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Exclusive: An inside look at investors for Trump's DC hotel



However, according to a copy of the brochure seen by CNN, the hotel's biggest selling point is one thing the Trump family insists it did not take advantage of: to take advantage of foreign governments.

"There is tremendous upside potential for a new owner to take full advantage of state-related companies in redistributing the asset," reads the 46-page investor.

The Trump Organization insists that its refusal to seek foreign companies has cost it more than $ 9 million. According to the brochure, these "sacrifices" include departing from 17,100 room nights in 2019, resulting in $ 5.3 million in lost room revenue and $ 3.9 million in lost food and drinks.

The deal is for the 263-room luxury hotel in the Old Post Office building blocks from the White House.

Although it contains specific numbers of how much money was turned in by foreign governments, the pitch does not include figures for how much the hotel has accepted, despite reports showing that it has become a magnet for foreign officials. It also does not provide actual or historical financial performance data for the hotel, which is mentioned in several lawsuits accusing Trump of using the property to illegally utilize his presidency.

These lawsuits allege that Trump has violated the compensation clause in the United States Constitution, which prohibits the president from receiving gifts or payments from foreign governments. In its defense, the Trump Organization says it has voluntarily donated over $ 340,000 in revenue it has received from foreign governments to the US Treasury in 201

7 and 2018. President's attorneys have also claimed that because his assets have been put into a trust, he does not directly benefit from the hotel's operations.

Instead, the materials offer financial forecasts for the years 2020 to 2026 based on a sales and marketing strategy aimed at foreign governments.

Trump previously reported in his financial information form that the hotel had $ 40.8 million in revenue in 2018 and $ 40.4 million in 2017. The family has never disclosed whether the hotel is profitable.

The Trump Organization did not respond to CNN's request for comment.

Estimated jump in revenue

Still, the company projects a full 65% jumped in revenue from 2018 to 2020. According to investor pitch, the hotel is projected to have operating income of 67.7 million next year and $ 6 million in earnings before interest, taxes, depreciation and amortization minus expenses to keep the hotel up to date.

JLL Hotels & Hospitality, the real estate company hired to sell the hotel lease, projects the occupancy rate of the hotel in Washington next year will reach 68.3%. It is under other five-star hotels in the area that JLL estimates it will have a 74.5% occupancy rate, according to the Investors Committee.

  Exclusive: Trump Show & # 39; s DC hotels were more expensive and cleaner than comrades in 2017

with the General Services Administration. After signing the lease in 2013, the Trump organization poured millions of dollars to rebuild the old post office building and opened its doors in October 2016, less than two weeks before Trump won the election.

"People object to us making so much money at the hotel, which is why we may be willing to sell," Eric Trump said in a statement last month. When Trump became president, he did not sell his assets as past presidents did, but put the family business in a trust that delegated the running of the family business to his two sons, Eric and Don Jr., and other executives.

500 million sale price

A person familiar with the matter told the Wall Street Journal that the company hopes to get more than $ 500 million for the property, or about $ 2 million per room key (the sale price divided by number of rooms) – which would be one of the highest prices ever paid for a hotel in Washington.

In contrast, Rosewood Hotel, a luxury five-star property in Georgetown, sold for $ 1.3 million per room key in 2016.

"It is an extremely high price but the location and the recent renovation of the hotel will command a historic value for the Washington, DC area, "said Dan Hawkins, director of the hotel and hospitality group in Berkadia, a commercial real estate company.

A sale is not without complications. The buyer will not own the land because it is rented from GSA, which must also approve the sale. The event also raises potential conflicts of interest since Trump is actually on both sides of the transaction as the seller and the head of the GSA officials accused of approving a deal.

Some potential buyers have questioned why Trump would not wait until he leaves the office to sell the property to avoid debate if he tried to take advantage of his office. Others have raised ethical concerns that it is too expensive and marketed to foreign buyers with deep pockets, who may be motivated to curry favor with the president.

When Trump instilled confidence in his business, he also appointed Ethics Advisor Bobby Burchfield, a Washington lawyer, who would need to approve certain transactions, including a sale of the hotel. According to the ethics review, Trump is not allowed to sell to a sovereign wealth fund or to a foreign government. However, a foreign national would not be immediately disqualified from purchasing the hotel.

The transaction must also be set at fair market value without any indication that the counterparty is trying to influence the Trump administration or to extract a concession.

Despite the Trump Organization's claims that it rejected millions of dollars in foreign government deals, the Washington Hotel has done swift deals with them. Delegations from Saudi Arabia, Malaysia and Kuwait have stayed at the hotel or held events there, along with members of Trump's cabinet and GOP fundraisers. Romania's Prime Minister reportedly booked a room earlier this year.

Foreign business is not the only sales pitch highlighted by the Trump Organization for potential buyers. They also anticipate a lift in the hotel market from a company the president loves to hate, Amazon, whose CEO Jeff Bezos also owns the Washington Post.

A full page of the 46-page package promotes the benefits that can come from Amazon's decision to build its second headquarters in Northern Virginia. JLL projects that Amazon could add 880,000 room nights in seven years, "further pushing compression," or full occupancy, "to the lodging sector in Washington DC."


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