In the past, the prime real estate located on the corner of Fifth Avenue and 56th Street in midtown Manhattan has both attracted big-money shoppers and sky-high rents. The market for such properties has suffered due to the growing popularity of online shopping and the impact of Covid-19.
Landlords, including former President Donald Trump, who owns a specific location at the base of Trump Tower, is struggling to keep their businesses afloat.
According to an article released by Forbes, Gucci opened its store in this location back in 2008 and agreed to pay Trump a yearly sum of approximately $20 million until 2026. No other tenant in Trump’s property portfolio paid as much money as Gucci did.
However, six years prior to their lease expiration, Gucci renegotiated their agreement. According to a recent analysis of court documents from Forbes, Gucci’s annual rent dropped from around $22 million before the pandemic, to roughly $15 million. This renegotiation occurred in 2020, however, the exact date was not noted.
The outbreak of Covid-19 in March of 2020 resulted in the shutdown of the country and created an enormous challenge for both Trump’s presidency and his real estate firm. Trump’s real estate firm took a hit, with his clubs and hotels needing to fire about 2,400 workers in March and April.
Trump technically could’ve waited out the pandemic, then renegotiated Gucci’s lease deal once the real estate market stabilized, however, the Trump Organization was apparently under pressure to act faster.
In June 2020, Trump’s personal balance sheets showed that he only had $93 million of cash on hand, and that he owed millions of dollars against Trump Tower as part of a loan due to mature in September 2022.
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