The Trump Organization has reportedly pressed pause on plans to sell the Trump International Hotel Washington DC because no one has shown interest in paying anywhere near the $500million asking price.
The Trump Organization, which is owned by President Donald Trump and run by his children, hired top real estate firm Jones Lang LaSalle in October 2019 to find potential buyers for the 260-room hotel inside a historic post office.
The company’s initial January 2020 deadline to accept bids for the lease came and went, before the real estate industry ground to a near halt when the coronavirus pandemic took hold in March.
Nine months later efforts to sell the hotel have been put on an ‘indefinite hold’, LaSalle confirmed to CNBC this week.
People familiar with the hunt for a buyer told the outlet that there haven’t been any bids close to the half-a-million-dollar asking price – roughly $2million per room. They said several of the bids have been for less than $250million.
The Trump Organization has reportedly pressed pause on plans to sell the Trump International Hotel Washington DC (pictured) because no one has shown interest in paying anywhere near the $500million asking price
The Trump Organization hired top real estate firm Jones Lang LaSalle to find potential buyers for the 260-room hotel inside a historic post office in October 2019. Pictured: President Trump and his family hold a ribbon-cutting ceremony when the hotel opened in 2016
Unlike most of its other properties, the Trump Organization doesn’t actually own the building that houses the Trump International Hotel Washington DC.
Instead the president leased the Old Post Office building from the federal government in 2011, agreeing to pay $3million a year over 60 years, with the annual rent escalating with inflation.
The Trump Organization put in approximately $210million to renovate the property into a hotel, hosting a ribbon-cutting ceremony just weeks before Trump won the 2016 presidential election.
He brought up the project while campaigning, saying he would be in DC no matter what. He even let reporters traipse through the hotel’s ballroom while it was being constructed after a press conference in May 2016.
The building had a number of uses over the years, including – more recently – as a food court.
The National Park Service continues to run a museum on the property, where visitors can ascend the clock tower.
President Trump (center right) is shown during the 2014 groundbreaking of the DC property standing alongside sons Eric (left) and Donald Jr (center left) and daughter Ivanka (right)
The Trump International Hotel Washington DC features a spacious lobby and bar area, where allies of the president are often spotted hanging out
The Trump Organization initially hoped to get around $2 million per room for the lease of the grand hotel just blocks from the White House
After months of losses exacerbated by the pandemic, industry executives say the Trump Organization could soon be forced to either subsidize the hotel or default on the $100million loan it received for the property from Deutsche Bank.
‘At this point, they could either just turn over the keys, or keep it and make it part of whatever media company the President decides to create,’ DC real estate investor and developer Brian Friedman of Friedman Capital told CNBC.
‘I just don’t think they’re going to get the price they expected.’
Friedman’s company presented an undisclosed bid for the hotel earlier this year, but it was not accepted.
A number of major hotel brands including Marriott and Hilton had also showed interest in buying the lease, the Wall Street Journal reported in January, but its unclear if they actually made a bid.
Hotel owners who spoke to CNBC said it was unlikely that anyone will want to take over the lease even when the economy recovers after the pandemic because the annual payment to the government is so high.
Trump himself has acknowledged that he overpaid for the property with his $3million/year bid in 2011, which far exceeded competing offers.
‘I mean, we are paying too much for the Old Post Office,’ he told the Washington Post in 2012. ‘But we will make that so amazing that at some point in the future it’ll be very nice.’
Also deterring bidders is the fact that the Trump Organization required any buyer to keep the Trump name on the hotel, CNBC reported.
Unlike most of its other properties, the Trump Organization doesn’t actually own the building that houses the Trump International Hotel Washington DC. Instead the president leased the Old Post Office building from the federal government in 2011, agreeing to pay $3million a year over 60 years, with the annual rent escalating with inflation
The Trump Organization reportedly required any buyer to keep the Trump name on the hotel
Trump’s ownership of the hotel has been a source of controversy throughout his presidency as critics argued that it presented a conflict of interest.
For one, the General Services Administration’s lease states that no elected federal or DC official can benefit from the hotel.
The GSA, under the Trump administration, ignored subpoenas from the Democrat-led House Committee on Transportation and Infrastructure requesting information on how the agency deems it appropriate that the Trumps remain holding the lease.
There’s also an emoluments clause case that’s wound through the courts over whether President Trump is violating the Constitution when the hotel is patronized by foreign governments.
The Trumps are giving that money back to the US government, they claimed.
‘People are objecting to us making so much money on the hotel, and therefore we may be willing to sell,’ Eric Trump said in a statement in October 2019, previewing the sale.
The potential conflict of interest issue disappeared earlier this month when Trump was voted out of office – but concerns about his company’s ability to keep up with lease payments going forward remain.