Ahh, the attacks begin. Since former president and now candidate Trump posted my
column and analysis on his property values via his Truth Social account, numerous keyboard warriors have weighed in with their opinions. So, let’s have a little fun at their expense – and respond.
First, no one put me up to this. I decided to analyze Trump’s property values myself, and I don’t think anyone who knows me would say that I’m some lackey. I was curious, and seeing that things just didn’t add up, I wanted to investigate. And I hate seeing our justice system abused.
Second, for those who claimed that Trump’s PFS (personal financial statement for those of you who don’t know industry terminology) values were before his election in 2016 (to counter my argument that properties owned by a president would have higher values), well, I hate to burst your bubble, but the lawsuit covers 2011 thru 2021, so my analysis is relevant.
The next argument by some of these people is that the deed restriction on Mar-a-Lago
suppresses the value and that Trump couldn’t claim a higher value. Au-contraire mon ami, as a developer I have never in my entire career let a deed restriction or other barrier (like an easement) stand in the way of redevelopment. Very few properties in the U.S. are free of any barriers. Houston’s lack of a zoning code is one place, but that’s very rare. Almost every property will need a rezoning or have a deed restriction or easement in the way.
The job of a developer is work their way through all those. And yes, the appraisals that the banks order up for new developments also assume those barriers are removed.
According to Wikipedia, Mar-a-lago was built in the 1920’s, which means eventually the building will need to be torn down. In fact, the original owner gave it to the National Park Service hopefully to be used as a winter White House, but Congress gave it back because of the high cost of maintenance and security issues.
Eventually old buildings like this see their electrical wiring fail (or they burn down from electrical fires), their HVAC systems fail, and probably have lead pipes that need to be completely replaced due to the health hazard. The concrete used back then was also very poor and eventually, like that condo tower in south Florida that collapsed, the concrete here will continue to break apart and fail, especially in a salt water environment on a location with a high water table, tides, and hurricanes. (I’m sure the building is not up to today’s hurricane building code standards.)
Even its historic nature can be changed as proved the liberal Chamber of Commerce board in Ripon, Wisconsin that packed up and moved the Little White School House a year ago, i.e. the original 1850’s building in which the Republican Party was founded – doing so without park service authorization. So, yea, barriers can be removed (right or wrong).
The keyboard warriors also don’t know much about property valuations either. Take property tax assessments, which are a one time (window) valuation – at a single moment in time; January 1st of each year. Whereas an appraisal considers many factors and is a valuation over time.
Appraisals can also be different depending on the situation. Is it for a new development
considering a ten year proforma? Is it valuing a stabilized property that is fully occupied?
Each situation is different. Even an appraisal or valuation today is going to produce a lower value than just three years ago, because of higher interest rates. So values can go up and down – depending on the economy, interest rates, construction costs, and many other factors. The court shouldn’t try to pretend that the values today (looking back with perfect hindsight) are lower due to a Trump over valuation. They would be lower today – but due to interest rates.
I’ve been to court fighting with an assessor when the assessor over values a property, but of course, when that happens there’s no punishment for the assessor for getting it wrong. And in my case, the assessor tried to compare the insured value to our proposed market value, saying the higher insured value was evidence that we had it wrong. The only problem was that the insured value was for replacement cost and had nothing to do with market value, which we proved. Then the assessor tried to compare the tax basis (or tax value) that was on our tax return to our proposed market value, but again, the assessor failed to understand that the tax basis is after depreciation is deducted under IRS rules has nothing to do with market value, which we proved again.
This went on for six hours of testimony, with the city attorney and assessor trying to paint us as dishonest when, in fact, it was the assessor and city attorney who didn’t understand different valuations. The court ended up agreeing with us.
Likewise, in Trump’s case, the assessor and the court don’t even agree and the defendant doesn’t agree with either of them. They’re comparing apples and oranges over different years, when market and economic circumstances can change cap rates and valuations quite rapidly.
For this reason alone, the case should be dismissed.
I’m not a lawyer, but I’ve been to court many times and I did earn a masters degree from the number one real estate university in the nation, and I have 40 years of real estate experience valuing properties, so yeah, I think I do know a little more than the keyboard warriors, but don’t ask me to second guess a surgeon, because that’s not my area of expertise.
If there is no victim, no damages, and no harm done, the case must be dismissed. That’s the law. And there is simply too much doubt (remember ‘reasonable doubt’?) and too much uncertainty in valuation comparisons over ten years time, to try to compare them in court when a man’s life and business are at risk.
So, take that naysayers.
On October 18 and November 23, 2023 Donald Trump tweeted out on Trump’s Truth Social account T. Wall’s October 6th column on Trump’s property valuations. T. Wall holds a degree from the UW in economics and an M.S. in real estate analysis and valuation and is a real estate developer. Disclaimer: The opinions of the writer are not necessarily those of this publication or the left!