Real estate executives often struggle to place valuations on assets for which clear market indications of price are not available. Accounting rules nevertheless require them to assign “fair value” to these assets, meaning what would the properties fetch if sold today. It is a barely kept secret that this valuation process involves art as well as science.
We therefore took heart to learn that the most famous real estate investor in the world recognises the copious wiggle room built into the valuation process. In a recently unveiled deposition, Donald Trump said of his own financial value: “My net worth fluctuates, and it goes up and down with the markets and with attitudes and with feelings, even my own feeling.”
Asked whether he ever exaggerated the value of his properties in statements, Trump responded: “I think everybody does. Who wouldn't?”
At one point Trump mocked the notion that a property developer would candidly describe the true performance of the project: “Would you like me to say, ‘oh, gee, the building is not doing well, blah, blah, blah’ … nobody talks that way. Who would ever talk that way?”
Well, for one, general partners who don't want to be burned alive by their investors. But we accept and embrace the exceptionality of The Donald.