Trump-linked hotel investors are begging for a bailout as they struggle with Wall Street debt: report

On Tuesday, The New York Timesreported that hotel owners with ties to President Donald Trump are struggling to pay off debt in the midst of the COVID-19 pandemic — and are begging the administration for a bailout.

"Thomas J. Barrack Jr., the billionaire investor and major donor to President Trump, has run into an unexpected patch of red ink thanks to the pandemic: He has struggled to keep up with payments on $1.97 billion in Wall Street debt he used to buy a collection of more than 160 hotels," reported Eric Lipton and Jeanna Smialek. "Monty Bennett, another big donor to Mr. Trump, is in a similar tough spot after he recently halted payments owed on the $2.6 billion worth of Wall Street debt used to acquire his own hotel collection."

"The precarious financial position that some friends of Mr. Trump and other hotel executives are now in has fueled an intense lobbying campaign aimed at persuading the Trump administration, the Federal Reserve and Congress to rescue hundreds of hotel industry players that relied on riskier Wall Street debt to finance their lodging empires before the virus hit," continued the report.

Trump reportedly understands the dire problems facing the industry — being a real estate investor himself — but is hesitant to offer direct help because he fears the political fallout if he is seen bailing out his friends and donors.

"The hotel industry is running into trouble in part because it spent years loading up on a type of debt, known as commercial mortgage-backed securities, which must make regular payments to the bondholders who own the debt," said the report. "But as hotel occupancy has fallen, the owners of these properties in many cases have lacked the cash flow to cover payments on the loans, which had been bundled together and then sold off to Wall Street investors as bonds. Over all, there are $550 billion worth of commercial mortgage-backed securities outstanding in the United States, financing hotels, shopping centers, office buildings and even self-storage facilities."

From the outset of the crisis, Trump has advocated bailouts to various industries that complement his own, like airlines and cruise ships, which has stirred controversy. A ProPublica investigation discovered that some of Trump's own properties appeared to qualify for the most recent round of coronavirus stimulus.