In a surprising turn of events, former president Donald Trump pocketed $127 million when he sold his D.C. hotel in 2022. However, to close the deal, he had to lend the buyer, CGI Merchant Group, $28 million. This loan proved to be a risky move, as CGI eventually defaulted on its payments, leading to the foreclosure of the hotel by the main lender, BDT & MSD Partners, who purchased it for $100 million at auction.
Trump’s ties to the D.C. post office date back to 2012 when he won a bid to restore the historic Old Post Office into a luxury hotel. Despite objections from competitors, including Hilton Worldwide, Trump proceeded with the project, committing to monthly rent payments for 60 years. The hotel quickly became a power center during Trump’s presidency, attracting political committees and foreign dignitaries. However, the hotel’s revenue fell short of expectations, leading Trump to put it on the market in 2019 for $500 million.
After failing to attract any offers close to his asking price, Trump found a buyer in 2021 willing to pay over $370 million. However, the buyer, CGI Merchant Group, financed most of the purchase with a loan from BDT & MSD Partners. Trump also loaned CGI $28 million for transfer and mortgage taxes. Despite the change in ownership to CGI, little changed at the hotel when it reopened as a Waldorf Astoria, including retaining 95% of the staff from the Trump era.
Despite efforts to rebrand and attract new customers, the financial troubles underlying the lease ultimately led to CGI defaulting on its payments to Trump. After numerous loan amendments and missed payments, BDT & MSD initiated foreclosure proceedings on the property. Ultimately, the hotel was sold at auction for $100 million to BDT & MSD, with no other bidders present. The $28 million owed to Trump by CGI was wiped out in the foreclosure process.
While BDT & MSD remains optimistic about the future of the hotel, with a spokesperson stating confidence in the partnership with Hilton, questions remain about the viability of the hotel’s economic model. The outcome of Trump’s ongoing civil case against CGI, as well as the future performance of the hotel under new ownership, remains uncertain. Despite the challenges faced by the hotel, Hilton spokesperson declined to comment on the previous concerns about the economic model of the lease.
