Donald Trump’s legal woes add new twist to Wall Street tower’s tangled story
IT was with barely concealed menace that Letitia James, the New York attorneygeneral, mentioned one of Donald Trump’s buildings after winning a nearly halfbillion-dollar fraud judgment against the former president.
“We are prepared to make sure the judgment is paid to New Yorkers,” James told ABC News after the February judgment. “And yes, I look at 40 Wall Street each and every day.”
Trump earlier this month posted a surety bond to cover a separate $83mn judgment for defaming the writer E Jean Carroll. As the clock ticks on the larger payment, speculation is rampant as to which assets he might be forced to sell or pledge as collateral for a surety bond — or which might be targeted by James.
The financial district office building may not be “Trump’s rosebud”, as one acquaintance recently described his beloved Mara-Lago club. Unlike Trump Tower, it is not his personal address and the source of his gilded origin story.
Still, the 72-storey, neogothic tower with the copper-green pyramidal top claims a special place in Trump’s empire: It ranks as one of the former developer’s best property investments — a place where he made a bundle and repaired his reputation after his casinos went bust.
“It’s one of my favourite deals, and one of my favourite buildings,” Trump told the Financial Times in 2008. “I had been watching this building for decades before I made my move in 1995.”
If 40 Wall Street should slip from Trump’s grasp it would be one more eventful chapter for a boom-and-bust building that was conceived in the euphoria of a speculative boom, rose during the 1929 stock market crash, and is now muddling through an epochal office market crisis.
In between, it passed through the hands of Ferdinand Marcos, the late dictator of the Philippines, and his wife, Imelda, served as the home of the ill-fated Trump University, and was struck on a foggy night in 1946 by an army transport plane. (The tower survived but five crew members did not).
When it opened its doors in 1930, opposite the New York Stock Exchange, it was briefly the world’s tallest building, thanks to a distinctive rooftop lantern designed by architect H Craig Severance that brought it to a record 927 feet. But it was trumped a few months later by 70 Pine Street, which stretched 25 feet higher. Then came the 1,046ft Chrysler Building, whose architect William Van Alen shrewdly concealed a 185ft spire within its tower until the final stages of construction. Chrysler, in turn, would soon be topped by the Empire State Building.
For all the fanfare that accompanied its construction, the Depression-era 40 Wall Street was a commercial bust. It fell into foreclosure within a decade as many of its tenants went broke. It was revived only by the postwar boom, eventually housing Wall Street stalwarts such as Manufacturers Hanover and Kuhn, Loeb & Co.
William Zeckendorf Sr, who preceded Trump as New York’s flamboyant developer king, bought 40 Wall Street in 1959 for $18.15mn in an 87-round auction held in its 26th-floor Wall Street Club.
The ‘60s and ‘70s were good to 40 Wall Street. Then came the ‘80s and the Marcoses, who took control of it using secret bank accounts and money US prosecutors said was looted from the Philippine treasury. After Ferdinand was ousted in 1986, 40 Wall Street became trapped in litigation over who actually owned it. Adnan Khashoggi, the Saudi arms dealer and financier, was at one point accused of helping the Marcoses hide their involvement but eventually acquitted by a New York jury. All the while, the tower was starved of investment.
Burton Resnick, another developer, bought it in 1989 for $77mn, and — with a $50mn loan from Citicorp — began renovations. But it was a disaster. The economy fell into recession and financial firms fled a blighted downtown for newer offices in midtown Manhattan or the suburbs. Modern trading floors required larger floor plates than 40 Wall Street could offer, as James Grant, the financial historian, detailed in his book, The Trouble With Prosperity.
By 1992, the tower was so decrepit that The Wall Street Journal described it as “80 per cent vacant, 100 per cent run down, and said to be available for $10mn”.
Trump claims to have paid just $1mn for it in 1995. At first he planned to convert it for residential use but was dissuaded by two astute brokers from Cushman & Wakefield. (In subsequent retellings, Trump claimed he was the one to shoot down the idea).
He poured tens of millions of dollars into a gut renovation that raised its ceilings, narrowed its columns and upgraded its elevators and communications equipment. In Trump style, it also featured plenty of brass.
The economy recovered and Bear Stearns and American Express were among the tenants that soon took up residence in the newlychristened Trump Building. By 1998, the tower was so successful that Trump could take a $125mn mortgage against it, providing a huge windfall — and ego boost.
“Things that are great always seem to work out,” he told the Daily News with characteristic brio that year, calling the building “the best investment I’ve ever made”.
It was also the subject of one of Trump’s odder remarks. On September 11 2001, after the World Trade Center towers had collapsed, a radio interviewer asked the developer how his own nearby building was faring. He erroneously replied that “40 Wall Street actually was the second-tallest building in downtown Manhattan . . . And now it’s the tallest”.
As James documented in her fraud lawsuit, the Trump Organization’s valuations for 40 Wall Street would escalate wildly in the ensuing years. In 2014, for example, mortgage lender Capital One valued it at $257mn but Trump pegged it at $550mn on his annual financial statement. It was an attempt, the attorney-general alleged — and a New York judge agreed — to inflate his wealth to win better terms from lenders and burnish his reputation.
Just what 40 Wall Street is worth these days is anyone’s guess. With remote working, New York City office vacancies have reached record levels. Older buildings have been particularly hard hit, including 40 Wall Street.
Whereas it was 98 per cent occupied when Trump refinanced it with a $160mn mortgage in 2015, its occupancy last year dipped below 80 per cent. Its revenues fell from $41.7mn in 2019 to $33.7mn in 2022, according to Trepp, a real estate data provider. A servicing company placed the loan on watch for possible default — although the Trumps have remained current on their payments.
Whatever becomes of 40 Wall Street, Trump will forever be part of its lore. As he said in 1998: “It has been a great honour to be involved with such a tremendous building.”