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Trump condo plans implode, this time in Mexico

A Trump Ocean Resort Baja highway billboard with a large photo of Donald Trump that advertises condos for sale remains on the project lot near Tijuana, Mexico. The project is dead, leaving buyers out a total of $32.2 million in deposits.

Associated Press

A Trump Ocean Resort Baja highway billboard with a large photo of Donald Trump that advertises condos for sale remains on the project lot near Tijuana, Mexico. The project is dead, leaving buyers out a total of $32.2 million in deposits.

SAN DIEGO — Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.

The Southern California couple paid a $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first construction crew arrived.

But admiration for the celebrity developer and star of The Apprentice has now turned into anger and disbelief as Trump's luxury hotel-condo plan collapsed, leaving little more than a hole in the ground and investors out of their deposits, which totaled $32.2 million.

"I can't even stand to see Trump's face on TV," says Linda Drake, a psychologist, whose husband is a commercial airline pilot and financial adviser.

In a scene all too familiar to those who dreamed of high-end condo living in the promised-but-never-delivered Trump Tower Tampa, investors were told last month their money was spent and they won't get a penny back. A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities. A Los Angeles-area businessman lost a deposit of more than $1 million on four Trump units, including two penthouses.

Trump and his children heavily promoted the northern tip of Mexico's Baja California coast. He sold 188 units for $122 million the first day they went on a sale at a lavish event in a downtown San Diego hotel in December 2006.

After signing papers, buyers were ushered to a buffet of sirloin tip and fish tacos. Cheers erupted in the hotel ballroom for each new owner.

Trump Baja demanded about 30 percent down for units that sold from less than $300,000 to $3 million, buyers said.

Buyers pressed for updates as construction fell behind schedule. They got a bombshell letter in December saying negotiations for a construction loan from a German bank collapsed and Trump Baja had only $556,000 left. It quoted a contract clause that gave the developer a right to spend their deposits.

Another letter came in January that said Trump was removing his name. A Feb. 16 letter PB Impulsores of Mexico said the project was scrapped "given the extreme dislocation of the financial markets."

The December letter says Trump was not an investor, but buyers said they were sold on his imprimatur.

"We thought of Donald Trump," Drake says. "If Donald Trump was behind it, it was going to work."

All that remains of Trump Baja is a highway billboard with a large photo of Donald Trump that advertises condos for sale. It hovers over a closed sales center and showroom, a paved parking lot, a big hole that cuts a wide swath, drainage pipes and construction equipment.

"They put their trust in this project and feel betrayed," said Bart Ring, a Woodland Hills attorney who says he represents about 75 buyers.

Sound familiar?

What's happening to investors in the trumped-up Mexican development bears a shocking resemblance to how things played out in Tampa. A refresher:

. Trump Tower Tampa was planned in 2005 as the biggest skyscraper in west-central Florida, with the Donald himself trumpeting its coming.

. Units started at $700,000 and topped out at $6 million. But developers SimDag-Robel couldn't get a $200 million loan amid Florida's condo glut.

. After a series of increasingly desperate financing proposals, SimDag filed for Chapter 11 bankruptcy in June, although it says plans are not dead for development at the site.

. Dozens of condo buyers who placed 20 percent deposits are still out their money but still holding out hope.

Trump condo plans implode, this time in Mexico 03/06/09 [Last modified: Friday, March 6, 2009 10:47pm]
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