It turned out that what he wanted to do more than anything was go out for lunch. He’d heard about this restaurant in downtown Cincinnati called the Maisonette, which was supposed to be one of the five best restaurants in the country. He really wanted to eat there, and when he called to say he was coming, he asked me to make a lunch reservation. I said fine.
His flight came in a little late, about midday, and I met him, and I took him over to Swifton Village and showed him the job. We still had 100 percent occupancy at the time, and he wasn’t interested in asking a lot of questions beyond that. He was anxious to get to the Maisonette. It took about half an hour to get there from Swifton, and we ended up spending about three hours over lunch, which is the opposite of the way I normally work. If I’d had only one day to look over a big job like Swifton, I’d sure as hell skip lunch and spend my time learning everything I could about what I was thinking of buying.
By the time we were done with lunch, it was almost four o’clock, and I had to take him to his plane. He returned to New York well fed and feeling great, and he strongly recommended going ahead with the purchase. He told his bosses that the area was wonderful and that Swifton was a great deal. They approved the sale. The price was $12 million—or approximately a $6 million profit for us. It was a huge return on a short-term investment.
What happened next is that we signed a contract. By then, I could see the dark clouds clearly on the horizon. A lot of tenants had their leases coming up and weren’t planning to renew. We put a clause in the contract of sale saying that all representations contained in it were as of the signing of the contract—not as of the closing, which is what’s typically required. In other words, we were willing to represent that the project was 100 percent rented at the time of the contract signing, but we didn’t want to make the same promise at the time of closing, three or four months down the line.
The other thing I did was to insist on a clause in the contract in which they guaranteed they’d close, or else pay a huge penalty. That was also very unusual, because in nearly every other deal, the buyer puts up a 10 percent deposit, and if he fails to close, all he forfeits is the deposit.
Frankly, the Prudent people should have been more prudent. But, as I said, the REITs were hot to trot, and they couldn’t make deals fast enough. In the end, of course, it never pays to be in too much of a hurry. On the day we closed, there were dozens of vacant apartments.
5
THE MOVE TO MANHATTAN
I HAD MY EYE on Manhattan from the time I graduated from Wharton in 1968. But at that point, the market in the city was very hot, the prices seemed very high, and I was unable to find a deal I liked—meaning a good piece of property at a price I found affordable. My father had done very well for himself, but he didn’t believe in giving his children huge trust funds. When I graduated from college, I had a net worth of perhaps $200,000, and most of it was tied up in buildings in Brooklyn and Queens. So I waited. I went to work helping to run my father’s business, and I continued to spend as much time as possible in Manhattan.
The turning point came in 1971, when I decided to rent a Manhattan apartment. It was a studio, in a building on Third Avenue and 75th Street, and it looked out on the water tank in the court of the adjacent building. I jokingly referred to my apartment as a penthouse, because it did happen to be near the top floor of the building. I also tried to divide it up so that it would seem bigger. But no matter what I did, it was still a dark, dingy little apartment. Even so, I loved it. Moving into that apartment was probably more exciting for me than moving, fifteen years later, into the top three floors of Trump Tower on Fifth Avenue and 57th Street overlooking Central Park.
You have to understand; I was a kid from Queens who worked in Brooklyn, and suddenly I had an apartment on the Upper East Side.
The really important thing was that by virtue of this move I became much more familiar with Manhattan. I began to walk the streets in a way you never do if you just come in to visit or do business. I got to know all the good properties. I became a city guy instead of a kid from the boroughs. As far as I was concerned, I had the best of all worlds. I was young, and I had a lot of energy, and I was living in Manhattan, even though I commuted back to Brooklyn to work.
One of the first things I did was join Le Club, which at the time was the hottest club in the city and perhaps the most exclusive—like Studio 54 at its height. It was located on East 54th Street, and its membership included some of the most successful men and the most beautiful women in the world. It was the sort of place where you were likely to see a wealthy seventy-five-year-old guy walk in with three blondes from Sweden.
I’ll never forget how I became a member. One day I called up Le Club and I said, “My name is Donald Trump and I’d like to join your club.” The guy on the other end of the phone just laughed and said, “You’ve got to be kidding.” Nobody, of course, had heard of me. The next day I got another idea, and I called back and I said to the guy, “Listen, could I have a list of your members? I may know someone who is a member.” And he said, “I’m sorry, we don’t do that,” and he hung up.
The next day I called again and said, “I need to reach the president of the club. I want to send him something.” For some reason, the guy gave me the president’s name and his business number, and I called him up. I introduced myself. I said, very politely, “My name is Donald Trump, and I’d like to join Le Club.” And he said, “Do you have any friends or family in the club?” and I said, “No, I don’t know anybody there.”
He said, “Well, what makes you think you should be admitted as a member?” I just kept talking and talking, and finally this fellow said to me, “I’ll tell you what, you sound like a nice young man, and maybe it would be good to have some younger members, so why don’t you meet me for a drink at Twenty-one?”
The next night we met for a drink. There was just one small problem. I don’t drink, and I’m not very big on sitting around. My host, on the other hand, liked to drink, and he had brought along a friend who also liked to drink. For the next two hours, we sat there as they drank and I didn’t, until finally I said, “Listen, fellas, can I help you get home?” and they said, “No, let’s just have one more.”
Now, I just wasn’t used to that. I have a father who has always been a rock, very straight and very solid. My father would come home every night at seven, have his dinner, read the newspaper, watch the news, and that was that. And I’m as much of a rock as my father. This was a totally different world. I remember wondering if every successful person in Manhattan was a big drinker. I figured it that was the case, I was going to have a big advantage.
Finally, about ten, these guys had enough, and I practically had to carry them home. Two weeks passed, and I never heard from the president. Finally, I called him, and he didn’t even remember who I was. So now I had to go through the whole thing all over again, back to 21, only this time he didn’t drink as much, and he agreed to put me up for membership. He had only one misgiving. He said that because I was young and good-looking, and because some of the older members of the club were married to beautiful young women, he was worried that I might be tempted to try to steal their wives. He asked me to promise that I wouldn’t do that.
I couldn’t believe what I was hearing. My mother is as much of a rock as my father. She is totally devoted to my father—they recently celebrated fifty years of marriage. That’s what I grew up with, and here’s this guy talking about stealing wives.
Anyway, I promised. I was admitted to the club, and it turned out to be a great move for me, socially and professionally. I met a lot of beautiful young single women, and I went out almost every night. Actually, I never got involved with any of them very seriously. These were beautiful women, but many of them couldn’t carry on a normal conversation. Some were vain, some were crazy, some were wild, and many of them were phonies. For example, I quickly found out that I couldn’t take these girls back to my apartment, because by their standards what I had was a disaster, and in
their world appearances were everything. When I finally did get married, I married a very beautiful woman, but a woman who also happens to be a rock, just like my mother and father.
During that same period, I also met a lot of very successful, very wealthy men at Le Club. I had a good time when I went out at night, but I was also working. I was learning how the New York scene operates and I was meeting the sort of people with whom I’d eventually work on deals. I also met the sort of wealthy people, particularly Europeans and South Americans, who eventually bought the most expensive apartments in Trump Tower and Trump Plaza.
It was at Le Club that I first met Roy Cohn. I knew him by reputation and was aware of his image as a guy who wasn’t afraid to fight. One night I found myself sitting at the table next to him. We got introduced, and we talked for a while, and I challenged him. I like to test people. I said to him, “I don’t like lawyers. I think all they do is delay deals, instead of making deals, and every answer they give you is no, and they are always looking to settle instead of fight.” He said he agreed with me. I liked that and so then I said, “I’m just not built that way. I’d rather fight than fold, because as soon as you fold once, you get the reputation of being a folder.”
I could see Roy was intrigued, but he wasn’t sure what the point of it all was. Finally he said, “Is this just an academic conversation?”
I said, “No, it’s not academic at all. It so happens that the government has just filed suit against our company and many others, under the civil rights act, saying that we discriminated against blacks in some of our housing developments.” I explained to him that I’d spent that afternoon with my father, talking to lawyers in a very prestigious Wall Street firm, and that they’d advised us to settle. That’s exactly what most businessmen do when the government charges them with anything, because they just don’t want bad publicity, even if they believe they can beat a phony rap.
The idea of settling drove me crazy. The fact was that we did rent to blacks in our buildings.
We wanted tenants who we could be sure would pay the rent, who would be neat and clean and good neighbors, and who met our requirement of having an income at least four times the rent. So I said to Roy, “What do you think I should do?”
And he said, “My view is tell them to go to hell and fight the thing in court and let them prove that you discriminated, which seems to me very difficult to do, in view of the fact that you have black tenants in the building.” He also told me, “I don’t think you have any obligation to rent to tenants who would be undesirable, white or black, and the government doesn’t have a right to run your business.”
That’s when I decided Roy Cohn was the right person to handle the case. I was nobody at the time, but he loved a good fight, and he took on my case. He went to court, and I went with him, and we fought the charges. In the end the government couldn’t prove its case, and we ended up making a minor settlement without admitting any guilt. Instead, we agreed to do some equal-opportunity advertising of vacancies for a period of time in the local newspaper. And that was the end of the suit.
I learned a lot about Roy during that period. He was a great lawyer, when he wanted to be. He could go into a case without any notes. He had a photographic memory and could argue the facts from his head. When he was prepared, he was brilliant and almost unbeatable. However, he wasn’t always prepared. Even then, he was so brilliant that he could sometimes get away with it. Unfortunately, he could also be a disaster, and so I would always question Roy very closely before a court date. If he wasn’t prepared, I’d push for a postponement.
I don’t kid myself about Roy. He was no Boy Scout. He once told me that he’d spent more than two thirds of his adult life under indictment on one charge or another. That amazed me. I said to him, “Roy, just tell me one thing. Did you really do all that stuff?” He looked at me and smiled. “What the hell do you think?” he said. I never really knew.
Whatever else you could say about Roy, he was very tough. Sometimes I think that next to loyalty, toughness was the most important thing in the world to him. For example, all Roy’s friends knew he was gay, and if you saw him socially, he was invariably with some very good-looking young man. But Roy never talked about it. He just didn’t like the image. He felt that to the average person, being gay was almost synonymous with being a wimp. That was the last thing he wanted to project, so he almost went overboard to avoid it. If the subject of gay rights came up, Roy was always the first one to speak out against them.
Tough as he was, Roy always had a lot of friends, and I’m not embarrassed to say I was one. He was a truly loyal guy—it was a matter of honor with him—and because he was also very smart, he was a great guy to have on your side. You could count on him to go to bat for you, even if he privately disagreed with your view, and even if defending you wasn’t necessarily the best thing for him. He was never two-faced.
Just compare that with all the hundreds of “respectable” guys who make careers out of boasting about their uncompromising integrity but have absolutely no loyalty. They think only about what’s best for them and don’t think twice about stabbing a friend in the back if the friend becomes a problem. What I liked most about Roy Cohn was that he would do just the opposite. Roy was the sort of guy who’d be there at your hospital bed, long after everyone else had bailed out, literally standing by you to the death.
In any case, I got to know a lot of people when I moved to Manhattan, and I got to know properties, but I still couldn’t find anything to buy at a price I liked. Then, suddenly, in 1973 things began to turn bad in Manhattan. I’d always assumed the market would cool off, because everything runs in cycles and real estate is no different. Even so, I never expected things to get as bad as they did. It was a combination of factors. First, the federal government announced a moratorium on housing subsidies, which they had been giving out by the bushel, particularly in the city. At the same time, interest rates began to rise, after being so stable for so many years that it was easy to forget they could move at all. Then, to make things worse, there was a spurt of inflation, particularly in construction costs, which seem to rise even when there’s no inflation anywhere else.
But the biggest problem by far was with the city itself. The city’s debt was rising to levels that started to make everyone very nervous. For the first time you heard people talk about the city going bankrupt. Fear led to more fear. Before long New York was suffering from a crisis of confidence. People simply stopped believing in the city.
It wasn’t an environment conducive to new real estate development. In the first nine months of 1973, the city issued permits for about 15,000 new apartments and single-family homes in the five boroughs. In the first nine months of 1974, the number dropped to 6,000.
I worried about the future of New York City too, but I can’t say it kept me up nights, I’m basically an optimist, and frankly, I saw the city’s trouble as a great opportunity for me. Because I grew up in Queens, I believed, perhaps to an irrational degree, that Manhattan was always going to be the best place to live—the center of the world. Whatever troubles the city might be having in the short term, there was no doubt in my mind that things had to turn around ultimately. What other city was going to take New York’s place?
One of the pieces of property that had always fascinated me was the huge abandoned railyard along the Hudson River beginning at 59th Street and extending all the way up to 72nd Street. Every time I drove along the West Side Highway, I found myself dreaming about what could be built there. It didn’t take a genius to realize that one hundred acres of undeveloped riverfront property in Manhattan had a lot of potential. But it was another story to consider trying to develop such a huge piece of property when the city was in the midst of a financial crisis.
I don’t believe that you can ever be hurt by buying a good location at a low price. At the time, a lot of neighborhoods on the West Side were considered dangerous places to live. There were welfare hotels on every side street, and drug dealers in every
park. I remember the New York Times running a long series of articles about the block between Central Park West and Columbus Avenue at 84th Street—what a tough area it was.
Even so, you didn’t have to look very far to see how easily it could all change. Even on the tough side streets, like West 84th, there were magnificent old brownstones only a few steps away from Central Park. And on the avenues, especially Central Park West and Riverside Drive, there were beautiful old buildings with huge apartments and spectacular views. It was only a matter of time before people discovered the value.
One day, in the summer of 1973, I came across a newspaper story about the Penn Central Railroad, which was in the middle of a massive bankruptcy filing. This particular story said that the Penn Central trustees had hired a company headed by a man named Victor Palmieri to sell off the assets of the railroad. Among the assets, it turned out, were those abandoned yards in the West Sixties, as well as more yards in the West Thirties. The deal Victor made with the Penn Central was that each time his company managed to find a buyer for an asset, he got a percentage of the sale.
I had never heard of Victor Palmieri, but I realized immediately that he was someone I wanted to know. I called his representatives and said, “Hello, my name is Donald Trump, and I’d like to buy the Sixtieth Street yards.” The simplest approach is often the most effective.
I think they liked my directness and my enthusiasm. I hadn’t built anything yet, but what I did have was the willingness to go after things that people in a better position than mine wouldn’t have considered seeking.
I went to meet Victor, and we got on very well right from the start. He was a very smooth, attractive guy, an Italian who looked like a WASP. I told him how bad the 60th Street yards were, that the neighborhood was in trouble and the city was in trouble, and that I was probably crazy to be interested in the property at all. If you want to buy something, it’s obviously in your best interest to convince the seller that what he’s got isn’t worth very much.
Trump Page 8