PALM BEACH — Not far from Donald Trump’s Mar-a-Lago compound in Palm Beach, cosmetics heir William Lauder bought the estate of the late conservative talk show host Rush Limbaugh for $155 million.
Elsewhere around the island this year, luxury auto sales mogul Michael Cantanucci bought a mansion on North County Road for $170 million. And fashion designer Tommy Hilfiger sold a 6,500-square-foot home built in 1927 on South Ocean Boulevard for $41.4 million.
So why did a New York State judge last Tuesday place Mar-a-Lago’s value in a range of $18 million to $27.6 million?
Those figures, based on an assessment by the Palm Beach County Property Appraiser, arose after New York State Attorney General Letitia James sued former President Trump, his Trump Organization and three family members alleging they overvalued assets and exaggerated his net worth while securing loans and insurance while building his real estate empire.
The use of those numbers by New York State Supreme Court Justice Arthur Engoron stunned real estate professionals who either deal in or help manage some of the priciest estates and mansions that occupy the island haven for the rich and famous. The judge last Tuesday concluded Trump had committed business fraud against banks and insurers and ordered various business licenses in the state of New York rescinded.
“The value of $18 million to me is way off the mark,” said Billy Nash, founder of Nash Luxury at Illustrated Properties, a division of The Keyes Co.
“At the end of the day the market dictates value,” he said. “If you had that property on the market for $18 million, there would be 100 people lined up to buy it. And it’s an historical landmark. I would put it in the category of a Henry Flagler estate.”
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Flagler, the railroad baron and development pioneer, extended his Florida East Coast Railway line to South Florida in the early 1900s. Socialite Marjorie Merriweather Post built Mar-a-Lago between 1924 and 1927. The estate, whose name means “Sea to Lake” in Spanish for its location between the Atlantic Ocean and Lake Worth, cost $7 million to construct or roughly $90 million in modern-day dollars, according to Smithsonian Magazine.
The valuation dispute is the latest controversy involving the estate, which was the scene of an FBI raid in connection with the U.S. Government’s criminal case against Trump over his alleged illegal retention of classified documents.
“The market is screaming over this because it’s obviously incorrect,” Nash said of the judge’s ruling. “People in real estate are scratching their heads: How do you come up with this number? There is a lack of supply that continues on the island. It is a sought-after destination by people from all over the world.”
Mendy Katz, founder of Monarch Estate Services of Greenwich, Conn., which helps owners manage their luxury properties in the Northeast, Florida and elsewhere, said the market dictates value. The demand for homes in Palm Beach, he said, remains high.
“Clearly supply and demand is what drives up the price,” he said. ”The assessor will determine what the taxes cost. That has nothing to do with the actual value of the property.”
Ken Johnson, a real estate economist at the Florida Atlantic University College of Business, said it’s a difficult task assigning values to the behemoth trophy properties of Palm Beach.
“If you take the name out of it and this was someone else in Palm Beach, it’s very hard to assess value there because these are very unique properties,” he said. “They don’t trade very often.”
An earthquake of a ruling
Engoron last week ordered the cancellations of Trump’s business licenses, a move that would make it difficult for the family organizations to do business in New York. The ruling swept aside the need for a trial to determine whether Trump fraudulently received favorable terms for loans and insurance.
James in her lawsuit asserted that Trump inflated the value of his properties by as much as $2.2 billion. She is seeking a penalty of $250 million.
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A trial on penalty phase of the case is scheduled to start Monday.
Florida lawyer Christopher M. Kise, who is among those defending Trump in the case, said he would appeal after calling the decision “completely disconnected from the facts and governing law,” according to media reports.
The former president called the judge “deranged,” and the ruling “un-American.’
“I have a Deranged, Trump Hating Judge, who RAILROADED this FAKE CASE through a NYS Court at a speed never before seen,” he declared on his Truth Social platform Wednesday.
In reality, he said, Mar-a-Lago “could be worth almost 100 times” the $18 million figure. During testimony last year, he told state prosecutors the estate is worth $1.5 billion, citing local brokers. Trump, who bought the estate in 1985, noted that he never put the property up for sale.
The judge concluded that Trump overvalued Mar-a-Lago, inflating its value on one financial statement by as much as 2,300%.
One of the real estate professionals who suggested it is worth more than $1 billion was Lawrence Moens of Palm Beach, who was called to testify via deposition for the defense as an expert witness.
Recounting Moens’ testimony, the judge was dismissive.
“In his sworn deposition, when asked “who were the dozen or so (qualified) buyers that you were referencing in your report, Lawrence Moens replied: (he) could dream up anyone from Elon Musk to Bill Gates and everyone in between. Kings, emperors, heads of state. But with net worths in the multiple billions.”
“Obviously, this Court cannot consider an ‘expert affidavit’ that is based on unexplained and unsubstantiated dream(s),” the judge noted.
But Moens is well-versed in the Palm Beach market. A broker in town for decades, he recently represented the seller in the $170 million sale of the mansion to Michael Cantanucci, the auto dealer..
Moens did not respond to a telephone message left at his office on Friday.
It’s about the deed
The valuation used by the judge, according to the spokeswoman for the appraiser office, was based on a deed restriction that Trump signed in 1995.
In the “Deed of Conservation and Preservation Easement,” Trump was barred from using the property as a residence, and allowed to use it only as a social club.
Later, the deed’s provisions were further tightened to prohibit development or use for anything else besides a club.
Yet, James asserted in her lawsuit that Trump falsely valued the resort at $347 million to $739 million from 2011 to 2021. The numbers were based, she said, “on the false premise that it was unrestricted property and could be developed for residential use.”
During the same period, she noted, Mar-a-Lago was assessed by Palm Beach County based on its restricted use as a social club. The figures: Between $18 million and $27.6 million.
In early 2021, after Trump left the White House, the head of the Palm Beach Town Council told the South Florida Sun Sentinel that the former president was free to live at his estate, despite concerns from neighbors who want him evicted.
Town Council President Margaret Zeidman said the council did not take an official vote on the legal question of Trump’s residency, but she did not see any violations that would prohibit Trump from living at the 17-acre estate.
Some of Trump’s neighbors alleged that he violated a 1993 agreement with the town that limits the number of days club members can stay in the estate’s guest suites.
John Marion, Trump’s lawyer in Palm Beach, said at the time that nothing in the agreement barred Trump from residing at Mar-a-Lago, and Trump could live there under the town’s zoning rules because he is a “bona fide employee” of the club.
His presence there over the last two years does not appear to have influenced how the county values the property for tax purposes
“The deed restriction impacts how we value it,” spokeswoman Becky Robinson said in a telephone interview on Thursday. “We use an income approach. We research what the income of the property would be and come up with a valuation.”
“We are a government agency and we appraise properties for taxation,” she added. “It’s different than what a private appraiser would do for loan purposes.”
Fraud: How was it possible?
Some questioned how Trump could manipulate the institutions that provided him with loans and insurance in the first place.
“I don’t see how any homeowner can manipulate a bank unless you sat on the board of a bank,” FAU real estate economist Johnson said. “Even the banks will have a loan committee where if they are worried about a property they will order appraisals.”
“When banks are lending in places with ultra values, before they make a loan they will go out and investigate the value of that home,” he added. They are not just going to take the owner’s word.”
Said Katz, the estate services manager: “There are checks and balances with every purchase. It’s really difficult for somebody to play this game and create fraud.”
