USA | Trump International Hotel DC sale indefinitely suspended amid low bids
The Trump Organization has reportedly pressured plans to sell the Trump International Hotel Washington DC because no one has shown interest in paying close to the asking price of $ 500 million.
The Trump Organization, which is owned and run by President Donald Trump, hired the largest real estate agency Jones Lang LaSalle in October 2019 to find potential buyers for the 260-room hotel in a historic post office.
The company's original January 2020 deadline for accepting offers for the lease came and went, before the real estate industry came to a virtual halt when the coronavirus pandemic took hold in March.
Nine months later, efforts to sell the hotel were indefinitely suspended, LaSalle confirmed to CNBC this week.
People familiar with buyer research told the outlet that there had been no offers close to the asking price of half a million dollars - about $ 2 million per room. They said several of the offers were under $ 250 million.
The Trump Organization hired the largest real estate company Jones Lang LaSalle in October 2019 to find potential buyers for the 260-room hotel in a historic post office in October 2019. Pictured: President Trump and his family are hosting a inauguration ceremony when the hotel opened in 2016
Unlike most of its other properties, the Trump Organization does not actually own the building that houses the Trump International Hotel Washington DC.
Instead, the president rented the old post office building to the federal government in 2011, agreeing to pay $ 3 million a year over 60 years, with the annual rent rising with inflation.
The Trump organization invested around $ 210 million to renovate the property into a hotel, hosting a ribbon cutting ceremony just weeks before Trump won the 2016 presidential election.
He spoke about the project during his campaign, saying he would be in Washington no matter what. He even let reporters roam the hotel's ballroom during its construction after a press conference in May 2016.
The building has had a number of uses over the years, including - most recently - as a food court.
The National Park Service continues to operate a museum on the property, where visitors can climb the clock tower.
President Trump (center right) is pictured during the 2014 DC Ownership Revolution alongside his sons Eric (left) and Donald Jr (center left) and daughter Ivanka (right)
The Trump International Hotel Washington DC has a spacious lobby and bar, where the president's allies are often seen
The Trump Organization initially hoped to get around $ 2 million per room to rent the large hotel a few blocks from the White House
“At that point, they could just hand over the keys, or keep them and make them part of whatever media company the president decides to create,” Friedman Capital DC real estate investor and developer Brian Friedman told CNBC.
“I just don't think they'll get the price they expected.
Friedman's company made an undisclosed offer for the hotel earlier this year, but it was not accepted.
A number of big hotel brands, including Marriott and Hilton, had also expressed interest in buying the lease, the Wall Street Journal reported in January, but it's unclear whether they actually made an offer.
Hotel owners who spoke to CNBC said it was unlikely that anyone would want to take over the lease even when the economy recovers from the pandemic, because the annual payment to the government is so high.
Trump himself admitted he overpaid for the property with his $ 3 million / year bid in 2011, which far exceeded competing bids.
“I mean, we're paying too much for the old post office,” he told the Washington Post in 2012. “But we're going to make it so amazing that at some point in the future it will be very pleasant."
The fact that the Trump organization has required any buyer to keep the Trump name on the hotel is also a deterrent to bidders, CNBC reported.
Unlike most of its other properties, the Trump Organization does not actually own the building that houses the Trump International Hotel Washington DC. Instead, the president rented the old post office building to the federal government in 2011, agreeing to pay $ 3 million a year over 60 years, with the annual rent rising with inflation.
The Trump Organization reportedly asked 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 have argued it presents a conflict of interest.
On the one hand, the General Services Administration lease stipulates that no elected federal or DC can benefit from the hotel.
The GSA, under the Trump administration, ignored subpoenas from the Democratic-led House Transport and Infrastructure committee, asking for information on how the agency deems it appropriate for the Trumps to continue to hold the lease .
There is also a fee clause case that is being taken to court over whether President Trump violates the Constitution when the hotel is sponsored by foreign governments.
The Trumps are giving that money back to the US government, they said.
“People are opposed 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, anticipating the sale.
The potential conflict of interest issue disappeared earlier this month when Trump was removed from office - but concerns about his company's ability to keep up with lease payments going forward remain.
