A Financial Post story on 26 December 2012 stated that the Trump International Hotel & Tower Toronto could be the canary in the coal mine warning everyone that the Toronto condo market is about to collapse.
I think that the Trump Tower troubles are in are all its own making and is not at all related to the residential condo market in the rest of the city.
The Trump Tower is made up of two completely different types of condos. The top floors consist of 118 luxury residential condominium units that are similar to the expensive luxury suites on top of the nearby Ritz-Carlton, the Shangri-La Toronto and the Four Seasons Hotel. They are priced at $2.3M to $6.6M. The developer claims that 60% have been sold.
Underneath them, there are 261 condominium hotel rooms. These are commercial units (without kitchens) that pay real estate taxes at commercial rates. They sold for $967,000 to $3,100,000. Approximately 80% of these hotel rooms have been bought.
Some of the owners of the hotel rooms are disgruntled. They believed that they were going into the hotel business with Donald Trump and when they bought their units, several years ago, they were told that they would be making between 5% and 27% profit a year. They also claim that they would be able to easily get financing when they took possession.
Instead, the purchasers are finding it difficult or impossible to obtain mortgages on units that have been dropping in value. One owner states that he is losing $7,000 a month on his “investment”.
So some of the owners are suing the developer to get out of the deals as they thought they were buying safe investments that offered monthly returns. They also are upset because Donald Trump is not an investor in this property.
In return, the developer is suing some of the owners. The developer states that anyone investing a million dollars should be smart enough to know what they are getting into and that the purchasers were given all the proper documentation they needed to make a sound decision.The Trump name
It seems that the hotel condo purchasers thought that Donald Trump was a modern day King Midas. How little they knew. Donald Trump’s many business failures are listed on several Internet websites. The one that the hotel room buyers should have taken note of was the Trump Tower in Tampa.
Trump was on hand in 2006 for the ground breaking of a 52-story luxury apartment building that was going to redefine Tampa's skyline.
The project went bust in fairly short order. It later emerged that Trump wasn't even the developer of the tower. He recently told MSNBC: It was just a licensing deal. ... I licensed the name 'Trump' to those buildings. Investors are suing Trump to recoup some of the money they lost in the doomed project.
It looks like history may be repeating itself.top