Finance  ·  Distress

Former Trump International Hotel in DC Headed to Foreclosure Auction

Current owner CGI Merchant Group defaulted on loans tied to the property earlier this year.

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CGI Merchant Group’s Waldorf Astoria hotel in Washington, D.C. is headed to a foreclosure auction in June after months of financial difficulties.

Chicago-based BDT & MSD Partners, the main lender of $285 million in financing backed by the hotel, filed an affidavit of nonresidential mortgage foreclosure on Friday, according to the Business Journals, which cited records filed with the D.C. Recorder of Deeds. The auction is scheduled for June 20 at the District office of Alex Cooper Auctioneers.

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Miami-based CGI defaulted on $252.7 million in outstanding debt on the property earlier this year. CGI, in partnership with Hilton, purchased a leasehold on the 269-room hotel, at 1100 Pennsylvania Avenue NW, in 2022 for $375 million from former President Donald Trump. Within a month of acquiring the hotel, CGI rebranded it from the Trump International Hotel to the Waldorf Astoria.

“CGI is engaged in productive discussions with the property’s manager, Hilton, and several other parties who want to reach a consensual financing solution that reflects the realities of today’s challenging, rising rate environment,” a CGI spokesperson told Commercial Observer in a statement. “MSD’s unilateral decision to file a foreclosure notice is inconsistent with the discussions and possibly invalid. Although our goal is to continue advancing constructive negotiations with all parties, including MSD, we’re prepared to take all necessary steps to protect the rights of CGI and its partners.”

Representatives for BDT & MSD did not immediately respond to a request for comment. 

The hotel is located within D.C.’s historic Old Post Office, which remains one of the tallest buildings in the District. The federal government in 2012 leased the property on a 60-year term to the Trump Organization, which then spent some $200 million renovating it into a luxury hotel. 

The Trump International Hotel opened in 2016 just a few months before Trump was elected president. It was a source of controversy while Trump was in office because his family profited from the hotel, which was often visited by foreign dignitaries and their entourages.

Trump is currently facing a $355 million penalty for real estate fraud, with the hotel being one of the assets implicated in the case. The New York judge in that case ruled that he won the contract from the General Services Administration due to false information, rendering Trump and his children liable for the profit he received from the property. 

Just because the foreclosure auction is set for the Waldorf Astoria, however, does not mean that its sale is a foregone conclusion. Before the auction was announced, CGI was in the midst of negotiating a $75 million capital infusion into the property from Mavik Capital Management — and it’s possible that CGI and MSD Partners could reach a new deal before the June 20 deadline. 

“Mavik has not reached a definitive agreement to provide rescue capital to restructure the property’s balance sheet,” a Mavik spokesperson told Commercial Observer. “If the parties decide they want a consensual resolution, we will reengage and anchor a constructive outcome.”

Nick Trombola can be reached at ntrombola@commercialobserver.com.