Trump Real-Estate Empire Suffers Accelerating Financial Decline

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Four key buildings in the Trump Organization’s portfolio have not been performing as well financially as expected, according to data shared in a new report from CBS News, and the problems stretched before the COVID-19 pandemic, although the impact on the worldwide hospitality industry certainly has not helped. The properties where net profits have been below expectations include Trump Tower in Manhattan, the Trump International Hotel & Tower near Columbus Circle, the Trump business’s skyscraper at 40 Wall Street, and Trump Plaza, a building in Manhattan’s Upper East Side.

CBS reported that “last year marked the fifth year in a row in which the four most prominent Trump-owned buildings in Manhattan, including the Fifth Avenue Trump Tower made famous by “The Apprentice” TV show, missed lenders’ earnings expectations,” marking continued problems for the ex-president’s family business. Compounding the problems even further, CBS added that, as of this past January, three of the buildings “had been flagged by mortgage-payment processors because of their worsening financial shape.” Only around one out of every four commercial loans across the entire industry have gone on similar watch lists, according to the outlet.

As CBS explains, mortgages like the ones covering the four Trump properties in question are often “bundled by bankers into investment vehicles called commercial mortgage-backed securities,” and investors in these securities receive estimates of expected incomes at the properties — but the “four Trump properties have never met their CMBS income targets,” according to CBS. Across all four properties, net operating incomes were projected to hit a total of $45 million a year, but profits have consistently fallen below this level. In 2012, Trump Tower in particular — where Trump lived before winning the White House and then moving to Florida — was projected to imminently earn a little over $20 million in net profits a year, but the property has never reached this point.

Some of the financial deterioration at Trump properties has been recent. In January, the Kroll Bond Rating Agency placed a loan connected to the Columbus Circle-area property on a watchlist, while Wells Fargo did the same for a loan connected to 40 Wall Street on November 6, a few days after the presidential election. Trump’s business owes huge sums of money on the properties — for 40 Wall Street alone, the former commander-in-chief owes $135 million in debt, which is, according to current terms, due in 2025 — which is not that far in the future! Trump has left the option open of running for the presidency again in 2024… around the same time that he’s facing this debt.

Trump Plaza’s spot on a watchlist was, apparently, temporary, according to CBS. A PNC Bank division flagged a loan connected to the property last December, but in February — last month — they backtracked.

Going forward, the office of Manhattan District Attorney Cy Vance is investigating the Trump family business’s financing for the four buildings in question as part of their broader ongoing criminal investigation into the Trump family business. Vance’s team is investigating potential fraud at the Trump Organization, and the purview of their investigation also includes a Trump property in Westchester County, New York, known as the Seven Springs estate. Trump’s business is suspected of potentially presenting fraudulently adjusted valuations of its assets in order to secure particular financial benefits.

Speaking to CBS, finance professor John Griffin said that the consistent under-performances at Trump’s properties “raise concerns about how the financial health of the buildings was presented at the time of the deals, and how they have performed since.”