Experts say Trump debt load not as devastating as it seems
NEW YORK — President Donald Trump reportedly must pay back more than $300 million in loans over the next four years, raising the possibility his lenders could face an unprecedented situation should he win a second term and not be able to raise the money: foreclosing on the leader of the free world.
But financial experts say the notion of Trump going broke anytime soon is farfetched.
Even with a total debt load across his entire business empire estimated at over $1 billion, they note he still has plenty of assets he could cash in, starting with a portfolio that includes office and condo towers, golf courses and branding deals that have been valued at $2.5 billion.
Based on Forbes magazine estimates of the value of his buildings, for instance, selling his partial interests in two properties— an office complex in San Francisco and a Las Vegas tower that houses a hotel and condos — could bring in $500 million alone.
Trump’s true financial picture has gotten renewed scrutiny in the wake of a New York Times report this week that he declared hundreds of millions in losses in recent years, allowing him to pay just $750 in taxes the year he won the presidency, and nothing for 10 of 15 years before that.
But the Times report was quick to note that tax filings alone can’t help determine someone’s net worth. And several experts told The Associated Press that, while the true state of Trump’s financial situation is unclear because of a lack of public information, he is probably not scrambling for money.
At issue is the often wide
difference between what businesses report as profits and losses to the IRS and what they actually receive in profits they put in their pockets.
Plenty of real estate investors report big losses under tax accounting rules and pay little in federal taxes. That is because the tax code allows them to reduce their tax bills with myriad legal loopholes and breaks, including sometimes generous depreciation charges that reflect expected wear and tear on buildings.
Phillip Braun, a finance
professor at Northwestern University’s Kellogg School of Business, said Trump’s minuscule tax payments don’t surprise him, nor do the losses claimed. “His accountants work really to make sure he doesn’t pay any taxes,” he said.
A better idea of how Trump is faring, Braun said, comes from Trump’s operating profits.
Forbes, which has been valuing Trump properties for decades for its annual billionaire issue, says Trump’s 40 Wall Street office tower generated $18 million in operating profits in 2019, Trump Tower $13 million, and Trump’s share in San Francisco’s 555 California Street tower $26 million.
The Times said Trump’s real estate company has $421 million in loans he has personally guaranteed, with $300 million of that coming due over four years.
The Trump Organization did not immediately respond to an email and phone call requesting comment. Trump dismissed the Times story as “fake news” and said he is “extremely underleveraged.”
Among his lenders listed in his personal financial disclosure are New Yorkbased commercial lender Ladder Capital, which is owed at least $110 million, and Bryn Mawr Trust Co. a suburban Philadelphia bank, which held Trump debt worth between $5 million and $25 million for Seven Springs, a New York estate owned by the Trump Organization.
Trump’s biggest lender on his disclosure is Deutsche Bank, his chief financier stretching back two decades. It helped him buy and fix several buildings in New York and Chicago and his Doral golf club in Miami. It is owed at least $125 million, with loans coming due in 2023 and 2024.
One option for Trump is to get his lenders to refinance his debt or to take out a new loan. Deutsche Bank is an obvious candidate to help him with either because it has been so forgiving to him over the years.
Trump defaulted on bonds that the bank helped sell to investors to finance his casinos in Atlantic City, New Jersey, and a bank loan for his Chicago hotel and condo tower, and yet the bank has continued to lend to him.