Trump’s Washington hotel has been a center of controversy since he entered office. Trump continues to own his business, which operates properties including the hotel, leading to charges of conflicts of interest. Several lawsuits have alleged that Trump is violating the Constitution’s ban on “emoluments,” or payments by foreign governments, when foreign government officials visit the hotel.
The company leases the building, the Old Post Office Pavilion, from the federal government’s General Services Administration (GSA), but the terms allow for the sale of the lease under certain conditions. The Trumps are trying to sell the lease at the earliest they are allowed. According to lease documents, the Trumps were not allowed to sell their interest until three years after the hotel’s opening date, which was Oct. 26, 2016.
Trump’s son Eric Trump told the Wall Street Journal, which first reported the sale, that, “People are objecting to us making so much money on the hotel, and therefore we may be willing to sell.” Officials from the Trump Organization and JLL declined to comment.
The president recently referred to the issue of whether foreign spending at the hotel violates the Constitution as “the phony emoluments clause.” His statement was part of a discussion about his decision to hold the 2020 Group of Seven summit of world leaders at his Trump National Doral Miami golf resort in Florida. Days after announcing that plan, the White House reversed course after criticism from across the political spectrum.
Opening weeks before Trump won the 2016 election, the hotel has become a popular place for customers and clients aligned with the president’s politics and a go-to place for Republican campaigns to hold fundraisers, Christian groups to hold conventions and conservative authors to host book parties. Members of Trump’s Cabinet have often been spotted there, and Trump has visited there 23 times as president, according to the watchdog group Citizens for Responsibility and Ethics in Washington.
But the property has also suffered from the unwillingness of many mainstream corporations, embassies and associations to book business there, narrowing the pool of candidates to fill the hotel’s massive ballroom and its 263 guest rooms.
The hotel’s dealings with foreign governments have led to multiple lawsuits, congressional inquiries and investigations. In three lawsuits winding their way through the federal court system, plaintiffs argue that Trump is violating the foreign emoluments clause of the Constitution, which bars the president from accepting gifts or payments from foreign governments.
Plaintiffs in the cases repeatedly cite instances in which government officials — from Kuwait, Saudi Arabia, Malaysia and other nations — have booked business at the hotel. The judge in one case, in which the D.C. and Maryland attorneys general sued the president, narrowed the arguments strictly to Trump’s D.C. hotel.
Justice Department attorneys have argued in court that the president cannot be charged with a crime while in office and that the president does not violate the Constitution by charging market rates to foreign governments. The Trump Organization has also donated money to the U.S. Treasury each of the past two years, money it says equates to the amount of profits it has received from foreign governments and political leaders.
House Democrats are looking more aggressively into the hotel project. The House committee that oversees the GSA issued a subpoena Thursday to the agency for financial records, legal memos and correspondence related to the project, including material relating to any communications between the GSA and Trump, Donald Trump Jr., Ivanka Trump or Eric Trump.
Rep. Peter A. DeFazio (D-Ore.), who issued the subpoena, released a statement Friday calling the possible sale a “good place to start” in terms of addressing ethical concerns but said he was “skeptical that this latest development isn’t an attempt to make a massive profit that directly benefits the Trump family so I will be following this marketing attempt closely.”
When Trump was bidding for the deal in 2012, he told The Washington Post he planned to hold onto it long-term.
“We will not be selling any portion of the real estate,” Trump told The Post at the time. The next year, he signed a 60-year lease with three 10-year options on the building, giving his company control over the property until 2103.
Ivanka Trump, then an executive at her father’s real estate company and now a senior adviser to him in the White House, so coveted the building that she suggested at the time to GSA officials that her daughter, Arabella Rose, then not yet 5 months old, would one day oversee it.
Trump’s company is permitted to sell the lease under certain conditions and with the GSA’s approval, according to lease documents. The company is required to retain the lease for a “Minimum Hold Period” of three years from the hotel’s opening, according to lease documents. The documents say that Trump may receive a 20 percent return on his investment from a sale and that the GSA would then receive 15 percent of any additional proceeds.
Because the sale would take place while Trump is in office — rather than before he entered office, in the way previous presidents have sold private interests — any deal may carry its own ethical questions. For instance, foreign investors and sovereign wealth funds often acquire U.S. real estate, particularly hotels, possibly raising concerns about the foreign emoluments clause.
Because the GSA would have to approve the deal while Trump is president, critics may also raise questions about whether taxpayers are receiving a fair deal.
A GSA spokeswoman did not respond to requests for comment. Agency officials have said in the past that they have provided thousands of documents to the House committee and that it is up to the courts to determine whether any emoluments violations have taken place.
It is difficult to determine how well the hotel is performing and what role that may have had in the decision to explore a sale. Financial information on other Trump-branded properties, in New York and Chicago, has shown signs of declining business since Trump entered office, but the GSA has not released financial information about the D.C. property.
Trump has an enormous financial stake in the project. He bested 10 other competitors to win the deal by offering to spend $200 million to renovate the building, far more than some other bidders were willing to offer. He borrowed $170 million from Deutsche Bank to do it. His company is now looking for a sale price of around $500 million, according to the Journal.