Donald Trump at the opening of the Trump International Hotel & Tower in Toronto in 2012 (Photo by Kevin Van Paassen/The Globe and Mail)
As Donald Trump continues to make his ascent in US politics, having secured enough delegates to capture the Republican presidential nomination, his presence in the Toronto skyline is in danger of being erased as the owners of his namesake hotel look for someone to take the property off their hands.The Trump International Hotel & Tower, which houses 261 hotel units and 118 condo units, has been on the market for about a year, and according to the lawyer for the real estate company that owns the building, a deal is currently in the works.
"A letter of intent has been signed, and they're doing their due diligence," said Symon Zucker, who represents owner of Talon International Development Inc., Alex Schnaider.Zucker wouldn't reveal the identity of the bidder, but says it's surprising that efforts to sell the building, which has been marketed actively for the past while, are suddenly newsworthy.Shnaider and Raiffeisen Bank International, which loaned his company $310 million — $260 million went into default last summer — for the construction of the 65-storey building, could also put the tower into creditor protection and terminate their contract with the Trump-owned management company that operates the hotel.While Trump has no ownership stake in the property, he and his family were highly visible in its marketing during construction, and he owns Trump Toronto Hotel Management, which takes care of its reservations, marketing, and housekeeping.Zucker says Trump himself has nothing to do with why the building, where most of the condo and hotel units remain unsold, is being shopped around.
The Trump campaign didn't immediately respond to a request for comment. Glodow Nead Communications, which handles public relations for Trump Hotels, however, responded with a statement:"We do not own this property and as such, it would be inappropriate for us to comment on a potential change in ownership," said the statement. "However, we do have a long term agreement to manage the hotel and want to assure guests that they will continue to receive the same superior level of service, quality and luxury that has become synonymous with our brand."
"Trying to deal with Mr. Trump is separate from the sale of the hotel," said Zucker. "One doesn't hinge on the other."The real estate tycoon's management company is in the middle of a battle with Talon over its contract. According to the Toronto Star, in December, Trump filed a court motion in an effort to block Talon from ending the contract, alleging that the company was trying to terminate the agreement in order to arrange the sale of 280 units — an allegation Talon denies.According to court documents, Talon wants to cancel its licensing and management agreement because it contends that Trump's management of the building has been subpar, while the management company blames the property's failures on Talon's "unnecessary and excessive" fees on unit owners, the Star reported in April.Zucker believes, based on his interpretation of the contract, that whoever ends up buying the property would be able to terminate the contract with the management company, which is currently in the middle of mediation with Talon."Trump would have a different view. What the new purchaser would do at this point, I can't say, whether he wants to keep him or doesn't want to keep him," he said."The whole thing may become short circuited if there's a sale," Zucker continued. "Then it'll be irrelevant."The Trump tower opened significantly behind schedule in 2012, five years after construction had started. Occupancy rates for the hotel, which opened its doors as several other luxury hotels popped up in the area, were lower than expected, forcing prices to drop.
Both Trump and Talon are being sued by unit owners, who want out of their purchases, alleging that they were misled by marketing materials to believe they were buying directly from Donald Trump and that the units would be filled with ease, only to find out later that that wasn't the case.While Zucker stressed to VICE News that the hotel is not being sold "because of any distress" or because of Trump, and added that owner Schnaider simply "buys and sells things" every day, he told the Star in April that his clients were "no longer interested in the Trump brand.""It's more important for him to be president than run a successful business," Zucker had said.
And while Trump's presidential run may well have nothing to do with the sale, potential buyers aren't exactly enthused by the association.According to unnamed sources in The Globe and Mail, US real estate funds, competing hotel companies, and distressed-debt investors were looking into the property, which would likely be sold for $180 to $200 million, and it's unlikely any of them would keep Trump's name in the case of a sale.An unnamed real estate professional working for one potential buyer told the newspaper that any new owner would likely want a new manager, and that there are too many negatives associated with Trump's management.An executive at a hotel company that looked into placing a bid commented that the hotel needs a stronger reservation network because Trump's network is "weak."But Trump doesn't seem to see it that way -- in an interview with Bloomberg in February, he called the Toronto property a "tremendous success.'"Normally I would let them do that. Maybe I will, maybe I won't," he said. "I'd rather buy it."Follow Tamara Khandaker on Twitter: @anima_tk