Donald Trump, the real estate developer turned TV personality, is betting his name will boost the value of his golf courses even as the premium for the brand declines on condo properties and ratings slide on his show, "The Apprentice."
Trump has acquired nine golf properties in the U.S., including four since 2008, after mostly steering clear of using his own money to buy real estate since 2005. In July, he started building a $1.15 billion luxury golf course and resort in Scotland. Trump says that putting his name on the courses increases membership sales and the fees he can charge.
The Trump name hasn't prevented the failure of real estate developments in Florida and Mexico, nor has it helped his New York condos sell for more than other apartments in the city. Trump buildings in Manhattan, whether he owns them or licenses his name for the properties, command prices similar to or lower than comparable towers, said Sofia Song, vice president of research at StreetEasy.com, which compiles real estate listings.
"There's no obvious premium for the Trump name," she said in an interview.
With the Trump name appearing on vodka, health products, mattresses, furniture, cuff links, shirts, ties and a seminar company once known as Trump University, the brand has been devalued, said Josh Feldmeth, chief executive officer of the New York division of consulting company Interbrand.
"Once that branding decision has been diluted, it becomes difficult to charge a premium," Feldmeth said. "He has cashed out. He's become kind of a circus sideshow. He's not making smart luxury decisions."
Trump, 64, says the popularity of his brand continues to grow and helped him navigate the recession better than most real estate developers.
"The name is hotter than ever," he said during an interview at his 26th floor office in Manhattan's Trump Tower, where he has a view of Fifth Avenue, the Plaza Hotel and Central Park. "It's been hot as a pistol."
On Nov. 17, investors bought the 41-story Trump Hollywood, in Hollywood, Fla., out of foreclosure. At the time, 22 of the tower's 200 condos had sold. The Trump Soho and Trump Hollywood are both keeping the Trump name.
"The Trump brand is powerful for a luxury product," Daniel Lebensohn, a partner in BH III LLC, the Miami investment firm that paid $160 million for the $223 million note on the Florida tower, said in a telephone interview. "It's internationally known."
The failure of projects bearing Trump's name has hurt his reputation among institutional investors, said John Arabia, managing director at Green Street Advisors, a Newport Beach, Calif.-based provider of real estate research and advice to investment banks, pension funds and private equity firms.
"In conversations with institutional investors, I don't know anybody who would give him money," Arabia said. "He has a worse reputation with institutional investors than he does with mainstream America."
Trump said he doesn't need institutional money.
"I don't have any problem financing because I self-finance," he said. "Everything I buy, I buy out of cash. We have a tremendous amount of cash."
Trump is expanding his golf holdings as the number of private clubs in the U.S. fell to 4,256 this year, down 3.4 percent from 2008, according to the National Golf Foundation. In addition to owning courses, he also stars in "Donald J. Trump's Fabulous World of Golf' on the Golf Channel, which starts its second season Jan 31.
The Trump name hasn't prevented a decline in initiation fees at Trump clubs as the recession weighs on consumers' discretionary spending. At the Trump National Golf Club Bedminster in New Jersey, for example, initiation fees have dropped as low as $150,000 today from as high as $300,000 before the recession, Trump said.
"Demand for new golf courses in the USA has slowed to a crawl," said Tom Doak, a Michigan-based golf course designer.
Trump's personal fortune is an estimated $2.4 billion, Forbes said in September, ranking him 153rd on its annual list of richest Americans. That's up from $2 billion in the magazine's March estimate and excludes the value of his brand, Trump said.
Trump paid $3.7 million of his own funds last Christmas for a lease with an option to buy the Pine Hill Golf Club in New Jersey out of foreclosure. Trump changed the name to Trump National Golf Club Philadelphia after the nearby city. He repainted the brown clubhouse white and increased membership by 200 to 330.
"I fixed it," he said. "I re-branded it, and the people are through the roof."
In June, Trump won preliminary planning approval to develop a 1,400-acre estate north of Aberdeen, Scotland, where construction has begun on a course in his mother's homeland and birthplace of the game he said he now plays with "a good 2' handicap.
"I got it built because they wanted Trump," he said. "If my name was anything else than Donald Trump, zero chance zero."