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Rejected by more than two dozen bond companies, Donald J. Trump has so far been unable to come up with the nearly half-a-billion dollar penalty owed by Monday in his civil fraud trial.
Just days before the deadline, the former president’s social media company completed a merger — a move that is poised to pump an estimated $3 billion into Mr. Trump’s coffers. That is more than enough to cover the $454 million penalty that he owes to the state of New York, but the merger restricts him from selling his shares for six months, or using them as a collateral against a loan.
Unless those rules are waived to allow him to tap the infusion of cash, Mr. Trump faces the possibility that the state’s attorney general will move to freeze some of his bank accounts and attempt to seize his properties in the city where he made his name as a real estate developer.
The buildings at the heart of the lawsuit — several that dot the Manhattan skyline, like 40 Wall Street, as well as a 212-acre property north of the city in Westchester County — sit like the smallest figurine inside a Russian nesting doll, protected by layer upon layer of legal entities. Lawyers specializing in bankruptcies, foreclosures and corporate insolvency warn that getting control over, and trying to liquidate, any of the former president’s flagship properties is an uphill battle.
And even if the attorney general succeeds in acquiring Mr. Trump’s real estate, unloading a 60-story skyscraper involves a spider web of transactions.
“People are really, really good at litigating and getting to the point of a judgment,” said Brad Eric Scheler, a senior counsel at the law firm Fried, Frank, Harris, Shriver & Jacobson, where he oversees corporate restructuring and insolvency. “But they never focus on the fact that collecting on a judgment is very hard.”
Accused of grossly inflating the value of his real estate empire to get better loan and insurance terms, Mr. Trump lost his civil fraud trial in February. A judge fined him nearly $355 million, a penalty that has now topped $450 million with interest. He has until March 25 to pay the penalty, but it’s unclear what will happen if he doesn’t.
In a letter to the clerk of the court last Thursday, one of Mr. Trump’s lawyers reiterated that they had approached 30 bond companies through four separate brokers, and had failed to find any that would underwrite an i.o.u. of such magnitude. The bond companies, the letter said, refused to accept real estate as a collateral and instead required a guarantee in the form of cash or other liquid assets worth around 120 percent of the value of the judgment — or over $557 million.
The former president had around $350 million of cash as of last year, a Times analysis found — not even two-thirds of what the bond companies are requesting.
Appraisers and commercial brokers warn that it is difficult to know how much his assets are worth, with numerous variables at play, including his debts. The value of his real estate also would take a beating if he is forced to sell it in a hurry, something that Trump’s lawyer also highlighted: “A ‘fire sale’ of real estate holdings would inevitably result in massive, irrecoverable losses,” wrote the lawyer, Clifford Robert.
Here is a look at the challenges that the state faces as it tries to seize, or even a pin a value, on some of Mr. Trump’s best-known properties in Manhattan.
Who Really Owns It?
Mr. Trump does not own almost any of his properties outright. They are protected by a maze of interlocking trusts and limited liability companies. According to the lawsuit, there are as many as 500 separate entities that operate for the benefit of, and under the control of, Mr. Trump.
This creates a challenge for the court, bankruptcy experts said.
“Let me give you an analogy,” said Mr. Scheler, who has no direct knowledge of Trump’s assets, describing how yellow cab operators have been similarly protected. “Taxi fleets had each of their taxis in a separate corporation, so that if the taxi was in a car accident and the insurance didn’t cover it, it would be limited to the entity that had the cab.”
The Banks Get Paid First
Even if New York Attorney General Letitia James succeeds in seizing a property, if there are mortgages or loans against it, those debts will need to be paid first, say lawyers who have represented distressed corporate clients.
“It’s 1,000 percent complicated and the reason it is 1,000 percent complicated, is there are creditors and equity holders that are ahead of Letitia James,” said Leo Jacobs, a commercial bankruptcy lawyer. “Imagine 40 Wall Street is worth $250 million, and there’s $200 million collateralized against it. After transfer taxes and fees, she will be left with $1 million. Is it worth it to enforce the judgment? The answer is no, it’s not.”
The attorney general could issue a lien against Mr. Trump’s property, but lawyers who represent corporate clients warn that a lien is not the same as acquiring property.
“Putting a lien is kind of like a stop sign,” says Leni Morrison Cummins, a partner at the Manhattan office of the law firm Cozen O’Connor, who has mediated fraud claims before the New York State Office of the Attorney General.
Mr. Trump would not be able to sell the property himself or take out loans against it without paying the lien.
“It will prevent you from doing almost anything else with the property,” said Lisa A. Smith, a real estate lawyer and partner in the New York office of the law firm Smith, Gambrell & Russell.
The Fine Print
For some of the buildings, the ownership structure is so complex that it becomes unclear what, if anything, the court could seize.
Take the sleek skyscraper at 1290 Avenue of the Americas. Nearly two decades ago, Mr. Trump acquired a 30 percent stake in an entity that owns the 43-story building in Midtown Manhattan adjacent to Radio City Music Hall. The other 70 percent is owned by the Vornado Partnership Trust.
The fine print of the partnership makes it difficult, maybe even impossible, for Mr. Trump to sell his 30 percent stake. Initially set to expire in 2044, the partnership states that “a partner may not, directly or indirectly, sell, assign, transfer or otherwise dispose of” any part of their partnership interest, without prior written consent from the majority owner,” according to an excerpt from the agreement shared during the trial.
In the lawsuit, New York Attorney General Letitia James argued that Mr. Trump and his proxies had inflated the value of this property by treating it as if it were an asset that could be bought and sold.
Now, if the same asset is seized, the state will face the same limitations that they uncovered during the trial — namely that he is more or less stuck in this partnership for another two decades, said real estate attorneys.
Owning Not the Building But the Right To Rent It.
Diagonally across from the New York Stock Exchange, 40 Wall Street has long been one of the marquis properties in Mr. Trump’s portfolio. Completed in 1930, it was briefly the world’s tallest building. In 1995, for $1.3 million, Mr. Trump bought the right to lease it, according to court records. An offering memorandum for the building shows that the agreement lasts for nearly another two hundred years, until the year 2194.
That’s right — the right to lease it. He is not the owner of the building or the land under which it sits. The arrangement, known as a “ground lease,” makes selling it harder, say real estate lawyers and commercial brokers.
“Anytime a building has a ground lease, there’s automatically a stigma associated with it,” said Roshan Shah, a commercial real estate broker who was formerly a principal at Avison Young. “At the end of the day, the building is sitting on land that you don’t control.”
In 2010, 2011 and 2012, three different appraisals by Cushman & Wakefield valued his leasehold at between $200 and $220 million, if it were to be sold as is, according to documents that were made public during the lawsuit. In 2015, a lender-ordered appraisal valued it at $540 million. By 2021, the former president claimed that his leasehold was worth $663.6 million, a figure that the court found was inflated.
The value of the lease is a function of two things: how much Mr. Trump is paying in rent to the building’s owner and other expenses, and how much he is earning in return from the dozens of tenants occupying the skyscraper.
While stressing that they do not know the value of Mr. Trump’s leasehold, multiple commercial brokers and analysts contacted by The Times said that it’s likely that the asset is worth significantly less today than in 2015, and may even have dipped below $200 million.
The drop is attributed to the seismic shift in commercial real estate, as remote work required by the pandemic has continued. Looking at 380 buildings in Manhattan, one in every four were appraised at lower values than their previous sale price as of last summer, Andrew Lim, director of research at JLL, a real estate services firm, found.
The Triplex
Mr. Trump’s “triplex” occupies the top three floors of Trump Tower on Fifth Avenue. He filmed his first TV interview as president-elect under the penthouse’s frescoed ceiling.
Of all of his properties in Manhattan, this one may be the easiest to sell, or to at least pin a value on; it’s a single apartment, rather than a complicated partnership or lease.
Brokers and an appraiser say that its market value may not be tethered to reality. The unit is near so-called “Billionaire’s Row,” where condominiums periodically sell for upward of $10,000 per square foot. In 2015, Mr. Trump and his associates tried to claim that its value was around $327 million, according to his financial statement.
But Trump Tower, where the triplex sits and which opened in 1983, has long been eclipsed by more modern high-rises, according to brokers and analysts. A fairer comparison, they say, would be units in Olympic Tower, located five blocks south on Fifth Avenue and developed in the 1970s, where condominiums are selling for an average of $1,958 per square foot.
Ondel Hylton, senior director of content and research of CityRealty, a real estate listing firm, said the triplex could net as little as $2,000 per square foot, or $22 million. If it were renovated, its value could jump as high as $2,800 to $3,500 per square foot, or between $30.8 million and $38.5 million, he estimated.
Susan C. Beachy and Kirsten Noyes contributed research. Kate Christobek contributed reporting from New York.
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