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In just a month, Donald Trump lost a third of his fortune due to coronavirus

In just a month, Donald Trump lost a third of his fortune due to coronavirus

Donald Trump may argue that coronavirus did not significantly affect his business. But the calculations show a different thing: in just a month, the US president lost a third of his fortune.

A month ago, we estimated the condition of US President Donald Trump at $3.1 billion. Now — $2.1 billion. And that's why.

To assess how much the coronavirus affected Trump’s condition, we looked at changes in stock prices in the segments in which his companies operate. Commercial real estate is clearly in crisis: from the first to the 18th of March (on this date we considered the status for the rating of billionaires), the shares of several development companies, including Boston Properties and Vornado Realty Trust, fell by an average of 37%. A similar drop is observed in the hotel business, among companies that own residential buildings, and operators of golf clubs. We applied this discount to Trump's pre-coronavirus asset value and analyzed the changes together with industry experts.

Here's where we got it: Trump’s net worth is now valued at $2.1 billion — $1 billion less than a month ago. This assessment, of course, will still change, since the movement of each exchange index now looks like an electrocardiogram.

What is part of Trump's business empire

Commercial property

Retail and office real estate in New York and San Francisco

Valuation before coronavirus: $1.9 billion
Valuation after coronavirus: $1.2 billion

Trump is still leading his business empire, although his sons Eric and Don Jr. run it day after day. The basis of the empire is commercial real estate. Prior to coronavirus, these assets were valued at $1.9 billion after deducting debt. By March 18, this amount was reduced to $1.2 billion. Part of the problem is that Trump owns 11,613 square meters. M retail property near Fifth Avenue in Manhattan. This is usually a busy shopping street, but today New York resembles a ghost town. Office space these days does not seem like a safe investment either, especially if the home experiment in America is successful.

Residential Properties

Over 500 units in five states

Valuation before coronavirus: $235 million
Valuation after coronavirus: $148 million

In addition to commercial real estate, Trump owns more than 500 units of residential real estate throughout America. Quarantine in the USA began to be introduced so suddenly that there is still little data on the sale of houses, and therefore it is difficult to determine what and how much it costs. “Buyers are unlikely to make the biggest financial investment of their life until after a virtual tour of the apartment,” said Jonathan Miller, an expert in residential real estate in New York. From March 1 to March 18, shares of five public companies that own residential real estate fell by an average of more than a third.

Hotel business

Hotel in Washington and Resort in Miami

Valuation before coronavirus: $107 million
Valuation after coronavirus: $38 million

Trump hotels have faced much greater difficulties. The Trump Organization tried to sell a hotel in Washington, but these plans will have to be postponed. According to the Washington Post, the president’s companies have reduced more than 550 employees.

Licensing and management activities

Branding and hotel management in Hawaii, Uruguay, India, and other countries

Valuation before coronavirus: $80 million
Valuation after coronavirus: $42 million

“I have very little debt, so everything is in order,” Trump answered the question about the consequences of coronavirus for his business at a press conference in March. However, this probably does not apply to the Washington hotel or the president’s golf resort in Miami. Deutsche Bank provided Trump with $170 million to rebuild the Trump International Hotel and another $125 million to set up the Trump National Doral Resort in Miami, which brought $9.7 million in 2018 (interest, taxes, depreciation, and amortization). “Sounds like impressive debt,” says hotel industry analyst Dan Vasiolek.

Golf clubs

Ten golf clubs in the USA, three facilities in Europe

Valuation before coronavirus: $271 million
Valuation after coronavirus: $217 million

The consequences for Trump's golf resorts depend primarily on how long the economic crisis caused by the coronavirus will drag on. The good news for investors is that it’s easy to keep social distance while playing golf. The bad news is that expensive clubs rarely succeed during recessions. “The first thing people start to save on is golf,” said Jeff Davis, managing director of the golf industry, Fairway Advisors, a brokerage firm. The value of Trump's assets in this segment, which was estimated at $271 million in early March, fell by about 20%.

Luxury estates and other properties

Mar-a-Lago, Trump Tower penthouse, winery, and other assets

Valuation before coronavirus: $348 million
Valuation after coronavirus: $295 million

Mar-a-Lago, the president’s most famous resort, may be able to deal with the crisis better than the rest of his clubs, despite press reports that there were people among his guests who confirmed coronavirus. This is because Mar-a-Lago is valued more like a luxury estate than as an operating business, which, apparently, protects it from the consequences of the current crisis.

Money pillow

Valuation before coronavirus: $160 million
Valuation after coronavirus: $160 million

The most successful part of the president’s portfolio is the cache. The president has long gotten rid of his shares, and now he has $160 million in cash in his accounts. In the past few years, this seemed like a bad investment — the stock market was growing, and the president was missing out on the opportunity to make money. But today, a stable income is a good income.

Even in difficult times, there are reasons for optimism. The stock market has begun to show growth since Forbes considered the fortunes of billionaires. “I think this crisis will be a minor obstacle for Trump,” said resort operator Joel Page, who ran Doral before Trump acquired the facility.

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