When President Donald Trump appeared at an NBC town hall Thursday night, presenter Savannah Guthrie asked a question that has been asked a lot over the past two weeks.
“Who do you owe $ 421 million,” Guthrie asked, citing a recent story in the New York Times about Trump’s tax returns, where the obligations will be due over the next four years.
The idea that his creditors are a mystery became a kind of meme in the wake of the newspaper report that said lenders are often not identified on tax returns.
But the identity of Trump’s lenders has been known for half a decade. In 2015, then-candidate Trump filed his first personal financial disclosure with the U.S. government. It listed real estate in debt, the names of the companies that made the loans, due dates, and a range of debt values.
In addition, because the loans are mortgages, they are publicly known with county registrars and in some cases commercial mortgage-backed securities.
The bulk of Trump’s liabilities can largely be divided into three groups: loans made by commercial real estate lender Ladder Capital against its office properties; Loans from Deutsche Bank AG to comparatively risky properties such as his hotel in Washington and the Doral Resort; and loans raised by the Vornado Realty Trust against two office towers in which it has minority interests. Other loans are mostly older and smaller.
Office towers
The $ 421 million figure reported by the Times is a personally guaranteed subset of at least $ 600 million in loans that Trump’s company owes. Additionally, approximately $ 450 million in debt is tied to its 30 percent stake in Vornado’s office towers.
Some of the loans were sold in commercial mortgage-backed securities and are now owned by a large number of other investors, some of whom are difficult to identify. These usually include pension funds, insurance companies, hedge funds, and other institutional investors.
Given the fragmentation of ownership of this debt, it is unlikely that even the Trump Organization would have knowledge of these investors or be in contact with them about the loans. When problems with debt arise, communication is usually through an intermediary known as a loan servicer.
Many of the loans will mature in the next few years, but Trump, whose previous career included a string of bankruptcies, likely has some flexibility.
When he refinanced Trump Tower with a $ 100 million loan in 2012, it was valued at $ 480 million. A 2015 refinance for 40 Wall Street raised a $ 160 million loan for a valuation of $ 540 million.
Low leverage
This resulted in both properties having relatively little leverage over Manhattan real estate, suggesting either a newly learned financial conservatism from Trump or a squeamishness from Ladder Capital, Trump’s second largest lender after Deutsche Bank.
An August Bloomberg Billionaires Index valuation of the buildings, based on current net income and capitalization rates, was less rosy, placing them at $ 365 million and $ 375 million, respectively. But as long as the pandemic does not crater office values, the real estate could carry far more debt if Trump needed it.
Because Trump made the historic decision to retain ownership of his companies and because the filing was self-reported to the government, critics and professional ethicists have long feared that Trump might have other unreported liabilities that pose conflict or even a national security risk could. However, such liabilities did not arise.
At one point, Trump updated a disclosure to reflect the money owed to Michael Cohen, his former personal attorney, who paid adult film actress Stormy Daniels to prevent her from going public on allegations of an affair with Trump go.
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