hear. He was the first person whose bid was ruled out.
Being Stubborn Is Often an Asset
My first big deal, in 1974, involved the old Commodore Hotel site near Grand Central Station on Forty- second Street in New York City. The hotel was vacant, except for a sleazy club called Plato’s Retreat and some rundown street-level stores.
The land was owned by the Penn Central Railroad, which was bankrupt and owed New York City $15 million in back taxes that the city desperately needed. The city was about to default on its bonds, and banks would not consider real estate loans in Manhattan.
My idea was to transform the Commodore into a state-of-the-art hotel. I had a six-point plan:
1. Buy the land from the railroad.
2. Induce the railroad to use the purchase price to pay the City of New York the back taxes it owed.
3. Convince a New York State agency with the power of eminent domain to accept a deed to the land to condemn all existing leases.
4. Persuade the city to accept a fixed rental and a share of the profits in lieu of taxes.
5. Find a big hotel operator to join me in the project, since I had no hotel experience.
6. Convince a bank to loan me $80 million to build the hotel.
When I first told my lawyer, George Ross, of my plans, he told me I was crazy to attempt something so bold in such a bad economic environment. I told him I was determined to get it done. He agreed to help.
For two years, I stuck to my guns. Eventually, it paid off.
The railroad sold me the land for $12 million and used the money to pay the city its back taxes.
The Urban Development Corporation accepted the deed to the land and agreed to condemn all existing leases, provided I would pay all damages to the displaced tenants.
The city agreed to the lease from UDC with a fixed rent and a share of the profits.
Hyatt became my partner in the deal and funded half of it.
I got a loan from the Bowery Savings Bank to cover the cost of acquisition and construction.
The hotel became the Grand Hyatt.
The fact that I was stubborn and had achieved a result others deemed impossible jump-started my career as a developer.
Be Patient
I like to move quickly, but if a situation requires patience, I will be patient. The speed depends on the circumstances, and I keep my objective in mind at all times. This alone can be a patience pill. I’ve spent from five minutes to fifteen years waiting for a deal.
One good tactic for speeding up a deal is to show a lack of interest in it. This will often make the other side rekindle their efforts to get something going. I was very interested in a deal once, but I had a hunch that it wasn’t a good idea to look too eager to these people. I would put off their calls and do my best to appear aloof. Then I said I’d be traveling for a couple of weeks and would get back to them after that. While I was traveling, they used the time to modify their position and present to me almost precisely what I’d been hoping to get. It saved us all a lot of negotiating time.
A good tactic for slowing down a deal is to distract the other side. One way is to drop hints about whether a certain aspect of the deal should be looked into further, or to mention other deals and properties as examples. That will set them off in a direction that consumes their time and focus. While they’re off on a tangent, you’ll still be on target.
One time, I was in the middle of a negotiation that seemed to be speeding out of my control. I suddenly asked the other side if they knew the history of a particular development, implying that their understanding of it might be crucial. They figured the development must have had some bearing on what we were trying to accomplish together, so they backed up a bit, took some time to investigate it, and gave me control of the negotiations with enough time to assess everything at my leisure. I got the upper hand.
Life at the top means the phone calls never stop.
Be Strategically Dramatic
In 1999, I began construction on the tallest residential tower in the world, Trump World Tower at the United Nations Plaza.
The location was terrific—the East Side of Manhattan, close to the United Nations, with both river views and city views. It was hot stuff, but not everyone was happy about it, especially some diplomats at the United Nations, who didn’t want their thirty-eight-story building to be outclassed by our ninety-story tower. According to CNN, UN secretary general Kofi Annan acknowledged talking with New York City mayor Rudolph Giuliani about the project and how to stop it.
It will not fit here, the Ukrainian ambassador, Volodymyr Yel’chenko, told CNN, because it overshadows the United Nations complex.
When the protests became vocal, I used my own brand of diplomacy and refused to say anything critical of the United Nations. I predicted that many ambassadors and UN officials would end up buying apartments in the building. Sure enough, they have.
But as soon as we were in business, the city hit us with an enormous tax assessment, costing us over $100 million more than we thought we should pay. We decided to take the only action possible. We sued the city for $500 million.
For four years, we fought this case. The city lawyers held their ground, and we held ours. We could have given up. It’s not easy to take on the government and win, especially when the issue is taxes, but I knew we had a case.
Finally, after many conversations, we reached a settlement. The city agreed to cut our taxes seventeen percent and give us the ten-year tax abatement that we sought if we would agree to withdraw our lawsuit and subsidize two hundred units of affordable housing in the Bronx.
The lawsuit saved us approximately $97 million. We never would have gotten any of it if we hadn’t taken dramatic action.
Sometimes You Still Have to Screw Them
For many years I’ve said that if someone screws you, screw them back. I once made the mistake of saying that in front of a group of twenty priests who were in a larger audience of two thousand people. I took some heat for that. One of them said, My son, we thought you were a much nicer person.
I responded, Father, I have great respect for you. You’ll get to heaven. I probably won’t, but to be honest, as long as we’re on the earth, I really have to live by my principles.
When somebody hurts you, just go after them as viciously and as violently as you can. Like it says in the Bible, an eye for an eye.
Be paranoid. I know this observation doesn’t make any of us sound very good, but let’s face the fact that it’s possible that even your best friend wants to steal your spouse and your money. As I say every week in
