No one thought he was going to do it, but a few days ago, Donald Trump released disclosures of his financial empire as part of the requirements for his presidential run. And boy, was it long?! My first point of curiosity was the $10 billion figure the man pegs his net worth at.
I did a lot of looking, estimating, and calculations. And at the end of the day, my own valuation of Donald Trump’s assets, after deducting for debt carried on them, is more like $4 billion. I hear he values the Trump brand name at another $4 billion, but that is not for us to determine. He certainly didn’t list it as part of his assets. So, $4 billion it is, for me. But whether or not he is worth ten billion, there is no question about it, Donald Trump is wealthy.
And last year, from the disclosures he made anywhere between three to seven hundred million dollars in straight income. If we thought Mitt Romney was too rich to be president, I’m not sure what we’ll have to say about this guy.
(Due to the way the disclosure documents work, it’s hard to have an exact figure for some of the asset values and income figures. You only get a range. I did a lot of googling, finding comparable sales and properties, tracking rental incomes or apartment sales in his buildings, applying valuation multiples based on revenues to other businesses, and more to come up with my income and net worth estimates. They’re not accurate but they paint a close enough picture).
Here’s a broken down figures for Donald Trump’s 2014 income:
Aircraft Rentals: $5.5 million.
Interest earned from Cash Holdings: $3.3 million
Miss Universe Beauty Pageant: $3.4 million
Commercial Real Estate: $298 million
Golf Clubs: $196.8 million
Hotel Condo: $450,000
Book Income: $140,000
Dividends/Capital Gains: $6.7 million
Licensing Agreements (lending his name to other companies for Home goods, Menswear, Drinks, Restaurants): $20.8 million
Management Fees (for other Hotels): $16.09 million
Modeling Agency: $2.3 million
Operating Agreements (running businesses for NY state and another golf course owner): $11.2 million
Pension (From Screen Actors Guild): $110,228
Production Revenue (Apprentice, Golf Productions/Tournaments): $4.06 million
Real Estate Brokerage: $2.09 million
Residential Real Estate Rentals: $3.5 million
Resorts: $16.6 million
Trump Restaurants: $3.1 million
Salary (from NBC Studios): $14,222.
Seminar Program: $11,819
Speaking Fees: $1.75 million
Transport Company: $26,675.
Vineyards: $1.1 million.
TOTAL: $626.2 million
Here are some insightful things I got from his disclosures. First, the guy is smart. People give him a hard time for having gone bankrupt a number of times, but the truth is that the real estate business is built on astronomical leverage, especially when you get into the ultra luxury commercial and residential space that Trump plays in. You commit hundreds of millions of your own money, and borrow a lot more than that, to finance billion dollar developments that, were they to go bad, would bust you. So let’s have a little context. Having said that, it’s clear the Donald learned from his bankruptcies.
He separated almost everything he owns into their own independent company, with it’s own legal standing and financials. If one of them were doing badly, he could liquidate the asset and close that company down without affecting any single thing else that he owns. It’s brilliant. And what more, he doesn’t directly own any of the companies either. Let me take one example:
The Trump International Hotel and Tower, 401 North Wabash Avenue, Chicago.
The hotel isn’t owned by Trump directly. It’s owned by the company 401 North Wabash Venture, LLC a limited liability company registered in Illinois. Okay, that’s fairly standard procedure. So we go further. Turns out 401 North Wabash Venture LLC is owned by 401 Mezz Venture LLC. 401 Mezz’s owners are Trump Chicago Member Acquisition LLC (50%), Trump Chicago Member LLC (49%), Trump Chicago Managing Member LLC(1%).
Now each of these companies are owned by another layer of companies, let’s take the biggest shareholder TCMA. It’s owned 100% by DJT Holdings LLC, which is owned by DJT Holdings Corporation whose shares are 30% owned by Donald J. Trump while the rest is split evenly between Trump Family Associates LLC and Trump Family Trust of which Donald J Trump is one of the 13 trustees. And the Trump Family Trust was created by his father, leaving him simply as executor.
That is just for one property.
Trump owns one of these bad boys: a Gulfstream G650-B, aka the RollsRoyce of private jets.
The $65 million plane isn’t in his name though. It’s owned by DJT Operations I LLC with it’s own web of companies.
His Sikorsky S-76 Helicopter? DT Connect LLC.
His other private jet, a Citation X Cessna which he rents out? DT Connect II LLC
His Boeing 757 which he also rents out? DJT Operations I LLC.
It’s like that for everything, including a separate company to hold the rights to every book he published. It’s an accountant’s nightmare, but for legal purposes, it’s lit.
His $4 billion in asset value is divided up into the following categories
1. Real Estate – $3.55 billion (88.1%)
Majority of the Donald’s wealth is concentrated in real estate. Of that, 48% is in commercial real estate which includes his hotels, office buildings, rental properties and more. another 40% is in his Trump National and International Golf Clubs around the world, about 7% is in vacation resorts in St. Martins, St. Vincent, Dominican Republic etc, another 5% in his vineyards, apartments and personal residences like his Seven Springs estate in New York or this $9 million home in Beverly Hills:
2. Stocks/Bonds/Funds- $177m (4%)
The Trump has some hedge fund investments with Oppenheimer and Paulson, and then a plethora of blue chip stocks, limited partnerships, and a scattered position in American and foreign companies. Altogether however, they only amount to just 4% of his overall net worth.
3.Licensing and Management Companies- $155m (3.8%)
A division of Trump’s empire is dedicated to spinning off the reputation and brand he built over the decades into lucrative licensing deals with several companies in different sectors that aren’t directly connected to Real Estate. There is Trump Homes collection by a number of luxury furniture makers, like Dorya Homes, Istanbul to mention just one. There is his mattress line, and his menswear label sold in Macy’s and so on. Some of those deals have been cancelled since he made some terrible, racist comments about Mexican, Chinese and other people during his campaigns. But we’ll have to wait till another presidential run to see the financial impact, I guess.
4. Aircraft- $100m (2.4%)
A small fleet of aircraft, some of which are for rentals and others which are for personal use add up to a hundred million.
5. Cash – $47.3m(1.1%)
The rest of his net worth is held in cash and money market deposits which provide liquidity for his lifestyle.
Overall, for someone who has such a high exposure to real estate, I would expect the Donald to pour more of his money into stocks, bonds and fixed incomes to reduce his real estate concentration from 88% to maybe 60%. It will also make his empire more resilient.
In fact, according to some studies, if Donald Trump has retired in the late 80s when he was worth $500m or so, and invested all his net worth into the broad market tracking S&P 500, earning the average returns during the period, he’d be worth $20 billion today, which is double what he
inflated it to estimates it at.
However, he clearly seems to enjoy real estate deal making, the reputation and ego boost of having his name on so many iconic buildings and the use of leverage to amplify his returns even though it’s riskier. So he made the rational choice, based on what he loves to follow the path he did. It’s perfectly normal. Your goal in life is to enjoy your life, not maximize your net worth.
All in all, it’s been an interesting walk into the finances of the Donald.
As for him becoming President, I don’t think even he believes that’s going to happen. Let’s just hear him out, and then pray he goes back to his empire when he’s done.
You can go through the disclosures for yourself here.