Toronto’s Trump Tower is up for sale and has wooed at least one potential buyer.
Symon Zucker, lawyer for Talon International, which developed the Trump Tower project and still holds a majority of the condos and hotel suites in the building, confirmed an offer has been made through a letter of intent. He would not name the interested buyer or the price.
Zucker denied a media report that said Talon has defaulted on a $260-million construction loan from an Austrian bank, saying “there is no active default” and company chairman Alex Shnaider has a successful long-term relationship with the bank.
“It’s not a distress sale,” he said. “There are no vultures flying around trying to pick up the carcass.”
A new owner could mean a new name for Trump International Hotel & Tower, which has beenplagued by problems since it launched more than a decade ago, including lengthy construction delays, investor lawsuits and, most recently, a feud between Talon and the controversial U.S. Republican presidential candidate who lent his name to the project.
Toronto realtor David Fleming said a new owner would be wise to remove the name from the building at Bay and Adelaide Sts. as soon as possible and rebrand it.
“Donald Trump and United States politics aside, the name Trump Tower in Toronto is synonymous with failure,” he said. “We’ve been watching this debacle for the last half-decade.”
Donald Trump holds no ownership stake in the project. As with many of his hotel-condo projects around the world, he licensed his brand for a fee. In Toronto, his company also has a long-term contract to manage the building.
“We have a long-term management agreement so bringing in a new operator is not a possibility,” Alan Garten, general counsel at the Trump Organization, said in an email. “We look forward to working with whomever the new owner/developer may be, and I know that anyone replacing Talon would certainly be welcomed by the unit owners. Under Trump’s management the hotel has done phenomenally well and had been bestowed with every conceivable award the hotel industry has to offer.”
Trump Tower was intended to be Toronto’s first luxury hotel-condominium project, with a five-star hotel operating on the lower floors and multimillion-dollar residential condos built on top.
Talon marketed two types of units. Investors could purchase hotel suites, which would be placed in a profit-earning rental pool to be managed by Trump. Or they could buy residential condominiums, which were permanent homes with kitchens and dining rooms on floors above the hotel, but would allow owners to benefit from amenities such as the pool and spa. Investors were attracted to the Trump name and large profit projections.
Sales began in 2004. Talon broke ground three years later, but the hotel didn’t open until January 2012. By then, the luxury hotel-condo market was saturated. When hotel unit owners — many of them inexperienced investors — received their first financial statements, they were panicked to learn their rooms were running at a loss far below the worst-case scenario Talon marketers had predicted, according to statements of claim later filed in court.
Many investors refused to close on the deals, and those units were left in Talon’s hands. Lawsuits and countersuits were filed. Last year, an Ontario judge ruled in Talon and Trump’s favour, agreeing that Talon’s marketing materials were “deceptive documents,” but ruling that the buyers knew all investments are risky. An appeal is set to take place in June.
In the meantime, the relationship between Talon and Trump has taken a nosedive, with each alleging in documents filed in Superior Court that the other has been trying to sabotage the project.
Late last year, the developer sought permission from the hotel and condo boards to fire Trump as manager and remove his name from the tower. Trump management filed a motion accusing Talon of trying to unlawfully end their contract and threatened to sue for hundreds of millions of dollars.
The two sides are in mediation, but with a sale on the table there may soon be no need for it.
Source: The Star.com