Covid 19 coronavirus: Trump (the company) asks Trump (the administration) for hotel relief

The Trump International Hotel in Washington is owned and operated by the president's family business, but the building belongs to the government. Photo / Erin Schaff, The New York Times

The president's family business pays at least $5 million a year to the federal government for the lease on its DC hotel, which is all but empty because of the virus. The next monthly payment is coming due.

President Donald Trump's signature hotel in the nation's capital wants a break on the terms of its lease. The landlord determining the fate of the request is Trump's own administration.

Trump International Hotel, just a few blocks from the White House, had been a favoured gathering place for lobbyists, foreign dignitaries and others hoping to score points with the president. But like most hotels, it is now nearly empty and looking to cut costs because of the coronavirus pandemic.

In recent weeks, the president's family business has inquired about changing its lease payments, the company confirmed Tuesday, which the federal government has reported amount to nearly US$268,000 ($449,000) per month.

The Trump Organisation owns and operates the luxury hotel, but it is in a federally owned building on Pennsylvania Avenue. As part of its deal to open the 263-room hotel, the company signed a 60-year lease in 2013 that requires the monthly payments to the General Services Administration.

The Trump Organisation is current on its rent, according to Eric Trump, the president's son, but he confirmed that the company had opened a conversation about possible delays in future monthly payments.

The younger Trump said the company was asking the GSA for any relief that it might be granting other federal tenants. The president still owns the company, but his eldest sons run the day-to-day operations.

"Just treat us the same," Eric Trump said in a statement Tuesday. "Whatever that may be is fine."

The GSA did not immediately respond to a request for comment, including about whether its other tenants had made similar inquiries. The White House also did not respond to a request for comment.

Companies across the country have pleaded for relief from lenders and landlords, but the Trump Organisation's submission presents a particular predicament.

If it denies the request, the agency risks running afoul of the president, who appoints its leader; but if it accommodates the Trumps, the agency is likely to draw fire from critics.

The Trump Organisation was barred by Congress from seeking relief from the US$500 billion rescue fund being administered by the Treasury Department, and a Trump Organization executive said Tuesday that the company had decided not to apply for a federal loan through the Small Business Administration. The company argues that it is seeking only temporary relief from the GSA while the hotel industry globally copes with an extraordinary drop in business.

Along with the broader hospitality industry, the company is expected to take a significant hit from the economic shutdown. The Trump Organisation has temporarily closed its hotel overlooking the Las Vegas Strip, cut staff and services at its hotel in New York, and effectively closed its golf clubs in New Jersey and Florida. It also shuttered the Mar-a-Lago club in Florida, which at this time of year would ordinarily be acting as the "winter White House," as the president refers to it. The Washington hotel's bar, restaurant and spa are closed, but it is still accepting reservations.

The request to the GSA is one of a number of attempts by the Trump Organization to get breathing room from its lenders and other financial partners.

The company has been talking with Deutsche Bank, the president's largest creditor, about the possibility of postponing payments on its loans from the bank.

Trump owes Deutsche Bank more than US$300 million ($502 million) on loans connected to the Washington hotel, his Doral golf resort in Florida and a skyscraper in downtown Chicago. The Trump Organisation has a small amount of debt compared with other major real estate companies, which could weigh in its favor as it seeks support from Deutsche Bank and others. Representatives have been in talks with Rosemary Vrablic, a senior banker in the Deutsche Bank division that serves the ultrarich, about delaying or reducing its loan payments. Vrablic has been working with Trump for nearly a decade and, before that, worked closely with Jared Kushner, Trump's son-in-law and senior adviser.

While Vrablic is in charge of the bank's relationship with the company, changes to the terms of the loans could generate acrimony inside Deutsche Bank and are likely to be vetted by senior executives responsible for protecting the bank's reputation, according to a person familiar with the deliberations.

Bank executives already have been debating the wisdom of granting forbearance to the president, with some worried about the political blowback they would almost certainly encounter for cutting Trump slack, the person said. Deutsche Bank is overseen by federal regulators, and the Justice Department has been conducting a criminal investigation into the bank over allegations of money laundering and other misconduct.

In Florida, the Trump Organisation in late March sought guidance from Palm Beach County about whether it had to continue making monthly payments on land that the company leases for its 27-hole Trump International Golf Club in West Palm Beach, according to people briefed on the discussions and documents reviewed by The New York Times.

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This month, the Trump Organisation was about a week late on its monthly lease payment of about US$88,000 ($147,000), according to county documents. Company executives are still seeking guidance from Palm Beach County about whether they are expected to keep making lease payments with the golf industry shut down.

Eric Trump confirmed that the negotiations were underway and said the company was seeking the same relief that any other companies were getting.

"In Florida, the very county that mandated we close is the very county collecting rent," he said. "What are they doing for others? Just treat us the same."

Some of Palm Beach County's commissioners worry that if they don't give the president's company extra time to make lease payments, the county could anger the president and lose out on federal assistance to fight the coronavirus, according to a county official who wasn't authorized to speak publicly.

Separately, the Trump Organisation, like other hotel chains, was eligible to apply for loans of up to US$10 million ($16 million) that can be converted into grants from the Small Business Administration, based on a provision inserted into the stimulus package that allowed large companies with hotels that individually had fewer than 500 employees to apply for the assistance.

But this program would have required the Trump Organisation to bring back workers, as it is intended to prevent job losses. The Trump Organization did not apply, according to the company.

Of all the company's dealings, the Washington hotel's relationship with the federal government has provided the most fodder for the president's rivals, who argue that the property is a prime example of the president blurring the lines between his administration and his business.

Soon after he took office, the GSA ruled that Trump's ascending to the presidency did not violate the terms of the lease between his company and the government. But in 2019, the GSA's inspector general issued a report asserting that the agency's lawyers had largely ignored potential constitutional issues related to the lease, essentially allowing the president's operation of the property to continue.

The president's lawyers have disputed charges that the arrangement could violate a constitutional provision that bars federal officials from taking payments or gifts from foreign governments. The hotel, frequented by foreigners and others doing business with the government, has been at the center of those allegations, while the Trump Organisation has pledged to donate profits from foreign governments.

The company last year put the hotel on the market for a possible sale, citing the ongoing objections, and a potential for a major financial windfall. The company fielded bids, but any deal is now off the table because of the pandemic.

Last week, the managing director of the Washington hotel, Mickael Damelincourt, posted a photo to Twitter of himself wearing a mask, standing in the hotel's empty bar, with his chin up. "Keep looking up and Never Ever Give Up," he wrote.

Written by: Ben Protess, Steve Eder and David Enrich
Photographs by: Erin Schaff
© 2020 THE NEW YORK TIMES