In its effort to sell off the lease to the Trump International Hotel in Washington, the Trump Organization has put together a glossy investor brochure complete with pictures showcasing the hotel's grandiose architecture, its central location and its spa's Himalayan salt chamber.
The hotel's biggest selling point though, according to a copy of the brochure seen by CNN, is the one thing that the Trump family insists it didn't take advantage of: profiting off foreign governments.
"Tremendous upside potential exists for a new owner to fully capitalize on government related business upon rebranding of the asset," reads the 46-page investor pitch.
The Trump Organization insists that its refusal to solicit foreign business has cost it more than $9 million. According to the brochure, those "sacrifices" include turning away 17,100 room nights in 2019, resulting in $5.3 million in lost room revenue and $3.9 million in lost food and beverage revenue.
The investor pitch is an explicit acknowledgment of how important foreign business is to the 263-room luxury hotel in the Old Post Office building blocks from the White House.
Though it includes specific numbers of how much money it turned away from foreign governments, the pitch does not include figures for how much the hotel has accepted, despite reports showing it has become a magnet for foreign officials. Nor does it provide actual or historical financial performance data for the hotel, which is named in multiple lawsuits accusing Trump of using the property to illegally profit off his presidency.
Those lawsuits claim Trump has violated the emoluments clause of the US Constitution, which forbids the President from receiving gifts or payments from foreign governments. In its defense, the Trump Organization says that it has voluntarily donated over $340,000 in income it has received from foreign governments to the US Treasury in 2017 and 2018. The President's lawyers have also argued that since his assets have been placed into a trust, he does not directly benefit from the hotel's business.
Instead the materials offer financial projections for years 2020 to 2026 based on a sales and marketing strategy targeting foreign governments.
Trump previously reported in his financial disclosure form that the hotel made $40.8 million in revenues in 2018 and $40.4 million in 2017. The family has never disclosed whether the hotel is profitable.
The Trump Organization did not respond to CNN's requests for comment.
Projected jump in revenue
Nevertheless the company is projecting a whopping 65% jump in revenue from 2018 to 2020. According to the investor pitch, the hotel is estimated to have operating revenues of $67.7 million next year, and $6 million in earnings before interest, taxes, depreciation and amortization minus expenses to keep the hotel updated.
JLL Hotels & Hospitality, the real estate company hired to sell the hotel lease, projects the occupancy rate at the Washington hotel next year will hit 68.3%. That's below other five-star hotels in the area, which JLL estimates will have 74.5% occupancy rates, according to the investor brief.
The investor pitch began circulating in recent weeks after the Trump Organization announced last month that it was exploring the sale of its 60-year lease with the General Services Administration. After signing the lease in 2013, the Trump Organization poured millions of dollars into revamping the Old Post Office building, and opened its doors in October 2016, less than two weeks before Trump won the election.
"People are objecting to us making so much money on the hotel, and therefore we may be willing to sell," Eric Trump said in a statement last month. When Trump became President he did not sell off his assets as previous presidents have, but put the family business into a trust delegating the running of the family business to his two sons, Eric and Don Jr, and other executives.
$500 million selling price
A person familiar with the matter told the Wall Street Journal that the company is hoping to get more than $500 million for the property, or about $2 million per room key (the sales price divided by the number of rooms) -- which would be one of the highest prices ever paid for a hotel in Washington.
By contrast the Rosewood Hotel, a luxury five-star property in Georgetown, sold for $1.3 million a room key in 2016.
"It's an extremely high price but the location and the recent renovation of the hotel are going to command a historic value for the Washington, DC, area," said Dan Hawkins, a senior director in hotels and hospitality group of Berkadia, a commercial real estate firm.
A sale is not without complications. The buyer won't own the land since it's leased from GSA, which would also have to approve the sale. The arrangement also raises possible conflicts of interest since Trump is effectively on both sides of the transaction as the seller and the boss of the GSA officials charged with approving a deal.
Some potential buyers have questioned why Trump wouldn't wait until he leaves office to sell the property to avoid debate over whether he sought to benefit from his office. Others have raised ethical concerns that it is overpriced and being marketed to deep pocketed foreign buyers, who may be motivated to curry favor with the President.
When Trump created the trust for his business he also named as ethics adviser Bobby Burchfield, a Washington lawyer, who would have to approve certain transactions, including a sale of the hotel. Under the ethics review, Trump is not permitted to sell to a sovereign wealth fund or to a foreign government. A foreign citizen however would not be immediately disqualified from buying the hotel.
The transaction also has to be determined to be a fair market value with no indication that the counterpart is trying to influence the Trump administration or extract a concession.
Despite the Trump Organization's claims that it turned away millions of dollars in business from foreign governments, the Washington hotel has done brisk business with them. Delegations from Saudi Arabia, Malaysia and Kuwait have stayed at the hotel or held events there, along with members of Trump's cabinet and GOP fundraisers. The Prime Minister of Romania reportedly booked a room earlier this year.
Foreign business is not the only selling point the Trump Organization is highlighting to possible buyers. They're also anticipating a boost to the hotel market from one company the president loves to hate, Amazon, whose CEO Jeff Bezos also owns the Washington Post.
One full page in the 46-page package promotes the benefits that may come from Amazon's decision to build its second headquarters in northern Virginia. JLL projects that Amazon could add 880,000 room nights in seven years, "further driving compression," or full occupancy, "to the lodging sector in Washington DC."