According to a new report in The Wall Street Journal, the Vornado Realty Trust — a business partner of ex-President Trump’s family business — is “exploring ways to end a lucrative partnership with the former president’s real-estate company, people familiar with the matter said.” The partnership involves two office buildings that are in Manhattan and San Francisco where Vornado is the majority owner of both developments, but a failed effort to sell the properties led Vornado founder Steven Roth “to believe the Trump Organization’s stake in the buildings was a reason for the lack of buyers,” the Journal explains. Doing business even by association with the Trump Organization seems increasingly unpopular.
According to the Journal, Vornado has explored options including directly buying out the Trump Organization’s stakes in the properties in question, and the company has also “weighed finding a reason to withhold income generated by the properties” from the ex-president’s family business, which could “force a confrontation that sends both parties to court and accelerates a separation,” according to the publication. Besides the failed Vornado attempt to sell the buildings, the company also tried unsuccessfully to refinance the properties, but “no buyers or lenders stepped up,” the Journal says.
Personally, Roth is a longtime Trump ally and was even at the ex-president’s wedding to his current wife, former First Lady Melania Trump. The ex-president himself told the Journal that “Vornado has been an excellent partner so far and we expect that to continue” — but Donald Trump isn’t exactly known for being forthcoming.
Cutting ties with Vornado could produce a financial windfall for the Trump Organization, which has hundreds of millions of dollars in debt coming due that could be partly covered by money from sales — although on the other hand, both office buildings have significantly higher revenue streams than key parts of the Trump Organization’s broader real estate portfolio, meaning that the long-term impacts of cutting ties could be destructive.
According to the Journal, the Manhattan and San Francisco buildings are “each estimated to generate combined yearly cash flows of more than $20 million for the Trump Organization after expenses and debt service,” which is higher than the yearly income from other properties including Trump Tower in New York City and Trump’s controversial hotel in D.C. From 2016 to 2019, net operating income grew by a whopping 27 percent at the Manhattan office building.
Besides the impacts on the hospitality industry as a whole from the COVID-19 pandemic, the Trump Organization has also faced pushback after a Trump-incited mob stormed the Capitol building. BankUnited and Professional Bank, both of which are Florida-based institutions, have moved to draw their relationships with Trump to a close, and Signature Bank, a New York institution, has done the same.
