People keep wondering who Trump owes $ 400 million to? That is not the real problem. – Mother Jones
Last month, in the first episode of his series on Trump’s taxes, the New York Times noticed – as Mother jones had previously reported that Donald Trump owed more than $ 400 million over the next four years. Commentators and politicians have picked up on this data point and demanded that it reveal its creditors. Kamala Harris brought up the issue during last week’s Vice Presidential Debate and said, “It would be really good to know who the President of the United States, the Commander-in-Chief, owes money to because the American people have a right to know what influences” the decisions of the president. ”At NBC City Hall last night, Savannah Guthrie Trump also put pressure on his debt. “Who do you owe $ 421 million to?” She asked. Trump, for his part, veiled.
But the controversy surrounding Trump’s creditors misses the point. It is – mostly – known who has it on the hook. The real problem is this: how does Trump, whose businesses stalled prior to the coronavirus pandemic and have since been battered, plan to deal with this soon-to-come debt?
Here’s what we know about Trump’s liabilities, based on the personal financial return forms he has been filing annually since 2015 and other public records: He has at least fourteen loans through seven lenders. According to Trump data (where assets and liabilities are given in ranges), those loans could be in excess of $ 650 million. There is, of course, a major caveat here: We assume that Trump was truthful with these documents. It is illegal to lie on them, but they are not tested.
The amount of money Trump owes and to whom is important there Mother jones reported since Trump took office, these debts represent an unprecedented conflict of interest. They are a leverage on an incumbent president, and intelligence experts say Trump’s debts are not only an ethical issue but also a national security issue.
Last night when Guthrie Trump came across the New York Times‘Recent revelations about his taxes and finances, she asked him if he owed any foreign banks. “Not that I know of,” replied Trump. It was a surprising – and strikingly false – claim. His largest (and primary for the past decade) lender is German financial giant Deutsche Bank, which has loaned him at least $ 320 million. And all of that debt falls due in the early years of a theoretical Trump second term.
In June, Mother jones reports on these and other loans that Trump will have to pay off or refinance over the next four years. Based on Trump’s information, we estimated the outstanding amount to be $ 479 million. the Times, based on Trump’s tax returns, put the figure at $ 421 million. These are Trump’s maturing debts:
- Deutsche Bank ($ 125 million): In 2012, Trump took out two loans from Deutsche Bank, totaling $ 125 million, to help the aging and recently bankrupt Doral Golf Course near Doral Miami to buy. They are due in 2023. Both are floating rate loans, which means that the interest rate fluctuates depending on the market. Commercial finance experts told the story Mother jones this also means that it is likely to be an interest-only loan. He probably owes them the full amount (or almost).
- Deutsche Bank ($ 170 million): In 2014, Trump borrowed $ 170 million from Deutsche to develop his luxury hotel in DC. The loan is due in 2024.
- Deutsche Bank ($ 25 to 50 million): Trump tied a loan to his Chicago hotel and tower, which he has been slowly paying off since 2014. The rest is due in 2024.
- Ladder Capital ($ 100 million): In 2012, Trump refinanced a previous mortgage on his beloved Trump Tower and took out a new $ 100 million loan from Ladder Capital, a Wall Street firm specializing in debt securitization -Dollars on.
- Ladder Capital ($ 13 million): Trump owes Ladder an additional $ 13 million for his Trump Plaza building.
So we know who Trump owes and for how much he is responsible (see also the reservation above). The big unknown is how Trump is going to deal with this debt. It’s a problem because as rich as Trump is – he has some valuable assets – he doesn’t necessarily have a lot of cash. the Times The story, based on an analysis of his tax returns, portrays a man who receives monetary profits – from his father’s estate, from his work on the apprentice, and from various advertising and license agreements – and then immediately fizzled out and had to look for money. Some of Trump’s properties are far from profitable and some, like his Scottish resorts, are bleeding to death.
So repaying the loans doesn’t seem like an option. His most recent financial disclosure shows that Trump had between $ 46.7 million and $ 156.6 million available in checking or money market accounts at the end of 2019. He, of course, has assets that he could sell. In fact, the Trump Organization pushed through the sale of its DC hotel before the pandemic, and recently Trump’s company spoke of selling a property in Westchester that Trump unsuccessfully attempted to convert into a golf course.
If Trump can’t pay the debt, he’ll have to refinance it. But banks weren’t interested in doing business with Trump before he became president. Who in the world would lend Trump money now? As we reported this summer:
Nancy Wallace, professor of real estate finance at the Haas School of Business at the University of California at Berkeley, says the exam Deutsche Bank faced could put other banks off. “I think any bank I can think of in the United States would have exactly the same reaction: It’s toxic. Exposing yourself to this type of oversight under the current regulatory reality is just a non-starter for lenders large enough to provide them with capital. “
Deutsche Bank has reportedly already told Trump that it will not do business with him while he is in politics. And he wasn’t a good partner to work with.
Though Trump and Frankfurter Bank made several profitable deals, the Germans’ commercial credit department eventually learned the hard way why other banks viewed him as persona non grata: when he is pressured into payments by his creditors, Trump pushes back. In 2008, after defaulting on a loan for his Chicago hotel and condominium development, he filed a multibillion dollar lawsuit accusing Deutsche Bank and others of contributing to the recent financial crisis, the he blamed his inability to repay the loan.
Non-bank lenders like Ladder Capital, who typically charge higher interest rates and are not as flexible with repayment, could be an option for Trump. But these types of companies tend to be numbers only. Since they are securitizing loans, they are not particularly interested in who you are or your story. They just want to make sure that these loans bring a profit to the investors. At least on some of Trump’s properties – especially his golf courses – the numbers don’t work, experts say.
Kevin Riordan, a longtime real estate financer and director of Rutgers University’s Center for Real Estate, says Ladder has been successful in his previous deals with Trump – but notes that economics have changed. Ladder and its competitors in the commercial mortgage-backed securities (CMBS) industry can only lend if there is a real estate bond market that could dry up during a financial crisis. “It’s a completely different ball game today,” he says. He adds that the CMBS industry has largely stopped funding golf courses in recent years – since these are seasonal deals, they’re not considered a safe bet.
“The world has changed a lot since 2012 and I think the Trump organization is not suitable for this new world.” [Nancy] Wallace says. “That doesn’t mean there isn’t a private equity firm that is tempted to pay a very high coupon.”
And that’s exactly what Trump may be left with – to turn to the private equity world, or rather “opportunistic lenders,” as a former Trump banker put it. In the end, there is no shortage of financial players – conservative billionaires, foreign banks, sovereign wealth funds – who would be ready, perhaps even eager, to help Trump out of the refinancing backlog. That, of course, begs the troubling question at the heart of the issue: what could Trump’s financial savior want in return?