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Trump still strong


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POSTED: Tuesday, May 12, 2009

Three years ago, real estate, tourism and Donald Trump were soaring to new heights in Hawaii.

Some 1,600 potential buyers from across the globe put down $20,000 for an opportunity to reserve units in the celebrity tycoon's first condominium-hotel in the islands. In eight euphoric hours, all 463 suites in Trump International Hotel & Tower Waikiki Beach Walk were sold for an average $1.5 million. Hundreds were placed on a waiting list.

“;I predicted Trump Tower Waikiki would be the most luxurious development in Hawaii and buyers responded,”; Trump said then in a press release highlighting $700 million in sales, which set a world record for dollar and unit volume sold on a single day in a residential development.

Today, Hawaii's real estate values are faltering, and several other Trump-branded projects around the world are in trouble, but his Trump Waikiki tower appears to be withstanding the downward spiral.

As finishing touches are put on the tony 38-story tower, a few of the prized units have returned to the market for the first time as buyers try to turn a profit even before the keys are in their hands. The only problem is, their listings could be invalid because the buyers are contractually prohibited from selling until after closing, which is expected late this year, the Associated Press has learned.

John Herkenrath, an agent with Trump Waikiki's exclusive broker, S&P Destination Properties, said buyers own an interest in a property that's not completed yet, so they cannot reassign their interest to someone else.

“;They do not have the right to list or sell anything,”; he said. “;Once they close, it's theirs to do as they please.”;

As of Friday there were 15 listings on the market, including six this month. An additional 11 listings have been withdrawn after potential sellers were cautioned by the Los Angeles-based developer Irongate. The others were in the process of being notified, Herkenrath said.

People trying to sell is expected. “;You have people that bought in low are willing to sell high,”; he said. “;There's profit takers.”;

Despite steep declines in real estate, Trump units are being listed considerably higher than original prices.

The lowest-priced unit is a 355-square-foot, furnished studio on the 20th floor for $750,000, with a $542 monthly maintenance fee. The highest priced is a 1,660-square-foot, two-bedroom, 35th-floor unit with sweeping ocean views. It was listed for $4.5 million by Hawaiian Joy Realty LLC.

Tsuyako Fukayama, who owns the agency, said she has not been notified to withdraw the listing. The owner wanted to test the market but is willing to keep the unit, she said.

Fukayama, who represented many buyers, said they are wealthy Asians who are paying cash and don't require financing.

“;They love the building and the location,”; she said.

The attempted selling might be a prelude to when the owners do close. A flurry of condos could hit the market. However, they could end up stuck with their properties for some time because of strict lending standards, especially for second homes.

“;That could be problematic for a while because people who want to buy cannot buy,”; said Honolulu real estate analyst Stephany Sofos, who is not affiliated with the project.

However, Sofos believes the building will hold its value. Besides being the newest property around, high-end condos in the area have fared much better than other properties, off about 10 percent from their peaks.

“;You're not seeing any disasters,”; she said. “;That's indicative of the marketplace and the people that are buying.”;

She said the high percentage of buyers from Asia also will help the project, since they have a longer-term approach to real estate and investing.

Meanwhile, plans for similar Trump-branded condotels stretching from Mexico to Tampa, Fla., have been scrapped and are mired in legal battles.

Buyers at the failed Trump Ocean Resort Baja sued Trump and Irongate in March for deposits totaling between $18 million and $20 million after they were told there was no money left to refund deposits. Trump, in turn, filed a $40 million lawsuit last month against Irongate, accusing the developer of failing to build the five-star resort.

In Waikiki no buyers have dropped out—remarkable considering the severe shifts in the economy, real estate, tourism and lending. “;There's been no cancellations. The developer has no inventory,”; Herkenrath said. “;Every one of the suites is in firm-and-binding contracts.”;

A major disincentive of canceling is the 20 percent deposit that buyers risk forfeiting. At an average $1.5 million per unit, the average deposit after the $20,000 reservation was $300,000.

The 350-foot tower is located steps from the sand and Fort DeRussy Park in a revitalized area known as Waikiki Beach Walk.