Trump’s Deutsche Bank Loans Appear To Be In Trouble

^For all the talk about Donald Trump’s debt, most of his loans are actually in decent shape. They’re pledged against valuable assets, which throw off big profits. But there are exceptions. Chief among them: The president owes an estimated $340 million to Deutsche Bank—all of which is mortgaged against troubled properties. No wonder the German bank is reportedly eager to sever ties with the president.

A Deutsche Bank representative declined to comment on the record for this story. The bank has been in a similar situation with Trump previously. In 2005, the lender agreed to extend him $640 million so that he could build a 92-story skyscraper in Chicago. Trump opened the building in 2009, while the world was still reeling from the Great Recession. One day before the Deutsche Bank loan matured, Trump sued the bank for $3 billion in damages, claiming it had helped cause the financial crisis.

Eventually, the two parties made up, and the bank agreed to loan Trump more money against the property. As the country now contends with another crisis, the building appears to be in trouble once again. So does an estimated $45 million of outstanding Deutsche Bank debt, which comes due in 2024.

The truth is, a lot of people booking rooms in Chicago don’t like Trump anymore. In 2015, his Windy City hotel generated $16.6 million of net operating income, according to documents obtained by the Washington Post. But in 2016, the year Trump won the presidency, that figure declined to $9 million. By 2018, it had fallen all the way to $1.8 million. And that was pre-pandemic. At a meeting earlier this year, the hotel’s managing director sounded the alarm: “It’s going to be very, very tough to keep the boat afloat,” he said, according to the Post.

Things don’t appear to be much better at Trump National Doral, a golf resort in Miami. Trump purchased the property for $150 million in 2012, borrowing $106 million from Deutsche Bank. He proceeded to dump a reported $213 million of additional money into the resort. In 2015, as he was running for president, Trump took out a second mortgage of $19 million, making his liabilities an estimated $125 million. Given all that he invested into the place, you’d think Trump would now be generating supersized profits that would make his interest expenses an afterthought.

But things haven’t gone according to plan. From 2015 to 2017, as Trump’s political career was blossoming, revenues at Doral fell from $92 million to $75 million. Net operating income plunged from $13.8 million to $4.3 million. Trump has a variable interest rate against the property, which makes it difficult to pin down his exact interest expenses. But it seems likely that, in 2017, Trump was barely making enough of an operating profit to cover his interest, let alone additional expenses that came after it. Revenues barely moved in 2018 and 2019.

Again, all those struggles were pre-pandemic. Doral has 643 rooms, which sat empty in early 2020, as the property shut down amid the coronavirus crisis. Before the resort reopened, Eric Trump touted the property to his 3.7 million Twitter followers, and Donald Trump retweeted the message to his 80 million-plus followers. Even still, only 38 rooms had guests the first day, according to two front desk agents. Not a good sign for the property’s 2020 prospects.

Then there’s the Trump International Hotel in Washington, D.C., perhaps the president’s most famous property. In 2013, Trump promised to invest $200 million into the hotel in exchange for the right to lease it from the government for 60 years. The Obama administration, which negotiated the deal, seems to have gotten the best of Trump. An analysis of financial documents connected to the hotel suggests that it could have produced $5 million or so in annual operating profits from 2017 to 2019. That does not appear to be enough to cover the interest expenses on the property. In September, the New York Times reported that Trump’s tax-return data showed $55.5 million of losses at the hotel from the time it opened in 2016 to the end of 2018. The loan comes due in 2024. Things may improve as the hotel industry recovers from the pandemic, but there’s little reason to think Trump’s hotel will perform better in the future than it did from 2016 to 2018.

Despite all of these challenges, a spokesperson for the Trump Organization struck an optimistic tone on Tuesday. “We have a wonderful relationship with Deutsche Bank,” the representative said in a statement. “The majority of our assets are owned free and clear, and with respect to the properties that do have mortgages, the debt is a small fraction relative to the value of the asset.”

That’s not the case with the assets in Chicago, D.C. and Miami, however. Fortunately for Deutsche Bank, Trump reportedly agreed to personally guarantee the loans. That means the bank could theoretically go after the properties—as well as other Trump assets—to get its money back. Doing so could be complicated, of course, especially given the litigious nature of the borrower. Don’t be surprised if this one gets messy.