Why Vornado’s Steven Roth was at Donald Trump’s victory speech last night
Steve Roth (left) and Donald Trump
Some people who Donald Trump called “our great businessmen of the world” flocked to his victory speech last night to watch the Donald bask in his overwhelming GOP primary win.
Carl Icahn, “is here someplace,” said Trump, who thinks the cranky activist investor would make a fine Treasury Secretary. He also called out Howard Lorber, who is chairman of real estate brokerage Douglas Elliman, as well as hot dog maker Nathan’s Famous, and is chief executive of Vector Group, which sells cheap cigarettes like Liggett Selects. Vector Group Chairman Bennett LeBow also got a shout-out from the GOP front-runner.
But Trump’s most effusive praise was directed at “the great Steve Roth,” chairman and CEO of Vornado Realty Trust, the city’s largest commercial landlord with more than 50 commercial and residential properties across the city covering 23.5 million square feet—10 times more New York real estate than Trump.
“Steve’s building a big building on Central Park South, it’s a tremendous success,” Trump gushed last night. “I said, ‘Steve, congratulations on the building.’ He said, ‘Donald, it’s nothing compared to what’s happening with you.’ Is that right? My man!”
Why was Roth, a Crain’s Hall of Fame inductee last year, at last night’s festivities? It may be that he supports Trump’s politics, though the publicity-averse landlord wouldn’t comment about that. Or maybe he was there to support a business partner.
It’s not widely known, but Trump and Roth are co-owners of a midtown office tower at 1290 Sixth Ave. The 2.1 million square-foot office building is the second-largest in Vornado’s New York portfolio and Roth’s firm owns 70% of it while Trump has 30%. The high-rise, along with Trump Tower on Fifth Avenue and 40 Wall St., are the only Manhattan buildings in which Trump actually has an ownership stake. The other buildings that carry his name do so via licensing agreements.
How a genuine real estate king like Roth ended up doing business with a considerably smaller player like Trump is a story in itself.
Both men trace their roots to the late 1970s turning around distressed properties. Trump made his name transforming the decaying Commodore Hotel on East 42nd Street into the Grand Hyatt, Roth bought out a New Jersey-based appliance chain called Two Guys and converted its real estate into successful strip malls. He later acquired Two Guys’ parent, Vornado, which was named for an air-conditioner manufactured by another company it owned.
Trump and Roth squared off about 30 years ago in the battle for Alexander’s, a chain of discount department stores whose flagship at the corner of Lexington Avenue and East 58th Street was prime real estate. Trump acquired 27% of the retailer’s stock while Roth acquired 29%. The two fought over what to do about the ailing retailer until Trump hit the rocks financially in the early 1990s and Roth took control.
The two men seem to have remained cordial toward each other, even as they competed on deals. Trump outbid Roth in 1998 to acquire the General Motors Building for $878 million, only to sell the tower five years later for a healthy profit after his partner sank into bankruptcy. Roth attended Trump’s 2005 wedding to Melania Knauss, but they appear to have avoided doing business together until 2007, when Roth effectively rescued Trump from a most unpleasant situation.
That situation started with the West Side Yards, the Great White Whale of Trump’s career. Trump bought the abandoned railyard along the Hudson River from West 59th to West 72nd streets in the 1980s with the hopes of building a massive office and apartment complex called Television City, later Trump City. Had Trump managed to build this, he would be a real estate mogul on par with Roth but he never managed to get the project off the ground. When his fortunes hit a low in the early 1990s, Trump’s bankers forced him to cede control to a Hong Kong investor group that bought a 70% stake and built the area now called Riverside South.
The Asian investors agreed in 2005 to sell the project for $1.8 billion to the private equity firm Carlyle Group and Extell Development Co. Trump sued, arguing he could have gotten a higher price for his 30% share. Rather than fight, the Asian group used the proceeds from the sale to buy 1290 Sixth Ave. and a San Francisco office tower, keeping Trump as their minority partner. They then sold their 70% stake to Vornado.
If Roth and Trump were pleased to be partners after years of competing, they kept those feelings to themselves. A Vornado press release announcing the transaction contained no quotes from the executives—none of Trump’s customary chest-thumping. It merely disclosed that Vornado was buying a controlling interest and “the remaining 30% limited partnership interest is owned by Donald J. Trump.”