Trump’s Empire: A Maze of Debts and Opaque Ties

[Bigun]

Trump’s Empire: A Maze of Debts and Opaque Ties

By SUSANNE CRAIG  AUG. 20, 2016

On the campaign trail, Donald J. Trump, the Republican presidential nominee, has sold himself as a businessman who has made billions of dollars and is beholden to no one.

But an investigation by The New York Times into the financial maze of Mr. Trump’s real estate holdings in the United States reveals that companies he owns have at least $650 million in debt — twice the amount than can be gleaned from public filings he has made as part of his bid for the White House. The Times’s inquiry also found that Mr. Trump’s fortunes depend deeply on a wide array of financial backers, including one he has cited in attacks during his campaign.

For example, an office building on Avenue of the Americas in Manhattan, of which Mr. Trump is part owner, carries a $950 million loan. Among the lenders: the Bank of China, one of the largest banks in a country that Mr. Trump has railed against as an economic foe of the United States, and Goldman Sachs, a financial institution he has said controls Hillary Clinton, the Democratic nominee, after it paid her $675,000 in speaking fees.

Real estate projects often involve complex ownership and mortgage structures. And given Mr. Trump’s long real estate career in the United States and abroad, as well as his claim that his personal wealth exceeds $10 billion, it is safe to say that no previous major party presidential nominee has had finances nearly as complicated.

As president, Mr. Trump would have substantial sway over monetary and tax policy, as well as the power to make appointments that would directly affect his own financial empire. He would also wield influence over legislative issues that could have a significant impact on his net worth, and would have official dealings with countries in which he has business interests.

Yet The Times’s examination underscored how much of Mr. Trump’s business remains shrouded in mystery. He has declined to disclose his tax returns or allow an independent valuation of his assets.

Earlier in the campaign, Mr. Trump submitted a 104-page federal financial disclosure form. It said his businesses owed at least $315 million to a relatively small group of lenders and listed ties to more than 500 limited liability companies. Though he answered the questions, the form appears to have been designed for candidates with simpler finances than his, and did not require disclosure of portions of his business activities.

Excerpt: http://www.nytimes.com/2016/08/21/us/politics/donald-trump-debt.html

[Bigun]

From the article:

That Mr. Trump seems to have so much less debt on his disclosure form than what The Times found is not his fault, but rather a function of what the form asks candidates to list and how.

The form, released by the Federal Election Commission, asks that candidates list assets and debts not in precise numbers, but in ranges that top out at $50 million — appropriate for most candidates, but not for Mr. Trump. Through its examination, The Times was able to discern the amount of debt taken out on each property, and its ownership structure.

[Oceander]

You do realize, of course, that this is from the NYT; they're not exactly above making things up if it suits their political agenda.  Just sayin'.

[Bigun]

You do realize, of course, that this is from the NYT; they're not exactly above making things up if it suits their political agenda.  Just sayin'.

Yeah! I'm aware!  But it IS interesting regardless.

[Oceander]

All large-scale real estate investment structures have a lot of debt; that minimizes the need for the owners to put in their own money, but still allows them to capture the upside on the investment since the cost of the debt (i.e., interest) is usually less influenced by the success (or failure) of the project.  They can also have convoluted ownership structures, particularly if the structure has been recapitalized at least once.

I'm not saying that Orange Julius isn't lying about his net worth - he lies freely about everything else, after all - but I am saying that I would take the NYT's take on even a plain vanilla REIT with a large grain of salt, when their political agenda is involved.