Former President Donald Trump and his company, the Trump Organization, are reportedly close to making a deal for the sale of the Trump International Hotel in Washington D.C., but the asking price has gone down considerably since he left office and COVID-19 hit the travel and lodging industries like a wet blanket.
Axios reports that the original asking price for the hotel — housed in the historic Old Post Office building — was $500 million:
How it would work: Trump would sell the leasing rights to a real estate developer, who in turn would negotiate with hotel companies that would manage the property and rebrand it.
Representatives for Trump are said to be in talks with “major hotel chains and investors.”
Just how bad are things for the Trump Organization, which is built on hotels and resorts as the backbone of its business model? Consider these numbers:
“When Trump left office, The Washington Post reported that the D.C. hotel had a $170 million loan outstanding, and had seen revenue drop more than 60 percent compared to the previous year.”
So no matter what Trump gets for the property, he has to repay the $170 million loan or get the buyer to assume the debt, which seems unlikely with the hotel business in what can only be called a depression.
The Trump Organization is also facing massive loan payments to other financial institutions which could wind up bankrupting the company if they’re unable to meet their loan obligations.
Just last year, Forbes reported that Trump has nearly a trillion dollars of loans coming due:
“Lenders will expect his businesses to pay back an estimated $900 million in the next four years, an alarmingly accelerated timetable that involves more than twice as much debt as the president previously indicated. In order to emerge unscathed, Trump will likely have to engage in a series of high-stakes, big-money transactions—deals that could produce arguably the biggest conflicts of interest that an American president has ever had to face.
“About half of the debt coming due from the start of 2021 to the end of 2024 is secured against assets that the president and his children own outright. He will have to pay back loans against his hotel in Washington, D.C., his golf resort in Miami and his tower in Chicago. He’ll also have to sort out the debt against Trump Tower and Trump Plaza in New York City.”
What happens if the Donald is unable to repay those loans? The banks who loaned the money would begin to seize properties and other assets to satisfy the debt. That could destroy the Trump Organization and the man whose name it bears.