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Wednesday , 27 August 2014
Trump name a lure but also a turn-off for investors

Trump name a lure but also a turn-off for investors

Donald Trump’s name is going up on another Canadian development, this one in Vancouver. It was announced last week with the usual hoopla by Trump and his children. The comments Trump made sounded exactly like those he delivered a few years ago in Toronto when the Trump International Hotel was announced here. “It’s a great market and it’s a great city . . . I like the site and I like the city. I believe it’s going to be a fantastic success. . . I love (name of city) and the people who live here. . . I think it’ll be one of the great buildings not only in Canada, not only in the United States, anywhere in the world. It’s that good.”

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Trump announcing the Toronto International Hotel in 2007. His appearances at events like these in the past have given investors the false impression that he is the developer when in fact he merely licenses his name. Photo: Michael Stuparyk, the Canadian Press/Toronto Star.

Hopefully, those who may be lured by the Trump name realize that he has very little to do with the actual building. Trump merely licenses the use of his name, the Trump brand. Apart from dictating, apparently, certain construction and design details, like the requirement for nine-foot ceilings and a certain kind of tinted glass, there’s nothing Trump about these developments. He is paid a fee, said to be in the $5–$10 million range, and that is the extent of it. He bears no liability for the development’s success or failure. As he told the Wall Street Journal, “My name makes everything more successful.”

The New York Times reported that when several developments bearing the Trump name ran into financing difficulties, Trump simply removed his name and let the actual developers deal with the mess. A lot of people who had bought in these developments thought that Trump was behind them, not just his name on the sign.

And he does give that impression with his personal appearances at development announcements like the one in Vancouver last week, and at sales events for the buildings. More than 300 people who bought in “Trump” developments that went bust are suing him in the US. According to the New York Times, one of the purchasers who is now suing Trump said that there was no disclaimer to indicate that Trump was not the real developer. In marketing materials, Trump added to the illusion by referring to these branded projects as “my latest development.” Purchasing documents did disclose Trump’s true role, his lawyer has said, but purchasers don’t always read all of the fine print. People who bought homes in the developments  lost tens of thousands when the developments went bust, but Trump loses nothing.

The Toronto Trump International Hotel and condo complex has also  had to deal with a number of lawsuits based on investors’ misunderstanding of what they were buying into. They probably should have known better, if they really thought it was a Trump property, but these kinds of troubles seem to follow him wherever he goes.

In Panama right now, the owner of the Trump Ocean Club International Hotel and Tower is in bankruptcy court after running into financial trouble. The hotel’s owners have asked the court not to reveal how much they paid for the use of Trump’s name, fearing that that information would be damaging to everyone—the owners themselves, the owners’ creditors, and the Trump brand. Disclosing the terms would be “anticompetitive to their business” the Wall Street Journal reported about the case.

In another case of dissatisfaction with the Trump promise, a designer filed a class-action lawsuit against Trump,  this time for his “Trump University.” The non-accredited, for-profit school advertises high-level courses in real estate, and charges up to $35,000. The lawsuit alleges the content presented at the “university” seminars is more like an infomercial and generally worthless. The name Trump is used to lure students, the suit alleges.

Trump, who is notoriously prickly about how much he is actually worth, owns a portfolio of high-profile buildings, including several in New York City (Trump World Tower, Trump Tower, The Trump Building, Trump Plaza, and several more) but his licenced buildings worldwide number around thirty-five. The Vancouver building is the latest. Trump has not licenced a building in the United States since 2007.

About Nicole Ryan Editor

I am Nicole Ryan, a contributing editor at Condo.ca—Canada's Condominium Magazine.

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