Trump comes to town

American billionaire Donald Trump has teamed up with Nakheel for a series of new ventures in Dubai. David Robinson finds out why.

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By  David Robinson Published  October 30, 2005

|~|Trump1-200.jpg|~|BRIGHT LIGHTS, BIG CITY: Donald Trump has been so impressed with the real estate potential and growth that Dubai has shown he wants to get a slice of the action.|~|It's one of the most unlikely pairings you are ever likely to see. One is a tall, controversial, three-times married, American celebrity. The other is a short, modest, unassuming, but highly respected Arab business leader. But against the odds, Nakheel boss Sultan Ahmed Bin Sulayem, and flamboyant real estate mogul Donald Trump are pouring millions into a massive joint development. Two weeks ago, Nakheel, developer of more than US$30 billion in real estate in Dubai, and The Trump Organisation stunned the region, revealing plans to invest US$400 million into a tulip-shaped hotel on The Palm man-made island development in Jumeirah. The Palm Trump International Hotel and Tower is set to provide a spectacular centrepiece to The Golden Mile — the boulevard on the trunk of The Palm Jumeirah. It will feature 500 apartments, and each residence will have access to five-star hotel services. Moreover, the two companies say The Palm Trump Tower is the initial development in Nakheel and the Trump Organisation’s plans for the Middle East. There could, quite literally, be billions more dollars of projects on the horizon. So why is Trump coming to Dubai? Trump himself puts it all down to Nakheel, explaining: “I see what they’ve done — and what they’ve done I’ve never seen anything like it before. I mean, they built man-made islands that are bigger than many states. I’ve never seen anything quite like it. In fact, the astronauts said, that’s a palm tree, in the ocean — they’re seeing it from the sky — which is probably the only thing that you can see from the sky in terms of man-made [developments]. So, I really had a great relationship with Dubai and with Nakheel, and we look forward to going ahead and just doing some really large and very extravagant jobs.” It is believed that Trump and Bin Sulayem have been in talks for over a year. Trump was first “sounded out” over a Dubai deal as early as June 2004, though at the time he told Arabian Business: “I’m happy doing what I’m doing. I’m happy doing projects in America and seeing my kids grow.” So what changed? Trump’s three children by his former wife, Ivana Trump, are thought to have been regular visitors to Dubai in the past year, singing the city’s virtues to their father each time they went back to New York. Earlier this month, Trump himself admitted: “My children just got back from Dubai — they loved it, and we’re going to have a lot of fun. “And we’re going to be doing some things that unfortunately you probably could never do in Manhattan, you just couldn’t do it.” He added: “I am delighted to invest, manage and sell this project on what is clearly the best location in Dubai. When I look at potential sites for real estate investment, I concentrate on ‘location, location, location’ — and this is not only the best location in Dubai, but the whole of the Middle East.” Trump’s entry into the Dubai property market is sure to prove a boost to the city’s soaring real estate sector. However, Trump’s stellar career has seen more that its fair share of ups and downs. Born in New York City of German and Scottish extraction, Trump began his career at his father’s company, the Trump Organisation, and initially concentrated on his father’s preferred field of middle-class rental housing. In the 1970s he benefited from the financially strained New York City government’s willingness to give tax concessions in exchange for investment at a time of financial crisis.||**|||~||~||~|As a talented dealmaker, he was able to secure loans with little collateral in the 1980s and created an empire in real estate, casinos, sports, and transportation, becoming something of a celebrity in the process. He put on front-rank boxing cards at his casinos featuring the likes of Mike Tyson, and revelled in the publicity they brought him. His developments are all characterised by a somewhat satirical personality cult around himself. The name “Trump” always appears in the name of his buildings — Trump Tower, Trump Taj Mahal — and often the decor features large letter “T”s in prominent locations. By 1990, the effects of recession left him unable to meet loan payments. Although he shored up his businesses with additional loans and postponed interest payments, increasing debt brought Trump to business bankruptcy and the brink of personal bankruptcy. Banks and bondholders had lost hundreds of millions of dollars, but opted to restructure his debt to avoid risking losing even more in a court fight. By 1994, Trump had eliminated a large portion of his US$900 million personal debt and reduced significantly his nearly US$3.5 billion in business debt. While he was forced to relinquish the Trump Shuttle (which he had bought in 1989), he managed to retain Trump Tower in New York City and control of his three casinos in Atlantic City. In 1995, he combined his casino holdings into the publicly held Trump Hotels & Casino Resorts. Wall Street drove its stock above US$35 in 1996, but by 1998 it had fallen into single digits as the company remained profitless and struggled to pay just the interest on its nearly US$2 billion in debt. Under such financial pressure, the properties were unable to make the improvements necessary for keeping up with their flashier competitors. In 1999, Donald’s father, Fred Trump, a multi-billion dollar real estate mogul, passed away. Fred Trump, the same man who co-signed Donald’s first business loans, also happened to be the man who enabled Donald to escape from the massive financial morass he had created over the decades. Unfortunately, creditors who got stuck with the past losses were not as fortunate. Whereas Donald walked away from his empire unscathed, others were forced to take catastrophic write-offs and losses even up to 2004 when Trump refused to continue to back his casino. Although Trump boasted he would build a bigger empire than his father, in the end, his father built an empire so large it could even accommodate Donald’s most lavish personal losses. In October 2004, Trump Hotels & Casino Resorts announced a restructuring of its debt. The plan called for Trump’s individual ownership to be reduced from 56% to 27%, with bondholders receiving stock in exchange for surrendering part of the debt. However, Trump’s personal fortune has not been, in recent years, affected by his financial troubles with hotels and casinos. The Forbes 400 lists his net worth at US$2.6 billion, though Trump himself claims to be worth over US$5 billion. Since then, Trump Hotels has been forced to seek voluntary bankruptcy protection to stay afloat. Last year, Trump became star and executive producer of the NBC reality show, The Apprentice, in which a group of competitors battled for a high-level management job in one of Trump’s commercial enterprises. The other contestants were “fired”, or eliminated, from the game. The winner of the programme earns a US$250,000 annual salary. At the end of each episode, Trump eliminated one contestant by telling them, “You’re fired,” which became a popular catchphrase. It is even rumoured that Trump, ever the businessman, tried to trademark the slogan. For the first year of the show, Trump was paid a mere US$50,000 per episode, but following the show’s success, he is now paid a reported US$3 million per episode making him one of the highest-paid television personalities in the US. But in the coming months, his focus will shift to the Dubai stage. He says: “I have great respect for Nakheel and ‘the sultan’ and the people that I’ve been dealing with at Nakheel. And we have just had a great, great relationship with them and weave been working on this for a long time. They’ve really wanted us there, I’ve really wanted to be there.”||**||

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