It will be interesting to see the business fallout from this considering how toxic his name has become. He's going to have to switch a lot of things around.
It's definitely well underway here in Toronto. The brand new Trump hotel downtown (maybe a 15 minute walk from my office) is supposedly more than 50% empty all of the time; on top of that, there are allegations that the Trump Company, which manages the hotel today, is intentionally mismanaging the hotel in order to take the property owner to court, win, buy the properly at a steep discount and then re-sell it for deep discount - but for a profit to them.
Toronto Star - Trump vs. Trump: Inside Toronto's 5-star tower struggle
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Beneath the dazzling surface of what is, yes, a very nice hotel, you may find more reality checks. A package of Trump chocolate bars costs more than breakfast. Half of the residential condos at Toronto’s “most influential address” remain unsold. James van Riemsdyk has never even heard of the James van Riemsdyk tour, and — whoops — his name is misspelled in the ad. And behind the scenes, Donald J. Trump is at war with the developer of the tower that bears his name.
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After the hotel opened in January 2012, Lee and Singh took interim occupancy, which is a temporary phase of possession — a kind of legal limbo — that is standard in the sale of new condos. With a traditional condo, it means a buyer can move in but does not immediately assume ownership. For the Trump hotel unit investors, it meant they would begin paying fees and earning income on their rooms, but Talon wouldn’t transfer ownership or request the balance of the purchase price until final closing months later.
When their first statements arrived during interim occupancy, Lee and Singh were shocked to discover their units were running at a loss, far below the worst-case scenario Talon marketers had predicted, according to their claim. Maintenance fees were higher than anticipated. Occupancy and room rates were much lower. Instead of building a nest egg, they were losing $4,000 to $5,000 a month.
As Talon gave notice that final closing would take place in November, investors scrambled to find lenders willing to offer a mortgage on the money-losing properties. Many couldn’t. Singh and others did not close. Lee was among a minority who paid final costs, and from October 2012 to December 2014, her losses totalled $134,500, according to her claim.
Toronto lawyer Mitchell Wine represents Singh, Lee and 20 other buyers who in late 2012 sued everyone involved — including Talon, Trump Toronto Hotel Management, as well as Donald Trump, Shnaider and Levitan personally — alleging they were “victims of an investment scheme and conspiracy.”
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In a response, Talon lawyers denied all allegations, saying the notice was full of inaccuracies and omissions. The real story, according to the developer, is that Talon was forced to become more involved as it became clear the building was being improperly managed. Talon accused Trump management of hiring unqualified staff, not resolving various maintenance issues and failing to produce financial records — issues that came up again when the condo boards fired back at Trump with their own notices of default a few months later.
Talon lawyers said in the response they believed Trump’s ultimate objective is to devalue the tower and purchase it at a discount. The evidence: senior Trump executives had expressed an interest in acquiring the entire project for $100 million, Talon said, and potential investors revealed that Trump employees had been disparaging the project and Talon’s handling of it.
That fall, Talon — as majority owner — initiated a special meeting of the hotel and condo boards, outlining the purpose in a memo: to vote on whether to terminate Trump. Trump took it straight to court, filing a motion in December accusing Talon and the boards of trying to unlawfully end their contract, which is how a private fight became part of the public record. The motion sought to stop Talon from cancelling the management agreement, arguing the company was required to first participate in mediation and arbitration.
Talon’s real motive, Trump and company lawyers alleged, was to sell off its units in a bulk sale to repay “hundreds of millions of dollars” owed to banks that funded the development, and then wipe its hands of the project.