Trump’s businesses teetering – With insights from The Wall Street Journal

The King is Dead. Long Live the King. In outgoing US president Donald Trump's case, the entire business kingdom is also teetering. Highly geared Trump Organization is getting heat from lenders now falling over each other to distance themselves with the man blamed for the mob that last week over-ran America's seat of government. As more financiers follow the lead of Deutsche Bank which is calling up its loans, the president's Trump Tower-based empire (below) faces a challenging future. Here's the latest from our partners at The Wall Street Journal. – Alec Hogg.Use Spotify? Access BizNews podcasts here..Use Apple Podcasts? Access BizNews podcasts here..___STEADY_PAYWALL___.Capitol riot threatens Trump's already-hurting business.A struggle by golf courses and resorts to attract and keep members would weigh on the overall Trump Organisation.By Brian Spegele and Craig Karmin of The Wall Street Journal.Updated Jan. 12, 2021 5:49 pm ET.The storming of the Capitol last week by a pro-Trump mob will ratchet up the pressure on President Trump's family business at a moment when some of his most lucrative assets were already suffering from the pandemic and facing looming debt payments..One of the Trump Organization's most loyal partners, German lender Deutsche Bank AG , is moving to distance itself from the president's businesses and is unlikely to lend it more money, said a person familiar with the matter. The bank has lent the Trump Organization more than $300 million that will mature in 2023 and 2024, forcing the company to refinance the debt or pay it off by potentially selling assets..Deutsche Bank was one of the few major financial institutions willing to do business with Mr. Trump, who has a tumultuous financial history. Since the riots, the Trump Organization's access to the financial system was squeezed further.New York-based Signature Bank SBNY 2.16% and Coral Gables, Fla.-based Professional Bank said they would be closing Mr. Trump's accounts. Signature Bank, where Mr. Trump had $5.3 million, urged the president to resign. "We witnessed the president of the United States encouraging the rioters and refraining from calling in the National Guard to protect the Congress in its performance of duty," the bank said.Professional Bank also said it was immediately winding down its relationship with the Trump Organization and its affiliates and wouldn't do business with them in the future.One reliable way for the Trump Organization to raise money has stalled. Vornado Realty Trust, VNO 1.89% a real-estate firm that owns an office tower in New York City and one in San Francisco with the Trump Organization, is pausing plans to refinance the two buildings, according to people familiar with the matter, in part because the riot at the Capitol has made lenders more leery of working with the Trump family.Another risk to the Trump Organization is that some customers stop patronizing its businesses, in particular its hotels and golf courses. The company has tried to sell its Washington, D.C., hotel, but the pandemic made buyers wary. The hotel was popular with supporters of Mr. Trump and with organizations trying to seek favor from the president. Business had already been expected to decline there once Mr. Trump leaves office.The Trump Organization's golf courses and resorts are particularly important, accounting for nearly half of the company's annual revenue. The courses are closely associated with the president and have used his name to attract customers in a weak market for golf. If the courses struggle to attract and keep members, it would weigh on the Trump Organization overall.On Sunday, PGA of America said it was terminating an agreement to hold the 2022 PGA Championship at Trump National Golf Club Bedminster in New Jersey, citing the risk to its brand of being affiliated with Mr. Trump. The Trump Organization said that the PGA of America's decision was a "breach of a binding contract."People involved with the Trump Organization previously said they believed that the polarized views of Mr. Trump would soften after he left office. The Washington riot in his administration's waning days now makes this less likely. Perhaps just as concerning is the schism that has formed in the GOP over Mr. Trump that could make Republican spending at his properties less likely. Political spending at Trump properties has topped $24 million since 2015, according to the nonpartisan Center for Responsive Politics.Companies including Shopify Inc., which ran online stores for Mr. Trump, and Stripe Inc., which processed payments for Mr. Trump's campaign website, have also stopped working with Trump entities following the Washington riot.The White House referred a request for comment to the Trump Organization.Eric Trump, who has been leading the Trump Organization day to day with his father in the White House, said in a written response that the Trump Organization's debt load was manageable relative to its assets and that the company had "incredible opportunities in real estate and beyond.""We have an unbelievable company with some of the best real-estate assets anywhere in the world," he said.The PGA of America's decision in particular comes as a personal blow to Mr. Trump. People who know the family say the lure of playing host to prestigious golf events was a big reason why Mr. Trump has invested heavily in golf clubs and resorts in recent years, despite the sector's weakness.The Trump Organization's holdings include two resorts in Scotland, where it has spent well over $150 million to buy and renovate the properties. The properties reported losing more than $4 million combined in 2019, the latest figures available.The latest disclosure from the Office of Government Ethics put the revenue from the Trump businesses at at least $446 million as of 2019, up slightly versus the previous year. Of that, more than $230 million comes from golf clubs and resorts, according to the disclosure, while most of the rest is tied to commercial real estate and hotels, as well as the Mar-a-Lago private club in Palm Beach, Fla.The Trumps have looked to raise cash by selling some of the family's most valuable real estate, asking top-of-the-market prices. But the family has been frustrated as the pandemic upended property values and caused the Trumps or their partners to retreat.The organization early last year was negotiating a sale of the long-term lease for its opulent Washington, D.C., hotel, according to people briefed on the matter. While the family initially hoped to raise as much as $500 million from a sale, it received offers around $350 million, some of these people said. That would have made it the most expensive hotel deal in Washington on a per-room basis.But those negotiations stalled after Covid-19 upended global travel and sent hotel values tumbling. The Trumps put the sales process on hold. JLL, the real-estate firm that was running the sales process, said it was no longer involved in any sale."Our previous listing agreement with the Trump Organization to sell its hotel in Washington, D.C., has expired, and we are no longer doing business with them," a spokesman said.There is still a market for this iconic property, housed in the Old Post Office building, analysts say. But after the business community's stinging criticism of Mr. Trump's role in stirring up the insurrection at the Capitol, it isn't clear if the number of potential buyers who would be willing to buy from Mr. Trump has diminished.The Trumps also aimed to raise large funds through the sale of their 30% stake in two premier office towers in New York City and San Francisco. Vornado hoped to sell the buildings for a combined $5 billion, according to people familiar with the matter. But in November, Vornado opted to end the sales process and refinance the office towers instead. It has now put those plans on hold.It is not clear how much, if any, money the Trump Organization would have received from a refinancing, which can also be used for a building's cash reserves or improvements. But this approach is typically among the easiest ways to wring cash out of a property.The Trump Organization could still benefit from Mr. Trump's unfounded allegations of widespread voter fraud, which fueled the Washington riot. In the weeks after the election, the Trump campaign and Republican National Committee reported raising more than $200 million, a sizable war chest that may still fuel further spending at Trump properties in the years to come.Some of that money ended up with a leadership committee set up by Mr. Trump in the final days of the election campaign, called Save America, that could serve to finance Mr. Trump's future political activities. Such committees have wide latitude in how they spend contributions. Funds could be used to finance Mr. Trump's travel, including on his company plane, and events at Trump properties.New York City Mayor Bill de Blasio said Tuesday that the city is reviewing its contracts with the Trump Organization to potentially terminate them following last week's riot.The Trump Organization holds contracts with the city to operate the Trump Golf Links at Ferry Point in the Bronx and attractions in Central Park. The contracts bring in millions of dollars annually to the company, a spokeswoman for the city's parks department said.—Katie Honan contributed to this article.Write to Brian Spegele at brian.spegele@wsj.com and Craig Karmin at craig.karmin@wsj.comCopyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8Appeared in the January 13, 2021, print edition as 'Trump's Business Under New Strain After Capitol Riot.'

Trump’s businesses teetering – With insights from The Wall Street Journal

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