After a long, complicated, drawn-out process, Mr Trump turned his initial cash investment of $4million to around $800million. It all started in 1985 when the real estate tycoon bought the former Penn Central site in Manhattan, New York, now known as Riverside South, for around $115million, all of it borrowed. He planned a huge development called Television City but was forced to reduce its scope due to community opposition.
The venture initially looked like a financial failure, as by the early Nineties he had defaulted on $310million in loans on the project and $2.5billion in personally-guaranteed borrowings.
In 1994, he managed to save himself financially by selling 70 percent of Riverside South to a group of Hong Kong investors.
They purchased the $310million mortgage on the property for $88million, with Mr Trump contributing around $4million in cash.
Because he needed the bailout, the future President agreed to a limited partnership interest that blocked him from participating in major decisions on the future course of the project, including a sale.
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US President Donald Trump reportedly made most lucrative deal of his life by accident (Image: GETTY)
Riverside South complex (Image: GETTY)
So when, in 2005, they wanted to sell and he did not, they went along with it anyway.
Mr Trump was furious, claiming the consortium shortchanged him by selling too cheaply.
In the $500million lawsuit, the future President accused Henry Cheng Kar-shun and Vincent Lo Hong-Sui of a “staggering breach” of fiduciary duty in the $1.76billion sale of the building to Extell and Carlyle.
He claimed that they had not entertained counter-offers as high as $3billion, although such an offer never materialised.
President Trump is already campaigning for his 2020 bid for reelection (Image: GETTY)
Michael Bowe, the lawyer representing Mr Trump, said: “There’s absolutely no rational basis for their behaviour and logic dictates that there must be some improper motive – and we’re going to find out what it is.”
What complicated matters was that the investors used the proceeds to buy two office blocks: 1290 Avenue of the America in New York City and 555 California Street in San Francisco.
This then transferred Mr Trump’s partnership stake into a 30 percent share of these buildings instead.
However, just a year after buying them – and while the litigation was still ongoing – the Hong Kong investors sold their stakes in those buildings to Vornado Realty Trust, so Mr Trump then attempted to sue Vornado too.
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Donald Trump with Vornado’s Steve Roth (Image: GETTY)
1290 Avenue of the America in New York City (Image: GETTY)
At first, Vornado’s chairman Steve Rothtried to buy Mr Trump’s 30 percent stake, but he refused.
In a letter to shareholders in Vornado’s 2006 annual report, Mr Roth stated that he’d offered the tycoon a “substantial sum, which we think is a full and fair price, but he does not yet think so”.
Instead, Mr Trump – who is barred by the partnership agreement from selling to an outside investor until 2044 – stayed as Vornado’s partner keeping his 30 percent equity.
In order to get the deal done, Mr Roth even took the step of indemnifying Mr Trump’s former partners against any damages from his lawsuit against them – probably because he was sure that his new partner had not been short-changed at all.
Both suits were eventually dismissed and the deal ended up being incredibly lucrative for Mr Trump.
According to Fortune, the two office blocks are now worth around $3.1billion, albeit with $1.56billion of mortgage debt.
This puts his equity stake at $450million and reportedly forms the largest portion of his net worth.
Mr Trump also received around $156million in cash from refinancing – and he pocketed rental income, after all expenses, approaching $20million a year – totally an extra $340million.
US President Donald Trump is a billionaire (Image: GETTY)
In this way, Mr Trump turned his initial cash investment of $4million to $800million by just being dragged along kicking and screaming into a deal he did not want.
He had branded it a “very bad and destructive” transaction and hurled accusations of kickbacks, tax fraud and a nefarious plot to deny him of hundreds of millions of dollars on the part of his Chinese partners.
Despite his protestations, the deal ended up being a very clever move and he has benefited greatly from it – it arguably multiplied his initial investment by 200.