Reports: Trump sells DC hotel to investment firm for $375 million
WASHINGTON (AP) — Donald Trump’s lavish hotel near the White House that has drawn favor-seeking lobbyists and diplomats from the ex-president as well as criticism as a symbol of his ethical clashes is sold to a Miami investment group, according to published reports citing unnamed sources.
CGI Merchant Group has agreed to pay the Trump Organization $375 million for the rights to the 263-room hotel and plans to rename it Waldorf Astoria, according to the Wall Street Journal and New York Times, citing sources with knowledge of the topic. .
Neither the Trump Organization nor CGI responded to numerous requests for comment.
The deal is expected to close early next year, after which the hotel will be managed by the Waldorf Astoria under a separate deal by CGI, according to the Journal. Waldorf Astoria is owned by Hilton Worldwide Holdings.
The hotel has been a big loser for the Trump family since winning the right to convert a stately federal building called the Old Federal Post Office under a lease that, with extensions, can last almost 100 years.
The federal agency that owns the property, the US General Services Administration, must approve any sale.
The Trump Organization paid $200 million to convert it into a luxury hotel, opening in late 2016, shortly before Trump became president. He then lost more than $70 million over four years, according to audited reports obtained by a House committee investigating Trump’s conflicts of interest with the company. The losses came even before the pandemic led to closures, hammering the hospitality industry.
Ethics experts urged Trump to sell the hotel and other business assets before he took office, but Trump refused and the hotel quickly became a magnet for the powerful and power-seekers: industry lobbyists trying to shape policy, Republican politicians seeking a presidential imprimatur, and diplomats from Azerbaijan, the Philippines, Kuwait and other countries.
Above all the din of his gleaming lobby loomed the question: To what extent were the decisions Trump made a few blocks away in the Oval Office shaped by his financial interests and, even if not at all, why risk tarnishing American politics with even the appearance of conflict?
Trump dismissed those concerns, saying he was too busy with government to care about making money from his office. The Trump Organization has promised to send a check to the US Treasury each year equal to the profits of foreign government patrons, a response to criticism that it violates the US Constitution’s emoluments clause banning gifts from foreign governments.
“The Trump DC Hotel was a neon sign telling foreign countries and financial interests how to bribe the President and a stark reminder to Americans that his decisions as President were just as likely to affect his bottom line as our interests,” said Noah Bookbinder, president of Citizens for Responsibility and Ethics in Washington, a watchdog group. “Selling him now that he’s out of power and the money has dried up is too little, too late, to say the least.”
The buyer, CGI, manages $325 million of wealthy families, artists and sports personalities, investing in office buildings and hotels, among other types of property, according to its website. Additionally, the company teamed up late last year with baseball star Alex Rodriguez and another investment firm to launch a $650 million fund to buy hotels and convert them to Hilton brands. .
CGI has also launched a chain of “socially responsible” hotels that donate to local charities, support local businesses and purchase environmentally friendly products. In September, it announced it would open a Miami hotel with a glass-bottom pool overlooking the Atlantic Ocean called Gabriel South Beach as part of its socially responsible offerings. The hotel will be part of Curio Collection, a Hilton chain.
The company’s head, Jamaican-born Raoul Thomas, has made large donations to Democratic Party politicians, including Joe Biden’s campaign. He is a board member of the National Association of Black Hotel Owners. His company has invested $30 million in Morris Brown College in Atlanta for a hotel and hospitality training program at the historically black Atlanta institution.
It’s unclear how much money the Trump family will make from the sale as the terms of the deal were not disclosed. Hotel sales sometimes include “earn outs” in which the seller only receives all the money promised if the buyer meets certain financial goals within years of closing the deal.
The Trump family originally hoped to get $500 million for the hotel when they first put it on the market in fall 2019. It was taken off the market and then put back up this year .
Some hotel experts were surprised by the advertised price given how few business people, tourists and lobbyists come to Washington.
Bill Collins, executive vice president of commercial real estate brokerage Cushman Wakefield, said a $1 million equivalent price for each room is the “best dollar” in the industry. According to this rough valuation, the Trump hotel would be worth no more than $263 million, almost $100 million less than he would have gotten.
“They put too much money into it and couldn’t increase occupancy,” he told the AP last month. “Can anyone handle it better?” Maybe, but only marginally.