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Karen Gibbs and Geoff Colvin Karen Gibbs Geoff Colvin Geoff Colvin Karen Gibbs
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Donald Trump interview, July 26, 2002
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On the July 26, 2002 broadcast of Wall $treet Week with FORTUNE, co-host Geoff Colvin sat down with Donald Trump, CEO, chairman, president of Trump Hotel & Casino Resorts. A transcript of their conversation:

COLVIN: If you think your net worth has been on a roller-coaster, consider Donald Trump. After hitting it big with properties like Manhattan's Trump Tower in the Eighties, he hit big trouble and actually had a net worth of negative $900 million in 1991, which may be some kind of record. He got it all back and more a story in itself and now is pushing ahead with several high-profile projects. The stock of his publicly traded company, Trump Hotel and Casino Resorts, is up slightly over the past year, down about 50% over the past three years. That company is focused on casino gambling and doesn't include Trump's many pure real estate projects. He joins us now from one of them, Trump National Golf Club in Briarcliff Manor, New York.

Donald, thank you for being with us.

TRUMP: Okay, Geoff.

COLVIN: You look like you just came in off the 18th green. Is that what you did?

TRUMP: Well, I no longer feel guilty about playing golf because now I can say I do it for, you know, work, so it works out pretty well.

COLVIN: How was your round?

TRUMP: I played okay.

COLVIN: The Dow was up 78 today. Were you better or worse than 78?

TRUMP: Well, I was a little bit better than 78, but I'm glad the Dow was up. It looks to me like a pretty good time to start investing in the market.

COLVIN: Well, this is what I want to ask you about, because the stocks have been falling like a brick for the past year. A lot of people are thinking maybe they ought to be in real estate. Is it a good time for that?

TRUMP: Well, real estate is always good, as far as I'm concerned. You know, my company now, and I did have a pretty rough batch along with just about everybody else, but my company now is much bigger, much stronger. It's a much bigger company than it was in the '80s or the early '90s. And, you know, I just, I love real estate. It's tangible, it's solid, it's beautiful. It's artistic, from my standpoint, and I just love real estate. But it just seems to me to be a very good time also to invest in stocks.

COLVIN: What do you think about the market? I mean it's not really your thing, but you must pay attention.

TRUMP: It's not my thing, but I do pay attention and I look at some stocks that are so inexpensive compared to what they were, and there would certainly look like a lot of good bargains out there. But still, I mean my preference would always be real estate.

COLVIN: Real estate development seems to go in cycles. Are we in what part of the cycle now?

TRUMP: Well, I've never seen a market as good as as you know, I'm building some of the biggest projects in New York and the biggest projects that I've ever built, including one on the West Side which is the largest ever approved by the New York City Planning Commission. We sold 29 units in one building last week. I've never seen a market as good as the condo market today in New York. Up in Westchester, where I have Trump National, housing sales are just going through the roof. So that market is good. I'd say the office market is okay to bad. The hotel market is not good at all. But the condo market, in New York City in particular, has been through the roof.

COLVIN: Well, let me ask you about home prices in general, because we've heard a lot of talk about it. In some cities, New York, San Francisco, Washington, prices seem almost unbelievable and there's a lot of talk about a housing bubble. Do you see it?

TRUMP: I don't see it. I don't see it at all. There's not that much housing being built, and I just think it's a tangible investment. People are tired of getting wiped out in the stock market. You know, they've had their money in there. They're losing it. In one of my buildings, I'm actually selling three, four and five units to people who are going to rent those units out and look at them as investments. And, you know, that's happening with a lot of other people as well.

COLVIN: What about the average individual investor? I mean you do this for a living. You've got big projects. Obviously you control them and so forth. What about the average investor who is thinking about getting a little more into real estate? What's your advice?

TRUMP: Well, I mean you can invest in companies like Vornado, which are run by total pros, Steve Roth and some friends of mine, and they're real pros. Or you can invest in other REITs if you want to do that. Or honestly you can buy General Electric and you can buy a lot of really good companies out there where their price is the lowest it's been in five years, and they're really good companies.

COLVIN: Yeah. You know, I want to ask you something about your history. As we mentioned in the intro and you mentioned yourself, there was a moment 10, 11 years ago when you were in a pretty deep hole. In fact, it was really deep. And you came all the way out of it and way more. A lot of people now have lost a lot of money in stocks. They're feeling kind of poor and wondering what to do about it. What did you learn from your experience?

TRUMP: Well, I learned that I can handle pressure and I learned that I can handle certain things. In fact you were nice enough to write an article about it in FORTUNE and I appreciated that. I was surprised to see it, but I appreciated it. But really people just have to stay the course. They need solid investment, solid stocks. Some of the stocks that I look at are terrible and they're always going to be terrible, but they need to stay the course and stay in solid things.

COLVIN: Your publicly traded company, Trump Hotel and Casino Resorts, has held up pretty well, the stock has, over the past year. Over three and five years, it's down quite a lot. What are the big challenges there?

TRUMP: Well, you know, we just announced incredible numbers two days ago, as you probably saw. We were up about 35 percent. The cash flow is tremendous, and yet the stock stays the same. So as you know, I've been buying back a lot of stock. I'm very proud to buy it back, and I think it's a great investment. You know, companies just, prices are just very low today. I think there's a great investment. I have bought back a lot of Trump Hotel stock. I own close to 50 percent of the company now.

COLVIN: Yeah. Let's talk a little bit more about a subject you touched on a minute ago, which is different kinds of real estate and what the prospects are for them. You obviously are in very high end, mostly residential real estate. But what about the other categories that are available?

TRUMP: Well, the office is a little bit more complex for people in terms of investment. You know people can buy a house or two houses or fix them up and make money on re-sales. The office market is complex. The hotel market is very complex and it's a tough market. Right now the hotel market is a very, very tough market. But the residential section of real estate I think is going to stay good for a long time. One of the reasons is interest rates. I mean I've never seen interest rates in my lifetime at this level. I remember years ago my father told me that he could remember when interest rates were 1.0 percent and 1.5 percent. Well, at 40 Wall Street, where I have a big and very successful office building, I'm paying 2.5 percent interest. I have a floating LIBOR rate. And, you know, I've never seen interest rates at this level. And I think that's why the housing market is so strong.

COLVIN: That's a pretty incredible number, an interest rate that low. But of course many people argue that one reason real estate is so strong is that rates are so low, and if rates have no place to go but up, might that not cause some weakness in real estate?

TRUMP: Well, if rates go up, then all bets are off, Geoff. I mean that's a whole different world. If the rates go up, then everything I say, throw it out the window. I'm assuming rates are going to stay about where they are. Some people are saying they're going to go lower. But, you know, assuming the rates stay where they are or even go up a little bit, residential real estate is going to be fantastic.

COLVIN: You obviously pay a lot of attention to rates, and the Fed meets quite shortly now, in another week or two. What do you expect?

TRUMP: Well, I'm a big fan of Alan Greenspan. I think he's done a tremendous job. I think the rates are going to stay low, and I think he's going to keep them low. If they do go up, a huge section of the economy, namely housing, will go kaput.

COLVIN: What was the impact of 9/11? Obviously you are a big force in Manhattan real estate. What did you observe?

TRUMP: Well, it was an amazing phenomenon. You would have assumed, I mean it was one of the great tragedies, the great tragedy of our country in its history, in my opinion, greater even than Pearl Harbor, but you would have assumed the office market would have gone through the roof, and it did for about a week. And then all of a sudden it just all settled out, and now, as I said, the office market is just okay at best. You would have assumed the hotel market would have been okay. The hotel market is lousy. The one thing that has been unbelievable, better than I've ever seen it, is the condo market. And again, I think that's because of interest rates. But New York has really done proud. I mean what they've done, what the New Yorkers have done is amazing. And I think the whole country and the whole world really respects the comeback that New York has made. It's been amazing.

COLVIN: It has been an amazing thing. And on that subject, I want to ask you about something else, just because you are a big force in Manhattan. A story in the news now has to do with the proposals for the redevelopment of the World Trade Center site. What's your opinion of that?

TRUMP: Well, I hate them. I think they're terrible. I think they're not imaginative. I would have liked to have seen the top 10 to 15 to 20 architectural firms in the country each come up with a proposal. I think that what's being proposed is just not good enough for what we all suffered through. It really deserves much better than what they've come up with.

COLVIN: Any chance of it improving?

TRUMP: I hope it's going to improve, a lot improve. A lot of people are, you know, really not very happy with it. That should be something really great, really monumental. There should be a tremendous memorial, but we should do something really spectacular there, and they have not done that.

COLVIN: And you're not involved, right?

TRUMP: I am not involved, no.

COLVIN: Okay. Donald, thank you very, very much for being with us. We appreciate your views.

TRUMP: It's a great honor, Geoff. Thank you.

COLVIN: You bet.

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