Trump the Huchem: Facing another Bankruptcy?

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Trump the “Huchem*” Facing another bankruptcy? Bookings in his hotels are down 60% (Investopedia, here) since he outed himself as a racist. The banks that hold the mortgages on those properties only care about cash flow and LTV. The value of a hotel, or any commercial property, as far as investors, and bankers, are concerned, is based on cash flow. Period. Trump reported mortgages of at Least $250 Million on six hotels (Wall St. Journal, here).

Assuming a 60% “LTV” or “Loan to Value,” then those hotels are worth $416.7 Million – or were last year, before bookings dropped 60%. However, assuming a normal cancellation rate of 20%, with bookings down 60%, those hotels are worth $216.7 Million. With mortgages of $250 Million, the LTV is 115.38%, which means

Trump’s hotels are under water.

Mortgages$250.0 Million

Trump Hotels
Property Val $416.7 Million
Mortgage Value $250.0 Million
LTV 60.00%
Bookings drop 60.00%
Assuming cancellation rate 20.00%
Value Drops 48.00%
New Value $216.7 Million
New LTV 115.38%
Table 1

The Blog Post in the Wall Street Journal also states that Deutsche Bank is the only large bank that Trump has dealings with,

Citigroup, Goldman Sachs Group Inc., J.P.Morgan Chase & Co. and Morgan Stanley are among the big Wall Street shops that do very little, if any, work with Trump-affiliated businesses. Bankers say that’s partly because Mr. Trump has moved away from developing multimillion-dollar real-estate projects to managing them and licensing the Trump name, reducing his need to borrow.

Trump has moved away from developing multi-million dollar real-estate projects because he can’t get financing. After four (4) bankruptcies, most large American banks evaluate Trump as a credit risk, a HUGE credit risk.

*Huchem, literally, “Wise Man,” in Yiddish, is used sarcastically to mean “Jerk who is a moron but who thinks he’s a genius.

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