The Empire State Building And The Art Of Trump's Deal In the 1990s, Donald Trump famously tried to acquire control of the Empire State Building. He lost — but ultimately won a nice profit, especially considering he put no money into the building.
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The Empire State Building And The Art Of Trump's Deal

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The Empire State Building And The Art Of Trump's Deal

The Empire State Building And The Art Of Trump's Deal

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ARI SHAPIRO, HOST:

Donald Trump says he would make a good president partly because he knows how to cut deals. In New York City, one of Trump's most famous deals involved the Empire State Building. It took place in the 1990s. The episode underscored how aggressive Trump can be, the kind of people he's willing to do business with and how he can still make money even when he loses. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: As a child, Donald Trump was drawn to New York's glittering skyline. He spoke here during a campaign event in Iowa.

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DONALD TRUMP: I was born in Queens, N.Y. And I always had a dream of going to Manhattan. I saw the big buildings, and I'd always tell my father, I want to go there; I want to go there.

ZARROLI: Eventually, of course, he made it to Manhattan and ended up acquiring an interest in the most famous building of all. Trump's effort to wrest control of the Empire State Building is a battle New York real estate people still talk about. Michael Cohen is tri-state president of Colliers International, the commercial real estate firm.

MICHAEL COHEN: It was kind of like, you know, one member of New York real estate royalty taking on another member. It was something I had never seen happen before and haven't seen happen since.

ZARROLI: In the '90s, New York's most famous building was owned by Japanese billionaire Hideki Yokoi. At the time, Yokoi, who had ties to organized crime, was in a Japanese prison, and Ray Hannigan of the law firm Herrick Feinstein who was involved in the litigation over the building says Yokoi's interests were controlled by his daughter. Hannigan says one day, the daughter met Trump's second wife.

RAY HANNIGAN: The story goes that Kiiko Nakahara was living in New York at the time, and she was in a gym on a treadmill or another device next to Marla Maples. And they got to speaking, and Kiiko said something to Marla Maples to the effect of, you know, I own or have an interest in the Empire State Building. I should meet Donald Trump.

ZARROLI: Trump and the daughter, who'd later do prison time herself, met and worked out a deal. Her father technically owned the Empire State Building because he bought what's called the ground lease. But he made surprisingly little money off it.

The building had signed a very long-term lease with a firm controlled by two real estate dynasties - the Helmsleys and the Malkins. Trump proposed going to court to break the lease. Longtime journalist Peter Slatin says Trump told the daughter...

PETER SLATIN: You think you're making a nice bit of change now from this ground lease. What if we get rid of Malkin and we take over the build and you don't have to do anything? I'm going to do all the work. I'm going to do all the heavy lifting.

ZARROLI: Under the arrangement, Trump got an interest in the building without putting up any of his own money, but he could keep 50 percent of any value he could add to the property. So if he broke the lease, he'd make a fortune. Former Judge Edward Lehner presided over the case.

EDWARD LEHNER: A great deal of money was at stake. I mean being able to terminate the lease for this marvelous icon - iconic building was worth not millions - billions.

ZARROLI: The effort to break the lease was a long shot. Slatin says Trump accused the Helmsleys and Malkins of being poor landlords.

SLATIN: He came in and basically said, you guys are in violation of your net lease of the building because this building is extremely poorly maintained.

ZARROLI: There was some truth to that, Slatin says. Despite its landmark status, the building was getting run down. It had a lot of small tenants who couldn't afford top-tier buildings. But the maintenance issues weren't seen as all that serious, and many people were shocked by Trump's move. Again, Judge Lehner...

LEHNER: You often have (laughter) tenant whose landlord seeks to terminate their lease that are based in a violation - nothing like a termination of a lease of a building of this nature.

ZARROLI: What bothered Michael Cohen was that many small investors had put money into the company controlling the building's lease over the years, and Trump's gain would be their loss.

COHEN: If he had won, the investors who had been partners with Helmsley and the Helmsley heirs who were then managing the building would have been wiped out.

ZARROLI: In the end, Judge Lehner dismissed Trump's claims. That didn't stop Trump from publicly criticizing the Helmsleys and Malkins at every turn. Then in 2002, he struck a deal, says Ray Hannigan.

HANNIGAN: And the question was whether he was going to make money. And sure enough, Donald Trump got on the phone, got a hold of Peter Malkin who'd probably paid the most for the building 'cause he has the ground lease, and he cuts a deal with Peter Malkin.

ZARROLI: What Trump did was sell Malkin and his partners his interest in the building. They wouldn't just have a long-term lease. They'd own the building outright. That gave them more control. They could even convert the building into condos if they wanted. It also got Trump off their backs.

As for Trump, he ended up making about $8 million in the deal. That was less than he'd hoped for, but it was a nice profit considering he put none of his own money into the building. He also got to associate his name with one of the most famous properties in the world. And for someone who loves publicity, that was no doubt a nice added benefit. Jim Zarroli, NPR News, New York.

(SOUNDBITE OF JAY-Z AND ALICIA KEYS SONG, "EMPIRE STATE OF MIND")

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