Friday, August 12 2022

The New York Attorney General is investigating the former president for manipulating the value of his properties in a way that benefits him. It’s something we know at Forbes, because Donald Trump has tried to mislead us about his financial information for decades. It is the second of a series stories going deeper into the numbers.

In she 2009 delivered, the Asset, Ivanka Trump bragged about buying her own apartment after graduating from college. Sure, it was a unit in her father’s Trump Park Avenue, but it didn’t “benefit from insider pricing,” she wrote. Except Ivanka got an insider’s price — multiple times, according to an analysis of newly released property records and court documents related to the New York Attorney General’s ongoing investigation into the Trump Organization.

The first chord, which Forbes previously reported, involved a two-bedroom apartment that Ivanka bought for $1.5 million a few months out of college. She paid $968 per square foot, while other buyers in the building paid an average of about $1,670 per square foot. Spanning 1,549 square feet, it’s a discount of around $1.1 million.

New court documents reveal a second deal. In 2011, Ivanka and her husband Jared Kushner, heir to another real estate fortune, had a child. That same year, Ivanka began renting a larger unit from her father, a penthouse in the same building. As part of the deal, Ivanka also got an option to buy the place for $8.5 million, according to a filing released last week. She does not appear to have ever exercised the option.

But the offer got him a second big discount. Court records suggest the exact unit was Penthouse 28, a 4,164 square foot apartment. Another penthouse with the same square footage had sold for $10.2 million in the building a few months earlier. If you assume that Ivanka’s apartment was worth the same amount as the other unit, then the option apparently gave her the right to buy the apartment from her father for $1.7 million less than her true value.

It’s worth noting that, according to court records, the Trump Organization’s own paperwork valued the apartment at $20.8 million, which would have made Ivanka’s option even sweeter. But the truth is, the place probably wasn’t worth that much money, as other sales in the building clearly show. The $20.8 million figure appears to be an inflated figure in line with others that Donald Trump has thrown around to make himself look richer than he really is.

In 2017, penthouse 28 sold for $15.9 million. That price was well below the numbers Trump had listed on his balance sheet, but it was still well above normal rates for the building. In fact, since 2005, nothing else on Trump Park Avenue had sold so much per square foot. The deal, which was struck just a month after Donald Trump took office, has sparked conflict of interest concerns. The buyer was a woman named Angela Chen, who ran a company that helped businesses grow in China and boasted on her website of her “extensive network of relationships with the highest levels of government officials”.

On paper, the sale did not appear to involve Ivanka. Ownership records indicated that the seller was Trump Park Avenue LLC, a company in which Donald Trump had a 99.9% stake. (The General Electric Pension Trust, a former owner of the entity, sold all but 0.1% of its stake in 2004, retaining the last tranche for tax reasons, according to a GE spokesperson.) Donald Trump counted the total sale proceeds as his own income on a personal financial disclosure report he filed with government officials.

It wasn’t until 2019 that everyone seemed to realize that Ivanka and Jared had a connection to this particular unit. Even then, it looked like they had just rented it from Ivanka’s father. The fact that Ivanka apparently had an interest in the property, via option, remained secret until last week, when the New York attorney general submitted new documents to the court.

The newly revealed arrangement makes the deal with Chen even more mysterious than it already was. If Ivanka had the option of buying the apartment for $8.5 million and Chen agreed to buy it for $15.9 million, why didn’t Ivanka exercise her option, pay $8.5 million to his father, then immediately sold to Chen for a profit of $7.4 million? For a family looking to pass on a multi-billion dollar fortune to the next generation, such a move would seem like a no-brainer. Yet records indicate that it was Donald Trump who sold the apartment to Chen rather than Ivanka Trump.

Maybe the option had expired in 2017. Or maybe there was some kind of hidden arrangement, whereby Ivanka shared the sale proceeds, even though the documents suggest otherwise. Neither Ivanka Trump nor the Trump Organization answered a list of questions about the transaction.

There’s a weird twist to this whole thing involving Ivanka’s apartments. The favor agreements that Donald Trump has granted to his daughter have deteriorated in recent years. The elder Trump’s policy has put off so many New Yorkers that the value of condos in his buildings has plummeted. Since mid-2015, when Trump declared his candidacy for president, prices on Trump Park Avenue have fallen about 68%, even as condo sales in the rest of Manhattan have increased about 10%.

That means Ivanka’s first apartment is now worth around $2.4 million, which is $900,000 more than she paid, but about $200,000 less than it was worth at the time of purchase. The penthouse is worth about $9.2 million, $700,000 more than the option price, but about $1 million less than it was worth when Ivanka was first given the option.

In other words, if Ivanka had made deals at fair rates, as she suggested in her book, she likely would have lost money on her original apartment. And the option to buy the penthouse, even if she could still exercise it, would now be worthless.

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