Toronto’s Trump International Tower is searching for a new buyer after years of concurring losses which led to its quiet default on the property. The court appointed a receiver to have custody on the property if and when the owner defaults. The starting price has been set at $298 million a bit lower than $500 million which was spent to build the tower by Talon International Development Incorporation.
The Ownership
The main reason for the sale is because of the strange ownership of the tower. 94 out of 261 condominium were available in the market to investors meaning that Talon, though expected the hotel to operate at a 5-star standard, was relying on the gamble that the luxury units would sell at luxury prices. When the tower was opened in 2012, Talon’s CEO was optimistic that the tower would bring lots of investors which will enable Talon make a profit but that did not happen as expected and by 2013, the investors who had already purchased rooms were losing money due to the low rates of rooms and by 2016, half of the residential condominium which were up on sale remained unsold.
Because of this, the investors alleged that they were misled by Talon and Talon turned the tables and pointed its fingers at Trump Toronto Hotel Management accusing them of not maintaining the building’s five-star reputation. In 2016, Talon’s lawyer, Symon Zucker said that his client was not interested in the Trump brand and the Trump organization’s lawyer, Alan Gatel called Zucker’s claim as baseless saying that the building had maintained the 5-star standard. Here is a video discussing removing the Trump brand.
Too Many Unsold Units
All the back and forth arguments did not change anything since there were still unsold units in the tower which were bleeding Talon’s money very fast. In May 2016, the developer defaulted to a construction loan of $260 million which left them hunting for a buyer. No matter which buyer will come along, Toronto Trump Hotel Management will continue managing it but it is yet to be determined if the next owner will opt out of the branding arrangement that Donald Trump had with Talon.
This has made their relationship take a turn for the worst where each is alleging the other of trying to destroy the project. The developer then asked the board to give them rights to fire Trump and get rid of the name from the tower but Trump management filled a Notice of Motion alleging that Talon wanted to terminate their contract and they threatened to sue. But since there will be someone wanting to buy the tower, there will be no need for suing.
