Wednesday, June 2, 2021

Trump Organization Revives Washington Hotel Sale

The Trump Organization is trying, once more, to Sell the Lease on its Washington Hotel, a potential Test of the Lodging Industry’s comeback and whether the Stain of doing Business with Trump has Receded.

The Trump’s Family-run Firm, has turned to Newmark, to Market the Lease on the Trump International Hotel.

The Brokerage, part of Billionaire Howard Lutnick’s Financial-Services Empire, is looking to Attract Offers North of $400 Million.

The Trump Organization put the 263-room Property on the Market in October 2019, asking more than $500 Million. It Failed to Sell as the Covid-19 Pandemic Devastated the Industry.

Jones Lang LaSalle Inc., which had been the Broker for the Hotel, later parted ways with the Company, part of a Wider Backlash as Corporate America Cut Ties with Trump after the Jan. 6th 2021 Riot at the U.S. Capitol.

Lutnick was a Prominent Trump Supporter. The Cantor Fitzgerald Head held a Fundraiser in 2019 at his Triplex Penthouse that Raised more than $5 Million for the Re-Election Campaign.

Trump’s Trophy Hotel is Hitting the Market again as Lodging Industry Transactions start to Pick-Up, with Pent-Up Demand for Vacations encouraging Investors to Bet on Properties that Appeal to Leisure Travelers.

The Montage Healdsburg, a 130-room Hotel in California Wine Country, traded for $265 Million in April, putting it among a Select Group of Properties to Sell for more than $2 Million a Room.

The Four Seasons Resort at Disney World Sold for $610 million in May.

Investors are Valuing High-End Resorts in Top Destinations in-line with Pre-Covid Levels, Green Street Analyst, Lukas Hartwich, wrote in a recent note. Less desirable Hotels are still facing Discounts of as much as 35%, according to Hartwich.

Trump’s Hotel near the White House defies Easy Comparisons. It’s a Luxury Property in a Prominent Location that relies on Corporate Travel and Group Events, which are expected to Recover more Slowly than Leisure Travel.

The Average Occupancy Rate at Washington Hotels was 44% in April, compared to 72% in Miami, and 52% in New York.

During Trump’s Presidency, the Hotel became a Hub for Conservative Politics, hosting Lobbyists, Right-Wing Media figures, and others trying to win Favor with the Administration.

Even at the Lower asking Price of roughly $1.5 Million per Room, a Sale would set a New High-Water Mark for the Washington Market. The 49-room Rosewood Hotel Traded for a Local Record of $1.3 Million per Room in 2016.

Trump could face Obstacles to a Sale of the Washington Property. He Admitted in 2012 that he Paid Too Much, a promised $200 Million, to Renovate the Historic Old Post Offic,e and $3 Million in Annual Base Rent. It sat on the Market for more than a year last time, without reaching close to the Asking Price.

The Trump Organization has said it Attracted Bids “north of $350 million” that the Company Rejected. Brian Friedman, a D.C. Real Estate Investor who went Public with his Offer Price, cited a much Lower Figure, $160 Million.

Trump could still face Opposition from Firms Refusing to do Business with his Company after his Divisive Presidency. But the Backlash may be Subsiding.

Vornado Realty Trust, Run by Steven Roth, recently Refinanced Debt on an Office Tower in San Francisco that it Owns with Trump. The San Francisco Refinancing boasted a $617 Million Cash out for its Owners. Trump has a 30% Stake in that Tower.

Those Bond Sales and the Re-Marketing of the Washington Hotel, come at a time when, Trump has at least $590 Million in Debt coming Due in the next Four years, more than Half of which is Personally Guaranteed. “We are one of the most under-leveraged real estate companies in the country relative to our assets,” Eric Trump said at the time of the Bond Sales.

Some History on the Washington Hotel. When Trump bought the Lease, he was a Private Citizen. When he became President, but sill the Majority Owner of the Trump Organization, he was in Violation of the Lease. The Lease says: No Federal Official can be the Majority Owner of the Lease. Also, as President he was the Government Offcial who controlled the Lease and the Lease Owner, at the Same Time.

The last Question: After Selling the Lease, will he still want the Mangement Contract?

NYC Wins When Everyone Can Vote! Michael H. Drucker

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