Chump Tower

South Florida's housing bubble has popped, suckas! But the Donald still wants your millions for his condos.

Note: An earlier version of this story attributed some quotes to Melania Knauss-Trump, Donald Trump’s wife, at an April 14 marketing event for Trump International Hotel & Tower. This woman was actually Senada Adzem, vice president of marketing for Bayrock Group, the developer building the hotel. Melania Knauss-Trump was not in attendance.


By the time Wyclef Jean arrived at the historic Bonnet House in Fort Lauderdale, party guests, paparazzi, and one of those never-catch-me-without-trendy-clothing guys from WSVN-TV's Deco Drive were being eaten alive by no-see-ums.

Donald Trump and Wyclef Jean (following image) talk to the media as their wealthy party guests mill around the Bonnet House with free cocktails and expensive condos on their minds.
Donald Trump and Wyclef Jean (following image) talk to the media as their wealthy party guests mill around the Bonnet House with free cocktails and expensive condos on their minds.
On NBC's The Apprentice, Donald Trump plays a know-it-all real estate magnate. Perception is reality.
On NBC's The Apprentice, Donald Trump plays a know-it-all real estate magnate. Perception is reality.
Someday, units at Trump International will be swank and modern, according to this rendering.
Someday, units at Trump International will be swank and modern, according to this rendering.
But today, Trump International is just a dirt lot on A1A.
But today, Trump International is just a dirt lot on A1A.

It was 7:30 on a late April evening, and photographers and cameramen were waiting impatiently near a red carpet placed in front of a silver backdrop promoting the new Trump International Hotel & Tower, a 298-unit condominium hotel currently under construction on Fort Lauderdale Beach.

Wyclef's entrance was unmistakable. Everyone else had been forced to valet his car in a dirt lot, then take a shuttle to the plantation-style estate near the Intracoastal Waterway. But Wyclef and his crew pulled right up to the entrance of the mansion — and with ostentatious class. Wyclef and three associates piled out of a brown Maybach. Three others opened the doors of a silver Maybach. And two more popped out of a red Italian sports car with those gaudy doors that reach to the sky when opened.

There was nearly $1 million worth of automobile outside the Bonnet House.

Dressed in an expensive black suit and wearing a black-and-pink-striped tie, Wyclef waved at the gaggle of media and headed toward the red carpet. He'd come a long way since his days as a Fugee, when he would intone: "I'm far from a jive turkey."

And he is. These days, Wyclef is a businessman.

Wyclef was helping capitalist-turned-TV star Donald Trump sell — gulp! — condos to a bunch of white, starstruck dupes with too much discretionary income and an unwillingness to believe that South Florida's once-blistering real estate market started a nosedive in mid-2005.

A reporter asked Wyclef the obvious: Donald Trump and... you?

"[Trump] rules," Wyclef said with a straight face. "He's real tough when it comes to business. I'm like a sponge right now. I know I can pick up things from him."

Holding a microphone, Pina Darcyl pushed her way forward. An upbeat, blond Argentine with a nose as elegantly shaped as a boxer's, Darcyl is the host of ¡Viva Florida!, a TV show in Argentina that promotes Florida real estate to Latin American investors. But even on real estate shows in South America, one subject reigns supreme: Shakira, Shakira, Shakira, whose song with Wyclef, "Hips Don't Lie," has been in heavy radio rotation in both hemispheres.

"When Mr. Trump comes to Argentina to build a new project, will you and Shakira perform for us?" Darcyl asked.

Wyclef looked baffled.

"Maybe Mr. Trump will fly you down to Argentina so you can perform with Shakira," Darcyl added.

"If Mr. Trump will fly me down, I'll be there," Wyclef said, trying to recover as a handler touched his arm and directed him away from the media.

"¡Viva Florida!" Darcyl said into the camera.

Twenty minutes later, Donald Trump arrived, pulling up to the Bonnet House in a black limousine. His son Don was by his side as the flashing bulbs from the cameras popped in his face. Don looked on in a vacant stare, as if someone had exhausted him with a trigonometry exam in the limo.

Dressed in his trademark black suit and blue-and-white tie, Trump strode to the red carpet. He was here to answer questions from the media. Or so it seemed. In fact, only two correspondents had been preselected, their questions as heavily screened as the guest list.

"So do you like South Florida and Fort Lauderdale?" the guy from Deco Driveasked.

Trump gave a canned response about how much he loves the Sunshine State.

Darcyl followed. She represented the most important news media here tonight, the one that can reach deep-pocketed Latin Americans who aren't frightened by Federal Reserve Chairman Ben Bernanke's interest-rate-increasing campaign to halt inflation.

"So you like Florida, Mr. Trump?" she asked, apparently inspired by the brilliance of the Deco Drivestooge.

"I love Florida," Trump answered, opening yet another canned response. "Florida is an exciting place to be. It's an international destination. And the new Trump International Fort Lauderdale adds to that excitement. It's right here in beautiful Fort Lauderdale, near the wonderful city of Miami and close to my own home in Mar-A-Lago."

"Our show is broadcast in Argentina. Have you ever been there?"

"Many, many times."

A media handler's arm came into camera view: Time was up.

"One more question," Darcyl said.

Trump stopped.

"Mr. Trump, say, '¡Viva Florida!'" Darcyl requested.

Trump pursed his lips, clearly annoyed. "¡Viva Florida!" he said with feigned excitement, then walked quickly into the Bonnet House.

The media handler, a short brunet who walked heavily in high heels, grabbed Darcyl by the shoulder. "I fucking told you not to do that ¡Viva Florida!shit!" she said. "We deal with Extra!, Access Hollywood, all media. You never hear them asking Donald Trump to say, 'Extra! Extra!' You're done. No more questions. You're fucking done here."

Clearly, Trump's message is tightly controlled. And it needs to be. He has associated his name with five large-scale condo development projects in South Florida: Trump International Hotel & Tower in Fort Lauderdale, Trump Las Olas Beach Resort in Fort Lauderdale, Trump Hollywood, Miami Trump Towers in Sunny Isles Beach, and Trump Grande in Sunny Isles Beach.

Despite the many Trump projects in South Florida, the Donald is an investor in only Trump Las Olas and Trump International. In fact, the guy with the world's most famous comb-over has a surname with such cachet among the wealthy that he merely licensed it to the three other developments. The Trump brand, developers must believe, has a market force all its own.

Wanna live like Trump? Buy this condo!

But Trump's prime-time-TV reputation as the world's greatest capitalist aside, timing doesn't appear to be his strong suit in the subtropics. His projects are going up just as Florida's condo market — once the envy of every fly-by-night, part-time real estate flipper in the nation — is crashing to the pearly white sand. Condo sales are down, way down. Preconstruction investors are walking away from down payments. Mortgage companies nationwide are laying off workers, citing decreased demand for home loans. Miami-based Related Group, the developer behind Trump Hollywood and Miami Trump Towers, has already aborted plans to construct two similarly large luxury condominium towers in Las Vegas, one of the few markets whose housing bubble inflated more furiously with hot air than the one in South Florida.

Some wonder if the Sunshine State is next. And when big money pulls out, smaller money always holds the bag. And this time, big money needs a lot of bag holders.

So how do you lure them?

Hire Donald Trump and Wyclef Jean — the famous faces of South Florida's biggest Ponzi scheme, er, um, condo market.


The housing market has softened.

That's the line. That is what every developer and real estate agent would like you to think — that, despite this little "temporary" dip in the market, condo prices will shoot back toward the heavens in the not-so-distant future. The market is just making a slight correction, they say. But that's not what those same developers and real estate agents will tell you in private.

They know that so much air was blown into South Florida's housing bubble with incessant prices-never-go-down spiels that the market has finally popped, as dramatically and as quickly as a piece of bubble gum in the mouth of a sweaty 8-year-old at the Swap Shop.

Don't believe it? Forget for a minute about your enormous mortgage and huge home-equity loan (interest-only, of course!) and simply look at Florida's sales numbers.

From 2002 to 2004, fueled by low interest rates and investors fleeing the stock market after the crash of high-tech stocks (see a pattern?), South Florida real estate exploded, with sales increasing each year by at least 10 percent. In 2002, the median house price went up 9 percent, followed by a 13 percent increase in 2003, 17 percent in 2004, and an extraordinary 29 percent boost in 2005. During this boom, many houses east of Interstate 95 in Broward County that had sold for less than $100,000 in 2000 had sticker prices north of $300,000. People camped outside sales offices — particularly in the condo-crazy downtowns of Fort Lauderdale and Hollywood — to put down payments on one-bedroom units listing for $300,000 or more.

You couldn't go wrong in real estate. Or so that was the prevailing belief in South Florida.

In truth, the housing market began to decline in mid-2005 even as prices continued to go higher in the buy-or-be-left-behind fervor. June 2005 — one year ago — marks the start of South Florida's real estate slide. That month, total sales were down 3 percent compared to June 2004. After that, sales fluctuated erratically until December, when the market took a steep dip. Total sales in December declined 15 percent over the same period the year before.

That trend has continued all year:

January: Single-family home sales down 19 percent and condo sales down 18 percent compared to the same month in 2004.

February: Single-family home sales down 20 percent, condo sales down 23 percent.

March: Single-family home sales down 22 percent, condo sales down 23 percent.

April: Single-family home sales down 31 percent, condo sales down 37 percent.

The raw numbers are even more discouraging. In April 2005, 8,775 condos were sold statewide. One year later, in April 2006, 5,556 units changed hands. There was a dramatic sales dip not only statewide but also in Fort Lauderdale, where 873 condos sold in April compared to 1,391 units in April of last year.

Have no doubt. The housing bubble has burst.

Ask Jack McCabe, a Deerfield Beach housing analyst who heads a "vulture capital" fund, positioned to goggle up all those overpriced luxury condominium units once the market bottoms out — and possibly overcorrects.

"This whole housing boom is artificial as a result of artificially low mortgage rates and exotic mortgages," McCabe says. "It gets to a certain point; then everything comes crashing back. It happens in every industry. We need to look no further than the tech bubble, which was all speculative investment. The tech bubble was fueled by the same thing that fueled the housing bubble in South Florida. It's greed, which creates this unwillingness to believe that the market can ever go down."

But the market is going down. And fast.

Which makes it odd that the Donald — widely believed to be a real estate genius despite an embarrassing bankruptcy in his past — is selling condos at this lavish party in Fort Lauderdale.

Does Trump know something we don't?


Around 9 o'clock on the night of the party, Donald Trump takes to the stage at the Bonnet House, near a small canal that leads to the Intracoastal Waterway.

The attendees begin to file in toward the stage. The chatter quiets down.

"Trump International Hotel & Tower — this is a celebration," Melania says. "We're celebrating the brokers who have been so good to us for bringing in clients. We're celebrating the success of the building, and we're celebrating now with the new release of the final remaining units. They're going to be beauties too, I understand."

"Yeah, they're really something," says Roy Stillman, the New York developer who is majority investor in the Trump International project in Fort Lauderdale.

Trump introduces Stillman. "This is Roy Stillman, everyone — and somebody who's really done a terrific job," Trump says. Stillman is, after all, the guy with all the money invested in the project, even though most in the crowd believe it's Trump's project.

"So, Roy, we are celebrating tonight with the people that purchased, with the brokers, with everybody who has made the job such a success," Trump says.

The back-patting goes on and on. But Trump and his crew don't mention numbers. They don't mention that Trump International is still mostly just a dirt lot of a city block on Fort Lauderdale Beach Boulevard. They don't mention that the condo market is tanking. Instead, they congratulate one another. After all, it's the suckers in the audience who are buying these multimillion-dollar units that are under construction.

Trump turns to his son, Don, who is wearing a black suit and expensive brown leather shoes. Don assisted in drafting the plans for the development. "Say a few words," Daddy tells him.

"Thank you all for being here," Don says. "This has been a truly amazing project, this whole thing... It's really been an amazing experience and an education I couldn't get anywhere, not even at the Wharton School of Finance."

The crowd cheers.

"Don has really worked hard," Trump adds.

The crowd roars again.

Stillman finally takes the microphone. "I'd really like to start by thanking you, Donald. It is, first of all, a thrill to work with the very best, to try and do the very best. That's what we came out here to do. I think the best days of Fort Lauderdale are ahead of it, and this property in Fort Lauderdale, the Trump International Hotel & Tower, is the five-star hotel of the city."

Trump smiles and nods, his face alight.

"Woooooo!" yells the crowd, as if cheering for a rock star.

The crowd does have a lot of incentive to cheer. This group, which is filled primarily with real estate agents who specialize in selling the most obscenely expensive properties in South Florida, have diamonds in their eyes. Stillman and Trump have issued a challenge: The first real estate agent to sell three units at Fort Lauderdale's Trump International will receive diamond cuff links (just like the ones worn tonight by the Donald!) designed by M. Zac & Co. That, of course, is in addition to the six-figure commission the agents will receive for each unit they sell. Condos at Trump International start at $1,200 per square foot — that is, about $2.4 million for the building's most basic 2,000-square-foot pad.

Diamond cuff links as an incentive to sell condos? Surely Trump International must be struggling to get signed contracts.

Not so, says Senada Adzem, vice president of marketing for Stillman's New York-based development company, Bayrock Group. Before the lavish Bonnet House party, 209 of Trump International's 298 units had been sold, she says. Another 20 were reserved for friends and family members of the developers. Sure, there's a market correction under foot, Adzem concedes, but not in Fort Lauderdale. The problems are south of the county line, she says.

"When we looked at coming into South Florida, we found that Miami-Dade had about 60,000 new units in development while Fort Lauderdale had only 6,000," Adzem says. "That gives you a very good feel in terms of the Fort Lauderdale market. Yes, the market has softened in South Florida. But from what we have seen in the Fort Lauderdale market in terms of supply and demand, we are not as affected as Miami."

In fact, Adzem's boss is so bullish on Fort Lauderdale that Stillman has partnered with Trump for a second project, Trump Las Olas Beach Resort, a smaller — the developers prefer the term "boutique" — condo hotel south of the Trump International. Trump Las Olas began to accept contracts in mid-June.

McCabe, the real estate analyst, doesn't think Fort Lauderdale's housing market is without risk. He's divested himself of everything but the roof over his head. "We know that there are going to be a lot of projects by second-tier developers and some even by names that we've come to know for quality and experience that are going to cancel, are going to fail," he says. "I'm concerned that Trump's projects are in all the markets that are susceptible to a major price correction — South Florida, Las Vegas, Chicago, New York. To this point, all the Trump projects have been very successful. But just about any project has been a success to this point. The question is going to be, what if one or two of Trump's projects do not do well? How will that affect the other projects?"

And in South Florida, there are fiveTrump projects.


Next to the posh The Atlantic hotel on Fort Lauderdale Beach Boulevard is a fenced-off construction zone. But the developers would have you believe this is no ordinary site. Along the fence are pictures of beautiful men and women dressed in skimpy bikinis and bathing suits on the sandy beach or in black cocktail dresses and suits in elegant ballrooms. Between each picture is a word — Trump. And the message is clear: If you buy one of these units, you too can live the glamorous life of The Apprenticestar.

But — ahem — only for one month out of the year.

Due to a pesky law that has been on Fort Lauderdale's books more than 50 years, no one can live in a single hotel room more than 30 days out of the year — with an obvious exception for innkeepers.

"The condo hotel means that the ownership is by an individual investor or owner," says Fort Lauderdale Mayor Jim Naugle, who is also a real estate agent. "Someone could buy one or two or ten units, but that doesn't mean it's a condo. The person can't live in it."

Trump International and its sister development, Trump Las Olas Beach Resort, are both condominium hotels. They will act just like other hotels: When the unit is not occupied by the owner, hotel management can lease the room on a nightly basis — and then pay a fee back to the unit owner. But whether buyers of Trump International and Trump Las Olas realize that they'll have access to their unit only 30 days out of the year is unclear. Developers are not required to make that law known to potential buyers. In fact, representatives of Trump International admit that they do not promote the 30-day limit.

The sly way in which condo hotels are being marketed as traditional condos has become a problem in America's Venice. "Some 'hotel' developments approved by the city are being marketed and used in a manner that has historically been considered a condominium use," Fort Lauderdale City Attorney Harry A. Stewart wrote in a February 9, 2005, memo to city commissioners.

City staff in Fort Lauderdale have proposed an ordinance that would require developers to disclose that buyers of condo hotels are limited to 30 days' residency.

"It's my understanding that if the requirement [to notify potential buyers of the 30-day limit] changes, we will be notified," Adzem says. "And we will take appropriate action at that time. Because it is a condo hotel, it is by default a second home. When people purchase a second home, it does not mean they will be living there full time."

That's one problem. Another is that the Trump brand isn't so exclusive in South Florida. With his name plastered on so many developments, Trumphas become a high-end version of Days Inn.

Trump International and Trump Las Olas, the two properties the Donald has a financial interest in, are roughly a mile apart. Twelve miles south is another property, Trump Hollywood, a 200-unit condominium tower on the beach being built by the Related Group under a licensing agreement with Trump.

And just south of Hollywood, across the Broward County line, are two more condominium projects that license Trump's name: Trump Grande and Miami Trump Towers, both in Sunny Isles Beach.

Is the Trump name still special and unique when it's plastered on five new condo developments in South Florida? Adzem brushes off the question.

"That was an initial concern," she says. "But Sunny Isles and Fort Lauderdale have completely different target audiences and target markets. In my Trump International project, half of my buyers are from the Northeast; the other half are from Broward. The rest is a mix — some from the Midwest and a few international buyers. I've learned from my colleagues that are working on the Sunny Isles project that their buyers are primarily Russian and Latin."

But no matter who the target audience is, the market is collapsing, McCabe says. "The jury right now is out on how shimmering the Trump name will be as the market continues to collapse. Let's say there are [a glut] of these luxury units for $2 million and above. Maybe we only have 500 buyers a year in that price range: Will they flock to Trump as the market dips, or will they go to deals offered by Trump's competition?"

If buyers do not flock to Trump's building, it wouldn't be the first time one of his South Florida projects failed. In 1986, Trump paid a developer 50 cents on the dollar to rescue the Trump Plaza of the Palm Beaches — a 221-unit luxury condominium project in downtown West Palm Beach — from foreclosure. Despite offering such incentives to brokers as free trips to his Plaza hotels, Trump was unable to sell 84 units. Owing $18.5 million on the project, Trump signed over the remaining units to the lenders.

Trump Plaza of the Palm Beaches was a failure. But even today, the project bears Trump's name, creating an illusion of success. Such illusions are the cornerstone of Trump's image. Despite widely held beliefs that Trump is a bulletproof billionaire, the real estate magnate was broke only 12 years ago. In 1994, Trump declared business bankruptcy and narrowly avoided personal bankruptcy. His company owed $3.5 million. The Donald himself owed $900 million in personal debt.

Trump has bounced back to become a financial tycoon again, but the Donald is likely worth much less than most people assume. He claims publicly to be worth $5 billion. Forbesmagazine lists Trump as number 74 on its Forbes 400 list, claiming he's worth $2.6 billion. But that is a guess at best, since most of Trump's assets are privately held. Last year, the New York Times magazine published a lengthy examination of Trump's finances. The magazine questioned whether the real estate mogul was worth even $1 billion.

But so what? Trump knows perception is more powerful than truth — especially when it comes to real estate.


Near 10 p.m., Wyclef Jean takes the stage at the Bonnet House. Like most of his audience for this private concert, he's dressed in a crisp black suit. He slings a guitar strap over his shoulder and plucks a string. The band behind him starts up. Later, Wyclef will entertain the crowd with Bob Marley covers, even a rendition of his duet with Shakira, but for now, he'll start with a song written just for his business idol, Donald Trump:

I ain't hard to find.

I'm at the Trump International, in Fort Lauderdale.

Ehhh!

I ain't hard to find.

I'm at the Trump International, in Fort Lauderdale.

Yo!

I landed in Fort Lauderdale.

I gave Donald Trump a call.

He said, Wyclef, no problem.

I'm at the Trump International, in Fort Lauderdale.

I landed at the Trump International.

They gave me a suite.

Man, it was expensive.

But I had the money, man.

It feels good to me.

I ain't hard to find.

I'm at the Trump International, in Fort Lauderdale.

If you're looking for me, we ain't hard to find, oh no.

We at the Trump International, in Fort Lauderdale.

Wyclef pauses. The band continues. Many of the women in the crowd dance. Their men stand next to them, as stiff as their designer suits. Wyclef puts his mouth to the microphone: "If you're making money, put your hands together!" he yells, then continues singing:

Make money, money.

Make money, money.

The men in the audience pump their hands up and down, open palmed, toward the sky, their gold and silver watches glimmering in the lights.

Make money, money.

Make money, money.

"Ladies!" Wyclef yells.

They scream. He continues:

Take money, money!

Take money, money!

At the other side of the room, Trump stands with guests on an elevated VIP platform. He dips his head to the beat.

Take money, money!

Take money, money!

And no matter how bad South Florida's real estate market becomes, that is exactly what Donald Trump aims to do.

Take money, money!

Take money, money!

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