Spartanburg business and finance writer Brad Thomas has written a book on the GOP presidential nominee and businessman that reportedly reveals the secrets behind Donald Trump’s businesses and his brand.
Thomas, a former real estate developer and now editor of the Forbes Real Estate Investor, unabashedly supports Trump.
He said he wrote the book – “The Trump Factor” – to “pull back the curtain” and reveal to critics, pundits, journalists and investors “the many obscurities” behind the man who wants to be president.
While there are many other books on Trump, the one by Thomas is different.
For starters, Thomas said in a recent telephone interview, “Obviously, it’s not written by Trump. I’m not paid by Trump like any of the other kind of shadow writers that get paid a fee.
“So in other words, I have no conflicts of interest with Donald Trump. I have used my own piggy bank to visit all of the properties he owns in the world. That’s why it took me three years to write this book.”
In doing research, he spent time with Trump and his executives at his properties. “Gradually, I realized that many people – both in and out of the real estate business – wanted to know more about Trump,” Thomas said.
He pondered Trump’s financial failures beginning with the risky investments that led to his casino, The Trump Taj Mahal, filing for Chapter 11, which permits reorganization under U.S. bankruptcy laws.
“Never before has America, or the world, seen an individual so creative, so focused and so determined to forge ahead regardless of the obstacles, to create superb quality hotels, golf courses, condominiums, retail shops and much more,” Thomas said in the book.
Unlike any developer he has met, Trump “has an incredible vision for selecting great locations,” Thomas said. “In his mind, barriers to entry don’t exist as he embraces unconventional ideas by taking a mental picture and converting it into a virtual blueprint.”
Counting Trump’s dollars
In looking at Trump’s financial worth, Thomas said it’s hard to determine the value of the hotel licensing business, which is growing in scale, because Trump’s company is private.
“The fees that are generated are not as predictable as rent checks and are often lumpy or inconsistent due to the characteristically volatile development process,” Thomas said.
To model the hotel licensing business, Thomas said he looked at the average costs to build all of the Trump-branded hotels and arrived at $500 million per property.
“Then we determined that Trump generates development and construction management fees of 5 percent per building,” Thomas said. “We continued by modeling the residential sales at 5 percent each over a course of 10 years and added recurring management fees of 5 percent based on our forecasted revenue.”
Assuming Trump rolls out two new projects each year, Thomas forecasted that Trump’s licensing business could generate about $55 million annually as the company expands into new markets.
Additionally, Trump gains a more predictable revenue stream in which the company can manage operations for third-party owners, Thomas said.
“We suspect that Trump is now receiving hotel management income of between $30 million to $50 million, and if the company opens 15 more properties before 2030, the fee income could top $75 million annually,” Thomas said.
He estimated general and administrative fees to be 12 percent, translating into a forecasted annualized net income of $81 million.
Since this is fee income, not owned real estate, Thomas used a 10 percent multiple that values the Trump hotel licensing business at $810 million.
Using public filings and his own estimates, Thomas also valued Trump’s U.S. golf course portfolio at $312 million and his Doral holdings in Florida at $722 million.
Overall, Trump’s real estate portfolio is valued at around $5.3 billion and he has an estimated annual cash flow of $550 million, Thomas said.
Trump has claimed his net worth is more than $10 billion, according to Thomas and The New York Times. That’s more than double the estimates of most media sources, Thomas said.
Thomas’ estimate – the true value of Trump’s real estate empire including cash and marketable securities – is less than $10 billion. But, as far as how much, you will have to read the book.
“My book was not written to be a puff piece for Trump or to serve as another smackdown,” Thomas said. “My job is to provide you with one simple thing: the facts.”
“Those were the days”
For Thomas, “The Trump Factor” is a reminder that to be successful in business, risks are involved.
Thomas worked for 20 years in real estate, including as an Upstate shopping center developer borrowing “hundreds of thousands of dollars” to build and lease buildings.
Now 50, he turned to financial writing after series of missteps took his worth as a developer from about $10 million to near bankruptcy.
“I made mistakes that cost me but I also made hundreds of thousands of dollars, justifying my more than 20-year career in the real estate industry,” Thomas said in the introduction to “The Trump Factor.”
“Those were the days,” he said in a recent telephone interview. “It was a lot easier to get deals done. You’d literally drive to a little town like a Union or Walterboro, find Walmart, find the outparcel for $100,000, throw up an Advance Auto [Parts] and sell it and go on to the next one.”
As his deals grew larger, so did his bank account. And his tolerance for risk increased.
At one point, Thomas wondered how a 35-year-old developer with five children living in a $2 million house could lose it all.
He found himself sitting in the parking lot of a $15 million shopping center he had developed. He had $20 in his pocket. He was picking up diapers and milk.
“I had forgotten that the most important lesson in investing is to protect principal at all costs,” Thomas said. “I had become a gambler, not a developer.”
Writing became his new career, and he chose real estate as his topic.
“Never before has America, or the world, seen an individual so creative, so focused and so determined to forge ahead regardless of the obstacles.”
Today, Thomas writes weekly for Forbes.com and does research on many publicly traded real estate investment trusts, or REITs. The Real Estate Investor is a monthly, subscription-based newsletter. He also is co-author of the book “The Intelligent REIT Investor.”
To write “The Trump Factor,” Thomas says he first met the developer on the 26th floor of the Trump Tower in New York. The two talked for 30 minutes about real estate. He and Trump met three times over six months, according to Thomas.
And in those meetings, Trump kept saying, according to Thomas, “The media doesn’t get it right. These writers don’t understand real estate and how to value real estate.”
At their fourth meeting, Thomas told Trump he wanted to write a book about him.
“I said, ‘But it’s not going to be your biography and it’s not something that I want you to pay me for,’” Thomas recalled.
“I want to be the one to get it right. I’m going to write a book about all of your real estate.”
Thomas said he told Trump he only wanted two things – access to his people and his properties.
If he agreed, Thomas told Trump, “I promise you one thing: that my book will be better than ‘The Art of the Deal,’” referring to the 1987 book credited to Trump and journalist Tony Schwartz.
“I said it just like that,” Thomas recalled. “I looked at him in the face and I stood up. I shook his hand and he said, ‘Good luck.’
“I smiled and I walked out the door,” Thomas said.
Trump Organization officials didn’t respond to requests for comment about their cooperation with Thomas.
Thomas examined public filings, each property Trump owns and consulted with numerous analysts and experts. He also used interns from several universities to help with research.
The author said the New York developer didn’t provide him with a copy of his bank accounts, and he has no interest in debating the merits of Trump as a presidential candidate.
But asked in a CNN interview earlier this year if he thought Trump has the temperament to be president, Thomas said, “Absolutely.”
“I mean, Donald Trump is a battle-tested CEO,” Thomas said, according to a transcript of his remarks. “He has been through multiple downturns, up and down, and how he’s dealt with that adversity is really a big part of his success today.”