Capitol Riot Threatens Trump's Already Hurting Business - The Wall Street Journal

The storming of the Capitol last week by a pro-Trump mob will ratchet up the pressure on President Trump’s family business at a moment when some of his most lucrative assets were already suffering from the pandemic and facing looming debt payments.

One of the Trump Organization’s most loyal partners, German lender Deutsche Bank AG , is moving to distance itself from the president’s businesses and is unlikely to lend it more money, says a person familiar with the matter. The bank has lent the Trump Organization more than $300 million that will mature in 2023 and 2024, forcing the company to refinance the debt or pay it off by potentially selling assets.

The other risk to the Trump Organization is that some customers stop patronizing its businesses, in particular its hotels and golf courses. The company has tried to sell its Washington, D.C., hotel, but the pandemic made buyers wary. The hotel was popular with supporters of Mr. Trump and with organizations trying to seek favor from the president. Business had already been expected to decline there once Mr. Trump leaves office.

The Trump Organization’s golf courses and resorts are particularly important, accounting for nearly half of the company’s annual revenue. The courses are closely associated with the president and have used his name to attract customers in a weak market for golf. If the courses struggle to attract and keep members, it would weigh on the Trump Organization overall.

On Sunday, PGA of America said it was terminating an agreement to hold the 2022 PGA Championship at the Trump National Golf Club Bedminster in New Jersey, citing risk to its brand of being affiliated with Mr. Trump. The Trump Organization said that the PGA’s decision was a “breach of a binding contract.”

President Trump golfed at Trump National Golf Club outside Washington, D.C., Dec. 13, 2020.

Photo: Al Drago/Getty Images

People involved with the Trump Organization previously said they believed that the polarized views of Mr. Trump would soften after he left office. The Washington riot in his administration’s waning days now makes this less likely. Perhaps just as concerning is the schism that has formed in the GOP over Mr. Trump that could make Republican spending at his properties less likely. Political spending at Trump properties has topped $24 million since 2015, according to the nonpartisan Center for Responsive Politics.

Companies including Shopify Inc., which ran online stores for Mr. Trump, and Stripe Inc., which processed payments for Mr. Trump’s campaign website, have also stopped working with Trump entities following the Washington riot.

The White House referred a request for comment to the Trump Organization.

Eric Trump, who has been leading the Trump Organization day-to-day with his father in the White House, said in a written response that the Trump Organization’s debt load was manageable relative to its assets and that the company had “incredible opportunities in real estate and beyond.”

SHARE YOUR THOUGHTS

Would you stay away from golfing at a Trump-owned course? Why or why not? Join the conversation below.

“We have an unbelievable company with some of the best real-estate assets anywhere in the world,” he said.

The PGA’s decision in particular comes as a personal blow to Mr. Trump. People who know the family say the lure of playing host to prestigious golf events was a big reason why Mr. Trump has invested heavily in golf clubs and resorts in recent years, despite the sector’s weakness.

The Trump Organization’s holdings include two resorts in Scotland, where it has spent well over $150 million to buy and renovate the properties. The properties reported losing more than $4 million combined in 2019, the latest figures available.

The latest disclosure from the Office of Government Ethics put the revenues from the Trump businesses at at least $446 million as of 2019, up slightly versus the previous year. Of that, more than $230 million comes from golf clubs and resorts, according to the disclosure, while most of the rest is tied to commercial real estate and hotels, as well as the Mar-a-Lago private club in Palm Beach, Fla.

The Trumps have looked to raise cash by selling some of the family’s most valuable real estate, asking top-of-the-market prices. But the family has been frustrated as the pandemic upended property values and caused the Trumps or their partners to retreat.

The organization early last year was negotiating a sale of the long-term lease for its opulent Washington, D.C., hotel, say people briefed on the matter. While the family initially hoped to raise as much as $500 million from a sale, it received offers around $350 million, some of these people said. That would have made it the most expensive hotel deal in Washington on a per-room basis.

But those negotiations stalled after Covid-19 upended global travel and sent hotel values tumbling. The Trumps put the sales process on hold. JLL, the real-estate firm that was running the sales process, said it was no longer involved in any sale.

“Our previous listing agreement with the Trump Organization to sell its hotel in Washington, D.C., has expired and we are no longer doing business with them,” a spokesman said.

There is still a market for this iconic property, housed in the Old Post Office building, analysts say. But after the business community’s stinging criticism of Mr. Trump’s role in stirring up the insurrection at the Capitol, it is not clear if the number of potential buyers who would be willing to buy from Mr. Trump has diminished.

The Trumps also aimed to raise large funds through the sale of the two premier office towers in New York City and San Francisco. Vornado Realty Trust, the controlling partner that owns the two skyscrapers with the Trumps, hoped to sell the buildings for a combined $5 billion, say people familiar with the matter. But in November, Vornado opted to end the sales process and refinance the office towers instead.

The Trump Organization could still benefit from Mr. Trump’s unfounded allegations of widespread voter fraud, which fueled the Washington riot. In the weeks after the election, the Trump campaign and Republican National Committee reported raising over $200 million, a sizable war chest that may still fuel further spending at Trump properties in the years to come.

Some of that money ended up with a leadership committee set up by Mr. Trump in the final days of the election campaign, called Save America, that could serve to finance Mr. Trump’s future political activities. Such committees have wide latitude in how they spend contributions. Funds could be used to finance Mr. Trump’s travel, including on his company plane, and events at Trump properties.