"The Hottest Brand in the World"

DECONSTRUCTED

“The Hottest Brand in the World” ^{- Trump according to Trump!}

Trump had to submit to a 7-hour deposition with the NY Attorney General for their civil fraud case against Trump Org this past April.

A transcript of that was just released.

The entire deposition was combative, with Trump's lawyers making hundreds of objections while Trump repeated over and over how unfair everything was and how badly he was being treated.

The case is basically focused on Trump misrepresenting the value of his net worth and assets to lenders and other entities to secure financing or to close deals in his Statement of Financial Conditions.

A common theme throughout the deposition is that Trump justifies overvaluations of his properties by discussing their potential worth - what he thinks could be done with them to make them more valuable - and he factored in these potential future earnings or projects in his statements of their current value. For example - he would say that the current market value of a property was X, but if he broke it up for condos it would be worth much more.

The Trump Brand

Trump said that one of the things that is most unfair when people value his assets is they fail to take into account the value of his name when it is attached to any property or asset. He frequently compared his name to Coca-Cola. He said that once he became president, his name became "the hottest brand in the world," and anything with his name on it is instantly worth more.

Trump said that the value of his name alone is worth more than the assessed value of all his other properties combined. He said that he has valued his name at $2.9 Billion on some financial statements, but he really thinks it is worth more like $10 Billion.

He said that when he submitted his net worth statement to Deutsche Bank for financing, he included an item for $2.93 billion in his assets for the value of his name. He explained that "if I wanted to build up my net worth, all I had to do was include my brand value."

Statements of Financial Conditions

Trump said when he valued his properties in these formal statements to lenders and other entities, he didn't have them appraised or assessed because it would take too long to do that. When asked what method he used, he said that he "would use common sense”.

For example, Trump claims that Mar-a-Lago is worth $1.5 billion. When asked where he came up with that number, he says that is his own personal assessment of its worth. Later in the deposition, he claimed he heard that number from "broker talk."

Trump also had claimed that his Silver Springs NY property was worth $291 million on his financial statement. He said it was the most valuable house in NY and if he sold it to the Saudis he could get that much. Saudi buyer aside the property is likely worth $23 million.

Trump claimed that he never needed to use banks to borrow money for his deals because he always had enough cash to self-finance, but he would do it for the tax benefits.

The link to full transcript is here: DocumentDisplayServlet (state.ny.us)

OUR TAKE

Financing property deals has its moments. The conditions at the moment are flukey and really do depend a lot on the proponents of the deal - possibly even more than the value of the property. Having a strong brand name does influence valuations (like it or not!!)

Trump leverages his brand there is no doubt. Trump used his brand among other things to attain finance and potentially Saudi sales.

I have been advocating and writing about the value of “World Building” in property development for some time. I know if I have a client with a strong brand my task of sales and marketing is oh so much easier.

Imagine if you had “The hottest Brand in the World”?

Read more about world-building here

To stay up to date between issues, make sure to give us a follow.