By Joy Wiltermuth
Donald Trump borrowed hundreds of millions of dollars against his properties before he took office, but experts say the 45th president of the U.S likely faces a harder time getting a loan as he resumes private life after Jan. 20, following last week’s riot at the Capitol in Washington.
In Trump’s final days in office, parts of the business, financial, political and sport’s world moved to cut ties with president after he egged on a mob of his supporters looking to thwart the peaceful change of power in Washington.
PGA of America over the weekend said it would cancel its agreement to hold the 2022 PGA Championship at Trump National Golf Club in Bedminster, New Jersey, a suburb of New York City, citing a risk to the PGA’s brand.
New York City followed on Wednesday, saying it would terminate the Trump Organization’s contracts to operate the iconic Central Park Carousel, the Wollman and Lasker ice skating rinks and the Trump Golf Links at Ferry Point in the Bronx. New York City’s contract’s with Trump’s businesses are worth $17 million.
Longtime Trump lender Deutsche Bank /zigman2/quotes/203042512/composite DB -4.39% also has no plans to lend more money to the president’s businesses, said a person familiar with the matter. The Wall Street Journal reported that Signature Bank /zigman2/quotes/204403715/composite SBNY -3.78% and Professional Bank in Coral Gables, Fla., plan to close Trump’s accounts.
“I don’t know where commercial bankers are going to be willing to lend large sums to the Trump Organization,” said Gerald Hanweck, a professor of finance at George Mason University and an expert on financial distress in the banking system.
Concerns about President Trump’s ability to obtain debt on his bread-and-butter real-estate business follow a dramatic final two months of his presidency that reached a low point, after hundreds of rioters, pushing past security barriers and security, breached the Capitol as lawmakers were going through the typically ceremonial procedure of confirming President-elect Joe Biden’s win over Trump. The violent storming of the Capitol, which resulted in the death of five people and the ransacking of the seat of government, followed a rally where Trump urged his supporters to head to the Capitol and “fight.”
Experts speculate that other lenders and real estate partners could now join some American corporations in severing ties with Trump, after recent events that rank as one of the darker episodes in American history.
Democratic lawmakers, led by House Speaker Nancy Pelosi, moved this week to impeachment Trump for a second time, saying he incited an insurrection, after a tumultuous four years in the White House.
Hanweck, who formerly worked in the Federal Deposit Insurance Corporation’s risk-management division, said the Trump Organization might sidestep seeking loans from traditional lenders in favor of obtaining corporate-level financing from public markets to sustain its real-estate business.
He also suggested Trump could seek funding from abroad for any non-U.S. projects he seeks to develop, but that future financing of individual properties in the U.S. could be complicated by the continuing investigation by New York Attorney General Letitia James into the Trump Organization’s financial dealings. The attorney general’s office declined to comment.
“I think Trump’s best opportunity is to really go with a large investment banking company and look to issue a lot of marketable debt,” Hanweck suggested.
The Trump Organization didn’t respond to several requests for comment, nor did Trump’s White House staff.
Trump late last week denounced the Capitol attack , while also acknowledging that he lost the election two months ago, after weeks of pursuing legal challenges to his election loss to Biden, alleging unfounded claims of massive voter fraud.
But his apparent concession may do little to bolster his presidential legacy or his reputation as a business leader as he exits the political arena and re-enters life as a private citizen, at least over the shorter term.
“From an income standpoint, a lot of royalties on properties are based on the use of his name,” said William O’Connor, a partner focused on commercial real estate at law firm Thompson & Knight. “But for a guy who’s all about his brand, it could really injure his brand.”