Could Trump’s property really be confiscated?

Donald J. Trump, rejected by more than two dozen bond firms, has so far failed to raise nearly half a billion dollars in penalties owed as of Monday in his civil fraud trial.

Just days before the deadline, the former president’s social media company completed a merger – a move expected to pump an estimated $3 billion into Mr Trump’s coffers. That’s more than enough to cover the $454 million penalty he owes New York state, but the merger prevents him from selling his shares or pledging them as security for a loan for six months use.

Unless those rules are overridden to allow him to tap the cash infusion, Mr. Trump faces the possibility that the attorney general will freeze some of his bank accounts and attempt to seize his property in the city he has made a name for himself as made by a real estate developer.

The buildings at the center of the lawsuit — several that dot the Manhattan skyline, such as 40 Wall Street, as well as a 212-acre property north of the city in Westchester County — sit like the tiniest figure in a Russian nesting doll, protected by layer upon layer of legal protection Persons. Lawyers specializing in bankruptcies, foreclosures and corporate insolvencies warn that it will be an uphill battle to gain control of and liquidate one of the former president’s flagship properties.

And even if the attorney general manages to acquire Mr. Trump’s properties, unloading a 60-story skyscraper involves a spider web of transactions.

“People are really, really good at litigating and coming to a verdict,” said Brad Eric Scheler, senior counsel at the law firm Fried, Frank, Harris, Shriver & Jacobson, where he oversees corporate restructurings and bankruptcies. “But they never focus on the fact that it is very difficult to collect judgment.”

Mr. Trump was accused of massively inflating the value of his real estate empire to get better credit and insurance terms and lost his civil fraud case in February. A judge fined him nearly $355 million, a penalty that now stands at more than $450 million plus interest. He has until March 25 to pay the fine, but it’s unclear what will happen if he doesn’t.

In one letter Speaking to the court clerk last Thursday, one of Mr. Trump’s lawyers reiterated that they had approached 30 bond firms through four different brokers and had found none that could underwrite a bond of this size. The bond companies refused, the letter said, to accept real estate as collateral, instead demanding a guarantee in the form of cash or other liquid assets worth about 120 percent of the judgment value – or over $557 million.

According to a Times analysis, the former president had about $350 million in cash last year – less than two-thirds of what bond companies charge.

Appraisers and brokers warn that it is difficult to determine the value of his assets because of numerous variables, including his debts. The value of his properties would also decline if he were forced to sell them hastily, which Trump’s lawyer also emphasized: “A ‘distress sale’ of real estate holdings would inevitably lead to massive, irrecoverable losses,” he wrote to lawyer Clifford Robert.

Here’s a look at the challenges the state faces as it seeks to seize or even place value on some of Mr. Trump’s most prominent Manhattan properties.

Mr. Trump outright owns almost none of his properties. They are protected by a maze of interlocking trusts and limited liability companies. According to the lawsuit, there are up to 500 separate companies operating for the benefit of and under the control of Mr. Trump.

This poses 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 were similarly protected. “Taxi fleets had each of their taxis in a separate company, so if the taxi was in a car accident and insurance did not cover the damage, liability was limited to the company that owned the taxi.”

Even if New York Attorney General Letitia James manages to seize a property, if there are mortgages or loans on it, those debts must first be paid, say lawyers who have represented distressed corporate clients.

“It’s 1,000 percent complicated and the reason it’s 1,000 percent complicated is because there are creditors and shareholders who are ahead of Letitia James,” said Leo Jacobs, a corporate bankruptcy attorney. “Imagine 40 Wall Street is worth $250 million and it has $200 million secured on it. After deducting transfer taxes and fees, she is left with $1 million. Is it worth enforcing the sentence? The answer is no, it’s not.”

The attorney general could place a lien against Mr. Trump’s property, but lawyers representing corporate clients warn that a lien is not the same as acquiring property.

“Putting a lien is kind of like a stop sign,” said Leni Morrison Cummins, a partner in the Manhattan office of law firm Cozen O’Connor, who has brokered fraud suits 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 attorney and partner in the New York office of the law firm Smith, Gambrell & Russell.

For some buildings, the ownership structure is so complex that it is unclear what, if anything, the court might seize.

Take the elegant skyscraper at 1290 Avenue of the Americas. Nearly two decades ago, Mr. Trump acquired one 30 percent Investment in a company that owns the 43-story building in Midtown Manhattan next to Radio City Music Hall. The other 70 percent belongs to the Vornado Partnership Trust.

The partnership’s fine print makes it difficult, perhaps impossible, for Mr. Trump to sell his 30 percent stake. The partnership, which was originally scheduled to expire in 2044, states that “a partner may not, directly or indirectly, sell, assign, transfer or otherwise dispose of any portion of its partnership interest without the prior written consent of the majority owner,” the notice reads in part the agreement shared during the process.

In the lawsuit, Ms. James argued that Mr. Trump and his surrogates increased the value of that 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 they uncovered during the trial – namely, being more or less stuck in this partnership for another two decades, real estate lawyers said.

Located diagonally across from the New York Stock Exchange, 40 Wall Street has long been one of the marquis properties in Mr. Trump’s portfolio. It was completed in 1930 and was briefly the world’s largest highest building. According to court documents, Mr. Trump bought the right to lease it in 1995 for $1.3 million. An offering memorandum for the building shows that the agreement would last for almost two hundred years, until the year 2194.

That’s right – the right to lease it. He does not own the building or the land under which it stands. The agreement, called a “leasehold agreement,” makes sales difficult, real estate lawyers and commercial agents say.

“Anytime there is a leasehold on a building, there is an automatic stigma attached to it,” said Roshan Shah, a commercial real estate agent who was formerly a director at Avison Young. “Ultimately, the building sits on land that you have no control over.”

In 2010, 2011 and 2012, three different appraisals by Cushman & Wakefield valued its leasehold property at between $200 million and $220 million if it were sold as-is, according to documents released during the litigation. In 2015, an appraisal commissioned by the lender estimated its value at $540 million. In 2021, the former president claimed his lease was worth $663.6 million, a figure the court found to be inflated.

The value of the lease depends on two things: how much rent Mr. Trump pays to the building’s owner and for other expenses, and how much he earns in return from the dozens of tenants who occupy the skyscraper.

Several commercial brokers and analysts contacted by The Times stressed that they did not know the value of Mr. Trump’s leasehold, but said the asset’s value was likely significantly lower today than it was in 2015, and may even have fallen below $200 million be.

The decline is attributed to the seismic shift in commercial real estate as remote work necessitated by the pandemic continues. Looking at 380 buildings in Manhattan, last summer one in four buildings was valued at less than the previous selling price. Andrew LimResearch director at JLL, a real estate services company, found out.

Mr. Trump’s “Triplex” is located on the top three floors of Trump Tower on Fifth Avenue. He filmed his first television interview as president-elect under the penthouse’s frescoed ceiling.

Of all his Manhattan properties, this one may be the easiest to sell, or at least put a value on. It is a single apartment and not a complicated partnership or rental agreement.

Brokers and an appraiser say the market value may not reflect reality. The unit is near what’s known as “Billionaire’s Row,” where condos regularly sell for over $10,000 per square foot. In 2015, Mr. Trump and his aides tried to claim that the value was about $327 million, according to his financial report.

But Trump Tower, where the triplex is located and opened in 1983, has long been dwarfed by more modern high-rises, according to brokers and analysts. A fairer comparison, they say, would be units in the Olympic Tower, five blocks south on Fifth Avenue and built in the 1970s, where condos sell for $100,000 Average of $1,958 per square foot.

Ondel Hylton, senior director of content and research for CityRealty, a real estate firm, said the triplex could fetch as little as $2,000 per square foot, or $22 million. If renovated, its value could rise to $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 to the research. Kate Christobek contributed reporting from New York.

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