"His taste is all right, but it is sometimes overwhelmed by his sense of publicity. He will become less and less glitzy. He'll listen to me."
- Philip Johnson, "The Expanding Empire of Donald Trump", The New York Times, April 8, 1984
"'Oh, he lies a great deal,' says Philip Johnson with a laugh. 'But it's sheer exuberance, exaggeration. It's never about anything important. He's straight as an arrow in his business dealings.'"
- Philip Johnson, "The Expanding Empire of Donald Trump", The New York Times, April 8, 1984
"HE made his presence known on the island of Manhattan in the mid 70's, a brash Adonis from the outer boroughs bent on placing his imprint on the golden rock. Donald John Trump exhibited a flair for self-promotion, grandiose schemes - and, perhaps not surprisingly, for provoking fury along the way.
Senior realty titans scoffed, believing that braggadocio was the sum and substance of the blond, blue-eyed, six-footer who wore maroon suits and matching loafers, frequented Elaine's and Regine's in the company of fashion models, and was not abashed to take his armed bodyguard-chauffeur into a meeting with an investment banker.
The essence of entrepreneurial capitalism, real estate is a business with a tradition of high-rolling megalomania, of master builders striving to erect monuments to their visions. It is also typically dynastic, with businesses being transmitted from fathers to sons and grandsons, and carried on by siblings. In New York, the names of Tishman, Lefrak, Rudin, Fisher, Zeckendorf come to mind.
And now there is Trump, a name that has in the last few years become an internationally recognized symbol of New York City as mecca for the world's super rich.
‘Not many sons have been able to escape their fathers,’ said Donald Trump, the president of the Trump Organization, by way of interpreting his accomplishments. Three of them, built since 1976, stand out amidst the crowded midtown landscape: the 68-story Trump Tower, with its six-story Atrium housing some of the world's most elegant stores; the 1,400- room Grand Hyatt Hotel, and Trump Plaza, a $125 million cooperative apartment. And more is on the way.
‘At 37, no one has done more than I in the last seven years,’ Mr. Trump asserted."
Fifteen years ago, he joined his father's business, an empire of middle-class apartment houses in Brooklyn, Queens and Staten Island then worth roughly $40 million. Today, the Trump Organization controls assets worth about $1 billion.
The largest and most striking properties were developed by the younger Trump and are owned by him individually or with one non-family partner. While his father, Fred C. Trump, is the company chairman and oversees the original holdings, the Trump Organization is unquestionably a Donald Trump extravaganza.
"HE makes that clear. At Trump headquarters on the 26th floor of the Trump Tower astride Fifth Avenue, he opened the door of a room furnished with a vast table.
‘This was supposed to be a board room but what was the sense when there's only one member,’ said Donald Trump. ‘We changed it to a conference room.’
Mr. Trump assiduously cultivates a more conservative public image now, a gentleman of taste in a navy- blue suit with discreetly striped shirts and blue ties, who weekends with his family in Greenwich, Conn. Last spring he forsook the Hamptons, his former habitat, to buy an estate in the conservative community.
His pastor, the Rev. Norman Vincent Peale of New York, avowed that he is ‘kindly and courteous in certain business negotiations and has a profound streak of honest humility.’
But Mr. Trump prides himself on being street smart and boasted that Brooklyn and Queens, where he was raised, are among ‘the toughest, smartest places in the world.’ Mr. Trump prefers the vocabulary of war and sports to document his exploits, acknowledging ‘I don't like to lose.’ Nor does he like to receive less than full credit for his victories.
‘He was a pretty rough fellow when he was small,’ recalled his father, who packed off his obstreperous teen-age son to the New York Military Academy in Cornwall-on-Hudson for his high school education. According to some of his peers in the industry, Donald Trump has not really changed much from those boyhood days.
His alternating skills of charming some individuals and riding roughshod over others has earned Donald Trump a reputation in some quarters as someone not to be trusted. He reneged, for example, on a promise to donate to a museum the Art Deco bas-reliefs on the facade of Bonwit Teller's - bulldozed to make way for Trump Tower. It was a sin deemed unforgivable by landmark preservationists. But the only negative comments about Donald Trump these days are given off the record.
‘Donald Trump became a controversial person and it worked for him,’ said the 57-year-old Preston Robert Tisch, president of the Loew's Corporation, and Mr. Trump's opponent on two bitterly contested real estate projects in New York - now a good friend.
‘He is one hell of a salesman,’ noted Francis L. Bryant, Jr., senior vice president of Manufacturers Hanover Trust, which extended the construction loans for the Grand Hyatt Hotel and for Trump Plaza, and the tenant financing for the cooperative apartment and the Trump Tower condominium."
"UNLIKE other real estate czars, notably the septuagenarian Harry Helmsley, ubiquitous in the city's development of office buildings, apartment houses and hotels, Mr. Trump does not syndicate his deals.
‘I don't have to,’ he stated flatly.
Backed initially by his father, Mr. Trump has operated as a lone wolf in Manhattan for nearly the last decade. He acquires properties through Trump Enterprises or Wembly Realty Inc. and has them transferred to Donald J. Trump so that he can personally take the huge tax write- offs from real estate projects rather than having them ‘wasted,’ as he called it, on a corporation. He also said he saves corporate and franchise taxes.
But to protect himself against the great risks in the building trade, he said, ‘I’ve bought tremendous liability insurance. After $10 million, it's cheap. You can get million of dollars of insurance for $500 in premiums.’
For major deals, he forges a partnership with a single gilt-edged financial institution or hotel chain. Holiday Inns, for example, is his co-venturer in the $200 million Harrah's hotel casino scheduled to open in Atlantic City next May, the largest gaming palace in the New Jersey resort.
‘It will be the biggest hit yet,’ he predicted. Benefiting from his successful track record, Mr. Trump was able to obtain a 50 percent share of the equity in Harrah's in return for a small investment in land, which he purchased before the referendum that opened the down-at-the-heels town to gaming - one example of his good timing, or good fortune.
The most striking evidence of Mr. Trump's entrepreneurship, however, is in New York.
There is the Grand Hyatt Hotel, reconstituted with a facade of mirrored glass on the skeleton of the Commodore Hotel adjoining Grand Central Terminal. Since it opened in 1980, it has been credited with reversing the deterioration of East 42d Street.
Then, of course, Trump Tower, a skinny bronze and glass skyscraper at 725 Fifth Avenue, atop the former site of Bonwit Teller at the corner of 56th Street. Its Atrium, a vertical shopping mall rendered in peach marble and bronze with an 80-foot cascade, is a showcase for 40 purveyors of super luxury wares such as Loewe of Madrid, Asprey's of London and the jewelers, Cartier, Harry Winston and Buccellati. Purchasers of condominium apartments - 91 are priced above $1 million - will start moving in later this month.
And Trump Plaza, the apartment building at Third Avenue and 61st Street, is scheduled for occupancy in 1984. Its least expensive unit is a three-and-one-half room apartment for $255,000.
Three years ago Mr. Trump bought the Barbizon Plaza Hotel on Central Park South and an adjacent rent-controlled apartment building at the corner of the Avenue of the Americas. According to Standard Abstract Corporation, publishers of daily realty reports, he paid about $13 million for this prime property to which sources now give a market value of $124 million.
Last June he offered to shelter the homeless in some of the vacant apartments - at least until he succeeded in getting the rest of the tenants to vacate theirs. He is reportedly about to sell the hotel to foreign investors.
Other plans are aborning. Mr. Trump is now concluding a deal to develop another site on the East Side, on the same scale as Trump Tower, in partnership with another leading financial institution.
Donald Trump thus appears to have followed the classic formula of the venture capitalist, using leverage and luck, and a third element peculiar to real estate development, namely location. ‘I have the best diamonds in the city of New York as far as location,’ he boasted.
To this formula, Mr. Trump has also added salesmanship, show business - and timing, riding the real estate boom of the last few years in spectacular fashion.
The Trump Organization, an umbrella for more than a dozen entities engaged in real estate and hotel development and management, consists of 45 key employees. Three are executive vice presidents: Louise M. Sunshine, who turned a formidable talent for raising millions of dollars in political campaign contributions into a skill at selling million-dollar apartments; Donald's 34-year-old brother, Robert, now supervising the hotel casino project in Atlantic City, N.J., and Donald's Austrian-Czech wife, Ivana, 30 years old, a former model and Olympic skier, who is in charge of design.
The secretaries address Mr, Trump by his first name. ‘Very little gets on paper around here. Donald does the work of 50 people in his head,’ said Mrs. Sunshine. He ‘never stops envisioning,’ she added.
A promotional slide show for Trump Tower describes it as ‘the ultimate vision of an elegant life seen through a golden eye.’ Flashes of model room settings appear amid scenes of Manhattan's glamorous restaurants, museums and theaters, while in the background the voice of Frank Sinatra belts out ‘New York, New York.’ The vision is Donald Trump's, though the word's are Sinatra's: ‘A No. 1 - king of the hill.’
The message is a clarion call to wealthy outsiders - foreigners or Americans from beyond the Hudson. The doormen's scarlet uniforms and white pith helmets - or high black fur hats in the winter months - evoke Buckingham Palace. Ivana Trump had them custom made in London.
In the lobby of the atrium a musician in black tie performs at a pink piano. ‘We try to give people a little show,’ said Mrs. Trump, a slender blond woman with aquamarine eyes. Her model's figure was sheathed in a white-and-black polka-dotted dress by Galanos. ‘The atrium is flashy but warm,’ she declared."
"The roots of the Trump Organization lie deep in the foundations of New York politics. Fred Trump, for instance, was closely involved with the Brooklyn Democratic organization which produced a New York Mayor, Abraham D. Beame, and a New York Governor, Hugh L. Carey, as well as lesser officials of strategic influence who were in power when Donald Trump mounted his invasion of Manhattan in 1974 and 1975, a low point in the city's economic history.
The tax abatement and other concessions he secured from government agencies were termed by Trump critics as both ‘outrageous,’ and ‘sweetheart deals’ - presumably awarded as political favors.
In the mid-70's, when plans were being laid for a New York City Convention Center, Mr. Trump began lobbying for a site in the West 30's, the vacant railroad yards of the bankrupt Penn Central on which he had secured an option in exchange for the promise to develop the site. Mr. Tisch's group backed a site on West 44th Street.
Municipal and state officials responsible for funding the project eventually swung to his side, and Mr. Trump collected $880,000 in commissions and expenses on the Penn Central's sale of the property to the city for $12 million. But it still rankles him that his offer to build the center at a guaranteed price of $200 million and to waive his fee, if it were named after his family, was spurned.
The project, since undertaken by the New York State Urban Development Corporation, has been plagued by cost overruns of $125 million and is two years behind schedule. Mr. Trump's inability to resist saying ‘I told you so’ by offering to take charge of finishing the center without fee, resulted in a verbal shooting match with the chairman of the corporation."
"DURING this same period, Mr. Trump parlayed an option to buy another Penn Central property, the nearly defunct Commodore Hotel, into a renovation project that resulted in the Grand Hyatt Hotel. It was made financially plausible by a 40-year tax abatement from the city - the first ever granted to a commercial property. The original option cost Mr. Trump $500,000.
As a hotel operator and chairman of the New York Convention & Visitors Bureau, Mr. Tisch objected to the abatement on the grounds of unfair advantage.
In retrospect, Mr. Tisch said, it ‘was right in what it did for that section of the city.’ But, he added, that the $200,000-a-year rental the city receives in lieu of taxes from the Grand Hyatt is equivalent to the tax bill for a motel on Eighth Avenue.
Since that skirmish Mr. Tisch and Mr. Trump have become close friends. They also buried the hatchet over another issue: whether or not to permit casino gambling in New York State.
Mr. Trump was gung-ho, having envisioned the lobby of the Grand Hyatt converted to gaming. Mr. Tisch believes he won him over by proving that the construction of gambling resorts in the Catskills (already on the drawing board) would have siphoned convention business from New York City hotels, and so Mr. Trump joined him as co-chairman of a coalition against permissive legislation. A more likely reason for the Trump turnaround is that his political allies, Governor Carey and Attorney General Robert Abrams, had changed their minds from pro to con on gambling and the likelihood of getting enabling legislation from Albany appeared nil.
The complexity of the 42d Street hotel deal and his cool derring-do in pulling it together before his 30th birthday won him the grudging respect of adversaries, and more crucial to his future plans, of the major lenders in New York.
Mr. Trump took his option on the Commodore, for which he would ultimately pay $10 million, less $2 million from the sale of its furniture and equipment, to line up a partner in the Hyatt Corporation, which was looking for a New York link for its hotel chain. He would build it; Hyatt would manage it; they would be equal partners.
He then turned to George Peacock, senior vice president of the Equitable Life Assurance Society. They had previously not done business, but Mr. Peacock had once been his guest at a United States Open Tennis competition.
Concerned about the Grand Central area (several office buildings were in or on the verge of foreclosure, and the city itself was facing bankruptcy), the Equitable, along with the Bowery Savings Bank and several smaller banks, promised him $70 million in mortgages once the doors of the renovated hotel opened.
‘So I took this commitment, which was a statement with 100 stipulations, to the city,’ Mr. Trump recalled. One of those conditions was that the financing be predicated on obtaining a tax abatement. ‘I said, “I will build you this incredible, gorgeous, gleaming hotel. I will put people to work in the construction trades and save hotel jobs and the Grand Central area will come around.” So the city made the deal,’ he commented.
Since there was no statutory basis for tax relief to a private commercial developer, Mr. Trump offered to sell the hotel for $1 to the Urban Development Corporation and lease it back for 99 years at a modest rental in lieu of taxes which the Commodore could not pay. Meanwhile, he could use the agency's vast powers of condemnation to get rid of undesirable retail tenants on the lower levels.
With these pieces in place, he obtained a $70 million construction loan from Manufacturers Hanover. ‘It was a leap of faith,’ the bank's Mr. Bryant noted.
Mr. Trump acknowledged that he was at substantial risk. He could have lost $3 million in option money, architectural and legal fees. ‘It could have been a disaster,’ he said. His father, he added, had taken ‘a neutral position’ and the son had won medals making money on earlier deals. But still, Mr. Trump said of the potential for failure, ‘I would have been embarrassed.’
After construction was underway, in 1979, the city's economy picked up, hotel rates doubled and he changed his plans. Instead of a moderate, $38- a-night hostelry, he would build a super-convention hotel commanding rates of $90 a night or more.
‘The whole economics of the deal changed,’ he says. ‘I got another $30 million from the Chase Manhattan Bank, so when the time came for me to put up equity, the bottom line was so good, I didn't have to put up money. It was timing. In another year, I wouldn't have gotten the abatement and no one ever will again.’"
“‘THE Hyatt really got us acquainted with Donald and that led us to the next big one,’ said Mr. Peacock of Equitable. The insurance company owned the land under Bonwit Teller and would sell only if it could get an active participation in an exciting project.
In 1974, Donald Trump had hired Mrs. Sunshine, finance director of the Carey re-election campaign, to help him lobby for the convention center.
Mrs. Sunshine said her political interest has waned, though this doesn't mean the Trump Organization lacks Democratic political entree - Roy Cohn of Saxe, Bacon, Bolan & Manley, and the firm of Shea & Gould are its litigators - or that its resources are not available to proper candidates of either party. Donald Trump supported Ronald Reagan in 1980 and has been to the White House several times.
It was Mrs. Sunshine who introduced Mr. Trump in 1975 to her friend, Marilyn Evins, wife of David Evins, a major stockholder in Genesco, the owner of Bonwit's. Through Mr. Evins he ascertained that the cash-hungry conglomerate might be willing to sell Bonwit's lease, which had 29 years to run.
‘Donald was the only developer who made sense to us,’ Mr. Peacock said.
The Trump-Equitable Fifth Avenue Company was formed, an equal partnership. Equitable put in the fee. Mr. Trump contributed the lease, two small units he acquired on East 57th Street, and the air rights to Tiffany's on the corner, which he needed for a zoning change to build a high-rise apartment house. The Trump Organization is sales and managing agent for the building, and Mr. Trump was able to put the family name over the four-story portal in colossal bronze letters - and two giant bronze Ts in the atrium.
Chase Manhattan financed his $24 million purchases of the various leases and rights, and the bank also formed a syndicate for the $150 million construction loan.
Mr. Trump expected that Trump Tower would qualify for a residential tax abatement. But after construction started, the city denied the exemption, estimated to be worth $15 million to $20 million, claiming it was intended to encourage low- and middle-income housing - not the deluxe apartments of the Tower. The city is now appealing a State Supreme Court ruling in Mr. Trump's favor last June.
‘I don't need this one,’ he said, ‘but it's wrong to hold out the carrot and then say, “Trump is not going to get it.” My psyche can't take that.’
He can, thus, add another star to the honor badge of the venture capitalist: for putting up practically none of his own money for an increasingly valuable equity interest in one of New York's most valuable pieces of real estate.
Anticipated condominium revenues of $260 million (85 percent of the 263 apartments have been sold) have effectively paid off the construction loan, leaving Trump Tower unencumbered by mortgages. The partnership retains ownership of the retail space and the 13 floors of office space, not yet rented, that are sandwiched in between. This commercial portion of the building is projected to yield rentals of $28 million a year.
Numerous New York merchants and real estate brokers expressed doubts that the Atrium tenants will be able to meet the lofty rents of $150 to $400 a square foot or to pay such capital expenses as the $3.5 million Loewe invested in building its three-level store. To cover the $1 million rent Charles Jourdan is paying for the first year, the store must sell $10 millIon in shoes and apparel.
Tenants do not know yet what the common charges or the real estate taxes will be. Such pass-on charges could possibly equal the basic rents, a broker said, predicting numerous lawsuits over interpretations of the 10- and 20- year leases. ‘The merchants will bear the risk of Trump Tower,’ he said, ‘and Trump will have a chance to weed out the ones he doesn't want.’
‘I only want the best,’ Donald Trump said. Holding out for ‘the great names’ fueled rumors that he was having difficulty filling his Atrium, which opened last February, half rented. ‘I took a chance that they would sign when they saw the building worked,’ he said. He won his gamble, though he conceded he gave ‘a little better break’ to a few of the hesitant.
From the triplex atop Trump Tower that he and his wife will occupy in the fall with their two children (Mrs. Trump is expecting their third child), he will be able to survey the metropolitan region, including those areas from which he maneuvered his ‘escape’ from his father's business.
While still at the Wharton School, from which he received a bachelor's degree in 1968, Donald Trump put into practice what he said he learned ‘by osmosis’ from the senior Trump. He began purchasing ‘little real estate pieces in Philadelphia and fixing them up,’ he recalled.
After graduation, he joined his father in Brooklyn and kept on buying - properties in Virginia, Ohio, Nevada, and land in California. Sometimes, he built, too. He had an eye for good locations and good financing: ‘F.H.A. mortgages 40 years out, and 5 1/2 percent interest’ taken over from owners desperate to sell ‘so we didn't have to put up much cash,’ explained Donald Trump.
He refinanced some of his father's older projects, swapped some in tax- free exchanges and, recently, has been turning others into cooperatives. For most of the period since he entered business, real estate and general inflation were skyrocketing.
After five years of such successes, Donald Trump was poised for escape. Or as some wags put it: ‘To trump his father.’
According to Harry Levinson, a Boston-based business psychologist who has studied family businesses, ‘The core problem of the entrepreneur in the family business is the unresolved Oedipal problem, trying to beat the old man.’ This is particularly so where the father has been very successful.
‘The son feels so inadequate and unable to compete with the father that he works out compensatory behavior,’ Dr. Levinson says. ‘He goes to the opposite and blows himself up to deny his feeling of helplessness. Particularly with an entrepreneur who has to fight through so many things, this compensatory self-centeredness serves him well.’
A record of successes ‘has made it very easy to do deals,’ said Donald Trump. ‘People want to invest with you.’ Inevitably, he is compared with the late William Zeckendorf, whose monuments include the United Nations and the Kips Bay housing complex in New York City, Century City in Los Angeles and Place Ville Marie in Montreal. Acclaimed a genius, he was finally forced to file both corporate and personal bankruptcy.
‘I used him as a model in a sense,’ Donald Trump acknowledged. ‘He was a great visionary but he wasn't fiscally conservative. Having seen the way he went down taught me to be overly so.’
Said Mr. Bryant of Manufacturers Hanover Trust: ‘Mr. Trump appears to be a wild man. He is not. Zeckendorf was spread from coast to coast. Donald stays home. He sticks to what he knows.’
Mr. Trump has been selling the properties he accumulated on his post-college buying binge outside New York and is co-oping 3,000 units in Brooklyn and Queens.
‘We've built up a lot of cash,’ he said. Cash to use ‘not necessarily in this business - I'm not married to this business.’ Associates say he likes both the communications and the sports industry, and he admitted to being fascinated by ‘the merger game.’ He does not find the takeover of a company he considers mismanaged to be daunting.
After the Government legalized private ownership of gold on Jan. 1, 1975, he jumped in and bought heavily. An ounce was then selling for $185. ‘We sold in the range of $780, $790. We did very well. It's easier than the construction business.’ he said."
"A speck on the horizon is Trump Village in the Coney Island section of Brooklyn, a middle-income residential complex that is Fred C. Trump's most visible monument. It was built in the 60's with Mitchell-Lama financing.
In an office at the rear of 600 Avenue Z, a six-story red brick apartment house that was formerly the headquarters of the Trump Organization, sits its chairman, Fred Trump. He has no intention of moving to Fifth Avenue. ‘I don't get involved,’ said the founding father, tall, reddish-haired and dapper at 77. ‘As you know, Donald has a competitive spirit and I don't want to compete with him.’
Mr. Trump manages the 25,000 units of housing that constitutes the empire he built, and he boasts about his son, Donald. ‘He amazes me. He's gone way beyond me, absolutely.’
Fred Trump was a prodigy. His mother had to sign his checks when he started building in 1923 because he was a minor. The impetus for his large-scale projects came after World War II with Federal financing.
He and his wife, Mary, raised three sons and two daughters in a spacious house in the Jamaica Estates section of Queens.
The Trump children were indoctrinated in the Protestant work ethic, loyalty to friends and employees, and in positive thinking, as promulgated by the family minister, Reverend Norman Vincent Peale. ‘The mind can overcome any obstacle,’ said Donald Trump. ‘I never think of the negative.’
During summers and free time, the boys worked at Trump construction sites or the rent collection offices. ‘Not your normal kid's vacations,’ noted Robert Trump, executive vice president of the Trump Organization.
The eldest son, Fred Jr., died a few years ago. Maryanne Trump Barry, the oldest daughter, is an assistant United States Attorney in Newark and a candidate for a Federal judgeship. Elizabeth Trump is a secretary at the Chase Manhattan Bank. ‘It's a man's family,’ she said, when asked why she and Maryanne were not in the real estate business."
ALL IMAGES BY SAM HORINE EXCEPT WHERE NOTED; WORKS CITED: "THE EXPANDING EMPIRE OF DONALD TRUMP" BY WILLIAM E. GIEST, THE NEW YORK TIMES, APRIL 8, 1984; "THE EMPIRE AND EGO OF DONALD TRUMP" BY MARYLIN BENDER, THE NEW YORK TIMES, AUGUST 7, 1983; SEE ALSO "THE RISE OF AMERICAN AUTHORITARIANISM" BY AMANDA TAUB FOR VOX, MARCH 1, 2016