Trump completes sale of Washington hotel to investor group

The 263-room hotel still pulled in an exceptionally high sale price, given its location on Pennsylvania Avenue. PHOTO: NYTIMES

WASHINGTON (NYTIMES) - The Trump International Hotel in Washington is now officially out of business after the Trump family on Wednesday (May 11) completed its sale to a Miami investor group, which plans to reopen it as a Waldorf Astoria.

The sale formally ended the Trump family's business presence in Washington, although the family company still owns a golf course in northern Virginia. The deal with the investor group, CGI Merchant Group, for a reported price of US$375 million (S$521 million) covers only the operation of the hotel, which is housed in a building leased from the federal government.

Hotel industry executives have said the hotel underperformed compared with other luxury hotels in the city, particularly since Donald Trump left office, in part because some companies and travellers were reluctant to book rooms or hold events at the hotel given the controversies surrounding the former US president. Those factors most likely contributed to the decision to sell the lease, they said.

But the 263-room hotel still pulled in an exceptionally high sale price, given its location on Pennsylvania Avenue, between the White House and the Capitol, and its presence inside a Washington landmark, the Old Post Office Building, whose clock tower makes it one of the tallest buildings in the capital.

The average sales price for hotels in Washington in 2020 was US$354,000 per room, according to a survey by JLL, a real estate firm. The reported price for the Trump hotel deal suggested a per-room price of more than US$1 million, a level that surprised some veteran real estate executives in Washington.

The hotel, which opened just a few weeks before Trump was elected president in 2016 after a US$200 million renovation of the once-decrepit building, became a gathering place for his supporters, members of his Cabinet, lobbyists, Republicans in Congress and foreign leaders, some of whom were on their way to see Trump.

"We took a dilapidated and underutilised building and transformed it into one of the most iconic hotels in the world," Eric Trump, Trump's son and an executive vice president of the Trump Organisation, said in a statement on Wednesday announcing the closing of the sale.

A spokesman for CGI declined to comment.

But since 2020, the hotel has generally seen sparse crowds in its sprawling lobby, including late last week, several days before the closing, when just a few tables were occupied at the lobby bar.

"It is a beautiful property," said David Lentz of Placentia, California, who visited the lobby last week. "Good for him, if Trump is making more money on it."

But some would-be guests expressed frustration after they received calls telling them their reservations had been cancelled. "They are just stiffing everyone," said Jayson Woodbridge, a California winemaker who had a reservation for a week-long stay at the hotel to attend his daughter's graduation in the area.

Last week, Mickael Damelincourt, the long-time manager of the hotel, moved from table to table to greet some of the regulars at the lobby bar, pausing to take photos with several of them in advance of the hotel's sale. The BLT Prime restaurant at the property had already closed permanently, as had the Ivanka Trump spa, and the hotel itself was no longer taking room reservations.

Just days before the sale closed, the Trump Organisation and Trump's 2017 inaugural committee agreed to settle a lawsuit filed by Karl A. Racine, the attorney general for the District of Columbia, who had claimed that the hotel had illegally received excessive payments from the inaugural committee, totalling more than US$1 million.

The settlement in the lawsuit came with no admission of wrongdoing by the Trump Organisation, the former president or the inaugural committee.

Those claims were among the many allegations in various lawsuits that Trump improperly profited from the presidency through payments made to the hotel by, among others, lobbyists and foreign governments. Suits from the state of Maryland and Democratic members of Congress cited the emoluments clauses of the Constitution, which prohibit federal officials from accepting financial benefits from foreign governments without congressional approval.

The Trump family has paid the federal government a base rent of US$3 million a year for the Old Post Office Building, according to its 2013 lease. The sale will generate a profit of about US$100 million for the family, once a loan taken out to pay for the renovations is paid off, according to estimates by House Democrats.

The contract with the federal government that the Trump Organisation signed called for the company to share some of its profits with the government if the hotel were sold. But a Trump Organisation executive said the way the lease was written - allowing the Trump family to earn a 20 per cent annual rate of return on equity put into the hotel project - meant there was not likely to be a large amount of such profit-sharing.

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