Absolute Kluge: Eyes on Trump as winery hits auction block

When the winery founded by Patricia Kluge was on the block in December, no one came close to the bank's $19-million minimum. But at the upcoming April 7 absolute auction, someone will go home with a winery– or part of one.

An absolute auction means the highest bidder gets the property, with no minimum, and the owner can't bid on it, explains Bill Shmidheiser, attorney for Farm Credit, which is trying to recoup its $35-million loan to Kluge.

"It assures buyers the property will be sold at the highest price," he says. "The public knows the owners are not testing the waters."

The 901-acre Kluge Estate Winery and Vineyards has been divvied up into six tracts.

"As a whole, it's a big bite," explains Shmidheiser.

But at least one high-profile potential buyer– The Donald– may think splitting the property is a mistake.

"We might be interested in buying the whole thing," says Jason Greenblatt, general counsel for Donald Trump's empire. "I think they're destroying it by splitting it. And I think they're harming the Virginia wine industry by doing so."

Trump emerged as a player in the liquidation of Kluge's assets when his representative bid on Albemarle House at its February 18 courthouse auction.

He's already acquired Albemarle House's front yard, says Greenblatt, referring to a 217-acre parcel that comes within 100 feet of the nearly 24,000-square-foot mansion and which county records still show belonging to a John W. Kluge Jr. Trust. Greenblatt says Trump has a right of first refusal on Albemarle House.

"I don't think he'd live there," says Greenblatt. "He has a number of other residences."

Patricia Kluge declined to comment for this article, but she's been telling folks that she and Trump are longtime friends. Is Trump just bailing out an old pal?

"We'd only do it if it made sense as a business deal," replies Greenblatt.

"All buyers are liars until they're buyers," says Shmidheiser. "Certainly [Trump]'s interested. He's been very vocal he's got it all sewed up, maybe to discourage other bidders. Are we talking? Yes. Do we have a deal? No. He's interested– at a price."

The April 7 auction at the Kluge Estate pavilion– the scene of last summer's Sotheby's auction and the bidder-less December auction of the winery– is being handled by high-end auction company J. P. King, and a company representative says there's been a lot of interest coming from about 20 states. The farm equipment will be sold separately April 8.

One 132-acre tract has the original vineyards and winery production building, and a 647-acre parcel includes vineyards, the event pavilion, office barn, and the carriage museum. ("The winery could sell separately and be used by other wineries," says Craig King, owner of the auction company.) A 21-acre tract along Carter Mountain Road has division rights and can be split into five parcels, and the farm shop is on a six-acre tract.

King lists three factors that bode well for auctioning: The location, "the notoriety of the previous owner," and a one-of-a-kind property.

"Obviously anyone's misfortune is regrettable," says King. "This one has created some interest other auctions wouldn't."

One other thing the sale will determine is the real market value of the property.

"This is really going to be an opportunity for someone to get a great value," says King. And if someone like Donald Trump really wants to buy the ensemble, according to the auction house, that's an option, too.