Trump just pulled a lifeline out of his debt hole – or did he? –Mother Jones

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Donald Trump likes to brag about his empire of high-end hotels, golf resorts and apartments, but much of his wealth actually comes from another source. Of Trump’s estimated $2.5 billion net worth, about $780 million is tied to a partnership with Vornado Realty Trust, one of the nation’s largest commercial real estate companies. Together, Trump and Vornado own two high-profile office buildings on opposite coasts: 1290 Avenue of the Americas in New York City and 555 California Street in the heart of San Francisco’s financial district. Trump owns a 30% minority stake in the company, and he has no say in how the buildings are operated, nor do they bear his name. But the former president could be on his way to earning a big and desperately needed paycheck from the venture.

Earlier this week, Bloomberg reported that Vornado had successfully refinanced the California Street property with a $1.2 billion loan from JPMorgan, drawing in $617 million of equity in the process. This could be great news for Trump. In his four years in the White House, revenue from nearly all of his businesses declined, his company closed few new deals (and no new deals overseas), and sales of luxury condos which had previously provided a constant flow of money almost ceased (with a few notable exceptions). And the pandemic made a bad situation worse.

Meanwhile, Trump is in a lot of debt. He came into office because of as many like 640 million dollars, according to his personal financial disclosure documents. And, with his presidency over, many of those loans are coming due. trump must up to half a billion dollars to various lenders over the next four years. If Trump were virtually any other businessman, he could probably easily refinance or extend some of these loans. But Trump is not just any other businessman. His long record of corporate bankruptcies and lender stiffs and lawsuits has made him an outcast to most banks – and that was before his presidency made him even more toxic.

Yet, as long as he was no longer president, Trump probably would not have had too much very difficult to find someone to refinance their loans, although the conditions may not be ideal, commercial real estate insiders say Mother Jones. Then January 6 arrived.

The insurgency, which Trump has openly encouraged, has changed the calculus for many companies that deal with Trump. In the aftermath of the attack, nearly every financial institution Trump has dealt with said they wouldn’t do business with him again. In fact, a number of its financial partners, including a small Florida bank that was its most recent lender, announcement they closed his accounts and returned his money. Even the PGA, drawn his 2022 Championship from Trump’s Bedminster, New Jersey Golf Course. Meanwhile, many tenants of Trump’s properties have said they will move out, meaning his building will no longer be as attractive to investors who don’t care to associate themselves with Trump.

In other words, after January 6, the question of how to repay those pending loans became much more acute, because the likelihood of finding someone to refinance the debts, even on poor terms, decreased significantly. If he cannot refinance the loans, Trump will have two options: repay the loans himself or default. Barring a sudden cash injection, the first option would likely require him to sell one or more of his signature properties. So if Trump could getting his hands on a big pile of money would really help him right now.

Vornado’s refinancing of 555 California could provide that significant cash injection – and if Vornado refinances 1290 Avenue of the Americas in New York, as is believed, it could receive more cash. could is the key word.

Only Trump and Vornado know how much Trump is likely to receive from the 555 California refinance. This is all dictated by the terms of their partnership agreement, says Kevin Riordan, a commercial real estate investor and professor of commercial real estate at Rutgers University and Montclair State University. “Can he make money from it? Yes. But we can’t say how many,” he says.

It could be as simple as Trump getting 30% of the money, due to his 30% stake, but that’s not likely. Riordan says that for a number of reasons – either because of the original terms of the partnership agreement or if Trump failed to live up to his end of the deal, failing to contribute his share when money was necessary, for example – Vornado may be able to claim most of the money from the refinance and has the upper hand in deciding how the money will be distributed.

Trump has been an even less equal partner in the relationship than his 30% stake already implies. He more or less stumbled in the arrangement. In the 1980s, he bought a huge swath of properties on Manhattan’s West Side, with the idea to build a huge “Trump City” above what had been the old Penn Central rail yards. This project was a huge flop and Trump defaulted on the loans he had taken out to purchase the property. But he had a stroke of luck when Hong Kong investors agreed to buy out the whole mess, and even let him remain a partner, provided he only had 30% ownership and he didn’t has no decision-making power. Investors eventually sold what remained of Trump’s development and reinvested in 555 California and 1290 Avenue of the Americas. They then sold the properties – partnership with Trump and all – to Vornado.

Steve Roth, a billionaire real estate mogul who runs Vornado, has been friends with Trump over the years, but recently there have been rumors that Vornado was less than happy with Trump as a partner.

After the November election, with Trump still contesting the results, Vornado began shopping around the two buildings, hoping to cash in. There were no takers, although the properties are considered “trophy buildings,” Riordan says. the the wall street journal reported that Vornado executives concluded that it was Trump’s involvement that made the properties unsaleable. After the January 6 insurrection, the Newspaper reported Vornado was looking for a way out of their partnership with Trump.

There’s no indication that this refinancing kicked Trump out of the deal, but Riordan says major events like a refinancing are often an opportunity for partners to reset their partnership agreements.

Since leaving office, Trump has reportedly been aloof from his business and preoccupied with political and political score settling. fight against control of republican fundraising away from the RNC. There are no major new Trump Organization projects underway and no signs that Trump companies are recovering from their pandemic-induced blows. He needs the Vornado refinancing money more than ever, but whether he will get it remains to be seen.

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