How Donald Trump Killed Mar-a-Lago's Market Value

The civil fraud trial against former President Donald Trump has sparked debate over the property value of Mar-a-Lago, with Trump claiming his Palm Beach estate to be worth "100 times" the price that prosecutors determined.

Trump's obsession over the value of his Florida residence spilled into view of the court during his Monday testimony as he decried the judge as a "fraud" for citing a tax assessment that put Mar-a-Lago's worth $18 million in his ruling when "it's worth a billion dollars or more."

"I could give you a quarter of a tennis court that's worth more than that," Trump told Judge Arthur Engoron from the witness stand.

But a Mar-a-Lago historian told Newsweek why there's a discrepancy between the valuations and how the former president may have lessened the value of his most prized real estate possession more than two decades ago.

"What really diminishes the value of that property is an easement that he signed with the National Trust for Historic Preservation," Mary Shanklin, the author of American Castle: One Hundred Years of Mar-a-Lago, said in a Tuesday interview. "That's what kills any potential market value."

In 2002, amid financial headwinds, Trump signed a deed easement that allowed him to turn the 17-acre resort from a residential property into a club. The easement essentially allowed Trump to turn Mar-a-Lago into new streams of income and benefit from tax breaks granted by the estate's new status. Financial disclosure forms show that between 2017 and 2019, Mar-a-Lago brought in over $69 million.

Trump initially drew up a plan to subdivide the property in the 1990s, but the proposal was met with significant pushback from the Palm Beach community who did not want the town's "residential hood ornament" to become a club, Shanklin said.

Instead, Trump decided to turn it into a club by giving locals the protected easement, which states that "the Club and Trump intend to forever extinguish their right to develop or use the Property for any purpose other than club use."

When asked about the language on Monday, the former president said, "'Intend' doesn't mean we will do it," calling it "bravado" and not "legal intent."

But Shanklin said Trump was aware of the financial risk that signing the easement could pose to him down the road.

"He knew that once it was signed, it would really quelch the values of their property," she said. "Seventeen acres that go from the Atlantic Ocean over to the intercostal waterway in Palm Beach—if it didn't have that kind of handcuff on it, probably it could go for $100 million, much more than that even."

According to New York Attorney General Letitia James, who is suing Trump, his two eldest sons and the Trump Organization in a $250 million lawsuit accusing the defendants of financial fraud, Trump's valuation of the Palm Beach property violated the restrictions of the easement. James' office argues that Trump overinflated the estimate to as high as $739 million on the basis that Mar-a-Lago could be sold as a private residence.

Shanklin explained that the easement laid out several limitations, which included restrictions that prevented Trump from making expansions on the property and that obligated him to bring in at least 100 people who otherwise wouldn't go to Mar-a-Lago to visit the grounds and study its architecture.

"To try to peddle a property with those kinds of restrictions out on the marketplace—even as idyllic as that setting is—you're just not going to get that many buyers who could get the banks and the financing," she said. "It's really the easement that is the deal killer."

Trump, however, disagreed during his testimony, insisting that Mar-a-Lago's "biggest value is using it as a club."

"If somebody wanted it, [the] smartest thing to do, have a club and have one member, and that would be the member that lives in the club. But it's much more valuable—and we'll show that in two weeks or five weeks or nine weeks or whenever this thing goes—that its biggest value is using it as a club," Trump said.