Trump

by Donald J. Trump

  I still remember the morning, just before we began selling apartments, when one of my salespeople rushed into my office. “Mr. Trump,” she said, “we’re in trouble. Museum Tower just announced its prices, and they’re much lower than ours.” I thought for a minute, and I realized that actually the opposite was true: Museum Tower had just done itself damage. The sort of wealthy people we were competing for don’t look for bargains in apartments. They may want bargains in everything else, but when it comes to a home, they want the best, not the best buy. By pricing its apartments lower than ours, Museum Tower had just announced that it was not as good as Trump Tower.

  A lot of people think that we set out to attract celebrities to Trump Tower, or that we hired a fancy public relations firm to promote the building. The truth is that we never hired anyone to do public relations, and every star who bought an apartment—Johnny Carson, Steven Spielberg, Paul Anka, Liberace, and many others—came to us. Nor did I give any of them special deals. Other developers cut prices to attract stars and celebrities, but to me that’s a sign of weakness. What really means something is when a celebrity is willing to pay full price for an apartment.

  If any press story about a celebrity helped promote Trump Tower, I suspect it was one about a sale that never actually occurred. Shortly after we began selling apartments, I got a call from a reporter asking whether or not it was true that Prince Charles had purchased an apartment in Trump Tower. It so happened that this was the week when Prince Charles and Lady Diana had gotten married, and they were, at that moment, the most celebrated couple in the world. Our policy was not to comment about sales, and that’s what I told this reporter, In other words, I refused to confirm or deny the rumor. Apparently, the reporter then decided to call Buckingham Palace. By this time, the royal couple had left for their honeymoon and they were out on the yacht Britannia, so the Buckingham Palace spokesman said just what I had: they couldn’t confirm or deny the rumor.

  That was all the media needed. In the absence of a denial, the story that the royal couple was considering buying an apartment in Trump Tower became front-page news all over the world. It certainly didn’t hurt us, but I had to laugh to myself. Just a month earlier, Prince Charles had come to New York for a visit, and the IRA had come out in force to protest. As Prince Charles walked into Lincoln Center for a concert one evening, hundreds of protestors stood outside, hissing and screaming and throwing bottles. It had to be a frightening experience for him, and I can’t imagine it left Prince Charles with a great desire to take an apartment in New York City. Also, while Trump Tower is a great building, I suspect Prince Charles would find it very hard to get used to any apartment after growing up in Buckingham Palace.

  With so much demand, our marketing strategy was to play hard to get. It was a reverse sales technique. If you sit in an office with a contract in your hand, eager to make the first deal that comes along, it’s quite obvious to people that the apartments aren’t in demand. We were never in a rush to sign a contract. When people came in, we’d show them the model apartments, sit down and talk, and, if they were interested, explain that there was a waiting list for the most desirable apartments. The more unattainable the apartments seemed, the more people wanted them.

  As demand grew, I kept raising the prices—twelve times in all. We started out selling for much more than Olympic Tower, which until then had been the most expensive building in New York. Within a short period, we’d almost doubled the price for the best apartments on the highest floors. People were buying two-bedroom apartments for $1.5 million, and before we finished construction, we’d sold a huge majority of the apartments.

  The cycles of buyers at Trump Tower became something of a barometer of what was going on in the international economy. At first, the big buyers were the Arabs, when oil prices were going through the roof. Then, of course, oil prices fell and the Arabs went home. In 1981, we got a sudden wave of buyers from France. I wasn’t sure why, but then I realized the reason was that François Mitterrand had been elected president, and anyone smart and wealthy realized immediately that Mitterrand was going to hurt the French economy. It wasn’t just that he was a socialist, and that he began nationalizing companies, it was also that he turned out to be a dangerous man. What can you say about a guy who goes around selling nuclear technology to the highest bidder? It’s the lowest anyone can stoop.

  After the European cycle, we got the South Americans and the Mexicans, when the dollar was weak and their economies still seemed fairly strong. Then, when inflation set in, their currencies were devalued, and their governments tried to restrict the outflow of cash, that cycle ended.

  During the past several years, we’ve had two new groups buying. One is American—specifically, Wall Street types, brokers and investment bankers who’ve made instant fortunes during the bull market frenzy. It’s ridiculous, when you think about it. You get stockbrokers, barely twenty-five years old, who suddenly earn $600,000 a year because clients they’ve never met call up and say, “I’ll take fifty thousand shares of General Motors.” The broker pushes a button on a computer and, presto, he’s got a huge commission. As soon as the stock market falls out—which it will, because it too runs in cycles—most of these guys will be out on the street looking for work.

  The other new buyers are the Japanese. I have great respect for what the Japanese have done with their economy, but for my money they are often very difficult to do business with. For starters, they come in to see you in groups of six or eight or even twelve, and so you’ve got to convince all of them to make any given deal. You may succeed with one or two or three, but it’s far harder to convince all twelve. In addition, they rarely smile and they are so serious that they don’t make doing business fun. Fortunately, they have a lot of money to spend, and they seem to like real estate. What’s unfortunate is that for decades now they have become wealthier in large measure by screwing the United States with a self-serving trade policy that our political leaders have never been able to fully understand or counteract.

  Because the 263 apartments in Trump Tower proved to be so desirable, I decided to keep a dozen or so off the market, much the way a hotel operator always holds a few choice rooms free for emergencies. It was a way of keeping options open—particularly my own. Originally, I decided to take one of the three penthouse triplexes on the top floors—about 12,000 square feet in all—for my family. We moved in at the end of 1983. I had offers as high as $10 million for each of the two apartments adjoining mine, but I resisted selling them, figuring I might ultimately want more space myself.

  It proved true sooner rather than later. In the middle of 1985, I got an invitation from Adnan Khashoggi, a Saudi Arabian and a billionaire at the time, to come to his apartment in Olympic Tower. I went, and while I didn’t particularly go for the apartment, I was impressed by the huge size of its rooms. Specifically, it had the biggest living room I’d ever seen. I had plenty of space in my triplex, but I figured, What the hell? Why shouldn’t I have exactly the apartment I wanted—particularly when I built the whole building?

  I decided to take over one of the other apartments on the top three floors and combine it with mine. It has taken almost two years to renovate, but I don’t believe there is any apartment anywhere in the world that can touch it. And while I can’t honestly say I need an eighty-foot living room, I do get a kick out of having one.

  Successful as we were in selling the Trump Tower apartments to the top buyers, we did at least as well in attracting the best retailers to the atrium. It began when Asprey, a London-based store that sells the finest crystal, jewelry, and antiques, selected the atrium for its first branch store in two hundred years of operation. At first, they took a small store in the atrium. Business was so good that they have since expanded to a much larger space. Quality, of course, attracts more quality. The next thing we knew we had leases with many of the world’s top retailers—Asprey, Charles Jourdan, Buccellati, Cartier, Martha, Harry Winston, and many others.

  It didn’t hurt,
of course, that in April 1983, just after the atrium opened, we got a good review from Paul Goldberger, who by then had replaced Ada Louise Huxtable as architecture critic of the Times. The review was headlined ATRIUM IN TRUMP TOWER IS A PLEASANT SURPRISE. It began by saying, in effect, that other critics had been wrong. The atrium, Goldberger wrote, “is turning out to be a much more pleasant addition to the cityscape than the architectural oddsmakers would have had it.” The review went on to say that the atrium “may well be the most pleasant interior public space to be completed in New York in some years. It is warm, luxurious and even exhilarating—in every way more welcoming than the public arcades and atriums that have preceded it in buildings like Olympic Tower, the Galleria, and Citicorp Center.”

  That review had two positive effects. First, it reinforced the feeling among the retailers in the atrium and the people who’d purchased apartments in Trump Tower that they’d made the best choice. But second, and more important, it helped bring more shoppers to the atrium. They, of course, were ultimately the key to its success.

  The odd thing is that no one could ever quite believe that the atrium was a commercial success. From the day it opened, false rumors circulated. One was that while it was obviously a tourist attraction, no one really bought anything there. Another was that the European retailers stayed only because their stores functioned as high-visibility loss-leaders. Still other stories had it that the stores on the ground floor did well, but those on the upper floors did not. As late as 1986, a New York Times reporter came to see me, obviously prepared to do a hatchet job on the atrium. Instead, he did his reporting and ended up writing a front-page business-section story about the atrium’s extraordinary success.

  Typically, a suburban mall has a turnover of at least a third of its original tenants during the first several years. Trump Tower lost only a handful of its stores during the first three years. More important, no sooner does a tenant leave than he is replaced by one of the fifty retailers we have on our waiting list. Stores with the most expensive merchandise in the world have prospered in the atrium.

  Not every quality retailer has found the location appropriate, of course. The best example is the experience of Loewe, the leather-goods retailer, which was among the atrium’s first tenants. Loewe had beautiful merchandise. But it turned out that while a wealthy woman might pay thousands of dollars for a piece of jewelry or an evening gown at a shop next door, she was not willing to shell out $3,000 for a pair of Loewe’s leather pants, no matter how soft and buttery they might feel. So Loewe’s didn’t do well. But in the end, everyone came out okay. Asprey, which was doing very well next door, took over Loewe’s space. Loewe, therefore, got out of a long-term lease, Asprey got an additional 4,600 square feet it very much wanted, and I got a great new lease.

  One last element helped make the Trump Tower deal a huge home run, and that was something called a 421-A tax exemption. Ironically, getting my 421-A ended up taking me longer than it had to assemble the site and complete the entire construction of Trump Tower.

  The city enacted the 421-A law in 1971, to encourage residential development. In return for improving a site, developers were entitled to an exemption from real estate taxes over a ten-year period. Every two years the exemption decreased by 20 percent. Everyone who applied for the 421-A exemption got it, almost as a matter of course. Then I came along with Trump Tower.

  There was no question that I was entitled. I was proposing to take a ten-story building in a state of disrepair and to build in its place a multiuse sixty-eight story $200 million tower. Unlike the tax abatement I’d gotten on the Grand Hyatt, where I was forgiven all taxes, the 421-A program wouldn’t exempt me from taxes currently being paid on the site—but it would exempt me from additional taxes attributable to an increased assessed value on the site. Who could argue that I wouldn’t be improving and better utilizing the site with Trump Tower?

  Ed Koch could, for one. And the reason had nothing to do with the merits of my case. It was all politics. Koch and his deputies sensed an opportunity they couldn’t resist: to position themselves as consumer advocates taking on a greedy developer. From a public relations perspective, I was vulnerable. It was quite obvious that Fifth Avenue wasn’t exactly a marginal neighborhood, and that I’d probably succeed with Trump Tower even if I didn’t get a tax exemption.

  But in my mind, none of that had any bearing on my legal right to a 421-A exemption. In December 1980, I applied for a 421-A for the first time. A month later, I met with Tony Gliedman, commissioner of the city’s Department of Housing, Preservation and Development, to make my case in person. In March, Gliedman and the HPD turned my application down.

  I called Koch and told him I thought the ruling was unfair, that I wasn’t about to give up, and that the city was going to waste a huge amount of money litigating a case I’d eventually win.

  In April 1981, I filed something called an Article 78 proceeding in state supreme court, seeking to have the city’s ruling overturned. The court found in my favor, but an appellate court reversed the ruling, so I took my case to the state’s highest court, the court of appeals. In December 1982—nearly two years after my original application—the court of appeals ruled 7-0 that the city had improperly refused me an exemption. But instead of simply ordering the city to expedite my exemption, the court told the city to reconsider my request. They did—and turned me down again.

  By now I was so outraged that the cost of the litigation was beside the point. We refiled an Article 78, and exactly the same scenario unfolded. We won in supreme court, got overturned at the appellate level, and ended up again before the court of appeals. My lawyer, Roy Cohn, did a brilliant job, arguing before seven justices without so much as a note. This time, the court again ruled unanimously that we were entitled to our exemption—and ordered the city to provide it without further delay.

  That was just the icing on the cake. By this time, Trump Tower was an unqualified success. It had given me visibility and credibility and prestige. It was also a great success financially. The way I figure it, the entire project—including land, construction costs, architecture fees, advertising and promotion, and finance charges—cost approximately $190 million. The sales of apartments have so far generated $240 million—meaning that even before including revenues from the stores and offices, we have earned a profit of approximately $50 million on Trump Tower. I also earned more than $10 million in commissions as a sales agent for apartments in Trump Tower. Finally, the rent from office space and the retail atrium generates many millions more a year—almost all of it profit.

  Ultimately, Trump Tower became much more than just another good deal. I work in it, I live in it, and I have a very special feeling about it. And it’s because I have such a personal attachment that I ended up buying out my partner, Equitable, in 1986. What happened is that Equitable put a new guy in charge of its New York real estate operation. One day this fellow called me up and said, “Mr. Trump, I’ve just been looking over the books, and I’d like you to explain why we’re spending so much on the maintenance of Trump Tower.” We were, in fact, spending nearly $1 million a year, which is almost unheard of. But the explanation was very simple. When you set the highest possible standards, they’re expensive to maintain. As one simple example, my policy was to have all of the brass in the atrium polished twice a month. Why, this fellow asked, couldn’t we save some money by polishing once every couple of months?

  At first I was civil. I tried to explain that one of the key reasons for the success of the atrium is that it was so impeccably well-run. I also said I had no intention of changing our policy, and I suggested to this executive that perhaps he ought to take a day to think about whether he really wanted to push it. He called me back twenty-four hours later, and he said he’d thought about it and he did want to go ahead with cutbacks. That was probably the end of my partnership with Equitable. Much as I liked Equitable, I wasn’t about to tamper with something so successful just to save a few bucks. To do that would have been t
otally self-destructive.

  I was upset, but I was also philosophical. I went to my friend George Peacock, the head of real estate at Equitable, and I explained that we had a problem, and that there didn’t seem to be a way out of it. Therefore, I wanted to buy out Equitable’s share. In a short time we made a deal, and I now own Trump Tower outright. After we’d signed the contracts, I got a letter from George Peacock, who ended by saying, “As with most things in life, time calls for change and it is best to accept that fact. Nevertheless, I shall always be proud of my involvement in the creation of Trump Tower and fondly remember how we worked to bring it about.”

  I was very happy to get that letter. It was a classy way to conclude a partnership that had been a class act from the start.

  My father, Fred Trump, in a recent photograph.

  With my sisters and brothers in 1951. Left to right: me, Freddy, Robert, Maryanne, and Elizabeth.

  HENRY KERN PHOTOGRAPHERS

  At age twelve, inspecting the foundation for a six-story building in Queens, New York.

  FREDERICK SCHROEDER

  At the New York Military Academy, May 1963.

  DON DONATO

  With my parents on the New York Military Academy grounds, spring, 1964.

  DON DONATO

  Graduation photo, June 1964.

  DON DONATO

  Leading the New York Military Academy contingent up Fifth Avenue during the Columbus Day parade, October 1963. This was my first real glimpse of prime Fifth Avenue property.

  DON DONATO

  Ivana as a top fashion model in Montreal, Canada, 1975.

  With Ivana on our honeymoon in Acapulco, 1977.

  In 1975, at age twenty-nine, proposing a convention center for New York City on the 34th Street railyards, for which I held an option. Success arrived in 1978, when the city and state chose my site over others that had been considered. MARIANNE PERNOLD