As if Donald Trump doesn't have enough problems as he pays a phalanx of lawyers to represent him in multiple trials and investigations, his Trump Organization -- also the subject of a $250 million New York inquiry into tax fraud -- is shelling out an extra $1 million-plus per month because the former president didn't have the foresight to see an economic calamity on the horizon.
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According to Forbes business analyst Dan Alexander, the former president and real estate developer made a big business miscalculation right after leaving office that centers on a three-building office complex in San Francisco.
As Alexander explained, "Trump has held a 30% interest in the property for years alongside publicly traded Vornado Realty Trust, which owns the rest. In May 2021, the partners secured a $1.2 billion, variable-rate loan that provided them with more than $600 million of cash."
At that time, he noted, inflation was already showing signs of exploding which made a variable-rate loan risky and, as the report explains, Trump's partner in the deal saw the coming storm and protected himself by swapping his part for a fixed rate of 2.26% rate - while the former president sat on his hands.
"Initially, Trump's strategy looked smart, as he began with a roughly 2% interest rate while Vornado paid 2.26%. But in early 2022, after the Fed realized that inflation was not going to go away on its own, it jacked rates-and sent Trump's interest expenses soaring," the report notes before adding, " America's most famous real-estate tycoon is now contending with an estimated 5.93% rate at the property, putting him on track to hand over $21 million of annual interest expenses, $13 million more than he would if he had followed Roth's lead and locked in a fixed rate at the outset."
As a result, Alexander is reporting, "The Trump Organization is now on pace to pay an estimated $51 million of interest across all of its properties this year, roughly 30% more than it paid the year Trump left the White House."
You can read more here.
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