A Russian fertilizer mogul paid Donald Trump more than $95 million for a Palm Beach mansion that sprawls like a super-sized white wedding cake along 475 feet of pristine ocean front, setting a record for the most expensive house sale in the country.
But that was back in May 2008, Trump says, before financial markets turned truly ugly and banks, propped up by billions in taxpayers’ money, ceased lending.
This week, Trump confessed to The Real Deal that he couldn’t pull that same record-breaking sale off any later than he did. If location is everything in real estate, timing is nearly as important.
“The market changed so drastically and so rapidly, I wouldn’t have been able to do it a week later than I did. A lot of that had to do with how drastically the financial markets changed,” said Trump, who bought the mansion for $39 million out of the auctioned-off ruins of Abe Gosman’s health-care empire.
Trump said that in this market, his sale will stand as a record “unfortunately, for a very, very long time.”
While the Palm Beach mansion market is down about 20 percent, it’s doing better than other South Florida luxury markets, including Miami Beach, which Trump calls “just a disaster.”
“Palm Beach is one of the really unique markets of the world,” said Trump, “When we had the real estate depression of 1990, the only market in the world that didn’t go down was Palm Beach.”
Much of Palm Beach’s resilience is due to the fact that few of the island’s mansions have mortgages.
But this time, warned Trump, Palm Beach real estate may not slip away unscathed.
“This time we have one intervening factor: a sleazebag named Bernie Madoff,” said Trump, with anger rising in his voice as he referred to the former Palm Beach resident and now island-vilified scam artist.
“The whole Madoff thing is one thing that Palm Beach has going against it that most other places don’t. Palm Beach was ground zero for Madoff. It’s where he spent his time and it’s where he conned everybody. He followed the money and the money is in Palm Beach.”
Trump said “a big chunk of the $65 billion” Madoff scammed came from Palm Beachers. He said some have been forced to sell homes or possessions, others have lost $600 million or $250 million “and just aren’t as well off as they were six months ago.”
“But the money in Palm Beach is so immense that it’s not going to end up to be a huge, huge thing,” he said.
Madoff aside, the biggest problem is the banks and the credit markets.
Trump is outraged at the banks which he said are “taking hundreds of billions of dollars in government and taxpayer money and they’re not lending. You can be a wealthy person and you want to buy something and they’re not lending.”
Trump noted the banks are lending less today than before they got billions in Troubled Asset Relief Program money.
“I don’t know if it’s that they don’t have money or that they are trying to shore up their balance sheets or what,” Trump said.
Then laughing, Trump joked: “The only way you can get a loan from a bank these days is to collateralize it with three times the amount of the loan and give it to them in cash.”
The banks haven’t stopped Trump. He says he’s got cash. Lots of cash. And he’s finding bargains in distressed real estate.
On April 30, he closed the deal to buy the Lowes Island Golf Course in Potomac Falls, Va., a luxury club on 800 acres of land that spans 2.5 miles of the Potomac River. Trump said he paid cash for the club which was immediately renamed “Trump National Golf Club, Washington, D.C.”
Trump declined to say how much he paid Chevy Chase Bank of Bethesda, Md. Last year, the bank put the club on the block for $18 million.
“Two years ago, it would never have been for sale. This is just a great time to buy things if you have the cash. I think. I’ll let you know in two years,” he said.