Written by Roger Showley
Dec. 9, 2011
Five years after a high-pressure sales campaign kicked off, the 526-unit, three tower Trump Ocean Resort remains unbuilt and the 18.5-acre site is now on the market for $7.5 million.
Instead of 26-story penthouse suites overlooking the Pacific Ocean at Punta Bandera, 10 miles south of Tijuana, a senior housing project makes more sense, says Rob Hixson, the CB Richard Ellis broker representing the lender who took back the property.
"It would not be as vertical as what they were planning on," said Hixson.
Such a project might take up no more than 8 acres and leave room for a nursing care facility, nursing school and other medical facilities that might appeal to retirees, both above and below the border, he said.
On the market for four months, the site has drawn one bid from a well-known Tijuana developer, whom Hixson declined to identify. He said he hopes a sale can be completed in the first half of 2012.
The project originally offered units ranging from $274,000 to nearly $3 million on floor plans of 485 to 2,685 square feet.
A high-pressure sales campaign culminated in a December 2006 reception at the Manchester Grand Hyatt hotel in downtown San Diego, where buyers were encouraged to turn $5,000 reservations into 10 percent deposits.
"The Douglas Ballroom had been converted into a combination beach scene and high-pressure showroom, where dozens of nattily dressed sales agents answered questions, gathered signatures on key legal documents and pointed the way to free food and drink," the Union-Tribune reported in a Dec. 9, 2006, story.
On that one day, buyers made deposits on of 188 units worth $122 million. A few months later, Trump's daughter Ivanka gave a speech in San Diego and said she had bought a unit herself. The project at build out was projected to be valued at nearly $220 million.
But by 2008, the developer, Los Angeles-based Irongate, had lost its financing. Trump, who had originally indicated he would be a major investor, withdrew from a licensing agreement to use his name.
And buyers sued Trump and others for fraud and demanded their $32.2 million in deposits back.
The lender, MKA Capital Group Advisors of Newport Beach, had lent $14 million for site acquisition to Irongate, said MKA President George Baker.
"When the great real estate recession hit, the developers' bank, a large Germany bank, pulled out of the fianncing and left them holding the bag," Baker said. "We proposed to take back the project."
He said besides the industrialist, interest in the property has come from several U.S. hospital groups and Mexican resort developers. Any new development potentially could be valued at up to $100 million.
Hixson said the timing may be right for getting the property developed now.
"I think we're at a bottom right now," he said. "I think Mexico is starting to get better."
In the prospectus, Hixson said potential developers, besides a senior retirement, might include high-rise condos, a "family compound," a company "retreat or education facility" and a hospital for "medical tourism."