Trump is richer in property and deeper in debt in new valuation

[NEW YORK] In the year that Donald Trump was transformed from a long-shot presidential candidate into the presumptive Republican nominee, he took on more debt and sold at least US$50 million of stocks and bonds. At the same time, the value of his golf courses and his namesake Manhattan tower soared.

Those are the findings of an updated assessment of the wealth of the man poised to accept his party's nomination Thursday night in Cleveland. While the performance of Mr Trump's major assets was uneven, his net worth rose to US$3 billion on the Bloomberg Billionaires Index, up from US$2.9 billion a year ago.

Mr Trump's riches have been debated for decades, and the billionaire's estimates have been higher than those made by others. Since becoming a candidate, he has repeated his assertion that he's worth more than US$10 billion, which he says is proof of his success as a businessman.

Estimates in the past year by Fortune and Forbes magazines have come in at less than US$5 billion.

Bloomberg's calculation was conducted in line with its methodology for valuing the fortunes of the world's richest billionaires. It uses information compiled from Mr Trump's financial disclosure to the Federal Election Commission in May, mortgage filings, property records, leasing agreements, annual reports from Mr Trump's European golf courses, market data on rent, occupancy and capitalisation rates, sales of hotels and condominiums and interviews with people familiar with the assets who asked not to be identified because they're closely held.

"There are numerous, generally acceptable ways to value regular and trophy properties, of which we have many," the Trump Organization said in an e-mailed statement disputing Bloomberg's methodology and valuation. Bloomberg "substantially undervalues our properties by failing to account for key value-generating components."

One difference between Mr Trump's estimates and Bloomberg's is the value of his personal brand. Mr Trump has said his ability to license his name and likeness to everything from international hotels to mattresses is worth US$3.3 billion. Bloomberg assigns it a value of US$35 million, or one times sales from ongoing licensing deals.

While Mr Trump hasn't explained how he arrived at his figure, it would indicate a sales multiple of almost 100, based on the average revenue he disclosed for management fees and royalties, adjusted for 12 months.

The highest price-to-sales ratio for any company in the S&P 500 Index is 18 times sales. Bloomberg values the licensing enterprises lower because their structure and profitability is unknown, and because some agreements from which Mr Trump derived such revenue last year have been suspended amid controversy generated by his campaign.

As Mr Trump's licensing revenue diminishes, his brand derives most of its value from cost-savings in earned media for his campaign, said Edgar Baum, chief executive officer of Toronto-based brand-valuation firm Strata Insights.

"If he does not win, all the cost savings value from earned media becomes null," Mr Baum said in an interview.

"I doubt anyone is going to give Mr Trump positive earned media to the remaining Mr Trump-branded revenue streams he'll need after that."

Mr Trump's debt almost doubled, to an estimated US$630 million from US$350 million, as he drew down on a US$170 million line of credit from Deutsche Bank AG for a hotel project in Washington. Mr Trump has said he will spend US$200 million renovating the Old Post Office building, blocks from the White House. It's scheduled to open this year.

At the same time, Mr Trump's liquid assets shrunk to about US$170 million from US$225 million, based on the high end of value ranges for those assets listed in his financial disclosure form. A comparison with the disclosure he filed last year shows he sold corporate bonds and shares of US companies including Apple Inc and Bristol-Myers Squibb Co.

Mr Trump loaned about US$50 million to his campaign but doesn't plan on recouping the amount, he said in a June statement.

The value of Trump Tower in New York increased to US$600 million from US$490 million as Gucci, its largest tenant, increased the rent it pays to occupy the bulk of the building's retail space. Mr Trump owns the building's 27 commercial floors and a three-floor penthouse that serves as his primary residence, which is valued at US$90 million. The remainder of the 58-floor tower is occupied by condominiums that Mr Trump doesn't own.

Mr Trump borrowed US$100 million against the tower in 2012 from Ladder Capital Corp, a commercial mortgage lender, according to a public filing. He personally guaranteed US$8 million and only has to pay interest on the debt until 2022, when the principal is due, the filing shows.

Around the corner, Mr Trump owns the leasehold for 6 East 57th St, where he has rented the 90,000-square-foot building to Nike Inc since 1995. Mr Trump pays about US$3 million to the deed holders annually for the right to rent the space, an arrangement valued at US$520 million, US$50 million more than a year ago. He's almost finished paying off a US$92.7 million bond issued against the property.

"It really is the best brand building in the city," said Faith Hope Consolo, retail brokerage chairman at Douglas Elliman Real Estate. "It's a super store with a super landlord."

Mr Trump's office building at 40 Wall St was appraised at US$540 million, according to a September filing by Wells Fargo & Co, about the same as what Bloomberg said the tower was worth last July. Mr Trump owns the rights to lease the building and collect rents but doesn't own the deed. He pays US$1.65 million in annual rent to the building's deed holders, the filing shows. He refinanced US$160 million of debt on the building last year with Ladder Capital, personally guaranteeing US$26 million.

Other Trump real estate holdings haven't fared as well. His 30 per cent stake in two office buildings owned by Vornado Realty Trust - 1290 Sixth Ave in New York and 555 California St in San Francisco - has declined in value to US$590 million from US$640 million as demand for workspace in those cities softened.

About 20 condominiums he still owns at 502 Park Ave in New York have also dropped in value, to about US$170 million from US$200 million, based on listings and recent sales. Thirteen apartments located at 100 Central Park South could sell for US$30 million on the open market, although Mr Trump recently sold two in need of repair to his son Eric at a discount.

The billionaire's 16 golf courses and resort properties had a 17 per cent increase in revenue last year, according to figures Mr Trump provided in his disclosure forms adjusted for 12 months. The amount almost doubled at his most valuable resort, Trump National Doral in Florida. An appraisal conducted by Cushman & Wakefield for the Trump Organization in July 2015 and seen by Bloomberg valued the property, which has four golf courses, at US$366 million.

Based on the average price-to-sales multiple for three publicly traded golf operators and the Doral appraisal, the properties have increased in value to US$710 million, up from US$375 million last year. Other properties, including Mr Trump's interest in towers in Chicago and Las Vegas that bear his name, have risen to US$220 million from US$195 million.

Investors prefer measures of price-to-earnings over multiples of sales, because the latter doesn't capture cost structure or profitability. Mr Trump only reported revenue for the golf properties in his campaign filings even though the disclosure form asks for income.

Annual reports for Mr Trump's three European golf courses obtained by Bloomberg show that they're all unprofitable. Three US courses have easements against them, meaning that Mr Trump sold development rights in exchange for tax breaks. That would decrease their resale value.

BLOOMBERG