Trump facing disastrous debt load? Experts say not so soon

NEW YORK (AP) – President Donald Trump reportedly should repay more than $ 300 million in debt over the next four years, raising the possibility that his lenders may face an unprecedented situation, giving him a second. Must win tenure and not be able to raise funds: leading on the leader of the free world.

But financial experts say Trump’s perception will break soon.

Even with a total debt load of over $ 1 billion across his entire business empire, he notes that he still has plenty of assets in which he can cash in, starting with a portfolio in which the office And condo towers, golf courses, and branding deals that cost $ 2.5 billion.

For example, Forbes magazine sold its partial interests in only two properties — an office complex in San Francisco and a Las Vegas tower that houses a hotel and condos — based on the value of their buildings – bringing in $ 500 million alone. Can.

And even if he doesn’t sell, that kind of valuation that supports the loan can make it easier for them to refinance.

“He is going to be able to eliminate these debts. They have collateral support. They are not at risk for lenders, ”said Philip Braun, a finance professor at the Kellogg School of Business at Northwestern University.

Trump’s true financial picture has led to a renewed investigation in the wake of a New York Times report This week that he announced a loss of hundreds of crores in recent years, which allowed him to pay just $ 750 in taxes in the presidential winning year and did nothing for 10 to 15 years before that.

But the Times report was quick to note that tax filings may not help anyone determine their net worth. And many experts told The Associated Press that, while the exact status of Trump’s financial position is unclear because of a lack of public information, he might not be splurging for money.

There is often a wide gap on the issue of what businesses report to the IRS as profits and losses and what they actually receive in the profits they put in their pocket.

Lots of real estate investors report large losses under tax accounting rules and pay very little in federal taxes. That is because the tax code Allows them to reduce their tax bills with myriad legal loopholes and breakdowns, sometimes including generous depreciation charges that reflect the expected wear and tear on buildings.

Braun of Northwestern said Trump’s minuscule tax payment did not surprise him, nor claimed damages. “His accountants really work to make sure he doesn’t pay any taxes,” he said.

Brump said a better idea of ​​how Trump is better comes from Trump’s operating profits.

Forbes, which has been evaluating Trump’s assets for decades for its annual billionaire issue, says Trump’s 40 Wall Street office towers raised $ 18 million in operating profits in 2019, Trump Tower $ 13 million and San Francisco’s Trump’s stake in 555 California Street Tower generated $ 26 million.

Even epidemic reduction prices leave Trump with $ 2.5 billion in assets and other assets, according to Forbes’ latest valuation, and his $ 1.2 billion debt is then deducted.

The Times said that Trump’s real estate company has a $ 421 million loan that he personally guaranteed, with $ 300 million that is due in four years.

The Trump Organization did not immediately respond to an email and phone call. Trump dismissed The Times called Monday as “fake news” and said she was “extremely weak”.

“I have very little debt compared to the value of my assets,” he wrote.

His lenders listed in his personal financial disclosure are New York-based commercial lender Stair Capital, which owes at least $ 110 million, and the Bryn Mawr Trust Company is a suburban Philadelphia bank that has $ 5 million in Trump loans and $ 25 million Is for. New York Estate Seven Springs, owned by the Trump Organization.

Trump’s biggest lender on his disclosure is Deutsche Bank, his principal financier two decades behind. This helped him buy several buildings in New York and Chicago and help him fix his Doral Golf Club in Miami. It owes at least $ 125 million with loans due due in 2023 and 2024.

An alternative for Trump is for his lenders to refinance their loans or to take out a new loan. Deutsche Bank is an obvious candidate to help with this as it has been forgiving him for years.

Trump defaulted on bonds that the bank helped sell to investors in Atlantic City, New Jersey to finance his casino, and gave a bank loan for his Chicago hotel and condo tower, and the bank still lent him Has continued to give.

Mike Offit, a former executive at Deutsche Bank who loaned Trump in the late 90s, said that if the borrower’s assets were still throwing good cash, and everything else was fine, the trunk loan would be accompanied by the bank’s The easiest solution is not to pay back, just to be pushed out on the due date.

“If I was sitting at my old job and the Trump loan was going to come next year and he is the president, I would just say let’s increase maturity.”

But many other real estate experts are not sure that Deutsche Bank could be ready to help Trump any more.

The bank has been subjected to money laundering and tax evasion investigations in Germany and the US, and last year alleged a Foreign Trade Conduct Act in association with US stock market regulators to hire relatives of government officials in Asia and Russia Had compromised to trade for infringement from. For its investment banking division. In addition, its US division had in recent years thwarted some annual “stress tests” administered by the Federal Reserve, hampering lending capacity for a while.

Deutsche Bank declined to comment.

Another problem: Not all of Trump’s lending banks and other institutions are ones he can negotiate with a table.

Nancy Wallace, a real estate professor at the University of California at Berkeley’s Haas School of Business, said Trump’s millions of bank loans have been packed into bonds and sold to investors, and banks are no longer in charge. If a borrower feels that it is in trouble, there may be little room to break it.

Office buildings and hotels have also been particularly affected by lockdown and travel restrictions. So lenders may no longer be eager to lend to Trump, and selling parts of his vast empire to raise cash will not be so easy either, and he is unlikely to get full value,

Still, “The real estate loan market is difficult at the moment, but for cash-throwing buildings? Bernard Kent, president of Scitcher Investment Advisors in Detroit, said that shouldn’t be a problem. “For something like Trump Tower, future cash flows will not be significantly affected by COVID-19 or people moving out of New York. Top-flight properties hold value. “

If all is lost, and Trump is really in trouble, some experts say there is another way he can raise money to pay off his lender: rocker David Bowie, who used to sell bonds that gave investors Allow your music to make money from royalty.

“Trump bonds” will enable investors to sell, say, share their names with condo builders or steak or purveyors of Cologne or neckties in their future earnings.

“Trump has a brand that has value,” Kent said.


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