As the world cuts ties with Trump, experts say he will likely have a harder time getting a loan on January 21

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Donald Trump borrowed hundreds of millions of dollars against his properties before he took office, but experts say the 45th President of the United States is probably having a harder time securing a loan as he regains his privacy after the January 20, after the riot last week on Capitol Hill in Washington.

In Trump’s final days in power, parts of business, finance, politics and sport decided to sever ties with the president after pushing a host of his supporters to thwart the peaceful change of power. in Washington.

The PGA of America announced this weekend that it would cancel its deal to host the 2022 PGA Championship at Trump National Golf Club in Bedminster, New Jersey, a suburb of New York City, citing a risk to the PGA brand.

New York City followed on Wednesday, saying it would end contracts with the Trump Organization to operate the iconic Central Park Carousel, the Wollman and Lasker rinks and the Trump Golf Links at Ferry Point in the Bronx. New York’s contract with Trump’s companies is worth $ 17 million.

Longtime Trump Lender German Bank
BD,
-2.01%
also has no plans to lend more money to the president’s businesses, a person familiar with the matter said. The Wall Street Journal reported that Signature Bank
SBNY,
+1.20%
and Professional Bank in Coral Gables, Florida, plan to close Trump’s accounts.

“I don’t know where the commercial bankers will be willing to lend large sums to the Trump Organization,” said Gerald Hanweck, professor of finance at George Mason University and a expert in financial distress in the banking system.

Concerns over President Trump’s ability to take on debt on his core real estate business follow the dramatic last two months of his presidency that hit a low point, after hundreds of rioters breaching security barriers and security, lawmakers followed the typically ceremonial procedure of confirming President-elect Joe Biden’s victory over Trump. The violent storming of the Capitol, which resulted in the deaths of five people and the sack of the seat of government, followed a rally in which Trump urged his supporters to come to the Capitol and ‘fight’ .


“I don’t know where the commercial bankers will be willing to lend large sums to the Trump Organization.”


– Gerald Hanweck, professor of finance at George Mason University

Experts speculate that other lenders and real estate partners may now join some American companies to sever ties with Trump, following recent events which are among the darkest episodes in American history.

Democratic lawmakers, led by House Speaker Nancy Pelosi, decided this week to impeach Trump for the second time, saying he had instigated an insurgency, after four tumultuous years in the White House.

Lily: House prepares to impeach President Trump in landmark vote

Hanweck, who previously worked in the risk management division of the Federal Deposit Insurance Corporation, said the Trump Organization may avoid seeking loans from traditional lenders in favor of company-level funding in the markets. public to support its real estate activities.

He also suggested that Trump could seek overseas funding for any non-U.S. Project he seeks to develop, but that future funding of individual properties in the United States may be complicated by pursuing New York Attorney General Letitia James investigation in the financial transactions of the Trump Organization. The attorney general’s office declined to comment.

“I think the best opportunity for Trump is to really go to a big investment bank and look to issue a lot of negotiable debt,” Hanweck suggested.

The Trump Organization did not respond to multiple requests for comment, nor did Trump’s White House staff.

Trump at the end of last week denounced the attack on the Capitol, while also acknowledging that he lost the election two months ago, after weeks of legal action against his electoral defeat to Biden, alleging unfounded allegations of massive voter fraud.

But his apparent concession may not help bolster his presidential legacy or reputation as a business leader as he leaves the political arena and re-enters life as a private citizen, at least in the short term.

“From a revenue perspective, many property royalties are based on the use of his name,” said William O’Connor, a commercial real estate partner at the law firm Thompson & Knight. “But for a guy who is focused on his brand, it could really hurt his brand.”

A handful of commercial real estate professionals interviewed for this article said Trump’s initial resistance to exposing the DC riot and the slow acceptance of Biden’s victory could add to the so-called “reputational risk” of lending. to Trump.

“Anyone who goes through a partner risk assessment should factor that into their calculation, especially any new partner,” said Matthew Cypher, director of the Steers Center for Global Real Estate at Georgetown University, and formerly of the Group. ‘real estate acquisitions of Invesco.

But Cypher also said the terms of existing loans will ultimately dictate the post-presidential relationship between Trump and his lenders. “Again, the legal documents are going to determine a lot of what happens. But in any business, there are judgment calls, ”Cypher told MarketWatch.

Trump brand

The private real estate portfolio that Trump built over decades was already facing enormous challenges in the face of a historic public health crisis.

Much of the commercial real estate landscape has been pummeled by the coronavirus pandemic after nearly a year, with COVID-19 claiming more 4000 US live in a single day Thursday.

Lily: Distress hangs over US commercial real estate in 2021

While hotels and retail have been hit the hardest, even the future of two sought-after office buildings in the Trump Organization portfolio remains in motion.

In November, Vornado Realty Trust, VNO,
+1.61%
a majority shareholder in a company with Trump on the iconic 555 California Street office building in San Francisco and 1290 Avenue of the Americas in Manhattan, said on a quarterly earnings call it continued to seek a “sale, partial sale, joint venture or refinance” of the two properties, despite earlier offers that fell short of initial expectations. Vornado did not respond to multiple requests for comment on the state of his partnership with Trump.

Trump took out hundreds of millions of dollars in property loans before entering the White House, many of which are not due for three years, including some that were pooled by Wall Street and sold to investors as of bonds.

Deutsche Bank owes around $ 340 million on the Trump Doral Golf Course and resort in Miami, the Trump International Hotel Chicago and the Trump International Hotel in Washington, DC, according to a count by MarketWatch.

The Trump Organization also recently put aside his plan to sell the DC hotel, after potential bids were well below the initially requested $ 500 million, according to CNBC.

A spokesperson for German Bank declined to comment. Ladder Capital Corp.
LADR,
+1.41%,
another pre-Trump lender, did not respond to multiple requests for comment.

A review of Trump’s mortgages shows that many loans required personal collateral, likely due to past defaults and bankruptcies, including the high-profile failure of his Taj Mahal Casino and Hotel in Atlantic City, the lawyers said.

This means that it might be more difficult for Trump to get out of debt on distressed properties without putting his personal wealth at risk. Forbes puts Trump’s net worth to $ 2.5 billion, but his wealth was a subject of debate.

Even so, the benefits of the presidency could follow Trump beyond public office, even if foreign governments become less willing to book at his Washington, DC hotel, or if incomes decline at his golf and resort properties. as the details of Trump’s presidential security dwindle, said Norm Miller, Hahn Chair of Real Estate Finance at the University of San Diego.

“But historically, chairs have been sought after as speakers and have paid fees of $ 50,000 to $ 750,000 per conference, so he may be able to leverage the money,” he said. to MarketWatch, adding “and he can afford his over $ 220 million political war chest, which has few cords.”

Update: This story has been updated to reflect the fact that five people died as a result of the riots on the United States Capitol.

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