03 Jun âEverything Is Stallingâ: Inside a Troubled Trump Proje…
PUNTA DEL ESTE, Uruguay â President Trumpâs son Eric traveled in January to Punta del Este, a Uruguayan beach town on a spit of land jutting into the South Atlantic Ocean.
He was en route to one of the Trump family companyâs most ambitious ongoing development projects â a 25-story, 156-condominium waterfront tower, complete with an indoor tennis court, multiple swimming pools and a rooftop helipad. âItâs incredible,â Eric Trump said to reporters on the trip. âWe have the best building anywhere in Punta del Este, anywhere in South America.â
Instead, the cylindrical high-rise is turning into the latest debacle in the Trump Organizationâs far-flung property portfolio â featuring a little-known Argentine real estate firm in a gaudy, hard-partying town that has been a destination for money launderers and tax evaders.
If all goes perfectly, Trump Tower Punta del Este will be completed at the end of 2020, about four years behind schedule. But people involved in the project said they are not sure if or when it will be finished.
Construction is barely proceeding, in part because less than one-quarter of the necessary workers are currently on the job. The Miami-based broker handling the sales of condos has sued Trumpâs local developer. Some purchasers are now seeking to sell their units, potentially driving down the prices just as the project needs to drum up cash via the sale of new units. The tower is currently uninhabited.
âOf course not,â Richard Sampallo, a director of the union that represents the construction crew, said when asked if it will be finished by the end-of-2020 target. At the current pace, he estimates it may take another four years, at which point it will have been roughly a decade since it got underway.
As with its other international developments, the Trump Organization isnât actually building the Punta del Este tower. Instead, it licensed the âTrumpâ name and takes a cut of the revenue from selling units.
The problems in Uruguay are a microcosm of the challenges facing the presidentâs company as it stakes its future on projects outside the United States. In February, the Trump Organization announced that it would discontinue any new hotel projects in the United States. As a result, the company is more reliant than ever on long-running international projects, such as the ones in Uruguay, Indonesia and the United Arab Emirates.
For a company largely owned by the United States president, this international-focused strategy carries risks.
For example, according to four people familiar with his role, a key figure in the early stages of the Punta del Este deal, who also tried to sell condos in the building, is now Argentinaâs economics minister. The minister, NicolÃ¡s Dujovne, negotiated last year with the International Monetary Fund, whose biggest funder is the United States government, for a bailout for Argentina.
In addition, some of the people who have agreed to buy condos have faced legal problems in their home countries, including allegations of tax evasion. According to real estate records reviewed by The New York Times, the buyers included at least 21 anonymous companies in offshore jurisdictions like Panama and Belize.
A portion of the proceeds from each sale flows to Mr. Trumpâs company, which generally collects about 5 percent of the purchase price.
Other Trump international developments have also flatlined. A planned hotel and condo project in Baja California, Mexico, never made it past a concrete foundation before being abandoned amid a series of lawsuits.
Another tower in Baku, Azerbaijan, remains unopened after construction delays and cost overruns. (The Trumps cut ties to the project after his 2016 election, amid questions about their partnerâs political ties.) And at least seven other projects announced in six other countries never got off the ground.
Representatives of the Trump Organization and its local partner, YY Development Group of Buenos Aires, declined to comment.
âItâs a joke,â said Felipe Rozenmuter, who runs a musical instrument store in Argentina and has a contract on an apartment in the Trump building. âThere is no one working there. Everything is stalling.â
Fendi. Cipriani. Trump.
Punta del Este â Spanish for Point of the East â is arguably Latin Americaâs capital of conspicuous consumption. During the peak summer season, about 400,000 people descend on the town, whose year-round population hovers near 20,000. They come mostly from Buenos Aires, 30 minutes away by private jet. The beachfront waters are crowded with yachts. Celebrities like Mark Zuckerberg and Naomi Campbell have vacationed there.
A small forest of white high-rises has sprouted in recent years, and the once-sleepy city resembles a miniature version of Miami circa 1970. More towers are rising, including high-end projects by the luxury brands Fendi Chateau and Cipriani. Some apartments sell for more than $5 million.
Punta del Este also has another claim to fame: For decades, wealthy Argentines and others have moved money out of their country and into real estate in Punta del Este to hide it from the tax authorities. Last year, Uruguay overhauled its anti-money laundering laws, prompted by high-profile incidents including a Mexican drug gang washing money through Punta del Este homes.
The Trump Organization hasnât been accused of wrongdoing in the Punta del Este project.
In 2007, the company was dipping its toes into Latin America, including trying to build a golf course and villa development in the Dominican Republic. Local real estate officials said a developer involved in that project â which was derailed by financial problems â introduced the Trumps to two Argentine real estate developers, MoisÃ©s Yellati and Felipe Yaryura, to discuss a development in Punta del Este.
By late 2011, Mr. Yellati and Mr. Yaryura had assembled a group of investors and bought the land in Punta del Este, according to people familiar with the deal. They paid about $18 million.
Another figure central to the projectâs early stages was Mr. Yellatiâs brother-in-law, Mr. Dujovne, Argentinaâs future economics minister. Mr. Dujovne, whose fatherâs architecture firm was designing the tower, was a prominent economist and television talk show personality. Mr. Dujovne was involved in the purchase of the land and later tried to sell condos to his contacts in Buenos Aires, according to people familiar with his role.
The Trump Organization unveiled the deal in 2012, saying the tower would be finished by 2016. Eric and Ivanka Trump traveled to Punta del Este in early 2013 for a ceremonial groundbreaking. Two years later, Eric was back, this time with his wife, Lara, to celebrate the beginning of construction with a party featuring Uruguayâs national red wine, Tannat.