The spirited efforts made by the Trump Organization to dispose of its Trump International Hotel in Washington DC was truncated, as the sale has been put on hold indefinitely.
This is even as the organization had already engaged Mr. Jones Lang LaSalle to look for buyers.
According to CNBC News, the asking price for the property is about $500m but none of the bids was close, with several bids less than $250m.
In consideration of the subsisting lease terms, industry executives and advisors are of the opinion that any realistic bid to purchase the hotel would have to be around $150 million to $175 million which is even less than the Trump Org.’s $200 million investment.
This scenario leaves the organization with the inevitable option of selling at a loss and as well default on the loans from Deutsche Bank loan and turn over the keys, or try to keep the property and return to profitability, at the end of the day.
According to Brian Friedman, CEO of Friedman Capital, who owns chains of hotels and properties in the DC area and as well bided for the property, “At this point, they could either just turn over the keys, or keep it and make it part of whatever media company the President decides to create. I just don’t think they’re going to get the price they expected.”
According to industry executives, “Faced with a $100 million loan from Deutsche Bank on the property and continued losses, the Trump Organization may end up either having to subsidize the business for years to come, or default on the loan and hand back the property.”
In response to the insinuations by the industry executives, the Spokesman for the organization said, “There are absolutely no plans to default on the loan, nor have we ever missed a payment. As for the stalled sales effort, we have had offers north of $350M, which would have been the most expensive price ever paid for a hotel in Washington D.C. and we have rejected those offers in full. Trump International Hotel, Washington D.C. is one of the finest hotels in the country as rated by Conde Nast and so many others.”
According to President Trump, he admitted to have overpaid for the property and said, “I mean, we are paying too much for the Old post office. But we will make that so amazing that at some point in the future it’ll be very nice.”
- The Trump International Hotel is the flagship company of Donald Trump’s diversified business empire and was officially opened for business in October, 2016.
- In 2019, the hotel achieved a total sum of $40.5m in revenue.
- The Trump Organization is expected to pay $3 million annually over 60 years lease period and the sum of $200m was invested to renovate the property, out of which $100m was a loan from Deutsche Bank.
- Importantly, potential buyers/bidders are averse and finding it difficult to agreeing to keeping the Trump name on the hotel which is one of the conditions of the offer.