In April of last year, during his season of indictments, Donald Trump sat for a deposition and defended his worth. The session was held at the New York State attorney general’s office in lower Manhattan, in a large conference room with a southern exposure that looked out on 40 Wall Street, Trump’s nearby copper-crowned Art Deco office tower. The building also happened to be at the center of that day’s litigation: a civil lawsuit accusing Trump of defrauding banks by overstating the value of his properties. Trump grimaced as Attorney General Tish James opened the deposition with a promise of a “fair and impartial” process. Over seven contentious hours, he brushed aside her team’s questions about valuation. With Trump, it has always seemed the strength of assets proves the quality of the man.
“We have the Mona Lisas of properties,” Trump testified, comparing himself to an art collector for whom cash flow is a secondary concern. He considered 40 Wall to be one of his masterpieces — maybe the canniest deal of his career. Trump had acquired the skyscraper for just $1.3 million during a real-estate recession in the 1990s, after which he convinced a bank to lend him money for renovations and rode the Manhattan office market back up. Kevin Wallace, a lawyer from James’s office, handed Trump a document prepared for his creditors in 2013, which listed the value of 40 Wall Street at $530 million — more than 400 times his original purchase price.
“It’s, I think, today worth more than that,” Trump said.
“How is the building doing today?” Wallace asked.
“Would you like to see it?” Trump said, turning his head to the left, toward the window. “Open the curtain, go ahead. It’s right there.”
In reality, the building behind the curtain is once again worth next to nothing. Like many Manhattan skyscrapers, 40 Wall has been devastated by the post-pandemic office-market crash. Its current operating income, as reflected in disclosures to its mortgage servicer, appears not to even cover its loan payments, and the building’s market value today is almost certainly less than the $114 million balance Trump will owe when the mortgage comes due next year. One real-estate investor said Trump’s most rational move would be to “throw in the keys to the lender,” like other New York office landlords who have seen their trophies turn into emblems of disaster.
Trump has built his identity around punching back and winning, whatever the odds. But while that approach has brought him a stunning comeback in politics, putting him on the cusp of a second term as president, his original business — New York real estate — is on the ropes. Earlier this year, James won her fraud lawsuit, and the penalties the judge assessed, $489 million (and counting, with interest), could be more than enough to wipe out Trump’s cash reserves if they stand up on appeal. His family company, the Trump Organization, has been hollowed out by criminal prosecutions and is now operating under the supervision of a court-appointed monitor. The company has been busy overseas, cutting deals to license Trump’s personal brand to developments in places like Oman and Dubai, and hosting tournaments affiliated with the Saudi-government-backed LIV golf tour. But at home in New York, Trump’s name has become a repellent. Condo boards have voted to rip it off their buildings. The city of New York was glad to see him finally out of his deal to operate a public golf course in the Bronx so it could remove the “Trump Links” signage that was so conspicuous from the Whitestone Bridge. Gucci, the anchor tenant in the aging mall at Trump Tower, managed to get Trump to slash its rent in 2020, but the retailer is once again rumored to be plotting a move, since its parent company recently spent nearly $1 billion to purchase another building across the street. Trump’s most lucrative real-estate investments, his passive stakes in a pair of New York and San Francisco office buildings run by Vornado Realty Trust, are also worth less than they were before the pandemic.
No Trump property, however, has experienced a fall like 40 Wall, which was once considered to be the single most valuable property in his portfolio. “What a fucking mess that building is,” says one real-estate professional who is familiar with its state. “You could charge a nickel a foot and no one wants to pay the Trump Organization rent.” Of the 75 tenants listed on 40 Wall’s rental rolls in 2015, the last time it refinanced its mortgage, more than 40 have left. Around two dozen others have long-term leases that appear to be set to expire in the next two years. Although the Trump Organization claims 40 Wall is still 75 percent leased, a few floors are entirely vacant and sitting on the sublet market. Its ground-level retail space is almost totally empty. In today’s world, the 1930s-vintage skyscraper is likely best suited for conversion to residential use; to survive as an office building, it needs expensive upgrades. Either way, it will require a landlord and lenders willing to invest hundreds of millions in capital, a potentially tall order for a convicted felon whose largest source of personal wealth is his founder’s stake in the profitless company that owns Truth Social, a meme stock that fluctuates with his poll numbers. And that’s before you even get to the dealbreaker: the fact that Trump doesn’t own the land beneath his own building and must pay rent to a secretive group of foreign investors who have a contractual option to jack it up in a few years.
Perhaps it seems discordant in this of all weeks to dwell on the fate of a mere building. But to look out the window and examine 40 Wall is to imagine a pair of divergent scenarios. In one, Trump is the loser. His billionaire benefactors desert him, his stonk goes to zero, his super-PAC donations dry up, the Saudis and other foreign governments lose interest in wooing his business, his prosecutions and his sentences go forward, his fines from civil judgments stand and his legal fees drain his fortune, the rule of gravity pulls his company into distress, and he gives up the keys. Or he could win, in which case his fight to save 40 Wall could go in a very different direction, opening up novel ways for President Trump to leverage his office.
When I brought up 40 Wall Street to people in the real-estate business, even usually talkative salesmen went silent. A broker at Cushman & Wakefield, which acted as 40 Wall’s leasing agent before the firm dropped Trump’s business after the January 6 assault, wrote back: “Better that I don’t.” Another broker who did a lease deal in the building, when reached on his cell phone, told me his train was going into a tunnel before the line went dead. He never picked up again. Of the sources who did agree to talk, several used the same metaphor in asking for anonymity, calling Trump a “third rail,” as if just saying the name in public might get them zapped. Of the more than three dozen 40 Wall tenants contacted for this story, the vast majority declined to comment.
So one day, I decided to go to work at 40 Wall myself. I rented a conference room at Jay Suites, a co-working company that occupies more than 40,000 square feet over three floors, making it one of the building’s largest tenants. 40 Wall is on a cobblestoned block that is barred to traffic by a retractable gate, just down the street from the New York Stock Exchange. Tourists are often clustered in front, taking selfies beneath the big gold letters that say “The Trump Building” over the door. (At least until recently, when the façade was blocked by that other scourge: scaffolding.) “No pictures!” a security man barked at a couple of stray yokels as I gave over my ID at the front desk. I was waved through toward a bank of tarnished gold elevator doors.
A commercial office broker had described the building to me as “slow and sleepy.” Soft music tinkled in the white marble lobby, where there was hardly a soul walking in or out on a summer workday. I got off the elevator at Jay Suites, on the 28th floor, which was decorated with a framed poster of Roger Moore sipping a martini. Past a giant red sculpture of a bear, I found my room, a generic unit with a sad plant, a large whiteboard, and a broken clock. One glass wall looked onto the hallway, where I could watch my temporary co-workers going about their days, phones pressed to ears.
Trump’s presence was felt only at the front desk, where his image sat on a table, looking imperious on the cover of a business magazine. Juda Srour, the chief executive of Jay Suites, said later that he was “sure some people don’t want to come to the building because it says ‘Trump’ on it.” But he was comfortable with the association. “I’m a numbers guy,” he said. “If I can make money, I’m going to stay.” Srour signed his lease in the midst of the pandemic. According to the real-estate-data firm CompStak, he is paying about $40 a foot, well below the average starting rent downtown.
The current tenant roster, compiled from CompStak’s database and other sources, is mostly made up of cost-conscious consumers: personal-injury and immigration law firms, penny-stock traders, small insurers and accountants, a company that does something with bitcoin, the U.S. offices of a Caribbean university, and a Kazakh brokerage and investment bank. The three lowest office floors are occupied by the private Pine Street School, which has a very long-term lease and its own entrance on the back side. In interviews, some tenants expressed satisfaction, saying they could keep their feelings about Trump the candidate and Trump the landlord separate.
“This could be revealing of a particular political bent of mine, but I found it weird that they were easy to deal with,” said one tenant. “It wasn’t filled with bluster and stupidity.” This tenant was fully aware that, for many people in New York, even walking through the door to a Trump building is anathema. “I understand,” the tenant said. “On the other hand, it’s just bricks.”
40 Wall is more than just that; it’s a national landmark that was once the world’s tallest skyscraper. (Albeit briefly: It was constructed in a famous competition with the Chrysler Building, which won by deploying its previously secret spire.) It was built to house the Bank of Manhattan Trust, which left behind giant basement vaults that are now a loungelike amenity space. After the bank vacated in the 1950s, the property passed through many hands, including a front company controlled by the late Philippines kleptocrat Ferdinand Marcos Sr. in the 1980s. It fell into disrepair — “proving once again,” Trump wrote in one of his many books, “that a business should never be run by a dictator.” Trump came along in 1995, when the building was nearly 90 percent vacant and hardly anyone wanted to invest in lower Manhattan.
The value of 40 Wall was especially depressed by its unusual ownership structure. The bankers who constructed it had not purchased the ground on which it sat, instead opting to sign a long-term lease with the underlying landowners. (The lease currently runs until 2059, with two renewal options that go on through the 22nd century.) The owner of a ground lease acts in every way like a building’s owner — keeping up with maintenance, paying property taxes, collecting rent — but does not hold the deed to the underlying land, and if the leaseholder stops paying its ground rent or otherwise violates the lease terms, the landowner can foreclose. The leaseholder that sold to Trump, a company from Hong Kong, had found 40 Wall impossible to manage. “All they wanted to do is get the building sold and go back to China,” recalls a former Trump Organization employee who worked on the deal. And so the seller was willing to accept the number Trump offered: barely more than zero.
Then Trump did his thing. He slapped his name on the building. He met the ground owners, a group of silent German investors who had purchased the land in 1982. (According to the Real Deal, 80 percent of the land is owned by a company representing the Hinneberg family, who run a Hamburg ship-brokerage company, while the other 20 percent belongs to a group that includes Stephanie von Bismarck, a descendant of the Iron Chancellor.) Trump hosted members of the family for dinner at his triplex in Trump Tower and “just charmed them to death,” the former employee said. Trump reasoned that most ground owners are just looking for a reliable return without hassle and expense. He promised stability in exchange for concessions that made it easier for him to rent the building and to take out loans to renovate it. He also negotiated a provision that said he could convert 40 Wall into condominiums if he chose. Trump went to Deutsche Bank and pitched it on lending him $125 million for improvements. The executive who struck the deal memorialized it by commissioning a scale model of 40 Wall to display in his office, and Trump became a longtime Deutsche Bank client.
Trump promoted the building and filled it with tenants, many of whom were drawn by the cachet of a Wall Street address and the landlord’s image as a winner. Trump used it as the headquarters for some of his enterprises, like Trump Mortgage, his subprime home lender, and Trump University, which would later settle claims it had defrauded students. In 2016, a Bloomberg News investigation found that 40 Wall’s past tenants have included a remarkable number of swindlers and felons. (Since then, the executives running an engineering firm that is one of the largest tenants pleaded guilty to bribery charges related to government construction contracts.) But 40 Wall also attracted plenty of small businesses and start-ups that were drawn to lower Manhattan by its comparatively low rents. By 2015, the building was around 95 percent full.
Since then, though, its business atmosphere has shifted. After Trump was elected president, he handed official control of his company to his sons Eric and Don Jr., whose attention has often been elsewhere. “Trump’s operation has only gotten leaner over the last couple of years,” says the commercial broker who called the building sleepy. “No one really focused on the asset.” Tenant amenities are sparse. The largest ground-floor tenant, a Duane Reade that the chain’s CEO once called “the most exciting drugstore in the world” — it had a sushi bar — bought out its lease last year, leaving behind a dusty vaulted space. Another unit facing Wall Street has windows covered by signage advertising a food court that has been “opening soon” for years. “Plus the Trump name is a hurdle to overcome,” the broker said. “They’ve got to overcompensate for it.”
This Trump effect is hard to quantify. After January 6, news organizations reported that a handful of tenants, including the Girl Scouts of Greater New York, were trying to vacate the building. Four years later, the Girl Scouts remain; its lease runs until 2035, according to the data firm Costar, so it’s stuck. But office leases typically last around ten years, which means many of the ones Trump signed before he was elected have been running out. Whether for economic or political reasons, many tenants are moving elsewhere. Duane Reade vacated the corporate headquarters it had on the 21st and 22nd floors when it abandoned its store. The engineering firm Thornton Tomasetti moved in 2020, citing a desire to consolidate its offices in another building after a merger, and is still trying to find someone to sublet its 60,000 square feet. (Its broker declined to discuss the space.) As tenants depart, CompStak’s figures show the Trump Organization has signed few leases to replace them.
The most notable activity inside 40 Wall lately has been provided by Trump himself. The legal team defending him in his criminal hush-money case set up a war room in the building. As Trump fought that and other legal cases, as well as competed in the Republican primaries, the candidate sometimes used an empty retail space off the lobby for press conferences in which he stood in front of a backdrop of American flags with his lawyers and attacked a crooked justice system. Tenants would be alerted to these visits by security notices telling them the front doors would be locked. Some took the elevators downstairs to watch the landlord perform. But when Trump left, the building would return to normal and the flags stuffed in crates.
Trump has always been able to convince lenders to take risks on him. Back when 40 Wall was full, he managed to take out mortgages on the property, even though banks generally hate to extend loans to ground-leased buildings. (They are considered to be shaky collateral because the property is not entirely owned by the debtor.) When Trump last refinanced the mortgage on 40 Wall, in 2015, he handled it like a family matter. Allen Weisselberg, his longtime chief financial officer and right-hand man, called up his son Jack, who worked at finance firm Ladder Capital. The Weisselbergs negotiated a ten-year loan of $160 million at an interest rate of 3.7 percent.The Manhattan office market was stable, Trump had successfully operated the building for decades, and the lender assessed that there would be little chance of a default. The loan would later be bundled with other commercial mortgages into a publicly traded bond, shifting its risk to investors. “Donald is on board and ready to go,” Jack Weisselberg emailed his colleagues in April 2015. That June, Trump rode down his escalator and announced he was running for president.
A decade later, as the 40 Wall mortgage matures, everything is different. The Trump Organization as a company has been criminally convicted of tax fraud. Trump and his company face the huge civil fraud penalty handed down earlier this year by Judge Arthur Engoron, and Tish James has signaled that if he refuses to pay, she could move to seize his real-estate assets, including 40 Wall. Engoron’s decision also banned Trump from involvement in running his family business. (All the penalties are on hold while Trump’s appeal makes its way through the courts.) Allen Weisselberg has served two separate terms in jail, one for tax evasion and the second for committing perjury at the civil fraud trial. In August, the rating agency Fitch downgraded its outlook on the mortgage bond that includes Trump’s loan, citing its concerns about 40 Wall’s solvency as a major factor. Last year, Bloomberg reported that the building’s loan had been transferred to a special servicer, a sign of distress, although the decision was later rescinded.
Between 2019 and last year, 40 Wall’s annual net operating income — the figure the real-estate industry uses to determine a building’s market value — fell by about a third to $12 million, according to disclosures made to bondholders. Through the first six months of 2024, the building was on pace to generate less than $8 million in net income this year, not enough to even pay all the $9.8 million Trump owes in debt service. Like many office landlords who borrowed before the pandemic, Trump now has a building that is worth less than its mortgage balance on paper. “40 Wall is not alone,” says Kent Swig, a real-estate executive who has redeveloped many buildings in lower Manhattan. “Two-thirds of the $2 trillion in debt that is coming due over the next two years is underwater.”
Any new mortgage would be much more expensive, because interest rates have more than doubled since 2015. A lender would also demand to see a plan to return 40 Wall to health. It is considered to be “Class B” real estate, in an office market that is punishing anything that is not at the top. “The common areas of the building are old and have not been upgraded,” says a commercial broker. “That would involve a pretty significant — possibly nine-figure — investment.” Because the building has diminished in value, Trump would also have to be willing to pay down his existing mortgage with cash and to take out a smaller loan. “Which is not what Trump does,” says a Manhattan building owner. “He’s a debt person.” And that is presuming he could find a bank willing to refinance the loan at all, which is far from certain because he also has another problem: his ground lease, which contains a contractual time bomb.
Currently, Trump pays the ground owners just $2.5 million a year. But 40 Wall’s lease contains a clause that says the rent will periodically reset to reflect the land’s fair market value, as defined by a formula that is very favorable to the ground owners, given the extraordinary increase in Manhattan land prices over the past few decades. The first reset was supposed to happen years ago, but during the 2008 financial crisis, Trump was able to push off the day of reckoning. In his civil-fraud-case deposition, Trump testified that he had renegotiated “very favorable terms” and said he foresaw that he would one day convert 40 Wall into a luxury residential building. “If the city ever comes back,” he said, “you can convert the entire tower of 40 Wall Street into condos and make an absolute fortune, far more than the five-or-six-hundred million probably that the building is worth now.” Maybe he’d forgotten that during the last lease negotiation, he gave up his option to unilaterally do a condo conversion. The long-postponed reset is now scheduled to happen in eight years, within the term of his next mortgage.
For the purposes of revaluation, the reset formula pretends there is no landmarked office building on the property and sets its value as if it were empty for development. An appraisal prepared the last time Trump refinanced estimated that in those circumstances, the 40 Wall land would be worth around $160 million, yielding a reset annual rent of around $10 million — more than the building’s current net operating income. The land might be even more valuable today. Woody Heller, a real-estate executive who handled a previous sale of 40 Wall back in the 1990s, said that in some circumstances, a rent reset can “destroy the economics” of a building, and for that reason, “a leasehold with a fair market value reset is very hard to refinance.”
“It’s like your head is on a chopping block,” a veteran investment-sales broker in Manhattan said of the situation facing any landlord with an impending rent reset. “The guillotine is being held up by a piece of twine that is fraying. That thing is about to fall, and when it falls, you’re dead.”
That may sound overdramatic. Matthew Kwatinetz, a professor of real-estate economics at New York University, says that usually ground-lease disputes get worked out with a compromise or a settlement in arbitration. “The reason someone does a ground lease is because they don’t want to run the building,” he says, and that is especially true at a time like this, when the real-estate market is difficult. But there is always the risk that the ground owner will try to use the rent reset as a lever to evict the leaseholder. “What’s their incentive?” said the investment-sales broker. “They get the building back. They get a much more valuable asset.” After evicting, the land owner can resell the property or hold onto it in the hope that the market rebounds.
That is what happened at Lever House, which the developer RFR lost during the pandemic. RFR is also currently fighting with Cooper Union, which owns the land beneath the Chrysler Building. The school recently asked a judge to “eject and remove” the developer for nonpayment of its reset ground rent. In another ongoing case, a landowning family recently took back the midtown skyscraper Tower 57, where the real-estate firm owned by Charles Cohen stopped paying ground rent after failing to agree with the family on a residential conversion plan.
Earlier this year, the ground lease on a 920,000-square-foot office building near Times Square, which sold for $332 million in 2006, was purchased by a Texas family for just $8.5 million in an online auction. If $9 a foot is the going rate for a ground lease, then the comparably sized 40 Wall would not be worth much on the open market. That explains why many real-estate investors say Trump would be wise to simply give 40 Wall to the bank when his mortgage comes due, rather than paying back the balance of more than $100 million. Commercial real-estate loans are generally “non-recourse,” meaning the owner is not personally responsible for repaying in the event of a default. Although it is theoretically possible that a lender could go after Trump personally for the balance, invoking what is known as a “bad boy clause” — he was found to have committed fraud in misrepresenting his net worth — such litigation would be costly and far from certain to succeed. Most likely, Trump would walk away free. He would take a tax hit, and an ego hit, but 40 Wall would become someone else’s problem.
It is not in Trump’s nature, though, to ever concede defeat. For all his spectacular ups and downs in the real-estate business, in his entire career he has transferred only three properties back to his lenders, all during his crash in the early 1990s. (The only large foreclosure was at the Plaza Hotel.) And it is easy to imagine how Trump might see a strategy for saving his personal investment in 40 Wall. It happens to be the same route he is taking to solve all his problems: He just has to win the election.
If that happens, Trump can sweep away his federal prosecutions and put off any sentence for his New York State conviction indefinitely. The legal pressure on his finances will ease, and he will have new delay options and new immunity arguments to take to the Supreme Court as he attempts to avoid paying the ruinous judgments in his civil cases. (Besides the civil fraud case, Trump owes $88 million in damages to E. Jean Carroll from her sexual-assault and defamation lawsuits.) He will likely be able to string out the legal collection process for years — presuming the judgments stand up. At a New York State appeals court hearing held in September, a panel of judges sounded skeptical of Engoron’s civil-fraud decision, and the size of Trump’s penalty could be adjusted downward. As a victorious president-elect, Trump would also be free to liquidate his stock in Truth Social at its peak market. (Over the past week, the value of Trump’s stake has risen from roughly $4 billion to $6 billion on market optimism about his chances.) He would have more than enough financial room to pay off the mortgage on 40 Wall.
But why would he bother? “Who’s going to foreclose on the president of the United States?” says a real-estate investor who is familiar with 40 Wall. “Nobody.” People will surely be lining up outside the Oval Office to extend Trump credit. The last time he was president, Trump elevated some of his former lenders — Wilbur Ross, Tom Barrack — to positions of influence. When he struggled to find a financial institution to issue him a $175 million bond so he could appeal the civil-fraud judgment, a sympathetic billionaire who had made his money in subprime car loans stepped in to help. “He has a lot of friends with a lot of money,” Kwatinetz says. “There will be someone who will back him for financial reasons or political reasons.”
Trump’s first election brought about unprecedented controversy surrounding his business relationships, conflicts of interest, foreign influence, and the constitutional emoluments clause. Those issues have now been mostly resolved in Trump’s favor. He turned his hotel on Pennsylvania Avenue into a resort for presidential favor seekers, then flipped it for a $100 million profit. You can imagine how the restored President Trump could do something similar with his Wall Street office building, marketing it to lobbyists, defense contractors, and other people who crave a relationship with the president. Kwatinetz says the building is a great office location “for people that want to flip the bird to the New York City Establishment.” Or for that matter, for foreign interests. Trump paused his overseas business dealings for the duration of his first term, but he and his children revved them back up as soon as he left office, and they are making no promises about self-imposed limits the second time around. (“Frankly, we got crushed anyway,” Eric Trump recently told the New York Times.) There would be little to stop a reelected President Trump from, say, taking a friendly investment or a loan from a Saudi sovereign-wealth fund.
With the building recapitalized, Trump would be able to renegotiate with the Germans from a position of strength. In his 2004 book Trump: How to Get Rich, he described a warm ongoing relationship with the Hinnebergs, calling them “among the finest people with whom I’ve ever done business,” but the current state of relations between the parties is unknown. (“I have been sworn to silence at the moment,” said Percy Pyne, a Florida shipping executive who has represented the family’s business interests at 40 Wall in the past.)
Typically, in ground-lease disputes, “who winds up winning is a question of who can wheel and deal the best,” Kwatinetz says. “I’m not a fan, but I am not personally putting money against Trump at that game.” Trump could rework the lease again. Or he — or someone interested in backing him — could buy the Germans out. Americans might not even learn if there was a change of ownership. The ground is technically held by a pair of LLCs, and those entities could change hands without public disclosure.
With the ground lease squared away and enough financial capital, Trump could embark on the venture he has previously suggested: a residential conversion. At one point during his civil-fraud deposition, lawyers representing the state AG handed him a thick document: a property appraisal of 40 Wall. “They ought to be fighting crime,” Trump grumbled to his personal attorney Alina Habba. But he brightened as he flipped through the exhibit and came to a photo of 40 Wall’s ornate tower. “That’s what I mean,” he said, holding the page up to the lawyers. “It’s a perfect condo. I’d live there myself.” The tower, which takes up the top half of the building’s 71 stories, has floor plates of 8,750 square feet on average, an ideal size for making apartments. In Manhattan’s current tight housing market, other people in the industry said, it would probably be most profitable to turn the space into luxury rentals. They could go for around $85 a foot, more than twice what Trump is getting for his office space. Emptying his remaining office tenants from the tower floors would be an expensive and time-consuming process, but for the right developer, there would be enormous profit potential in the transformation of 40 Wall.
“Even in this market where New York is, unfortunately, gone to hell, that building is a … it’s a great building,” Trump said. He tilted his face upward and said, “You’ve seen the future.”