On Wednesday, it became known that Donald Trump had refinanced his mortgage on the Trump Tower with a $ 100 million loan through a bank in California whose president was a donor to the former president’s political campaigns.
This seems like a strange move for a bank, given the legal and financial issues surrounding Trump since he left office in 2021. I contacted Kara Scannella CNN correspondent who is well aware of all the various legal and financial implications of Trump, for some answers.
Our conversation, which took place via email and was slightly modified for streaming, is below.
Cillizza: Let’s just start: What is this loan? When did Trump take it out? And when is it coming?
Scannell: The new loan is a refinancing of a commercial mortgage loan entered into by Trump’s Trump Tower in 2012. It was a 10-year loan with an interest rate of 4.2% that expired this year, according to a financial revelation submitted by Trump.
The lender of the original mortgage was Ladder Capital, a New York-based company where the son of Trump’s longtime chief financial officer, Allen Weiselberg, is a senior executive. The new lender is Axos Bank of California. The documents for the new loan do not state what the financial terms are, so we can not assess whether the interest rate is above or below average. (Weisselberg and Trump were charged last year with involvement in a 15-year tax fraud scheme. Weisselberg and company have pleaded not guilty.)
Cillizza: Earlier this year, his long-term accounting firm – Mazars – strayed from the truth of the last decade of its financial records. Does this loan play at all?
Scannell: This new loan was signed by Eric Trump on February 15, a day after the New York Attorney General released a letter from Mazars stating that the Trump administration and its creditors should no longer rely on these previous financial statements . The investigations of the NYAG and the Manhattan prosecutor for the Trump organization, and in particular the accuracy of his financial statements, have been publicly known for a long time. The NYAG has filed allegations of possible fraud in a January court hearing, specifically alleged inaccuracies and omissions in the financial statements.
It is very likely that the new lender knew about these public documents and had encountered them while doing their own due diligence and credit analysis before approving the loan. Banks do their own research on the creditworthiness of borrowers and make decisions based on many factors. Axos declined to comment on the loan.
Cillizza: What do we know about the bank that agreed to refinance the loan?
Scan: Axos Bank is headquartered in San Diego. Formerly known as the Internet Bank, its president for more than a decade was Greg Garrabrants, a Trump supporter who previously worked for Goldman Sachs and McKinsey. He and the chief credit officer, who signed the loan agreement, have donated thousands of dollars to the campaigns of Republicans, Trump and Trump in recent years.
Cillizza: Why would they do it because of Trump’s financial and legal risk?
Scannell: For banks, it has to do with risk, reward and repayment.
Big Wall Street banks stopped lending to the Trump Organization more than a decade ago after Trump’s bankruptcies and litigation – except for German lender Deutsche Bank, which was trying to make a mark on the United States. Deutsche Bank, which has lent the company more than $ 300 million, said after the January 6, 2021 attack on the US Capitol that it would no longer have any future dealings with Trump.
With this story, Trump has gone to smaller lenders, who were willing to finance deals based on the terms they negotiated, whether it was personal guarantees, high interest rates or other security. Collateral for the loans is the Trump real estate, which in this case is a high-rise apartment and office building on Fifth Avenue, with a privileged location and Gucci as the tenant flagship. Eric Trump said the company is financially sound despite the legal pressures it faces. “We have incredibly low debt, we have a huge amount of cash and we have an extremely profitable company. “We did not have a refinancing problem,” he said.
Cillizza: Complete this sentence: “This refinancing makes ________ for Trump’s total finances.” Now, explain.
Scan: The deal shows that lenders are still willing to finance the Trump brand, even when the parent company is under criminal prosecution and there are open investigations into the business and its founder.
According to Trump’s revelation, it is the only loan that expires in 2022, so it alleviates, at the moment, any pressure that the company is facing regarding the existing debt. Deutsche Bank’s loans for its Miami golf course, Trump National Doral, expire next year.
Trump is raising money from his presidency, raising funds from the Republican National Committee to pay for part of his legal defense, and expanding into books and other projects to fund his lifestyle. He also created a social networking platform, Truth Social, which is funded by a publicly listed white check company called Digital World Acquisition Corp. to the sons of Eric Trump and Donald Trump Jr. in 2017 and in business ventures after the presidency that can build on his popularity.