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Monday, March 14, 2011

Trump Signs Deal to Develop Two Towers in Georgia

For Georgia's president, it was a chance to show that his country, the
former Soviet republic, is grand enough to attract the world's
best-known real estate developer. And for that developer, Donald J.
Trump, it was yet another opportunity to demonstrate that he is world class.

In a ceremony with caviar and wine at Trump Tower in Manhattan on
Thursday, Mr. Trump signed a deal to develop the two tallest towers in
the republic of Georgia, the former Soviet state at the nexus of Eastern
Europe and Western Asia.

Giving his blessing to the deal was Mikheil Saakashvili, the flamboyant,
English-speaking president of Georgia. Mr. Saakashvili is eager to
attract foreign investment as he tries to yank his impoverished country
from the Russian orbit and align it more closely with the United States.

Mr. Trump, the world's first virtual developer, will not actually build
the towers. At this point in his career, he is more inclined to license
use of the Trump name on someone else's building than develop a property
himself — although he still occasionally erects skyscrapers, like Trump
World Tower in New York.

Mainly, the deal is another chance to extend the global reach of the
Trump brand, whose brassy gold letters are already stamped on buildings
on four continents, as well as a long-running television program, a
Scottish golf course, vodka, chocolate, books and jewelry. (The signing
ceremony was held at the bottom of the Trump Tower's four-level atrium,
where the surrounding shops include Trump Grill, Trump Bar and a Trump
t-shirt stand.)

Any actual construction, if it begins as scheduled in 2013, would be
overseen by Giorgi Ramishvili, chairman of the Silk Road Group, one of
the largest private investment companies in the south Caucasus region.

The deal, which the partners estimate at $300 million, calls for two
projects. The Trump Tower Tbilisi would go up on Rose Revolution Square
in Georgia's capital. The Trump Riviera would be part of a planned Silk
Road complex that includes a casino, an exhibition hall and a marina, in
the resort city of Batumi on the Black Sea, near Turkey.

The residential buildings will each contain 100 apartments and rise
nearly 40 stories — average by New York standards, but nearly twice the
size of the republic's tallest structures.

The partnership was born of a two-year friendship between Mr. Trump and
Mr. Saakashvili.

The Georgian president sought out Mr. Trump during a trip to New York
after reading Mr. Trump's 2008 book "Trump Never Gives Up." The men
formed a friendship, and last year Mr. Trump sent an executive, Michael
Cohen, to Georgia to consider working with Silk Road on several projects.

Mr. Saakashvili said in an interview that although Mr. Trump was
sometimes criticized as being self-centered, he found him
"intellectually curious" and knowledgeable about Georgia and its region.
"I think Donald Trump has amazing intuition," he said.

Mr. Saakashvili himself is known for a gregarious style. Elected
president in 2004, he is a staunch American ally. At one point Georgia
contributed the third-largest force to the mission in Iraq, after the
United States and Great Britain. A street in the capital is named after
George W. Bush.

After tamping down corruption in the police, Mr. Saakashvili built a new
ministry of interior building, designed by the Italian architect Michele
De Lucchi, with an all-glass facade to symbolize transparency. Now, all
new police stations in Georgia are made of glass, too.

And he has lavished attention on the resort town of Batumi, where 35
hotels have gone up in the last four years. In 2007, to inaugurate a new
amusement park in the town, Mr. Saakashvili and his young presidential
staff rode the carnival rides themselves.

In Georgia, Mr. Trump will license his name, and his company will manage
the two properties. He will also work with Silk Road to line up
financing for the projects and market the towers. Mr. Trump said that so
far he had no plans to put his own cash into the deal. "We'll decide
whether or not we want to invest," he said.

Mr. Saakashvili has been eager to draw celebrity foreign investors to
show Georgia is again open for business, after the global recession and
a war with Russia in 2008 dried up the foreign direct investment that
had been propelling the economy.

Georgians remain poor. The average income, in a country of about 4.3
million people, was $2,455 in 2009.

Before the Russian war, Georgia had attracted about $2 billion a year in
foreign investment. Mr. Saakashvili welcomed the inflow as an
endorsement of his pro-Western reforms.

During the crisis, Georgia pivoted to work with Middle Eastern investors
like the sovereign wealth fund of Ras al-Khaimah, one of the United Arab
Emirates. That fund bought the Georgian port of Poti on the coast just
north of the site of Mr. Trump's planned tower in Batumi.

Georgia has squeaked by with foreign aid donated after the war by the
United States and European countries. But with the new deal, Mr.
Saakashvili is sure to try to use the Trump imprimatur to encourage
other American investors to put money in the tourism and transportation
projects he sees as the future of his country's economy.

While Mr. Trump is the first large American developer to come to
Georgia, some locals have worked with American partners or financing
from United States banks, Irakli Matkava, a deputy minister of economy,
said in a telephone interview.

Silk Road, which recently opened the Radisson Tbilisi hotel in the
capital, expects to open another hotel, the Batumi Radisson this summer.
Tourism is a relative new field for Silk Road, which is a major fuel
trader and transporter, and also the largest Internet provider in
Georgia. The company also has a contract to move American military
equipment to Afghanistan from Iraq.

The Georgians seem to have had their eye on the Trump clan for some
time. Two years ago, Giorgi Rtskhiladze, an assistant to the chairman of
Silk Road, invited Mr. Trump's Czech-born ex-wife, Ivana Trump, to
Georgia to consider investing there.

She visited Batumi and met with President Saakashvili during her stay.
It was a tough decision, Mr. Rtskhiladze said, and although Mr. Trump
has yet to visit the country, "we went with the husband."

Andrew E. Kramer / The New York Times

GEORGIA ON MY MIND!