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Trump Debt on Jean-Georges Space at NYC Hotel on Watchlist

Tom Maloney and Caleb Melby
·2 mins read

(Bloomberg) -- A Trump Organization loan has been flagged as “at risk” by lenders after rental income at the property dropped precipitously.

The $6.5 million loan is secured by 28,876 square-feet (2,682 square meters) at the Trump International Hotel & Tower near Columbus Circle in Manhattan. The loan covers two commercial condominium units in the building and easement rights to the roof, but not the hotel itself.

President Trump’s finances are under fresh scrutiny after reporting in the New York Times about his tax returns. The debt at the hotel constitutes a small part of at least $560 million in loans the Trump Organization is directly responsible for.

The restaurant Jean-Georges, a tenant at the property, filed a notice with the New York Department of Labor in March indicating that 216 employees would be impacted by a temporary closing due to the coronavirus.

Part of the restaurant has since reopened for outdoor dining. An email to an assistant of the restaurant’s founder wasn’t immediately returned. Another tenant at the property includes a parking garage.

The pandemic has battered Manhattan, keeping tourists and office workers home and forcing restaurants and hotels to close for months. Even as properties have re-opened, a recovery has been slow to take hold.

“Over the last few months, we have worked closely with our tenants to help them through this difficult time,” said Alan Garten, general counsel for the Trump Organization. “Despite this downturn, we continue to remain current on all of our debt obligations.”

Income Drops

In the six months ended in June, the property covered by the Trump Organization loan had net operating income of $71,773, down about 75% from the previous period. That was not enough to cover the $201,727 required for loan interest. Financial records show loan payments have continued through September, indicating the shortfall has been covered so far.

A placement on the watchlist means that the loan, which was originated by Ladder Capital, is considered “at-risk.” Lenders may take that step for a variety of reasons, including a drop in occupancy levels, the upcoming expiration of tenant leases or a drop in income.

The borrower said the primary driver for the drop in income was the coronavirus pandemic and its effect on the lodging industry, according to a report from the loan’s servicer.

The loan is packaged into a commercial mortgage-backed security and makes up a small fraction of $994 million in collateral. Several larger loans in the deal from borrowers unrelated to Trump are delinquent, and a tranche rated BBB- by Fitch is currently trading at around 61 cents on the dollar.

(Updates with statement from Trump Organization in seventh paragraph.)

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