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Imagine that

3 comments, 394 views, posted 1:31 pm 19/03/2019 in News by griffin
griffin has 15623 posts, 2193 threads, 0 points

Deutsche Bank loaned more than $2 billion over two decades to Donald Trump before he became president despite numerous red flags about him being a risky client, according to a report.

The real estate mogul managed to secure the loans from the German bank despite his bankruptcies and exaggerations of his wealth, the New York Times reported late Monday, citing interviews with more than 20 current and former bank officials.

A number of congressional committees and New York Attorney General Letitia James have launched investigations into the relationship between Trump and Deutsche Bank.

The Times report said Trump often inflated his wealth and enticed bank officials with flights on his private jet and weekends at his Florida resort Mar-a-Lago to get loans to build skyscrapers and other high-end properties.

In turn, the bank used Trump’s celebrity to attract other clients to build its investment business.

Trump told bank officials he was worth $3 billion as he tried to get a loan in 2004 to build the Trump International Hotel and Tower in Chicago, but after reviewing his finances Deutsche concluded that he was worth about $788 million.

Despite the concerns, the bank lent him more than $500 million.

In 2010, Trump sought a $100 million loan from the bank to buy the Doral Golf Resort and Spa in Florida.

Bank officials examined his personal and corporate financial records and determined that he overestimated his real estate assets by as much as 70 percent. The loan was eventually approved.

Deutsche Bank spokeswoman Kerrie McHugh told the Times that “we remain committed to cooperating with authorized investigations.”

The White House referred questions to the Trump Organization, which declined to comment.

Comments

6
2:05 pm 19/03/2019

Suckapuncha

This is pretty common in commercial real estate investing. The investment can be used as collateral for the loan. Individual asset wealth wouldn't play as big a part as the LTV when building a multifamily structure like a hotel. My father built several even when he didn't have the personal assets to cover the loans used to build them. The general scale for LTV goes from 65% - 80%, and would be used to measure the value of the property against the loan amount. For a hotel, it would probably be approved around 80% LTV. If he borrowed $500 million, and the appraised value of the final hotel were say, $1billion, that would be an LTV of 50%, and it would definitely get approved. If the appraised value were only $700 million, the LTV would still be 72%, below the approval margin. Even if you take his reported individual asset value from this article, the loan would only be 63% LTV, still a low ratio from a bank's perspective. There is always a risk, but banks are in the business of taking risks to earn off of depositor money. From an investment point of view, the examples in this article don't even seem like a very high risk.

Pretty sure the person who wrote this article has never invested in commercial real estate.

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2:19 am 20/03/2019

HariSeldon

Quote by Suckapuncha:
This is pretty common in commercial real estate investing
Pretty sure the person who wrote this article has never invested in commercial real estate.


Or they just hated Trump no matter what or they saw the profit in attacking Trump counting on those who salivate and will click on anything that might possibly be spinned as Trump wrong-doing

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2:57 am 20/03/2019

griffin


Quote by HariSeldon:
Or they just hated Trump no matter what or they saw the profit in attacking Trump counting on those who salivate and will click on anything that might possibly be spinned as Trump wrong-doing


Could be just that trump is in hock to foreign interests. Since he hasn't divested himself. Cool that he got those Chinese trademarks and loans, though.

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