The former Trump Taj Mahal was sold in March to Hard Rock International for $50 million, a massive discount on what it cost to build the Atlantic City property more than a quarter-century ago in 1990.
Throughout the country’s history, real estate has typically been a relatively safe investment that’s returned strong returns for homeowners, as well as developers.
That’s changed, of course, in recent years following the economic recession that hit the US in 2008 and 2009. The new reality is no more evident than in the valuation of the Trump Taj Mahal.
Dubbed the “Eighth Wonder of the World” when it opened 27 years ago, billionaire Carl Icahn unloaded the resort, which he closed last October after failing to come to new labor terms with casino workers, for the gravely discounted price of $50 million. That equates to less than a nickel on the dollar compared to what Trump and his financiers paid.
The Hard Rock acquisition was announced in March, but financial terms of the deal weren’t made public until documents filed with the US Securities and Exchange Commission were revealed this week.
Along with his vast real estate and hotel portfolio, Trump has credited his casino dealings for helping build his unknown fortune.
The 45th president severed ties with Atlantic City in 2009, though he maintained a small stake in the Trump Taj Mahal through a licensing agreement until last year.
Icahn, a close friend to the commander-in-chief, acquired the last remaining Trump Entertainment Resorts property in bankruptcy in early 2016. At the time of the buyout, he called the Taj Mahal a signature Atlantic City property. Fast-forward 13 months, and the billionaire reveals the investment cost him $350 million.
A contentious dispute between Icahn and the Unite Here Local 54 workers union over a wage increase and the restoration of benefits led the corporate raider to shutter the Taj Mahal and put thousands out of work.
Rewriting “Art of the Deal”
Though many are saying the Seminole Tribe, which owns the Hard Rock brand, essentially rewrote the “Art of the Deal,” Trump’s signature book, by buying the formerly valued $1.2 billion resort for just $50 million, the bargain price comes with its fair share of drawbacks.
In addition to Hard Rock saying it will spend up to $400 million in rebranding and renovating the resort, the company also assumes the Taj’s massive property tax bill. Atlantic City officials have the venue valued at over $224 million, an assessment that Icahn has repeatedly appealed.
Hard Rock will also be forced to begin participating in the state’s PILOT program (payment in lieu of taxes) that mandates the city’s remaining casinos jointly remit a $120 million annual disbursement to local government instead of paying on gaming revenue.
The Seminoles will additionally be on the hook for the resort’s property taxes. The Florida Native American group should only expect to see those tariffs increase, as Atlantic City will likely raise its $224 million valuation as the tribe dumps hundreds of millions of dollars into the Boardwalk facility.