Last week, I wrote about corporate office landlords – specifically those in the form of real estate investment trusts (“REITs”). In, “The Office Market Will Rebound (Eventually),” I wrote how:

As investments, most office properties have been lousy. And I’m not saying since the 2020 shutdowns. I mean this year.

Out of all the [REIT] segments, offices rank second to worst for year-to-date results.

Down 8.7% as of Thursday, only hotels are underperforming them at negative 9.1%.

As for how they’ll perform this year and next? That’s not looking so hot either:

Source: Wide Moat Research

One of the more positive expectations listed there – not that that’s saying much – is for Vornado Realty (VNO), a New York City-based REIT. To quote its website, Vornado’s “portfolio is highly concentrated in two asset classes.”

Those would be NYC office space and Manhattan street retail.

Vornado also just so happens to be a company President Donald Trump is partnered with. While it owns the majority of 1290 Avenue of the Americas, Trump holds a solid 30% share.

Located in Midtown Manhattan close to Rockefeller Center and Radio City Music Hall, this property’s 43 stories add up to a whopping 2 million square feet. Between all that rentable space and its prime location, 1290 used to be worth an investment fortune.

But then Covid-19 hit, the shutdowns happened, and nobody was allowed in the office for months. Today, the building is still worth something, of course. Just not as much as it could be.

Recognizing this, I got rather curious about the rest of Trump’s holdings and how they’ve fared so far this decade. So I went digging.

What I found brought me right back to one of the most foundational investment rules I always try to stress.

Trump’s Properties on Display

As you may know, I published The Trump Factor: Unlocking the Secrets Behind the Trump Empire in 2016. It was mere weeks before the presidential election, but I had been working on it well before he ever announced his candidacy.

As a real estate man myself (on a much smaller scale, of course), I had long-since read his Art of the Deal and followed him in the media. Some of the stories surrounding him were larger than life.

So I decided to conduct an unbiased analysis of his net worth, which included his real estate properties, other businesses, and brand equity. As I explained in The Trump Factor, “This book could be summed up as a master developer’s blueprint of over five-decades of value creation.”

When I published it, Trump’s net worth was around $6.2 billion, including approximately $1 billion of liquidity. And I calculated his intangible value – his brand – at $3.3 billion, giving him a combined value of $9.5 billion.

Of course, it’s been over a decade since I began calculating all those numbers, with a whole lot happening since… more than enough time for me to start planning a follow-up book.

This one will focus more on America’s value creation under Trump. But in order to show how he can do that, I have to first show how he did it himself.

For example, let’s examine Trump’s real estate beyond Vornado. Because he also owns 40 Wall Street and a 30% interest in San Francisco’s 555 California Street.

Since both are office buildings, they’re not sitting ideally on Trump’s books. But the mixed-use (retail and condominiums) Trump Tower on 5th Avenue is in a much better place.

Mar-a-Lago, also known as the Winter White House, has appreciated even more nicely. When I first assessed it about a decade ago, I put it at $300 million. Today though, I believe the private club is worth much closer to $500 million.

New membership dues have skyrocketed since I wrote The Trump Factor, for one thing. For another, Covid-19 accelerated migration trends that have boosted West Palm Beach’s properties intensely.

Donald Trump’s Diversity on Display

Trump’s dozen golf clubs in the U.S. have also increased in value. My initial assessment put them at $105 million, with the exception of the much (much!) bigger Doral in Miami. That one, I valued at $722 million in and of itself.

Today, I would easily increase the value of those golf assets to $1 billion all told.

Trump also owns a few golf properties in Scotland and Ireland, which I valued at a combined $177 million… but which are easily worth $250 million now. And his resort properties – including the joint venture with billionaire Phil Ruffin in Las Vegas – have similarly risen in value.

So, back of the napkin, I believe his real estate equity is worth around $7 billion… more than it was in 2016, even though his office assets have decreased in value.

Positively, Trump has maintained low leverage so he’s not under as much pressure as it relates to higher interest rates. And his geographical and property type diversity have also saved him from the real estate crisis that nobody could have seen coming.

But that’s not the only way he’s differentiated his holdings. President Trump now owns Trump Media and Technology Group (DJT), which includes social media site Truth Social. His 114 million shares of DJT are worth around $2.6 billion.

Then there are his digital assets, with an active crypto portfolio that was worth around $10 million… at last disclosure.

All told, when his intangible and tangible assets are combined, I believe Trump’s net worth is close to $12.6 billion ($7 billion in real estate, $2.6 billion in Trump social, and over $3 billion in brand equity). Despite the black swan events of 2020, his portfolio is still in a better place.

Because he diversified and has maintained modest leverage.

Diversification Matters

Look, I know I talk a lot about real estate. It turned me into a millionaire – twice – and it holds a whole lot of sentimental value for me as well. But I learned my lesson after I lost my millions the first time around.

You need to diversify.

You need to diversify across your real estate, holding assets in more than one sector. And you need to diversify across your portfolio, holding assets outside of real estate… of varying sizes… in various locations.

Otherwise, when the unexpected and undesirable hits, you’re left with next to nothing. Or worse.

Take a page out of the president’s playbook: Look at your portfolio today and make sure you’re properly prepared. Ask yourself: Do I understand everything I own? Am I too concentrated in one sector/asset? Answering these questions thoroughly will help you be prepared for whatever comes.

If nothing bad happens, wonderful! But if it does?

You’re much more likely to find your assets growing over the next 10 years than if you didn’t.

Stay tuned for my upcoming “Lessons Learned” article in which I will provide details on one of President Trump’s toughest lessons in business that has transformed his mindset as well as the current political landscape.

Regards,

Brad Thomas
Editor, Wide Moat Daily

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After looking through your portfolio, do you think it is diversified enough? Write us at [email protected].