The timing couldn't be worse for Donald Trump, who faces the possibility of having to sell property to cover a huge judgment.
The former president said in a court filing on Wednesday that he may soon need to raise “contingency funds” to pursue his appeal of the $454 million civil fraud judgment New York state issued against him. Tough market conditions for many commercial property owners mean he faces big losses in his real estate empire if he sells the assets.
The billionaire has few options: To put the fine on hold while he appeals, he must pay the full judgment by March 25 or come up with bail of at least 110% of the amount. To obtain bail on appeal, Trump would have to hand over cash or sell or pledge real estate, which would tie up most or all of his liquid assets for months or longer.
If Trump cannot persuade an appeals court to put the ruling on hold while the appeal is pending, he could find himself in financial difficulty.
If Trump is forced to sell, “he will have no way to recover the assets he sold after the appeal is successful or to recover his resulting economic losses,” Trump's lawyer Alina Habba said in the lawsuit. Meanwhile, New York Attorney General Letitia James has made it clear she is prepared to seize Trump's assets if he doesn't pay the judgment or pay the appeal bond on time.
A cruel market
To make matters worse, the market is tough for many commercial property owners: Rising borrowing costs have caused property values to plummet, and the remote-work trend that began during the pandemic continues to reduce demand for office space. Prices fell 22% in the 12 months through January, according to real estate analytics firm Green Street.
Haba did not immediately respond to a request for comment.
Many sellers have had to accept significantly reduced prices: The Aon Center office building in Los Angeles recently sold for $147.8 million, about 45 percent less than its previous purchase price in 2014. Office buildings near Century City and Beverly Hills in Los Angeles sold for about 52 percent less than they went for five years ago.
The Trump Organization owns or has investments in several office buildings from New York to San Francisco. One of its flagship Manhattan properties, 40 Wall Street, was purchased by Trump in 1995 in what he called “one of the greatest real estate deals of all time.” It was valued at $540 million in 2015, according to commercial mortgage-backed securities data. Its value has since fallen to $270 million, according to Bloomberg Billionaires Index estimates.
Trump's appeals court filing is the first time he has publicly hinted that he may not have enough liquid assets to cover a judgment in a fraud case in which a judge ruled on February 16 that the former president defrauded banks for years in violation of New York state law. Trump also owes $83.3 million to author E. Jean Carroll, who won a defamation lawsuit against Trump last month, making things even worse for the presidential candidate.
In testimony last year, Trump claimed to have more than $400 million in cash on hand — a significant sum but likely not enough to cover the bail he would need to post in court while he appeals his successive convictions.
Trump SPAC Stocks
Meanwhile, Trump's finances could benefit from Trump Media & Technology Group, which runs the Truth social platform where Trump posts daily and agreed in 2021 to merge with a special purpose acquisition company called Digital World Acquisition Corp. to become a publicly traded company.
Trump Media Technology Group stocks have soared, bringing in nearly $4 billion for Trump. But that doesn't help him at the moment. The gains are only on paper and will take months to be realized. If the stocks continue to rise, Trump could use them to replenish his coffers in the future.
Meanwhile, on Wednesday the co-founders of Trump's media companies accused him of trying to undermine the value of their stock, a lawsuit filed in Delaware that could further delay the merger deal and cost him billions of dollars in new funds to pay judgments.
Trump has offered to reduce his bail to $100 million while he appeals his New York fraud conviction, arguing that the judgment against him is “ample secured” even if he does not post full bail to appeal. Trump said his “vast holdings in New York real estate” would be enough to pay the fine if his appeal were unsuccessful. After all, he argued, “trophy properties” like 40 Wall Street cannot be “secretly removed from jurisdiction.”
In appeals court filings, Trump's lawyers said other properties could also be used as collateral, including Trump Tower and Trump Park Avenue in Manhattan, his Seven Springs mansion outside New York City and Trump National Golf Club.
“Insufficient” assets
James balked at Trump's offer of a lower bail amount, arguing in a letter to the appeals court that the state risked gaining nothing if Trump's appeal was denied.
In her letter, James said Trump and the other defendants in the lawsuit, including his two adult sons, “have all but admitted that Mr. Trump does not have liquid assets sufficient to satisfy the judgment. While a successful plaintiff would be entitled to secure compensation, defendants have not demonstrated that Mr. Trump's liquid assets are capable of satisfying the full amount of the judgment.”
James has made it clear he is prepared to seize Trump's assets if he doesn't pay the judgment or pay his appeal bond on time, and in a recent interview with ABC News he made an explicit reference to 40 Wall Street. Trump's lawyer, Hubba, criticized the comments in a letter to the court, accusing James of “shamelessly” threatening to seize Trump's assets “if payments are not made with sufficient speed.”
Despite Trump's warnings about his financial situation, a Manhattan appeals court judge on Wednesday denied his emergency request to halt enforcement of his fraud judgment, at least for now.
But the former president will have another chance to argue for a stay during his legal battle against the civil fraud conviction. James is due to file a response to that request by March 11, and Trump is due to file a response by March 18. The full appeals court could rule at any time after that.