D
onald Trump's most troubled real estate asset, 40 Wall Street, may soon become a valuable tool for currying favor with the president.

    In April last year, during his season of indictments, Trump defended his worth in a deposition at the New York State attorney general's office. The building, once considered one of his masterpieces, was at the center of the litigation, which accused him of defrauding banks by overstating its value. Trump valued 40 Wall at $530 million, but it has since plummeted to nearly worthless.

    The building's current operating income barely covers loan payments, and its market value is likely less than the $114 million balance Trump will owe when the mortgage comes due next year. One real-estate investor suggested that Trump's most rational move would be to "throw in the keys" to the lender, like other New York office landlords who have seen their properties turn into emblems of disaster.

    Trump has built his identity around punching back and winning, but his original business – New York real estate – is on the ropes. His family company, the Trump Organization, has been hollowed out by criminal prosecutions and is operating under a court-appointed monitor. The company has been busy overseas, cutting deals to license Trump's personal brand, but at home in New York, Trump's name has become a repellent.

    Condo boards have voted to remove his name from their buildings, and the city of New York was glad to see him out of his deal to operate a public golf course. Gucci, the anchor tenant in the aging mall at Trump Tower, managed to get Trump to slash its rent, but the retailer is rumored to be plotting a move.

    No Trump property has experienced a fall like 40 Wall, which was once considered the single most valuable property in his portfolio. "What a fucking mess that building is," says one real-estate professional familiar with its state. "You could charge a nickel a foot and no one wants to pay the Trump Organization rent."

    The building's current tenant roster is mostly made up of cost-conscious consumers, including personal-injury law firms, penny-stock traders, and small insurers. Some tenants expressed satisfaction, saying they could keep their feelings about Trump separate from their business dealings.

    40 Wall is more than just a building; it's a national landmark that was once the world's tallest skyscraper. It has been devastated by the post-pandemic office-market crash, with its current operating income barely covering loan payments. The building's market value is likely less than the $114 million balance Trump will owe when the mortgage comes due next year.

    Trump has always been able to convince lenders to take risks on him, but a new mortgage would be much more expensive due to higher interest rates. A lender would also demand to see a plan to return 40 Wall to health, which could involve a significant investment in upgrades. The building's ground lease contains a contractual time bomb that will reset the rent to reflect the land's fair market value, potentially destroying the economics of the building.

    A real-estate investor familiar with 40 Wall suggests that Trump would be wise to simply give the building to the bank when his mortgage comes due, rather than paying back the balance. However, it is unlikely that Trump will concede defeat and instead plans to use his presidency as a way to save his personal investment in 40 Wall.

    If he wins re-election, Trump could sweep away his federal prosecutions and put off any sentence for his New York State conviction indefinitely. He would also be able to renegotiate with the Germans from a position of strength and potentially even buy them out or convert the building into luxury rentals.