Trump: How to Get Rich

Consider What the Other Side Wants

One of the best deals I ever made was the acquisition of the tallest building in lower Manhattan, a 1.3-million-square-foot landmark known as 40 Wall Street.

I got it for $1 million, and the negotiation was all about timing and intuition.

In the 1960s and 1970s, 40 Wall Street was truly a hot property—a fully occupied building. Then in the 1980s, it was bought by Ferdinand Marcos, who was busy dealing with a revolution in the Philippines. The skyscraper at 40 Wall Street fell into decline, proving once again that a business should never be run by a dictator, especially a real one about to be booted from power.

Then the Resnicks, a prominent real estate family, descended on 40 Wall Street, but after a long period of negotiation, it became clear that the Resnicks and Citibank weren’t going to make a deal and that 40 Wall Street would be back on the block. I wanted very much at this time to make my move, but this was in the early 1990s and I was in no position to do so. The real estate market was terrible, and my own financial straits were woeful.

The next buyer was the Kinson Company, a group from Hong Kong. They made a great deal, and after the purchase was complete, I requested a meeting with them to discuss a possible partnership. They weren’t interested in a partnership, but they did want to make 40 Wall Street the downtown equivalent of Trump Tower, including a public atrium. It sounded like a beautiful idea. However, what they would do with the steel columns that supported a seventy-two-story building never seemed to enter their minds. I was dumbfounded.

As you can probably guess, the Kinson group proved to be relatively clueless about renovating, running, and leasing out a New York City skyscraper. They weren’t in the real estate business to begin with—they were mostly in apparel—and they were in way over their heads. They poured tens of millions of dollars into the building but were getting nowhere. They had problems with tenants, contractors, suppliers, architects, even the owners of the land, a prominent family from Germany, the Hinnebergs. Eventually, Kinson wanted out, and they called me.

It was now 1995 and the market still wasn’t so good. Kinson had every reason to want to get out, and they wanted to do it quickly and quietly. So the negotiations began, with me offering them $1 million in addition to assuming and negotiating their liens. I also made the deal subject to a restructured ground lease with the Hinneberg family.

They accepted my terms without question.

Why? Because they wanted out—and fast. They knew it and I knew it, and because I knew it, the negotiation was easy.

There was another crucial aspect to this deal, which proves the importance of knowing what the other side wants: All of the prior leaseholders had dealt with the agent of the Hinneberg family. The agent insisted on increasing the rent and raised other financial obstacles that he said the owner insisted upon. I had to see for myself what the Hinnebergs wanted—was it money, or something else? If you want the truth, go to the source and skip the translation by the intermediary.

I flew to Germany with Bernie Diamond, my general counsel, for a face-to-face meeting with the owner, who seemed impressed by the fact that I would travel across the Atlantic to see him. I learned that what he really wanted was peace of mind in connection with his ownership of the land, but all he was getting was aggravation and litigation. I told him I would agree to turn the present disaster into a first-class office building if he would forgo all rent during the renovation period and revise the lease to permit rental to quality subtenants and bank financing for part of the building improvements. He agreed—and it was the first of many instances that confirmed my belief that Walter, Christian, and Walter Hinneberg Jr. are among the finest people with whom I’ve ever done business.

Very soon after acquiring 40 Wall Street, the markets turned for the better, and the downtown area experienced a renaissance in terms of both commercial and residential properties and developments.

I make a great deal of money from 40 Wall Street. Aside from owning the most beautiful building in lower Manhattan, I have the added attraction of owning a particularly lucrative one, all because I watched the property carefully for decades, waiting for my moment, and knew what the other side was thinking.