Nearly two years after Trump Soho developers claimed they had sold more than half of the building’s total inventory, newly released documents filed at the state attorney general’s office show that less than 16 percent of the 391-unit condo-hotel is under contract.
Alex Sapir, president of the Sapir Organization, and one of the developers of the project, in a sworn affidavit filed with Attorney General Andrew Cuomo’s office in late March, stated that Trump Soho had 62 units under contract.
The figures appear to contradict earlier claims by key executives linked to the project, including executive vice president Ivanka Trump, who told the Times of London in 2008 that 60 percent of the project was under contract. Rodrigo Nino, president of the project’s exclusive broker Prodigy International, told the New York Observer that 53 percent of the units were under contract. Sapir developed the 46-story building at 246 Spring Street with Bayrock Organization and an affiliate of the Trump Organization.
When The Real Deal asked the developers to clarify the apparent sales discrepancy, an e-mailed response attributed to Nino stated: “Closings began last week and we anticipate they will continue at a very strong pace. It is a very exciting time for Trump Soho.”
The Real Deal asked for a clarification of that e-mail, resulting in a second response from Nino stating: “During the pre-opening phase, Trump Soho went into contract with over half the units. Phase two is to begin after these closings are completed.”
A Trump Soho spokesperson, who asked not to be identified, declined to comment on Trump’s earlier statements.
Trump Soho officials have declined to comment on sales in recent months despite repeated requests. Referring to Nino’s comments about the pre-opening phase, lawyers familiar with the offering plan say they were not aware that Trump Soho ever divided up sales into phases, and noted that page 30 of the offering plan only states “the sponsor hereby offers the 413 hotel suite units.”
In November 2009, Bayrock principal Julius Schwartz told the New York Post that over 55 percent of phase one was sold. The Post, citing a Trump Soho spokesperson, said that the first phase represented over 50 percent of the building, or at least 196 units, which would result in at least 108 units under contract, a far cry from the 62 stated in the filing.
The AG’s office approved the amendment and declared the Trump Soho plan effective less than one month ago, allowing Trump Soho officials to officially schedule closings for the units that are under contract.
Financial experts say that market conditions could make it difficult to close deals, however, due to the dearth of financing for individual condo-hotel buyers.
“There’s no appetite for that right now on the part of lenders,” said Debra Schultz, director and senior mortgage consultant at Manhattan Mortgage, one of the largest mortgage brokers in New York. She said Manhattan Mortgage does not have any Trump Soho buyers.
The developers also slashed the property’s budget by 15 percent, in part cutting staff in maintenance, security and front office personnel, according to the amendment.
But when asked to comment on the budget cuts, Jim Petrus, COO of Trump Hotel Collection, claimed, in an e-mailed statement, that the condo-hotel has hired another 70 people because it has exceeded prior expectations by 40 percent. The Trump Soho spokesperson declined to elaborate on Petrus’ comments.
Trump Hotel Collection is a group of luxury Trump properties including hotels in New York, Chicago, Waikiki Beach, Hawaii and Las Vegas.
The disclosures come at a critical period for Trump Soho. In March, the Wall Street Journal reported that senior lender iStar Financial bought a $75 million mezzanine loan from Bank of America at a steep discount and that the developers were negotiating to restructure more than $350 million in loans.
Ben Thypin, senior market analyst at Real Capital Analytics, said the reason iStar would want such a loan would be to make sure it did not have to fight with a mezzanine lender over first priority in a potential foreclosure of the unsold inventory.
“Either way they did it because they wanted to make sure if someone is going to get some or all of these units it’s going to be them,” Thypin said.
Officials at iStar told The Real Deal that Trump Soho’s developers are current with their loan. A spokesperson for Cuomo was not immediately available for comment.