The $777 million surprise: Donald Trump is getting richer

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Donald Trump is getting richer.

With the former president on trial in New York, accused of inflating his wealth by billions of dollars for more than a decade, the question of how much he’s worth is as relevant as ever.

The answer may surprise: Trump’s fortune is valued at $US3.1 billion ($4.8 billion), a rise of $US500 million ($777 million) from 2021, according to the Bloomberg Billionaires Index.

Donald Trump’s net worth is growing. Credit: AP

He spent a combative day in court arguing about how he valued his assets. The civil fraud lawsuit, brought by New York Attorney General Letitia James, could result in hundreds of millions in penalties and the loss of some of his most iconic properties.

The higher net worth comes as Trump’s businesses are proving resilient in the face of a gloomy real estate market. His move to Florida after leaving the White House coincided with a boom in the state that’s bolstered the finances of two of his best-known properties — Mar-a-Lago in Palm Beach and the Doral resort in Miami — while revenues at the rest of his golf courses have surged more than 50 per cent since 2019. And after selling his Washington hotel and paying down loans, Trump is sitting on more cash and less leverage than at any point in the past decade.

“The company has never been stronger and never been better,” his son, Eric Trump, executive vice president of the Trump Organisation, said in an interview.

“We have the most cash and the lowest debt. We are in a fantastic spot.”

Bloomberg’s wealth index has been calculating Trump’s net worth since 2015, based on ethics disclosures required for presidential candidates, public filings tied to key real estate holdings and staff reporting.

Thousands of pages of exhibits detailing the performance of his assets made available during the trial have provided a deeper look into his fortune.

The former president’s 2021 statement of financial condition, filed as part of the lawsuit, pegged his net worth at $US4.5 billion. Bloomberg’s calculation has consistently been below Trump’s figures. At the same time, Bloomberg measured the value of some Trump properties higher than what New York state claims.

Trump took the stand and testified that the properties whose values he’s accused of inflating were actually undervalued, based on the premium his “brand” adds. He also said that banks didn’t rely on his statements of financial condition when weighing loans.

“They just weren’t a very important element in banks’ decision-making process,” Trump told the court. “And we’ll explain that as this trial goes along.”

Here’s a look at New York state’s valuation of four high-profile Trump properties where the prosecution alleges fraud occurred, along with Bloomberg’s own approach to assessing the assets.

Mar-a-Lago

Trump’s valuation (2021): $US612.1 million , Bloomberg valuation (2023): $US240 million, New York’s valuation (2021): $US27.6 million

It’s fair to say that Trump’s most famous property these days is no longer New York’s Trump Tower but his Mar-a-Lago Club, the historic Palm Beach estate built by Marjorie Merriweather Post in the 1920s that he now calls home.

New York’s valuation of Donald Trump’s Mar-a-Lago estate has raised eyebrows.Credit: AP

The sprawling resort has been at the centre of some publicised post-presidency scandals, from classified documents being kept in one of its bathrooms to the location where Trump is said to have shared nuclear submarine secrets with Australian businessman Anthony Pratt — something that Trump denies.

It’s also a major focus in Trump’s fraud lawsuit.

Trump made a series of agreements with Palm Beach County and the National Trust for Historic Preservation for Mar-a-Lago to be used only as a club, giving up any development rights. Consequently, Palm Beach values the property as a business on its tax rolls. In 2021, the county assessed it at $US27.6 million, lower than comparable residential properties. New York State argues that this appraisal is the one Trump should have been using.

New York’s estimated value “was a shock to the real estate community and anybody with any understanding of the island and its values,” said Liza Pulitzer, a real estate agent at Brown Harris Stevens and a Palm Beach native.

“It could easily fetch $US500 million or more.”

That assumes a buyer views it as a single-family residence. It’s currently not zoned for such use, though Trump is able to reside there through a loophole designating himself an employee.

Trump’s legal team engaged an expert witness who argued that a future buyer could do the same thing. And if they didn’t like the idea of sharing their property with others, they could reduce the club to a membership of one. Still, it’s unclear if Palm Beach would allow that without a change to its zoning status.

Historically, Mar-a-Lago never made much money for the Trump Organisation, but that seems to be changing. It took in about $US41 million in revenue last year, according to Trump’s most recent ethics disclosure, compared with $US21 million in 2019.

Bloomberg values Mar-a-Lago at $US240 million, based on a combination of comparable residential property sales in the area as well as its value as a business, reflecting some uncertainty around its future status.

That uncertainty isn’t shared by everyone. If the city and county allowed it, “there is no reason why it wouldn’t be able to converted to a full-time private residence,” said Eli Beracha, director of the Hollo School of Real Estate at Florida International University.

Trump’s Fifth Avenue penthouse

Trump’s valuation (2021): $US131.3 million, Bloomberg valuation (2023): $US40 million, New York valuation: No current estimate available

Trump’s penthouse apartment at Trump Tower has been an integral part of his image for 40 years, so it’s not surprising that one of the world’s masters of hyperbole exaggerated its size for most of that time.

Trump’s penthouse apartment at Trump Tower has been an integral part of his image for 40 years.Credit: AP

Between 2011 and 2016, Trump valued his apartment based on it being 30,000 square feet (2,787 square metres) in size — almost triple its actual measurement of 10,996 square feet. Because of this, New York State arrived at a valuation that was about a third of Trump’s in those years. They haven’t provided a more recent estimate.

Space inflation wasn’t the only issue. Between 2014 and 2015, Trump increased the value of the apartment to $US327 million from $US200 million. The prosecution argues that was to mask a drop in the value of one of his other properties.

“A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud,” Judge Arthur Engoron wrote in a September ruling.

‘The company has never been stronger and never been better.’

Bloomberg values the property using recent Trump Tower sales, as well as those of comparable Manhattan penthouses. While some splashy residences in much newer buildings on so-called Billionaires Row have listed for well in excess of $US100 million, they typically boast higher ceilings, more up-to-date finishes, contemporary layouts, outdoor space and better views.

A better comparison would be a 9450-square-foot penthouse in Olympic Tower, five blocks south on Fifth Avenue, which has been on and off the market for $US35 million since 2016. Then there’s Carl Icahn’s 14,000-square-foot penthouse at Museum Tower on West 53rd Street. It was listed for $US35 million in 2019 before he attempted to split the space and sell it as two separate apartments. Both were eventually delisted.

It’s possible Trump would get a higher price because of his name.

“There would be a Trump premium because the person that would want that property is likely to be a Trump supporter,” Beracha said. But it’s also likely that the association with Trump would turn off some buyers.

Trump Park Avenue

Trump’s valuation (2021): $US90.9 million, Bloomberg valuation (2023): $US86.4 million, New York’s valuation (2021): $US80 million

The residential condo tower on Manhattan’s Upper East Side, formerly the Hotel Delmonico, isn’t one of Trump’s best-known buildings, but it’s been the source of some significant asset inflations, according to the prosecution.

Its value to Trump mostly stems from unsold condo units that are owned by the Trump Organisation and rented out. A varying number have been rent-stabilised, meaning tenants pay below market rates. Typically, these apartments are valued at a discount because tenants can stay indefinitely, sometimes even passing them on to children.

In 2010, 12 rent-stabilised apartments owned by Trump were valued at an average of $US62,500 each in an appraisal provided by a real estate company. The following year, Trump valued them at $US4.1 million each — more than 65 times greater. Trump has continued to value stabilised apartments in the building at market rates, including in his 2021 statement of financial condition.

Rent-stabilised units “with a positive cash flow are often valued at 15-25 cents a dollar of the open market value, versus single digits for negative cash flow,” said Jonathan Miller, president of appraiser Miller Samuel.

Still, Trump’s optimism was shown to be at least partially justified. By 2021, only five of the 12 apartments remained rent stabilised.

The prosecution also claims two additional non-stabilised apartments in the building were overvalued because Trump ignored an option his daughter, Ivanka Trump, had to buy them at a price lower than the market value he used.

40 Wall Street

Trump’s valuation (2021): $US664 million, Bloomberg valuation (2023): $US270 million, New York’s valuation: No current estimate available

In valuing his flagship lower Manhattan office tower, Trump consistently ignored more conservative appraisals he’d received from professionals, New York State argues.

Trump has been accused of significantly over-valuing his flagship downtown New York property.Credit: Bloomberg

For example, 40 Wall Street was appraised by a real estate company at $US200 million in 2011 and $US220 million in 2012. Despite this, Trump valued the property in financial statements at $US524.7 million and $US527.2 million, respectively, for those years.

Bloomberg uses a capitalisation of net income approach in coming up with an estimate. Valuations for commercial offices across the board have taken a hit in the past 18 months amid rising interest rates and a lacklustre corporate leasing market.

But 40 Wall Street has its own unique problems. Tenant departures meant occupancy slid to 77 per cent in June, down from 98 per cent in 2015. Its net operating income is only 61 per cent of what was projected by underwriters.

“There’s not a lot of leasing velocity down there,” said Albert Sultan, a broker at Kassin Sabbagh Realty. The financial district used to offer a lower cost for tenants, but with Midtown rents declining, “there’s no reason to go downtown.”

The property is also subject to a ground lease that resets in 2032 at either 6 per cent of the land value or 85 per cent of its rent in the prior year. Based on current rent, that means the ground lease would jump to $US30 million from about $US2.6 million now.

The prospects for the building’s future are “not good,” said Ruth Colp-Haber, chief executive officer of Wharton Property Advisors. “As a Trump building, it’s definitely facing a reduced market to draw on. Under new ownership, it would mean massive upgrades, hundreds of millions of dollars for it to even compete with some of the other buildings in the area where owners have poured money into renovations.”

Bloomberg

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