GSA approves sale of Trump’s D.C. hotel lease
By Jonathan O'Connell
Washington, March 25, 2022
The General Services Administration has approved the sale of former president Donald Trump’s D.C. hotel lease to Miami investment fund CGI Merchant Group, the agency said Friday.
The agency said it approved CGI as a buyer after reviewing the company’s agreement with Hilton Worldwide, which will turn the hotel into a Waldorf Astoria, as well as the company’s financial capabilities and ability to secure bank financing.
“The confirmation was based on an extensive and exhaustive due diligence review of the documentation provided in support of the proposed assignment,” the agency said in a statement Friday.
While GSA’s decision was largely perfunctory, it moves Trump’s business one step closer toward unloading a hotel that became a center of controversy during his presidency — and which has recently draw interest from New York prosecutors looking into whether he misled the government in his initial application for the lease.
Leading Congressional Democrats have raised concerns about lease sale, asking GSA to investigate the Trump Organization’s management of the property or void his lease, particularly after Trump’s longtime accounting firm said last month that his financial statements — including those he provided to the GSA to get the lease — “should no longer be relied upon.”
“The original sin by GSA to allow President Trump to hold this lease and benefit has tainted this whole process. Today’s decision doubles down and abets the Trump family’s continued profiteering off the presidency,” Rep. Gerald E. Connolly (D-Va.) said in a statement on the GSA’s decision on Friday. “This is a stain on federal procurement that will not wash away.”
Trump’s lease only required GSA to perform a limited review, includingwhether a prospective buyer has the experience and financial assets to manage and operate the property. The deal is expected to close in coming weeks, according to a person familiar with the transaction who spoke on the condition of anonymity to share private business dealings.
Although the hotel struggled financially during most of the Trump’s time in office due to his controversial brand, the lease is expected to sell to CGI for $375 million, well beyond most experts’ estimates of what the property is worth. A sale at that price would deliver Trump an estimated profit of more than $100 million, according to analyses by industry analysts.
New York Attorney General Letitia James (D) last month subpoenaed the GSA for information about how the agency selected Trump for the lease, according to two people familiar with the request.
But the GSA under three presidents — Obama, Trump and now Biden — has taken no known action to intervene in Trump’s lease.
The building, the federally owned Old Post Office Pavilion on Pennsylvania Avenue, is one of the most treasured historic buildings in the city. Trump signed a lease for the building in 2013 and spent more than $200 million developing it into a 263-room luxury hotel that opened in late 2016.
Should he complete the sale, Trump would have to repay Deutsche Bank $170 million he borrowed to build the project. On top of the roughly $3 million he has been paying the GSA annually in base rent, the lease also stipulates that Trump pay a small share of the purchase price to GSA.
The hotel became a central gathering place for Republicans during Trump’s presidency but attracted tremendous controversy because foreign leaders, company executives and other people with business before the White House began staying there. Leading Democrats in Congress, as well as the attorneys general of D.C. and Maryland, filed suits alleging that Trump’s ownership of it violated a constitutional ban on payments to a sitting president, but Trump was never found of any wrongdoing and the cases were dropped.