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TR U M P STR A TEGI ES FO R R E A L ESTA TE

Creative Problem Solving: Trump, Ross, IBM, and the
Nike Building on 5th Avenue

In the process of putting together the property to build Trump
Tower (I tell that story in Chapter 5), Trump acquired the Bonwit
Teller building on 5th Avenue. However, the ground lease for this
site was owned by a veteran New York investor named Leonard Kan-
dell. Bonwit Teller was leasing the site for a below-market rent and in
1990 fell on hard times. They wanted out of their lease and were
willing to pay for the privilege. Gallerie Lafayette, a premier French
department store chain wanted a New York store, so Trump sold
them on the idea of taking over the Bonwit Teller store—at a rent
which topped the old Bonwit rent by over $3 million a year! He then
agreed to cancellation of the Bonwit lease and Bonwit paid a few mil-
lion to get off the obligation. The success Gallerie Lafayette envi-
sioned never happened and in 1993–1994 they too wanted out and
were also willing to pay for the privilege. At that time, Nike desired
to build a flagship store on 57th Street. The Bonwit/Lafayette/Kan-
dell site with its 50-foot frontage was too small but Trump also had a
long-term lease on a site owned by IBM that was next to the Kandell
site and also had 50 feet of frontage. Trump asked Nike, “If I can
combine both sites giving you 100 feet of frontage and 100 feet of
depth would you agree to a long-term lease?” Nike loved the idea and
agreed to a rent averaging $9 million a year. They also agreed to de-
molish the buildings on both sites and then construct a new $50 mil-
lion Niketown building at their own expense. Now the problem
Trump was faced with was convincing two separate ground lease
owners (Kandell and IBM) to revise and extend their ground leases
with Trump to permit Nike to build. Trump had previously been a
long-term client of mine but I hadn’t represented him for seven
years. At that time, I was the attorney for Leonard Kandell. Trump
sent two of his associates to renegotiate the Kandell ground lease
with me. Although I wasn’t working for Donald, I wanted to be help-
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