Trump's $1.1BILLION debt mountain: How the President owes huge sums with $900m due to be repaid within the next four years

Hotlantan

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BGOL Investor
Trump's $1.1BILLION debt mountain: How the President owes huge sums linked to his towers and golf courses with $900m due to be repaid within the next four years as Covid hammers the real estate market
  • He has a $1.1 billion mountain of debt, according to the Financial Times, $900 million of it due in next 4 years
  • The President has an estimated net worth of $2.5 billion but most of that is made up of real estate
  • Trump's TV checks were his major source of cash before he entered the White House in 2016
  • Analysis shows how some of his debts are due to be paid within the next two years
  • Trump owes as much as $340 million to Deutsche Bank – his biggest single banking backer
  • Refusal to publish his tax returns means that his finances remain opaque


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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 diminished 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 up for negotiation 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 the extent of his liquidity is unclear as revealed by the FT which has broken down his creditors into five groups:


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. The $285 million debt on the tower block in Manhattan is by far Trump's largest liability.

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.

The California Street block 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.

Earlier this year, Vornado said it was considering a recapitalization of 555 California Street and 1290 Avenue of the Americas.

Any such financial dealings could have a big impact on Trump because the two towers represent his most valuable assets.

2. $257 million 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.

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 banking backer

Trump's tax returns, exposed by the NYT last month, show that the National Doral in Florida and the International Hotel in Washington, D.C., have lost big money.

The Miami golf resort hemorrhaged $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.

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.

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.

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Hotlantan

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BGOL Investor
KEY FINDINGS FROM THE NYT REPORT ON TRUMP'S TAX RETURNS

TRUMP PAID JUST $750 IN TAXES IN BOTH 2016 and 2017.

The newspaper said Trump initially paid $95 million in taxes over the 18 years it studied. But he managed to recover most of that money by claiming — and receiving — a stunning $72.9 million federal tax refund. According to the Times, Trump also pocketed $21.2 million in state and local refunds, which are typically based on federal filings.

Trump's outsize refund became the subject of a now-long-standing Internal Revenue Service audit of his finances. The audit was widely known. Trump has claimed it was the very reason why he cannot release his returns. But the Times report is the first to identify the issue that was mainly in dispute.

As a result of the refund, Trump paid an average $1.4 million in federal taxes from 2000 to 2017, the Times reported. By contrast, the average U.S. taxpayer in the top .001% of earners paid about $25 million annually over the same timeframe.

TRUMP HAS FINANCED AN EXTRAVAGANT LIFESTYLE WITH THE USE OF BUSINESS EXPENSES

From his homes, his aircraft — and $70,000 on hair styling during his television show 'The Apprentice' — Trump has capitalized on cost incurred from his businesses to finance a luxurious lifestyle.

The Times noted that Trump's homes, planes and golf courses are part of the Trump family business and, as such, Trump classified them as business expenses as well. Because companies can write off business expenses as deductions, all such expenses have helped reduce Trump's tax liability.

MANY OF HIS BEST-KNOWN BUSINESSES ARE MONEY-LOSERS

The president has frequently pointed to his far-flung hotels, golf courses and resorts as evidence of his success as a developer and businessman. Yet these properties have been been draining money.

The Times reported that Trump has claimed $315 million in losses since 2000 on his golf courses, including the Trump National Doral near Miami, which Trump has portrayed as a crown jewel in his business empire. Likewise, his Trump International Hotel in Washington has lost $55 million, the Times reported.

FOREIGN VISITORS HAVE HELPED SUPPORT TRUMP'S PROPERTIES

Since Trump began his presidential run, lobbyists, foreign governments and politicians have lavished significant sums of money on his properties, a spending spree that raised questions about its propriety and legality.

The Times report illustrates just how much that spending has been: Since 2015, his Mar-a-Lago resort in Florida has taken in $5 million more a year from a surge in membership. The Billy Graham Evangelistic Association spent at least $397,602 in 2017 at Trump's Washington hotel. Overseas projects have produced millions more for Trump — $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.

TRUMP WILL FACE FINANCIAL PRESSURE AS DEBTS COME DUE

Trump seems sure to face heavy financial pressures from the enormous pile of debt he has absorbed. The Times said the president appears to be responsible for $421 million in loans, most of which will come due within four years. On top of that, a $100 million mortgage on Trump Tower in New York will come due in 2022.

Reporting by the Associated Press
 

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You're right dawg
OG Investor
Donald Trump has debts worth $1.1 billion and will owe $900 million of it during his second term as president if he wins the election, according to a report.
The huge sums of money are linked to his commercial real estate properties and golf courses, says the Financial Times.


Over the next two years the president reportedly has a loan due of $285 for his Avenue of the Americas tower in New York, and $162 million due on his California Street building in San Francisco.

The size of Mr Trump’s debts is almost twice the amount he has suggested during his campaign for the White House, according to Forbes.

 

tical

Rising Star
BGOL Investor
One of the greatest crimes amongst other things is how our court system rules it's okay for Trump to use his postion as POTUS to fund/pay debts etc of his private business.

Lol, There's no business in America where you can use your employers business as a way to fund your private enterprise. But it's okay for Trump to do it using his powerful position?


:smh:
 

blackpepper

Rising Star
BGOL Investor
When I went to business school, our case studies were very critical of highly leveraged or indebted companies. Lines of credit were essential, but to be in long term debt was almost always avoided when possible. In the last couple decades it's become a welcomed element on all their balance sheets, the thinking being if another company is stupid enough to let us borrow money of course we'll take it. We'll spend it on manipulating our stock price, cash our options, collect our bonuses and bounce. The next executive team will be responsible for paying it back.
 
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