbooks.

“He is this year’s phenomenon,” People said, “a 41-year-old member of a species on the verge of extinction: He is a Tycoon.”

It is possible that no individual in America is more overbought, personally, than Trump, It is one thing to call Edward Koch a “moron” and get away with it, or to patronize your father in your autobiography (“I had loftier dreams and visions,” writes Donald, comparing himself to Fred). It is another to get your face on the cover of People and Business Week and manage to hold on to your money. “Whom the gods would destroy, they first make merry,”: a friend quipped. Trump was the roaring 1980s in person. And now that the roaring has subsided, what will become of him? If New York City real estate should happen to sink, what will happen to the man who owns so much of it? Is it possible that publicity, the scourge of fortunes and breaker of luck, will be any kinder to Trump than it was to the investor-turned-literary-celebrity, George Soros?

Our curiosity was reduced to a few basic questions: Is Trump the type of tycoon with money or the type without? Does he personally go in for leverage? To what extent does his net worth depend on the quoted prices of illiquid assets? More broadly still: Will any real-estate fortune be secure in the coming credit difficulties? Seeking the answers, we read the Trump oeuvre: press clippings, public financial statements, autobiography, back issues of W and “Suzy” columns. We asked around town. Taking nothing for granted, we ordered up a Dun & Bradstreet report on the Trump Organization. The results were inconclusive:

EMPLOYEES: 4,200, including officers; 100 employed here.

FACILITIES: Rents 5,000 sq. ft. in multistory steel building in good condition. Premises neat [i.e., “the best piece of real estate in the world, in the most incredible city in the world”].

LOCATION: Central business district on a main street [i.e., Fifth Avenue].

BRANCHES: Subject operates a casino [he has two and is building a third] in Atlantic City, N.J.

D&B did not specifically address the question of whether Trump has any money or whether it is all spinach. Business Week had ventured $3 billion, seeing Forbes an estimate of $850 million and raising it a couple of billion, but the Business Week estimate appeared before the crash and before the tycoon took a controlling position in Resorts International with its vast sinkhole, the unfinished Taj Mahal casino in Atlantic City. Furthermore, the magazine spoke before the publication of Trump: The Art of the Deal, and the author’s specific guidelines for interpreting Trump, i.e.:

The final key to the way I promote is bravado. I play to people’s fantasies. People may not always think big themselves, but they can still get excited by those who do. That’s why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration—and a very effective form of promotion.

Donald Trump, Taj Mahal

Sell Donald Trump

Maybe he was only exaggerating, but Trump divulged that $320 million seemed like a lot of money to him as recently as 1985. That was the year he purchased Hilton’s Atlantic City hotel, which, he says, was the biggest bet of his life. He borrowed the money from Manufacturers Hanover, incidentally —got the president on the phone and got the money “just like that. It goes to show you the value of credibility. In return, I did something I’d never done before. I personally guaranteed the loan.”

That’s the rub with Trump: not knowing how many chits he has out. The tycoon has raised $600 million in junk-grade debt for his two Atlantic City casinos: $250 million in Trump Plaza Funding mortgage bonds (the 127/8s of 1998), $226.8 million in Trump’s Castle Funding first mortgage bonds (the 133/4s of 1997) and $125 million in another Trump’s Castle Funding first mortgage bond issue ( the 7s of 1999). As for Trump himself, our intelligence has it that he is, in fact, loaded. More than that, our informants say, he is probably liquid. “He’s big time, he really

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