Just when you thought the Ground Zero mosque debate couldn't get any worse, Donald Trump enters the fray. This week, the real estate mogul wanted to end the controversy by simply purchasing the property. After all, if the property's owners got an offer they couldn't refuse, then the buyer could simply choose not to build the mosque. But despite Trump offering a 25% premium for what the current owners paid less than a year ago, they refused, saying that it was worth at least four to five times what they paid for it. At that price, Trump quickly lost interest, saying he didn't want to be extorted.
He called into CNBC's Squawk Box this morning to discuss what happened. He explained that the owner of the property purchased it for $4.8 million less than a year ago. Trump offered him $6 million cash, a 25% premium. But the owner balked. He said that the property was worth between $20 million and $25 million. From the episode Trump concluded about the current owner:
He paid 4.8 million less than a year ago. If he paid $4.8 million, and if I'm willing to give him 25%, plus his cost, plus whatever he needs to get him the hell out of there -- but this isn't about, in my opinion, this isn't about a mosque, this is about a mosque being used to get this guy more money.
In fact, Trump believed that the owners believe someone might be willing to pay the outlandish sum they're demanding to end the controversy. He suggested they may believe New York State will want to end the controversy so bad that it will pay the high price. In fact, that might be the point. Trump also said:
If I could buy it, give him an immediate 24-hour, immediate all-cash offer of much more than he paid -- but I don't think he wants it. I actually think he may be using this so that he can bludgeon somebody into giving him a very big price.
Why didn't Trump simply concede and offer $25 million? "I don't want to be extorted," he said.
The big question here is what the real estate is worth. According to Trump it's not a very prime location, and he would be overpaying at $6 million. So his extortion theory isn't totally ridiculous. But any given piece of property might have different value to different people. For example, if a family has lived in a home that they love for 20 years and have no desire to move, then they might reject an offer for even twice what it's worth according to the market. That's their right as property owners.
Similarly, now that they have secured the real estate, the site of the planned mosque is probably worth quite a bit more than they paid in their minds. They might find this particular location an extremely unique place for to build a mosque. Whether their motives for wanting to build it at Ground Zero are honorable or not isn't the issue here -- either way their desire to create the mosque makes the property worth more to them than to others.
In a way, the controversy has increased the property's value. Trump's offer proves this. If no one cared whether a mosque was built at Ground Zero, then no one would be willing to pay more than the market price for it. Ironically, the public outrage has increased the real estate's value.
See the CNBC clip below. Trump talks about the mosque for the first six minutes:
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