WASHINGTON, (AP) — A Miami investment group is buying Donald Trump’s opulent hotel next to the White House. The hotel attracted both diplomats and lobbyists who sought favor with Trump.
CGI Merchant Group paid $375 million to Trump Organization for the rights to the hotel with 263 rooms. According to The Wall Street Journal, The New York Times and sources familiar with the matter, the group plans to rebrand the hotel as Waldorf Astoria.
CGI and the Trump Organization did not respond to multiple requests for comment.
According to the Journal, the deal is expected close in the first quarter of next year. After that, the hotel will be run by Waldorf Astoria as part of a separate agreement with CGI. Hilton Worldwide Holdings owns the Waldorf Astoria company.
Since the Trump family won the rights to convert the Old Post Office, a federally owned building, from the federal government, the hotel has been a huge money loser. The lease, which can be extended up to 100 years, allows for the hotel’s conversion.
Each sale must be signed off by the U.S. General Services Administration which is the federal agency that controls the property.
Trump Organization invested $200 million in the hotel to make it a luxury hotel. The doors opened in 2016 just before Trump took office. According to audited reports that were obtained by the House committee investigating Trump’s conflicts-of-interest with the company, it lost more than $70million over four years. These losses were made even before the pandemic, which led to hotel industry closures.
Trump was urged by ethics experts to sell the hotel and other business assets before he took office. However, Trump refused to do so. The hotel became a magnet for powerful and power hungry people: Lobbyists from industries looking to influence policy, Republican politicians seeking a presidential imprimatur and diplomats coming from Azerbaijan to the Philippines, Kuwait and other nations.
The question loomed over the noise of Trump’s glittering lobby. How much was Trump’s decision-making influenced by his financial interests?
Trump dismissed these concerns, saying that he was too busy with his business of governing to worry about making money from his office. In response to criticisms that Trump was violating the U.S. Constitution’s emoluments clause, the Trump Organization pledged to send the U.S. Treasury a check each year equal to foreign government patrons’ profits.
“The Trump hotel DC served as a bright, neon sign telling foreign nations and moneyed interests how they can bribe the president and a stark reminding to Americans that his decision as president were just as likely be about his bottom lines as about our interests,” Noah Bookbinder of Citizens for Responsibility and Ethics Washington (a watchdog group), said. “Selling it now after he leaves office and the grift is dried up is, at the very least, too little too late.”
According to CGI’s website, the purchaser manages $325million from wealthy families, entertainers, and sports figures. CGI invests in office buildings and other types of property. CGI partnered with Alex Rodriguez (baseball star) and another investment firm late last year to launch a $650 million fund that will buy hotels and turn them into Hilton brands.
CGI also has a network of hotels called “socially conscious”. These hotels support local charities and businesses, and purchase eco-friendly products. It announced in September that it would open a Miami hotel with a glass-bottomed pool and overlooking the Atlantic Ocean, called the Gabriel South Beach. This is part of its socially conscious offerings. The Curio Collection is a Hilton hotel chain.
Raoul Thomas (Jamaican-born) is the head of the firm. He has donated heavily to Democratic party politicians including Joe Biden’s campaign. He is a member of the National Association of Black Hotel Owners’ senior board. His firm invested $30 million in Morris Brown College, Atlanta, for a program in hospitality and hotel management.
Due to the terms of the deal not being disclosed, it is not clear how much money Trump’s family makes from the sale. Sometimes, hotel sales include “earn-outs,” which are where the seller gets all the money promised to the buyer if they achieve certain financial goals within the year.
When the hotel was first listed on the market in fall 2019, the Trump family originally hoped to raise $500 million. It was then pulled from the market, and then put back on the market again this year.
Considering how few tourists, businessmen and lobbyists visit Washington, a few hotel experts were shocked by the reported deal price.
Cushman Wakefield’s executive vice chair Bill Collins said that a room selling at $1 million per night is the “top dollar” price in the business. This rough valuation would have the Trump hotel worth less than $263 million. That’s close to $100 million less than what it was reportedly offered.
According to him, “They invested too much money in it and couldn’t drive up the occupancy.” He told the AP last month. “Can someone manage this better?” “Maybe, but only marginally.”