Real estate deal prompted resignation of Trump’s longtime banker

Donald Trump and Rosemary Vrablic (Getty/Illustration by Kevin Rebong for The Real Deal)

Donald Trump and Rosemary Vrablic (Getty/Illustration by Kevin Rebong for The Real Deal)

New details about the resignation of former President Donald Trump’s longtime personal banker at Deutsche Bank were revealed Wednesday in a regulatory filing.

Rosemary Vrablic was “permitted to resign” after an internal investigation found she engaged in “undisclosed activities” related to a real estate deal, Bloomberg News reported. Those activities included “the purchase of the property from a client-managed entity, and the formation of an unapproved outside entity to hold the investment,” according to the filing.

Vlabic, along with a colleague in the private banking division, Dominic Scalzi, stepped down at the end of 2020.

In August 2020, Deutsche Bank initiated an internal review of a Manhattan apartment purchase made by Vrablic and Scalzi from a company partially owned by Trump’s son-in-law, former White House adviser Jared Kushner.

Vlabic oversaw hundreds of millions in loans to Trump after Kushner, one of her private banking clients, introduced her to Trump. The former president had already defaulted on another loan from Deutsche. The relationship also drew undesired scrutiny from lawmakers and prosecutors.

The German lender signaled in November 2020 that, pending the outcome of the presidential election, it would sever ties with Trump. It publicly did so after the insurrection at the U.S. Capitol in January.

Deutsche Bank still holds more than $300 million in debt from the former president. Those loans will come due soon, with $125 million for the Doral golf resort in Miami maturing in 2023 and $170 million for the Trump International Hotel in Washington, D.C., maturing in 2024.

[Bloomberg News] — Georgia Kromrei

Trump Plaza’s condo board votes to remove ex-president’s name from West Palm towers

President Donald Trump and Trump Plaza  (Getty, Google Maps)

President Donald Trump and Trump Plaza  (Getty, Google Maps)

Trump Plaza’s condo board voted to remove the ex-president’s name from the West Palm Beach towers.

The twin towers’ board unanimously voted last week to change Trump Plaza’s name as a result of the attack on the Capitol on Jan. 6, the Palm Beach Post reported.

The move marks the latest attempt in the past year to create distance from Trump. Last year, residents voted to remove Trump signage, including street-level signs as well as the Trump Plaza signs that adorned the top of the buildings. The rooftop signs were originally taken off for repairs, but residents voted for them to remain off the building.

Trump purchased the 221-unit development at 525 and 529 Flagler Drive in 1986 and handed the buildings over to lenders in 1991. They decided to keep the Trump brand attached to the condo to help sales, according to the Palm Beach Post.

The 32-story towers have sweeping views of the Intracoastal, Palm Beach and the Atlantic Ocean, with units selling from $1 million to over $4 million. A new name has not yet been determined.

Many businesses and former partners of The Trump Organization are cutting ties in wake of the Capitol storming. In Chicago, the 3,000-square-foot “TRUMP” sign on the Trump International Hotel & Tower may also be coming down.

[Palm Beach Post] — Jordan Pandy

What’s in a name? If it’s Trump, alderman wants it gone

Photo illustration of Alderman Gilbert Villegas with the Trump International Hotel & Tower. (Getty, Trump Hotels, Gilbert for Chicago)

Photo illustration of Alderman Gilbert Villegas with the Trump International Hotel & Tower. (Getty, Trump Hotels, Gilbert for Chicago)

Days may be numbered for the 3,000-square-foot “TRUMP” sign that has been affixed to the Trump International Hotel & Tower along the Chicago River.

Alderman Gilbert Villegas said he would introduce an ordinance to yank the 20-foot tall sign from the skyscraper at 401 North Wabash Avenue, according to the Chicago Tribune.

Villegas’ measure would prohibit a person convicted of treason, sedition or subversive actions from doing business with the city, according to the report. That would include having a sign permit. The House of Representatives was expected to vote on President Donald Trump’s impeachment on Wednesday, although conviction in the Senate is far from certain.

Villegas said the Trump sign “just doesn’t represent Chicago’s values.” He added of his legislation, “We’re not sure how legal it is, but at the end of the day, sue us,” he told Crain’s.

Following last week’s mob insurrection at the Capitol that was stoked by the president, the Trump Organization has faced mounting challenges. Cushman & Wakefield, which handled retail leasing at Trump International, said Tuesday night “it would no longer do business with the Trump Organization.”

JLL, whose listing agreement to sell the Trump hotel in Washington, D.C., expired, also said it would stop doing business with the firm. Banks and political allies, too, have sought to distance themselves from the president, while New York City on Wednesday said it would exit its business deals with Trump. The firm said it would sue to collect the $30 million remaining on those contracts.

Trump signs have been disappearing from buildings and public recreation areas in New York over the past few years, including at two skating rinks and a carousel in Central Park — perhaps to avoid scaring off customers in places where the president is not popular.

In other cases, residents upset with Trump have sought to remove displays of his name from their buildings. In 2019, the TRUMP PLACE sign was pulled off a group of condominium towers on New York’s Upper West Side.

The 98-story Trump International in Chicago has 486 condos, 339 hotel rooms and 70,000 square feet of retail space. Nearly all of that retail has been vacant since the building opened in 2009.

The city approved the massive Trump sign in 2014, the same year that a special district prohibited signs along the river from rising between the second floor and the roof, the Tribune reported. Four years later, signs were capped at 1,100 square feet, far smaller than the existing Trump sign, which had been grandfathered.

[Tribune, Crain’s] — Alexi Friedman  

Oceanfront Palm Beach spec mansion hits the market, asking record $140M

535 North County Road (Google Maps)

535 North County Road (Google Maps)

An oceanfront spec mansion in Palm Beach hit the market for $140 million, marking the most expensive residential listing in South Florida.

Before the estate at 535 North County Road was built, it was part of a larger property that President Donald Trump sold in 2008 for $95 million. Trump sold the property to Russian billionaire Dmitry Rybolovlev in 2016, who knocked down the previous mansion and subdivided the land.

In 2018, Rybolovlev sold the Palm Beach lot to a company tied to spec home developer Mark Pulte of Mark Timothy Inc. for $37 million. Lawrence Moens of Lawrence A. Moens Associates has the listing, according to the Palm Beach Daily News, citing information on the Multiple Listing Service. Moens, a top broker in Palm Beach, also has an investment interest in the 2-acre, 15,350-square-foot mansion.

The $140 million price tag includes furniture. The property, with a separate guest house, has nine bedrooms, an oceanfront swimming pool, a gym, sauna and hair salon. William M. Boyle of Boyle Architecture designed the house. The lot has 150 feet of shoreline.

Rybolovlev sold the three lots for nearly $109 million, about $14 million more than Trump’s sale price.

Neighbors include billionaire investor Nelson Peltz, who co-founded Trian Fund Management, an alternative investment management fund based in New York.

The Ziff estate at 2000 South Ocean Boulevard in Manalapan is the second most expensive listing in South Florida at $115 million, according to Realtor.com.

[Palm Beach Daily News] – Katherine Kallergis

DA moving forward with Manafort case after Trump pardon

Manhattan district attorney Cy Vance, Paul Manafort, and President Donald Trump (Getty)

Manhattan district attorney Cy Vance, Paul Manafort, and President Donald Trump (Getty)

Manhattan’s district attorney is moving forward with his effort to prosecute Paul Manafort on mortgage fraud charges after President Donald Trump pardoned his former campaign chairman Wednesday. The case is likely to test a law New York passed last year to close the “double jeopardy loophole” for presidential pardons.

District Attorney Cy Vance’s office said it is continuing its attempt to appeal a ruling from last December in which a New York judge threw out its fraud charges against Manafort.

Judge Maxwell Wiley ruled that the prosecutor couldn’t bring those charges against Manafort, who at the time was serving a 7 ½-year prison sentence after being convicted in federal court in 2017 on charges relating to his business dealings. This October, an appellate court upheld that ruling.

Trump granted clemency to Manafort, citing “blatant prosecutorial overreach” in the case, but Vance’s office said it is not letting Manafort off the hook.

“This action underscores the urgent need to hold Mr. Manafort accountable for his crimes against the people of New York as alleged in our indictment, and we will continue to pursue our appellate remedies,” Vance spokesperson Danny Frost said in a statement.

Manafort’s defense attorney could not be immediately reached for comment.

The former campaign chairman had been released from prison in May because of coronavirus concerns.

Vance filed a 16-count indictment against Manafort in March 2019 that included allegations he deceived banks in order to get a loan on Soho condominium at 29 Howard Street in Manhattan.

The charges came on the same day a federal judge increased Manafort’s prison sentence and were largely seen as a hedge in case Trump issued a pardon.

In October of last year, New York state Democrats passed a law to close the “double jeopardy loophole,” to allow the state to prosecute people for state crimes after they have received presidential pardons, but it’s not clear how that will affect Manafort now.

Dmitriy Shakhnevich, a constitutional law professor at the John Jay College of Criminal Justice, said that if prosecutors move forward with a case against Manafort, it’s likely the state’s new law will be called into question.

“It will be challenged for sure if there’s any state prosecution under this law,” he said.

Manhattan townhouse featured in “The Undoing” relists at $30M

The townhouse (Credit: Sotheby's)

The townhouse (Credit: Sotheby’s)

The 19th-century Manhattan townhouse that appears in HBO’s new miniseries “The Undoing” is back on the market at a slight discount.

The home at 8 East 63rd Street is now asking $30 million, down from $31.5 million in 2018, the New York Post reported.

The home sits half a block from Central Park. The exterior appeared in the show starring Nicole Kidman and Hugh Grant, but the interiors never did.

The 25-foot-wide townhouse was built in 1878 as a single-family residence for Joseph Hodges Choate, a lawyer and U.S. diplomat. It spans 10,000 square feet but at some point was divided between two units and ground-floor commercial space.

It may cost a hefty sum to turn the property back into a single-family residence, but it retains many historic details that are in good shape, including moldings, herringbone floors and a formal central staircase.

There are nine bedrooms total, six fireplaces and two private terraces. The most striking feature of the house, both inside and out, is its bay windows curving toward the street on three levels. [NYP]Dennis Lynch

Election puts real estate’s generous tax breaks in spotlight

President Donald Trump and former Vice President Joseph Biden (Getty, iStock)

President Donald Trump and former Vice President Joseph Biden (Getty, iStock)

For many in the real estate industry, having a developer in the Oval Office has brought an uncomfortable amount of media attention to a long-standing practice: avoiding taxes.

A series of recent articles in The New York Times and other outlets have showcased the many ways developers and investors use tax breaks to lower their bills — sometimes to zero. And with the election in motion, some are feeling nervous.

“It kind of reminds me of when you’re in grade school and there’s one kid in the class that brings attention to something and ruins it for everybody,” said Peter Elias, a partner at Pillsbury Winthrop Shaw Pittman who specializes in tax law.

Joe Biden has already signaled he wants to axe certain tax breaks beloved by real estate, and with the pandemic and media coverage pushing income inequality back into the national conversation, industry insiders are steeling themselves for changes.

In July, Biden announced he would eliminate 1031 “like-kind” exchanges for high-earning investors to help pay for his $775 billion “Caring Economy” plan. The popular exemption, which is so ubiquitous it is often used as a verb, allows real estate investors to defer capital gains taxes by swapping one investment for another.

Announcing his plan at a fundraiser hosted by a top Blackstone executive, Biden called the tax program “unproductive.” Real estate professionals, however, call it a key driver of investment.

Francis Greenburger, CEO of real estate firm Time Equities, wrote to the Biden campaign, arguing that the Democrat’s intention to eliminate the real estate exemption for 1031 tax exchanges would hinder investment when the economy is struggling. Others warn that eliminating like-kind exchanges could also lead companies to hold assets and rely more on debt financing; and an industry study from 2015 predicted its elimination could reduce GDP by $8.1 billion.

The Biden campaign has not announced plans to eliminate other tax provisions that favor real estate. Still, investors suspect that some of their favorite tax provisions are in the campaign’s sights — especially given the coverage of Donald Trump’s use of the policies to pay no federal income tax for years and only $1,500 over two years of his presidency.

Many observers expect Biden would roll back a rule that lets heirs wipe out the tax liability on capital gains by resetting the value of the property they inherit.

Allowing heirs this stepped-up basis plays a major role in building multi-generational wealth. Repealing it, coupled with the elimination of the 1031 exemption, would increase real estate taxes and affect property owners’ decisions, said Alvin Schein, a partner at New York City development firm Seiden and Schein.

“It is likely that many properties whose owners would face huge tax hits on sale would simply not be sold,” he said.

In their 2017 tax law, Republicans also doubled the estate tax exemption, shielding from taxation the first $22.8 million a couple leaves behind. (In 2001, that number was $1.35 million.) Between that and the stepped-up basis, a family can pass appreciated real estate from one generation to the next without ever paying a dime in capital gains tax.

Through media coverage of Trump’s finances, more Americans became aware of a tax-reducing technique called depreciation, which provides for a write-off as purchases such as machinery lose value over time. But landlords can take depreciation on their buildings, even if they increase in value. Depreciation was not only preserved but acceleratedtwice — during Trump’s presidency.

Some industry players, including Greenburger, are concerned that if a Biden administration were to alter property tax rules beyond the 2017 Trump overhaul, it could severely disrupt economic activity.

“Hopefully the Biden administration would be listening to consider the overall effect on the economy, not just what seems politically advantageous,” Greenburger said.

Such arguments largely succeeded in protecting real estate’s coveted tax breaks after the 2008 election — and the financial crisis — swept Democrats into power in Washington. (When the economy is humming, business interests warn tax increases would kill the golden goose.)

One factor which could intensify pressures to roll back the 2017 Tax Cuts and Jobs Act is its projected cost. The Congressional Budget Office found that the law will add $1.9 trillion in debt over 11 years, starting in 2018. Nevertheless, details of the Biden tax plan remain unclear, and decisions after the election, including cabinet appointments, could determine the extent of any rollbacks.

“It’s one thing for [the Biden administration] to go back through all the Trump tax cuts. It’s another thing to start tinkering with every specific regulation affecting real estate,” Greenburger said. “The result of that will be severe economic destruction, which is the last thing we need.”

But such concerns may be overblown.

“Biden is not exactly Elizabeth Warren,” said Brian Lancaster, a senior lecturer at Columbia University Business School, noting that Biden, a moderate, has a reputation for being more pro-business than many of his colleagues.

There’s also the matter of where he draws support.

“If you think about the Democratic Party, a lot of their support comes from urban centers and urban centers are where most commercial real estate value is,” Lancaster said, adding that if the party wants to support cities, either by eliminating the SALT tax deduction cap or providing federal aid to depleted states, the real estate industry would actually benefit from a Biden presidency.

What’s not up for debate, however, is that the election winner will have the unenviable responsibility of getting the economy back on its feet as virus cases are surging across the country.

Washington may be reluctant to take aim at the real estate industry — an economic driver — when it is in such a weakened state.

In the meantime, with major social and political movements reshaping the country, media coverage of Donald Trump’s tax avoidance and the economic tools deployed by the rich are laying the groundwork for changes to America’s tax code, which has long favored real estate.

“I do think it could put some pressure on it,” Lancaster said. “It’s just a question of where.”

“Your rent will be increased” if Biden wins, landlord allegedly tells tenants

Joe Biden (Credit: Leigh Vogel/Getty Images)

Joe Biden (Credit: Leigh Vogel/Getty Images)

The owner of a Colorado mobile home park allegedly told tenants their rent would likely double if Joe Biden is elected president.

Residents of Fort Morgan shared the letter with local NBC affiliate KUSA questioning its legality, with some calling it an act of voter suppression. The Colorado Secretary of State’s office passed a complaint about the letter to the state’s Attorney General.

The letter said that “everything will be increased,” if Biden becomes president and then listed additional expenses that would be incurred such as “taxes, utilities, gasoline, groceries, new permits, fees, and regulations.”

“This also means YOUR RENT will be increased to cover these expenses. Most likely, rent would DOUBLE in price!” the letter said.

It added that the company “will not raise rent for at least two years” if President Trump is reelected.

One tenant, Cindy Marquez, told the station she received the letter on Tuesday. She’s lived with her family there for 20 years and worried that they and their neighbors wouldn’t be able to afford rent if it doubled.

“We can’t control what everyone else does, you know?” she said. “We can’t control the results.”

The letter goes on to urge recipients to vote in the presidential election on Nov. 3, and says that “we are not telling you how to vote.” But, it added, “we are just informing our tenants what WE will do according to the election results.” [KUSA]Dennis Lynch

Here are LA’s real estate players who donated to Biden and Trump in 2020

From left: Jeff Worthe, Joyce Rey, Geoff Palmer, Jaime Lee and Frank Gehry (Credit: Alberto E. Rodriguez/Getty Images, Jonathan Leibson/Getty Images, Grant Smith/Construction Photography/Avalon/Getty Images)

From left: Jeff Worthe, Joyce Rey, Geoff Palmer, Jaime Lee and Frank Gehry (Credit: Alberto E. Rodriguez/Getty Images, Jonathan Leibson/Getty Images, Grant Smith/Construction Photography/Avalon/Getty Images)

The presidential election is still nearly three weeks away but already there is a clear winner when it comes to which Los Angeles real estate player donated the most money.

That would be — by far — multifamily developer Geoff Palmer, a longtime supporter of President Trump. Developer Jeff Worthe has given the most amount of cash to Democratic nominee Joe Biden’s side.

The Real Deal tracked 75 of the biggest L.A. brokers, developers and property owners to see who has donated to either candidate directly or through PACs in 2020. Using Federal Election Commission filings, the results showed that just 18 industry pros made contributions of any dollar amount since Jan. 1. Fifty-seven did not contribute.

Just seven of those donors gave $2,000 or more to Biden or Democratic Party PACs. Only Palmer gave to Trump and affiliated Republican PACs.

The donation results come as California’s 55 electoral votes are an almost certain lock for Biden. Democratic nominee Hillary Clinton captured 73 percent of the L.A. County vote in 2016, compared to Trump’s 22 percent.

Of those L.A. real estate players who have donated, nearly all have thrown their support to Biden. The total, however, doesn’t come close to what Palmer has given.

The G.H. Palmer Associates head gave $6.4 million to candidates and committees affiliated with either Trump or Republican Party candidates and super PACs. A super PAC can raise unlimited funds from individuals as long as it doesn’t directly coordinate with a candidate’s campaign.

Worthe — of Brentwood-based Worthe Real Estate Group — gave $100,000 to the Biden Victory Fund. The group coordinates between Biden’s campaign and the Democratic National Committee and is not a super PAC. Worthe also gave $35,500 to the DNC itself.

Among L.A. residential brokers, Coldwell Banker agent Joyce Rey was the top donor on either side. She gave $5,400 directly to the Biden campaign, according to FEC filings.

Those who contributed did not return messages or declined to comment.

Trump megadonor

Among Palmer’s contributions was a $4 million donation to America First Action super PAC. Katie Walsh, Trump’s former deputy chief of staff, formed the group in 2017, and Palmer is one of its top donors, according to the FEC.

His allegiance to Trump is well-established. Besides donating millions of dollars to help get Trump elected in 2016, Palmer has also hosted Trump fundraisers in L.A.

Palmer also contributed to Republican Congressional candidates across the country this year. He has cut checks of $10,000 each to Republican Party groups in 24 states.

Biden’s backers

Hudson Pacific Properties CEO Victor Coleman and famed architect Frank Gehry have been among Biden’s biggest industry backers in L.A. Both gave $50,000 each to the Biden Victory Fund.

Thomas Safran, chairman of multifamily development company Safran & Associates, has given a total of $45,000 in 2020 to Biden, affiliated organizations and Democratic Party groups. That includes $25,000 to Unite the Country, a Biden super PAC, and $10,000 to the California Democratic Party.

Jaime Lee, a top executive at development and investment firm Jamison, gave $2,800 to Biden’s campaign directly. The L.A.-based family firm has become one of the biggest multifamily developers in Koreatown.

Rick Caruso, who owns the Grove mall and is a fixture in L.A. politics and business, gave $2,800 to Win the Era. The PAC was started by former Democratic presidential candidate Pete Buttigieg, who has become an outspoken Biden supporter.

Manhattan DA can see Trump tax returns: judges

Manhattan District attorney Cyrus Vance Jr and President Donald Trump (Getty; iStock)

Manhattan District attorney Cyrus Vance Jr and President Donald Trump (Getty; iStock)

The saga of whether the public will ever get to see Donald Trump’s tax returns just got a little bit more interesting.

A federal appeals panel ruled Wednesday that the Manhattan district attorney, Cyrus Vance Jr., can obtain Trump’s personal and corporate tax returns under a subpoena, rejecting the president’s argument that the probe amounted to political harassment.

“None of the president’s allegations, taken together or separately, are sufficient to raise a plausible inference that the subpoena was issued out of malice or an intent to harass,” wrote the panel, presiding in the U.S. Court of Appeals for the Second Circuit.

Should Trump appeal the decision, as he is expected to do, the case will head to the Supreme Court, according to the New York Times.

The decision is the latest setback for Trump in his long-standing fight with Vance’s office over the release of documents.

Last August, New York prosecutors issued a subpoena for eight years of Trump’s tax returns and other records, indicating the possibility of a wider criminal investigation. Since then, the dispute has gone through several courts, with Trump’s arguments repeatedly knocked back.

In July, the Supreme Court rejected Trump’s argument of immunity, but allowed him to challenge the subpoena on its scope. The lower court’s rejection of that effort reflects the possibility that the district attorney will look at Trump’s real estate transactions for possible wrongdoing.

A New York Times investigation revealed last month that the president had paid just $750 in taxes in 2016 and again in 2017. But the newspaper did not publish Trump’s returns. [NYT] — Sylvia Varnham O’Regan