Trump buys Kluge winery

It took hours of spirited bidding and more than $6 million, but representatives of billionaire Donald Trump successfully bought the vineyard and winery buildings at Thursday’s foreclosure auction of the Kluge Estate Winery and Vineyard.

Officials from Trump’s organization said Trump is interested in making wines and in talking with former owners, William Moses and Patricia Kluge, about running the operation.

“We plan on running it as a vineyard and continuing its use as a winery,” said Jason Greenblatt, representing Trump. “The Trump brand is very valuable and it signifies significant luxury and quality and that is where the interest lies.”

Moses said he and Kluge are also interested in talking with Trump about running the winery they started.

“We’re pleased that Mr. Trump wants to keep the winery and continue to make high quality wines,” Moses said, adding that the winery was a labor of love for the couple. “Patricia has known him for 20 or 25 years and we’re very interested in talking with him.”

The auction went through a multi-stage process with a final bidding war on the two tracts of vineyard. There were many hasty cell phone conversations, last-minute bids made as gavels fell and attempts by bidders to determine just how serious the other players were.

“There’s a lot of strategy in bidding and I’m a little tired,” Greenblatt admitted.

The auction is the latest chapter in the winery’s story since creditor Farm Credit Bank foreclosed on the winery after the owners could not sell enough wine to meet their $34.8 million financial agreement. The bank bought the property for $19 million at a December auction of the property.

The preliminary estimate for Thursday’s auction, not including any fees and premiums charged to the winning bidders, indicates the property sold for less than $7.5 million. A separate auction to sell equipment used in making wine and tending the vineyards is to be held today.

Greenblatt said Trump representatives would bid on equipment, but that he wasn’t concerned about being out-bid.

“The vineyards are the important part,” he said. “You can get equipment anywhere.”

Kluge and Moses put much of their personal fortune up as collateral to keep their winery running through the most recent recession. Profits from Sotheby’s summer auction of Kluge’s personal property and furnishings in her Albemarle House mansion went toward the winery’s loan, court records show.

Albemarle House is also in foreclosure. Trump’s organization recently closed the purchase of more than 200 acres of property surrounding the Albemarle House. The organization also has the right of first refusal to any sale of the house, representatives said.

The winery produced more than 30,000 cases of wine a year and there were plans to increase it to 75,000 cases. Its wine was distributed in 15 states and was estimated to be worth more than $70 million prior to the recession, according to a prospectus by Rothschild Investments.

The land tracts won by Trump’s organization on Thursday include a 131-acre tract with the estate’s original vineyard, production building, wine cave and modular office buildings. The other tract is a 647-acre swath of land including the vineyard, land suitable for future plantings, a former carriage museum, an event pavilion and a barn used for office space. Trump’s representatives also successfully bid on the trademarks and labels for the Kluge Estate Winery and Vineyard.

Sal Cangiano, a Loudon County-based developer, purchased the other properties, which may be used for residential purposes, and the winery’s store.

“I just thought it would be fun, so why not?” Cangiano said of his bidding on the properties. “They’re beautiful properties and they’re certainly worth the prices, so I figured it would be worth a shot.”

Cangiano said he knew Trump’s organization would be bidding.

“I’ve bid against them before and I know them very well, but it was fun,” he said. “The bidding was getting pretty high and intense for a while. When the comedy gets serious, it’s still fun. You have to be careful that comedy doesn’t turn tragic.”

Cagniano said he has no immediate plans for the tracts he purchased, including a 94-acre wooded lot, a 21-acre residential lot and the farm shop.

“This event pavilion would make a great gym, though, wouldn’t it?” he joked.