In what seemed like a stroke of genius–or incredible luck–Donald Trump sold his money-losing D.C. hotel in 2022 and ended up with a handsome $127 million payday. But what few knew is that in order for that deal to happen, Trump had to step in with a loan. So when the lease’s new owner got into trouble financially, he took a hit too.
Trump’s ties to the former D.C. post office dates back to 2012. That’s when Trump won a competitive bidding process to restore D.C.’s historic-but-dilapidated Old Post Office into a 263-room luxury hotel. The U.S. government would continue to own the property, which sits on Pennsylvania Avenue just a few blocks from the White House. But Trump spent $200 million restoring the 1899 Romanesque Revival building, as well as committing to make monthly rent payments of at least $250,000 for 60 years.
In winning the contract, Trump bested a consortium that included Hilton Worldwide and planned to develop the building as a Waldorf Astoria hotel. That group protested Trump’s victory to the General Services Agency, which oversaw the bidding process. Along with submitting dozens of pages of newspaper clippings highlighting Trump’s history of defaulting on loans, failing to complete projects and bankrupting hotels, Hilton and its partners claimed that the finances behind Trump’s bid just didn’t make sense. “[The] minimum base lease proposed by Trump would require Trump to obtain hotel room revenues which are simply not obtainable in this location based on the concepts for the redevelopment,” the protest stated. “GSA, instead, improperly scored the Trump proposal and hastily elected to choose the highest ground rent absent a sound economic and business foundation.” GSA rejected the protest on procedural grounds, with its contracting officer writing that Trump’s revenue estimates were “by no means unreasonable” the Washington Post reported at the time.
In October 2016, two weeks before Trump won the presidency, the stately Trump International Hotel Washington D.C. celebrated its grand opening. The hotel quickly emerged as a power center in Trump’s Swamp. In the year after Trump’s election, Republican political committees made at least 171 payments to the hotel, funneling $482,000 into the party leader’s pocket. By the end of the Trump administration, at least 29 of 38 members of Trump’s cabinet, officials from 33 foreign governments and 36 Senators (35 Republicans plus one Joe Manchin) were spotted there.
All that patronage, though, didn’t bring in enough cash to compensate for Trump’s bad business plan, which the Hilton consortium had flagged years earlier. In 2017, the hotel’s revenue was $52 million–$35 million less than what the Trump Organization projected. It didn’t get better. Sales stayed about even over the text two years: $53 million in 2018 and $52 million in 2019, according to an analysis of Trump’s financial disclosures. That’s about half of what the Trump Organization expected. Then the Covid-19 pandemic hit and revenues plummeted by more than 60% to about $20 million.
Trump first floated his money-losing hotel on the market in 2019, asking $500 million, CNBC reported. But when no bid came close to that price–and several were south of $250 million–the sale was put on hold the following year.
In 2021, now out of office, Trump tried again. This time he found a buyer willing to pay more than $370 million. When Brian Friedman, a D.C. real-estate developer who had earlier offered $175 million for the hotel, learned the news, he was shocked. “Oh, my god,” he said. “I don’t believe it at all, but that would be amazing. There’s probably some stupid South American, Florida group, or there’s probably some seller financing or something—or side letter that we’ll never know about, because the asset loses money.”
Friedman was right on both counts: The buyer, CGI Merchant Group, was based in Miami. And a financial disclosure Trump filed in October 2023 revealed that he had loaned the firm $28 million.
CGI financed most of the $375 million it ended up paying, though, with a $285 million loan from BDT & MSD Partners, a merchant bank connected with Michael Dell and co-run by investment banking billionaire Byron Trott. CGI also inherited the original lease Trump signed with GSA. The new leaseholder partnered with Hilton Worldwide, which lost out to Trump on the original procurement, to operate the hotel as a Waldorf Astoria.
Trump, for his part, walked away from his nonviable hotel with a $127 million payout, according to evidence in the New York attorney general’s civil fraud case.
Despite the new ownership, not a whole lot changed in the immediate aftermath of the Trump hotel shuttering and re-emerging a month later as a Waldorf Astoria in June 2022. Other than its branding (bye bye The Spa by Ivanka Trump) and different menu items, the hotel looked, felt and smelled just about identical to as it did before. Even the staff members were familiar: about 95% of them were holdovers from the Trump era, according to Senih Geray, the Waldorf Astoria’s general manager who came back from an early retirement to run the hotel.
One noticeable change, though, has been the arrival of new customers who would never have stepped foot in Trump’s hotel: Nancy Pelosi’s campaign, the Congressional Black Caucus’s PAC and a fundraising committee for Kamala Harris, as well as Planned Parenthood and Politico all held events at the newly christened Waldorf.
Clearly the changes weren’t enough to make up for the poor financials underscoring the lease CGI assumed from the Trump Organization. In July 2023, just 15 months after it bought the hotel, CGI defaulted on its loan for the first time, according to a source familiar with the proceedings. In May 2024, BDT & MSD initiated foreclosure proceedings. The lender gave CGI an extra 45 days to come up with financing. When it couldn’t, BDT & MSD offered to postpone foreclosure by another 45 days–if CGI could pay down a small portion of the accrued interest, either with cash or by providing a letter of credit that would allow it to do so.
Nothing materialized. So on Aug. 5, the hotel hit the auction block. When the gavel came down, BDT & MSD owned the hotel for $100 million. No one else even bid on it, according to Paul Cooper of Alex Cooper Auctioneers, which oversaw the foreclosure auction. Cooper called CGI’s original purchase “beyond ludicrous.” He added, “No sane person would have done this investment.”
As for the $28 million CGI owed Trump, that got wiped out. He did not have a mortgage and his debt was subordinate to BDT & MSD. “That’s gone,” Cooper said of the note.
Despite now owning a dud of a lease that no one else bid for, BDT & MSD is optimistic. “[We] remain dedicated to our partnership with Hilton and confident in the future of the asset,” said Sara Evans, a partner and spokesperson for the firm. For its part, a Hilton spokesperson said “the hotel continues to perform well.” But she declined to explain if the company stood by its earlier remarks that the lease was “an unrealistic economic model and [would lead to] another failed attempt to redevelop the Old Post Office.”
Dan Alexander contributed reporting.