At President Donald Trump’s hotel in Chicago, the most recent board meeting began with bad news. This year’s numbers were awful. Revenue had plunged. The hotel was just 24 percent occupied.
And worse: The hotel expected next year to be bad, too.
In fact, the hotel’s managing director, Gabriel Constantin, said the coronavirus pandemic had hurt the Trump hotel so deeply – reducing business travel and forcing the cancellation of Chicago conferences – that it might be nine years before their business returned to 2019 levels.
“The most optimistic [date] would be 2024,” Constantin said, according to an account of the meeting obtained by The Washington Post. He had a warning about the hotel’s future, if the pandemic’s economic effects didn’t ease: “It’s going to be very, very tough to keep the boat afloat.”
As Trump fights to save his political career, another key part of his life — his business — is also under growing stress.
In the next four years, Trump faces payment deadlines for more than $400 million in loans – just as the pandemic robs his businesses of customers and income, according to a Washington Post analysis of Trump’s finances. The bills coming due include loans on his Chicago hotel, his D.C. hotel and his Doral resort, all hit by a double whammy: Trump’s political career slowed their business, then the pandemic ground it down much further.
If Trump is reelected, these loan-saddled properties could present a significant conflict of interest: The president will owe enormous sums to banks that his government regulates. National security experts say Trump’s debts to Deutsche Bank, a German company, and foreign deals may constitute security risks if they make him vulnerable to influence by foreign governments.
Trump said at a televised town hall event Oct. 15 that his debts are “a tiny percentage of my net worth.”
“I’m very under-levered, fortunately. . . . I have a very, very small percentage of debt,” he said.
“Four-hundred million compared to the assets that I have, all of these great properties all over the world,” he added.
Trump owns his businesses while in the White House, though he says he has given day-to-day control to his sons Donald Trump Jr. and Eric. Eric Trump declined to answer detailed questions about the company’s finances and loans and instead sent a written statement. Trump’s financial disclosure form said that he took in at least $446 million last year, up from at least $434 million in 2018, although it does not reflect profits or losses.
“We had one of the best years in the history of the company in 2019. I am very proud of the fact that we remain seriously under leveraged and maintain very low levels of debt,” Eric Trump said in the statement. “We have an unbelievable company that continues to achieve great success even under all of the scrutiny that we face on a daily basis.”
The White House did not respond to questions.
The loans coming due for President Trump in the next four years are from two lenders, according to Trump’s financial disclosures and loan documents.
Trump took out at least $55 million in loans on Trump Tower and a condo building in Manhattan from a New York firm called Ladder Capital Finance. And he owes Deutsche Bank for loans on Doral, the D.C. hotel and the Chicago hotel. The Deutsche Bank loans were originally worth about $364 million, according to publicly available loan documents.
The Deutsche Bank loans all carry personal guarantees from Trump, according to the New York Times, meaning that the bank could go after Trump’s other assets if he defaults. A Deutsche Bank spokesman declined to comment.
Trump’s three properties carrying loans from Deutsche Bank appear to have been badly hit by the pandemic.
Trump’s D.C. hotel, for instance, had only been running a little over half-full in recent years, according to documents obtained by The Post. But this September, as the novel coronavirus curtailed business travel nationwide, the hotel was only about 5 percent full on some nights, according to one person familiar with the hotel’s operations, who spoke on the condition of anonymity to share private financial information.
One recent bright spot, the person said, was a three-day period in which Trump’s actions as president brought his allies to the hotel. Trump held a fundraiser at the hotel for his 2020 reelection campaign and held a White House ceremony to introduce Amy Coney Barrett as his Supreme Court nominee, drawing political allies from out of town. The hotel surged to more than half-full for three nights, the person said, then dropped down again.
At Doral, where business had already dropped sharply after Trump entered politics, the resort closed for more than a month this spring because of local lockdown measures. It furloughed more than 560 employees and laid off 250 of them for good, according to filings with the state.
One member of Doral said that on a recent visit, the vast lobby was almost empty – and the golf course even more so.
“We . . . played an entire round without seeing any other players on the course until we finally reached some players on the 14th Hole,” the member said in an email message, speaking on the condition of anonymity to avoid risking his membership. “Imagine, someone playing on our private course!”
The New York Times recently reported that Doral and Trump’s D.C. hotel had lost a combined $217 million before the coronavirus struck. The Times report cited data from Trump’s tax filings; Trump called their reporting “fake news” without challenging any specific details of it.
Under the scenario laid out by the Times, those properties are not producing enough cash to pay back their own loans, according to commercial real estate experts.
Borrowers in that position sometimes ask their banks to forgive or renegotiate their loans, moving back the deadline to pay or lowering the amount they owe, the experts said.
Because so many commercial property owners are struggling to pay their debts during the pandemic, officials at Deutsche Bank set up special committees in April to handle requests like this from borrowers, according to an internal Deutsche Bank memo obtained by The Post.
It isn’t uncommon for banks to break their own rules on behalf of big-name clients, but one person at the bank, asked if Trump would receive special treatment, said: “ALL client requests go through the exact same process and assessment – no exceptions.” The person spoke on the condition of anonymity to share internal communications.
The General Services Administration (GSA), which manages Trump’s federal lease on his D.C. hotel, may also have to determine how to handle the president’s business troubles.
Trump pays the GSA a little over $3 million in annual rent, and Eric Trump has already acknowledged inquiring about whether the agency will consider modifying rent payments. The GSA put its own forbearance policy into place May 6, when an agency memo declared that contracting officers may defer rent payments for up to 90 days to tenants who can show economic injury and financial need. For the agency to forgive rent requires approval from the agency’s general counsel, according to the internal memo, which The Post obtained.
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Trump’s company seems to be contemplating the sale of some properties: It offered the D.C. hotel lease for sale last year, then took it off the market after the pandemic hit. The Wall Street Journal recently reported that the company’s Seven Springs estate – a mansion on vast wooded grounds north of New York – might also be offered soon. And as first reported by Time magazine, the company is now trying to sell the helicopter that appeared in the opening credits of “The Apprentice.” “Call for price,” the online ad says.
Whether or not Trump is reelected, he could seek to sell condo units in some of his residential buildings – a strategy he has used to raise cash previously. But that would be a less lucrative option now than it would have been a few years ago because of the beating Trump’s brand has taken during his time in politics.
In the year before Trump took office, condos branded with his name in Chicago, Las Vegas, Hawaii and elsewhere sold at prices 34 percent above similar units, according to data from Redfin (this excludes New York City, for which data was incomplete), which said that premium has fallen by three-quarters, to 10 percent now.
Units in his buildings are remaining on the market longer, and some brokers have been stripping his name from listings to boost sales, according to Redfin. The fact that his units still receive any premium “may be a reflection of the president’s devoted supporter base,” said Redfin chief economist Daryl Fairweather.
Another option would be to refinance his loans – finding another lender who would let him borrow money to pay off the first lender.
But high-end hotels have fared terribly during the pandemic, with historic properties such as the Palmer House in Chicago and the Roosevelt Hotel in New York shutting down. The value of hotels will fall between 20 and 35 percent this year, according to recent research firm HVS.
If lenders believe that his properties are now worth less than the amount Trump owes on them, experts said it could be difficult.
“The risk of lending on a hotel property loan that is underwater would be so large that it would not be considered for a new loan,” said Mark Eppli, a University of Wisconsin business professor.
Trump, who spent much of his career as a New York real estate developer, has been in this situation before, facing huge loans on slumping properties.
In some cases, he retreated, losing control of the properties in bankruptcy proceedings or negotiations with lenders. He lost the famed Plaza Hotel in New York, walked away from a debt-saddled airline called Trump Shuttle and left an empire of casinos in Atlantic City.
But during the 2008 financial crisis, he tried a different tactic. Instead of paying a Deutsche Bank loan on his Chicago hotel, Trump sued the bank – saying that the financial crash was equivalent to an “act of God,” which absolved him of having to pay.
The result was negative publicity for Trump. But as a business proposition, it worked. One of Trump’s lenders forgave more than $100 million in debt, and despite the troubles, Deutsche Bank gave him a new loan that paid off the first. The lawsuit was settled out of court.
“His way of looking at the world has always been that it’s a planet of billions of people and opportunities for exploitation. He was okay with burning almost everybody because . . . there’s a sucker born every minute, and he could find them,” said Michael D’Antonio, a journalist who’s written biographies of Trump. “The fact that he found Deutsche Bank is proof that he was right.”
But D’Antonio said it could be harder now for Trump to repeat his past escapes from debt problems. In the past, he said, the Trump brand was an asset: Trump told his lenders that they should work out a deal to let him keep his properties because they would make more money with his name on them than without.
Now D’Antonio said lenders may not see it that way.
“It may turn out that he’s destroying the brand,” D’Antonio said, and lenders would be happy to have Trump – and his name – gone.