Archive for Saturday, March 7, 2009

Trump dumps condo investors

March 7, 2009


— Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.

The Southern California couple paid a $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first construction crew arrived.

But admiration for the celebrity developer and star of “The Apprentice” has now turned into anger and disbelief as Trump’s luxury hotel-condo plan collapsed, leaving little more than a hole in the ground and investors out of their deposits, which totaled $32.2 million.

“I can’t even stand to see Trump’s face on TV,” says Linda Drake, a psychologist, whose husband is a commercial airline pilot and financial adviser.

Investors were told last month their money was spent and they won’t get a penny back. A single mother in suburban Los Angeles lost $200,000 and won’t be able to send her sons to private universities. A Los Angeles-area businessman lost a deposit of more than $1 million on four Trump units, including two penthouses.

The project’s collapse comes at a delicate time for Trump, whose casino company, Trump Entertainment Resorts Inc., filed for bankruptcy protection last month. He also is embroiled in a lawsuit to avoid paying debt on the struggling Trump International Hotel & Tower in Chicago.

Trump and his children heavily promoted the northern tip of Mexico’s Baja California coast. He sold 188 units for $122 million the first day they went on a sale at a lavish event in a San Diego hotel in December 2006.

The Trumps remained buoyant even as the U.S. housing market began to crumble. Ivanka Trump assured buyers in an October 2007 newsletter that all Trump projects were immune to a slowdown.

“In characteristic Trump fashion, Trump Ocean Resort Baja will be the best of the best, and consequently always in demand,” she wrote.

All that remains of Trump Baja is a highway billboard with a large photo of Donald Trump that advertises condos for sale. It hovers over a closed sales center and showroom, a paved parking lot, a big hole that cuts a wide swath, drainage pipes and construction equipment.

The failure of Trump Baja is a big blow to a real estate market just south of the border from San Diego that was booming two years ago with U.S. buyers looking for second homes and easy profits but is now similarly swooning. The market has been hammered by Mexico’s drug-fueled violence and the global economic crisis.


just_another_bozo_on_this_bus 9 years ago

This must be what Cal Thomas was talking about when he said that "The Rich Make Us Richer."

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