At the beginning of the year, we heard about the Trump International Hotel Tower at Bay and Adelaide in Toronto going up for auction, with bidding to start at $298 million. We speculated about some big time developers that may be interested, but no one bit. So, what will happen to Trump Tower in Toronto?
According to an article on CBC.ca, the ownership will now fall to the largest debt holder. Back in September, JCF Capital ULC bought up an unpaid $301 million construction loan, which is about 60% of the total construction cost. This put them in control of the project. They immediately started the bidding sales process that kicked off in February. The auction didn’t receive a single bid, so JCF Capital ULC will likely be declared the owner. They have no interest in operating the property, so they’ll be looking into selling its ownership stake.
US President Donald Trump does not own any part of the Trump Tower in Toronto, but a Trump subsidiary does have the contract to manage the property. The Trump name on the building was initially put in place as a branding strategy, which has potentially contributed to the overall disappointing sales.
Even though the tower is located in the heart of Toronto’s bustling Financial District and features some beautiful luxury suites, there are few interested buyers. We’re positive that a new owner would have the right to rebrand the tower, so it’s interesting that no one jumped on this opportunity to own a prime piece of real estate downtown Toronto.
The 65-storey Trump Tower has 211 hotel suites and 74 residential condo units. It’s been five years since the Hotel opened and only half the condo units are sold. According to the CBC article, court documents state that the average daily rate for the hotel rooms has dropped 30% and are usually unoccupied.
When we met Neil Labatte, President & CEO of Talon International Development & Talon Luxury Collection, more than two years ago, we discussed how they were leaving the penthouses unfinished because there was international interest and it would be ill-advised to presume to know how the buyer would want it designed.
Also, when CBRE was managing the sale, it was implied that there were groups from Asia, Europe, and the US showing interest in the property. It appears that the Bay and Adelaide address isn’t as internationally desired as expected. Still, CBRE believes that the property offers “substantial unrealized potential.”
What does this mean for Toronto on an international scale? Is Toronto not the world class city we all believe it to be? Is the Trump name and relation so damaging that it’s affecting property value in Toronto’s hottest district? With the amount of tourism and other high-end hotels in Toronto, it’s difficult to believe that the clientele for a property like this does not exist.
As mentioned above, JCF Capital ULC has no interest in operating the hotel, so there’s still time for a local developer to get in on this property, whether its the hotel component, the commercial and retail, or the condo units.
Just like we did in January, we ask the same question; could we see a big name local developer jump in the ring to own this high profile property?