Donald Trump‘s $1.1 billion mountain of debt is wrapped up in skyscrapers and golf courses, with $900 million of it due within the next four years while coronavirus hammers the real estate market, the Financial Times has revealed.
The president has an estimated net worth of $2.5 billion but the economy has plunged off a cliff since the pandemic struck.
He has loans due within the next two years on his Avenue of the Americas tower in New York ($285 million) and his California Street colossus in San Francisco ($162 million), the FT reports.
Trump’s television work, his primary source of income in recent years, has also evaporated since 2016 as he’s been boosting the broadcasters’ ratings for free while working in the Oval Office. If he lands another term then much of the debt he owes could be renegotiated while he is president.
Last month it was revealed by the New York Times that Trump paid just $750 in federal income taxes in both 2016 and 2017, after years of reporting heavy losses from his business enterprises to offset hundreds of millions of dollars in income.
The president is asset rich but his liquidity is on uncertain footing as revealed by the FT which has broken down his creditors into five groups:
Donald Trump’s $1.1 billion mountain of debt is wrapped up in office space, hotels and golf courses, with $900 million of it due within the next four years while coronavirus hammers the real estate market
Trump’s television work, his primary source of income in recent years, has also evaporated over the last four years as he’s been boosting the broadcasters’ ratings for free while working in the Oval Office (pictured with his son Don Jr. and daughter Ivanka during the Season 6 Finale of The Apprentice)
1. Trump’s $447 million debt on towers in New York and California
The President owns a 30 percent stake of 1290 Avenue of the Americas in New York City and 555 California Street in San Francisco.
This gives him a pro-rata share of the $1.5 billion owed on the two skyscrapers which is due within the next two years, the FT reports.
The debt is owed by the partnership, Trump and Vornado Realty Trust, but fluctuations in the value of the debt would directly impact his equity value in the properties.
The loan on the New York building was originally granted by Deutsche Bank, UBS, Goldman Sachs and the state-owned Bank of China but they sold it a long time ago and it is not clear who now owns the debt. Nor is it known who owns the debt on the San Francisco skyscraper.
Vornado made no comment to the FT.
1290 Avenue of the Americas in New York City
555 California Street in San Francisco
California Street is a 1.8 million square foot office space. The income was down 5 percent in the second quarter of 2020 but filings from Vornado say that it is 99 percent filled to capacity.
The Midtown Manhattan tower is 2.1 million square foot of office space and the rest retail. Varnado’s filings do not give recent occupancy figures, the FT reports.
However, office real estate prices in Manhattan are down by around 13 percent on last year. The figure is 5 percent in San Francisco – matching the Trump building’s second quarter report.
2. $257m in loans taken out against Trump properties which have been packaged up with non-Trump loans
Banks that originally provided these mortgages sold them to a commercial mortgage-backed securities (CMBS) trust – this transformed them into trade-able debt securities (financial assets that entitle their owners to a stream of interest payments).
A ‘servicer’ is responsible for collecting the payments from debtors. If they fail to do so, a ‘special servicer’ can intervene to force the borrower to pay or repossess the property.
According to the FT, these debt collectors could sweep in if Trump’s real estate falls into arrears.
Trump has four properties in New York which fall under six CMBS trusts. The largest is the $100 million loan on Trump Tower, which makes up 10 percent of a 2012 deal packaged by Wells Fargo.
People participate in a pro-Trump rally in front of Trump Tower in Manhattan earlier this month
All of the properties are up to date on payments.
However, one of the loans, $6.5 million on Trump International Hotel at Central Park West, has been marked as ‘at risk’ after its income dipped significantly, the FT says.
The building has two tenants, a parking garage and the Triomphe Restaurant, closed due to the virus.
If the income on the tower were to dive, the loan could be handed to its special servicer, Midland Loan Services, according to the FT. Midland made no comment.
The other properties are in good financial health given the pandemic’s catastrophic impact on the economy.
3. Trump owes as much as $340 million to Deutsche Bank – his biggest single backer
Trump’s tax returns, exposed by the NYT, show that the National Doral in Miami and the International Hotel in Washington, D.C., have lost big money.
The Doral golf resort haemorrhaged $162 million between 2012 and 2018 and the D.C. property lost $55.5 million between 2016 and 2018, the FT reported.
Trump has fiercely guarded his tax filings and is the only president in modern times not to make them public.
He paid no federal income taxes in 10 of the past 15 years through 2017, despite receiving $427.4 million through 2018 from his reality television program and other endorsement and licensing deals.
The Doral golf resort (pictured) haemorrhaged $162 million between 2012 and 2018
The International Hotel in Washington, D.C. lost $55.5 million between 2016 and 2018
4. President owes another $25 million with smaller banks and an asset manager
All of the loans are between $5 million and $25 million, according to the FT, and most mature in the next four years.
Two are mortgages on Trump family homes in the NYC suburbs and in Palm Beach, Florida.
Another two are for golf courses in New Jersey and D.C.; and another which matures in 2020 is for a residential skyscraper in Midtown Manhattan.
It comes as the New York apartment market is languishing in a 17 percent price drop after the coronavirus outbreak.
Colts Neck Golf Club in New Jersey – there’s a less than $5 million debt due on the property by 2028
5. $50 million owed to Chicago Unit Acquisition Trust with the Trump International Hotel and Tower in Chicago as security
The trust is a corporation owned by DJT Holdings LLC – Trump seems to owe money to himself.
Asked about how this worked in 2016, Trump told the New York Times: ‘I have the mortgage. That is all there is. Very simple. I am the bank.’
But he is also the debtor and it is a ‘springing loan’ which means it is due when certain criteria (‘bad boy provisions’) are met – for example if there is a decline in credit rating.
According to the FT, ‘this debt is mysterious’ and could be a tax avoidance method.