In 2013, he made Forbes’ list of billionaires, but in the following years his investments went downhill. His $250 million bailout covered the biggest known chunks of his assets.
When Tom Barrack, a real estate investment mogul and former adviser to Donald Trump, was indicted last week for allegedly acting as an unregistered foreign agent for the United Arab Emirates, the huge $250 million bail he had to post was perplexing. (Barrack did not plead guilty.) The natural question is: How much of his net worth was that bail?
CNN called Barrack a billionaire, as did the Washington Post and New York Times, which means he had to give up less than a quarter of his fortune for his release from prison while awaiting trial. “If you were 74 years old, worth more than $1 billion and facing serious jail time, would you donate $250 million? I certainly would,” Josh Marshall, founder of Talking Points Memo, tweeted.
By all accounts Barrack is extremely wealthy, but he’s almost certainly not a billionaire. That means $250 million is far from chump change for him.
Barrack last appeared on Forbes’ list of the world’s billionaires in 2013, with an estimated fortune of $1 billion. In the eight years since then, he has made a disastrous business deal that has reduced his fortune by hundreds of millions of dollars.
The value of his investment in the company that made him a billionaire – formerly called Colony Capital, and which, according to his own comments in March 2018, accounted for most of his net worth – dropped from $400 million to about $178 million after a failed merger in 2017 caused the stock to plummet. He pledged $150 million of his roughly 5.7 percent stake in the company, now called DigitalBridge, plus $5 million in cash and about $95 million in real estate deeds, including his $15.6 million home in Aspen and those of his former wife, son and DigitalBridge investment director Jonathan Grunzweig.
In other words, it’s likely that Barrack is feeling the strain of his $250 million bail because it could account for most or nearly most of his fortune. A generous estimate of his fortune, according to Forbes, would be $600 million, given his claim that his company stock accounts for most of his fortune in 2018. He is likely worth even less than that amount.
The grandson of Lebanese immigrants, Barrack grew up in Los Angeles and spent time in Saudi Arabia working as a lawyer during the first decade of his career. In the 1980s, he served as deputy undersecretary of the Interior in the Reagan administration (Barrack and Reagan had been neighbors in Rancho del Cielo, California, since 1979) and then moved into the real estate investment management of famed billionaire investor Robert Bass.
Around this time, Barrack befriended Trump, working on a pair of deals with Bass that ended badly for the future president: Trump’s purchase of the Manhattan Plaza Hotel, which he resold at a loss, and a minority stake in the bankrupt Alexander’s department store chain.
Even though Trump won these deals, they became good friends. Barrack gave a keynote speech at the 2016 Republican National Convention in support of Trump, became a major fundraiser and chaired Trump’s inaugural committee.
Barrack is credited with introducing the Trump campaign to influential Emiratis and Saudis, as well as future campaign manager Paul Manafort. And while he was reportedly not the target of the ensuing Russia investigation, as Forbes reported in 2018, he was questioned by special counsel Robert Mueller because of his ties to Manafort and other members of the Trump campaign.
He made those contacts over nearly three decades in business. In 1991, Barrack left Bass to start Colony Capital, an investment firm. Backed by Bass and GE Capital, Barrack achieved initial success by buying bad loans on real estate from bankrupt S&Ls.
After that, there were several loss-making deals: Colony Capital’s lead investment to recapitalize the $1.5 billion Xanadu shopping complex in New Jersey in 2006 was quickly seized by lenders, and the Station Casino in Las Vegas went bankrupt shortly after Colony teamed up with gambling magnates and brothers Frank and Lorenzo Fertitta to buy it for $8.8 billion in a leveraged buyout in 2007.
In 2009, Colony Capital’s subsidiary, Colony Financial, went public to raise capital for Colony Capital deals (Colony Capital later merged with its subsidiary in 2015, and the public company was renamed Colony Capital).
Overall, Barrack was successful in building a real estate investment firm that managed $34 billion in assets by early 2013, the last time he appeared on Forbes’ billionaire list.
That was before Colony Capital’s disastrous “three-way peer-to-peer merger” with NorthStar Realty Finance and NorthStar Asset Management in 2017.
Barrack had hoped that the merger would allow the renamed Colony NorthStar to compete with big real estate investors like Blackstone. But it wasn’t long before management blamed nursing home real estate and other securities it inherited from NorthStar for a nearly 60 percent drop in its stock price from its first trading day in 2017 through July 2018.
By then, the value of Barrack’s roughly 5% stake in the company had fallen to $178 million, down from $400 million immediately after the merger. And the stock was trading 11% below that level when Barrack lamented the fate of his stock during a March 1, 2018 earnings call, “It’s a big part of my personal net worth. It’s a dominant factor in my and my family’s pride, reputation and future,” he told investors.
In an effort to move away from the failed merger, Barrack sold many of NorthStar’s legacy assets, eventually rebranding the June 2021 real estate investment trust as DigitalBridge, reflecting his shift to investing in digital infrastructure such as data centers and cell towers. But it doesn’t hide the fact that the company is running out of red ink: In 2020, the company had a net loss of $3.8 billion on revenues of $1.24 billion. Barrack, who left as CEO in 2020 and executive chairman in April, resigned from the company’s board of directors July 20, the day he was indicted. DigitalBridge released a statement saying that Barrack’s resignation was not the result of any disagreement with the company.
None of the moves had a significant impact on the stock price. The stock is up just 9 percent since the day before the 2018 investor call and is down 36 percent since Colony NorthStar’s first trading day in 2017, putting Barrack’s stake at $178 million. He also owns about $25 million worth of real estate, including a $15.6 million property in Aspen, a $6 million home in Santa Ynez, California, and a $2.4 million Trump Parc East condo in Manhattan, according to Forbes. That brings his wealth to about $203 million – plus all the assets he has accumulated outside of DigitalBridge and real estate. Under the generous assumption that including real estate, he had $400 million outside company stock in 2018, based on his comments, Barrack’s net worth is about $600 million, a far cry from his billionaire status. (And in fact, his stake in Colony NorthStar was probably more than 51% of his net worth in 2018, which means his fortune is likely even smaller.)
A spokesman for Barrack declined to comment when presented with this estimate.
The full extent of Barrack’s fortune, however, is difficult to determine. As a private investor, most of Barrack’s transactions through DigitalBridge are hidden from public scrutiny. Securities and Exchange Commission rules require the company’s funds to disclose some of their assets, but not the exact ownership of those funds, so it is difficult to determine how much each individual owner is taking out of the business.
One asset that Forbes did not include in our estimates: a $100 million-plus “mega-mansion” project in Bel-Air for which Barrack reportedly filed construction plans in 2014, but which reportedly is actually owned by the Al-Thani family, the royal family of Qatar. Barrack did not include this property in his lien; instead, he put up his own homes, as well as the primary residences of his ex-wife Rachel Barrack, son T.J. Barrack III and DigitalBridge chief investment officer Jonathan Grunzweig.
Whatever other assets Barrack has, they almost certainly haven’t generated enough income since July 2018 to make Barrack a billionaire again. And that’s without taking into account the fact that Barrack can’t liquidate most of his fortune right now if he needed to, since the U.S. government is entitled to his DigitalBridge stock and homes until Barrack complies with all necessary court requirements.
If all goes according to his plan, Barrack and his benefactors could get their assets back relatively soon. In an e-mailed statement provided by his spokesman, Barrack said: “Of course, I am innocent of all these charges, and we will prove that in court.”