 |
Turns out only about one-third of the units in the controversial Trump SoHo in New York are under contract, according to a media report.
In June, 2008, Donald Trump, Jr. announced that 60 percent of the 391 units in the 46-story hotel-condo project had been sold, “largely to foreign buyers.” That figure was often repeated even as the market collapsed and skeptics scoffed at the idea of paying $1.2 million for a unit in the hotel-condo scheme, which restricts owners from using their unit for more than 120 days a year.
The news is the latest installment in the saga of Trump SoHo, which is scheduled to open April 9, after a long series of delays.
Trump SoHo’s developers used the hotel-condo concept to skirt local restrictions on building new apartment towers, angering neighborhood residents. “As was the case with many of his projects over the past 15 years, [Trump] has invested none of his own money in the Trump SoHo,” the Wall Street Journal reports. “His deal with the developers, a venture of Sapir Organization and Bayrock Group, is primarily a hotel-management and licensing arrangement.”
Despite the hype, “after the first 100 or so units went to contract in the fall of 2007, buying stalled and there has been scant activity since,” the WSJ says. Bank of America recently "dumped" a $75 million mezzanine loan on the project for a "fraction" of the value, the paper reports.
Many see the Trump project as a bellwether for the hotel-condo concept, which has run into trouble in many areas.
“The Trump SoHo's disappointing sales expose a huge fault line in the condo-hotel business model,” the WSJ suggests.
With financing hard to find, many investors are wary of paying cash for units when the hotel market is relatively weak, the paper notes
Trump Soho’s problems could get worse if some of those buyers don’t close on their contracts, which is likely. In Las Vegas, the article notes, 70 percent of buyers didn’t close on their units in the Trump International Hotel and Tower.
