Trump Bids to Buy Florida's Doral Resort
March 09, 2012 - Florida
Donald Trump is eyeing a return to his traditional stomping ground: U.S. real estate.
It would be its biggest U.S. real-estate investment since the recession, according to people familiar with the matter.
The Trump Organization has cut a deal to buy the Doral Golf Resort and Spa, with its 700-room hotel and four of its five professional golf courses.
The seller, a joint venture of hedge fund company Paulson & Co. and landlord Winthrop Realty Trust, put the Doral into bankruptcy protection along with four other resort properties in February.
The agreement, which is expected to be filed in a New York bankruptcy court next week, is far from certain. Rather, it establishes Trump as the lead, or "stalking horse," bidder in a future auction of the property, and Trump's is the bid to beat.
While the $170 million price tag is far from a peak price, the resort market has recovered since the depths of the downturn. A final deal would have to be approved by the bankruptcy court.
The bid is a sign that Mr. Trump is returning to a strategy of risking his own capital on real-estate investments.
In recent years, he has largely avoided borrowing money to invest, or using his company's own money in projects.
Instead, the company has focused on lucrative licensing deals in its real-estate projects, wherein Mr. Trump lends his name to luxury apartment and hotel developments as a way of generating more sales for the developers.
The Doral deal also marks a growing role in the company by Mr. Trump's daughter Ivanka, one of his five children. She was one of the lead negotiators with Paulson and Winthrop, according to people familiar with the matter.
"It was a pleasure dealing with [the Trumps]. They stepped up and met their commitments in a very professional fashion," said Michael Ashner, Winthrop's chief executive, referring to the Trumps's ability to quickly present and sign an offer.
Since earlier this year, the Trump Organization has been scouting for new real-estate investments, according to people familiar with the matter.
In July, the company entered a competition to transform the government-owned Old Post Office building in Washington, proposing a luxury hotel for the site.
If chosen as the winners, Trump plans to invest as much as $250 million in new capital. At least three other developers have bid on the building.
If Trump wins the Doral resort, it plans to spend about $150 million on improvements, the people said.
Making big bets on real estate, of course, is how Mr. Trump got his start. He started building and buying hotels, casinos and resorts in the 1980s.
But he changed his strategy after financial problems threatened to topple his empire during the recession of the early 1990s, when he was forced to give up some assets.
Because he didn't take many big risks during the boom, Mr. Trump survived the latest downturn relatively unscathed, although many projects that bore his name ran into problems.
Since the recession, the Trump Organization has worked on a few large overseas projects, including the development of a $1 billion golf club on Scotland's North Sea coast and the purchase of several smaller golf course projects and a vineyard in the U.S. Trump is also planning to build a $150 million residential tower in the Philippines.
But Mr. Trump has focused much of his time on his TV shows, including NBC's Apprentice, and even flirted with a run for president earlier this year.
Meantime, Ivanka Trump, 29, has gotten more involved. She and her brothers, Eric, 27, and Donald Jr., 33, have been responsible for the company's hotel management division, the Trump Hotel Collection.
Like her father, Ms. Trump also has become a media darling. Her role in the Trump Organization's business ventures has long been overshadowed by her celebrity status as a fashion model, jewelry designer and recurring personality on The Apprentice.
In July, she and her husband, publisher and real-estate developer Jared Kushner, caught the attention of the paparazzi after the birth of their first child, a daughter named Arabella Rose.
The Doral resort is part of a portfolio of eight resorts purchased in 2007 by Morgan Stanley Real Estate Fund V, including the 780-room Grand Wailea resort in Hawaii and the 739-room Arizona Biltmore in Phoenix.
Burdened by billions in debt, Morgan Stanley ceded control of the resorts to a group of junior creditors led by the Paulson-Winthrop group in January.
But that group still had to repay five of the resorts' mountainous senior debt of about $1.5 billion that matured in February. Unable to do so, the lenders placed those properties into Chapter 11 bankruptcy protection in February.
On Friday, the Paulson-Winthrop group struck a deal with some lenders to extend the bankruptcy case through August of next year, effectively buying the owners more time to recapitalize the portfolio, and pay off some of its $1.5 billion in debt.
In September, an unidentified stalking-horse bidder emerged, willing to pay $170 million for the Doral, but the deal failed to gain traction in the past month, according to people familiar with the matter, paving the way for the Trumps to make an offer.
Via WSJ By ROBBIE WHELAN And ELIOT BROWN
Resort, blog, Miami, golf, Donald Trump, billionaire, golf course, Trump Hotel Collection