According to published reports citing anonymous sources, Donald Trump’s lavish hotel near the White House, which drew lobbyists and diplomats seeking favour with the ex-president as well as criticism as a symbol of his ethics problems, is being sold to a Miami investment company.
According to The Wall Street Journal and The New York Times, which cited persons familiar with the case, CGI Merchant Group agreed to pay the Trump Organization $375 million for the rights to the 263-room hotel and aims to rename it as a Waldorf Astoria.
Despite several attempts for comment, neither the Trump Organization nor CGI have answered.
According to the Journal, the sale is anticipated to close early next year, following which the property will be maintained by the Waldorf Astoria under a separate CGI agreement. Hilton Worldwide Holdings owns the Waldorf Astoria brand.
Since winning rights to convert a beautiful federal building known as the Old Post Office from the federal government under a lease that can last nearly 100 years with extensions, the hotel has been a major money loser for the Trump family.
Any sale must be approved by the federal agency that owns the property, the US General Services Administration.
The Trump Organization invested $200 million in its transformation into a luxury hotel, which opened in late 2016, just before Trump was elected president. According to audited data obtained by a House committee probing Trump’s conflicts of interest with the company, it then lost more than $70 million over four years. The losses began long before the epidemic forced closures, which wreaked havoc on the hotel industry.
Ethics experts advised Trump to sell the hotel and his other business assets before taking office, but he refused, and the property quickly became a magnet for the powerful and the power hungry: Industry lobbyists trying to influence policy, Republican politicians looking for a pretext
The question loomed over the din in Trump’s gilded lobby: How much were Trump’s actions impacted by his financial interests a few blocks away in the Oval Office, and, even if not, why risk tarnishing US policy with even the appearance of conflict?
Trump dismissed such concerns, claiming that he was too preoccupied with the business of government to worry about profiting from his position. In response to accusations that he was breaking the emoluments clause in the US Constitution by accepting foreign government gifts, the Trump Organization vowed to deliver a check to the US Treasury each year equal to income from foreign government supporters.
“The Trump hotel in DC stood as a bright neon sign telling foreign countries and moneyed interests how to bribe the president, and a stark reminder to Americans that his decisions as president were just as likely to be about his bottom line as about our interests,” Noah Bookbinder, president of Citizens for Responsibility and Ethics in Washington, said. “To say the least, selling it now that he’s out of office and the grift has dried up is too little, too late.”
According to its website, CGI handles $325 million from wealthy families, entertainers, and sports figures, and invests in office buildings and hotels, among other types of property. In addition, late last year, the firm formed a $650 million fund with baseball star Alex Rodriguez and another financial firm to buy hotels and convert them to Hilton brands.
CGI has also created a brand of “socially conscious” hotels that support local charities, use eco-friendly items, and donate to local organisations. As part of its socially aware services, it announced in September that it would open the Gabriel South Beach, a hotel in Miami with a glass-bottomed pool overlooking the Atlantic Ocean. The hotel will be part of the Hilton’s Curio Collection.
Raoul Thomas, the firm’s CEO and a Jamaican, has given generously to Democratic candidates, including Joe Biden’s campaign. He is a member of the National Association of Black Hotel Owners’ senior board of directors. Morris Brown College in Atlanta has received a $30 million investment from his company for a hotel and hospitality training programme. Morris Brown College is a historically Black university in Atlanta.
Given that the terms of the agreement have not been published, it’s unclear how much money the Trump family will make from the sale. Hotel sales frequently feature “earn outs,” in which the seller is only paid the full amount pledged if the buyer meets specified financial targets in the years following the deal’s closing.
When the Trump family first put the property on the market in the fall of 2019, they hoped to get $500 million for it. It was taken off the market last year and then reintroduced this year.
Given how few executives, tourists, and lobbyists visit Washington, a few hotel experts were astonished by the reported sale price.
A price equivalent to $1 million for each room, according to Bill Collins, executive vice chair of commercial real estate broker Cushman Wakefield, is “top dollar” in the business. According to that estimate, the Trump hotel is worth no more than $263 million, roughly $100 million less than it is said to have sold for.
He told the Associated Press last month that “they put too much money into it and couldn’t drive up the occupancy.” “Could someone do a better job?” Maybe, but only a smidgeon.”