Trump DC ironically could sell to ESG leader

How ironic would it be if the Trump International Hotel in Washington, D.C., sells to an investment firm with a mission to make positive social impacts on its hotel communities? In fact, the reported buyer refers to that focus as its “superpower” within its environment, social, governance (ESG) strategy.

Reports are now surfacing and HOTELS has received confirmation that CGI Merchant Group is poised to buy the lease rights to the Trump International Hotel in Washington, D.C., from The Trump Organization for somewhere between US$370-US$400 million. Negotiations are ongoing and a deal could be finalized within a couple of weeks.

Miami-based CGI has been working exclusively with Hilton to grow its socially conscious network of hotels and could bring Hilton’s Waldorf Astoria brand, or perhaps its LXR luxury brand, to the 263-room Pennsylvania Avenue property.

Trump started marketing the hotel for sale in 2019, originally asking for US$500 million for the property that has reportedly struggled mightily in recent years. Just last week, the U.S. House of Representatives Oversight Committee released documents suggesting the Trump hotel in D.C. lost more than US$70 million between 2016 and 2020, counter to claims of former President Donald Trump, who said the hotel was highly profitable. Trump’s income from the hotel during that period was more than US$156 million, according to the committee, yet the property suffered a net loss and had to take a US$27 million loan from one of Trump’s holding companies. The Trump Organization has refuted the committee’s finding.

The Trump Organization won the lease for the D.C. hotel in 2013, agreeing to pay a reported base rent of US$250,000 a month.

HOTELS spoke to CGI Merchant Group Co-Founder Raoul Thomas about a month ago to learn more about his plans for the global investment management firm’s US$650 million fund launched last year, which looks to purchase 20 hotels across gateway cities in North America and the Caribbean over the next three years. Whether the potential purchase of the Trump in D.C. will come from this fund is not yet clear, but Thomas definitely referred to its ESG-focused mission as its superpower.

To take its mission a step further, CGI created Conscious Certified Hotels (CCH) this year with the goal of making positive social impacts in its destinations. All CCH properties will be housed within Hilton’s collection of brands like Tapestry, LXR and Curio Collection.

In August, CGI Hospitality Opportunity Fund I purchased for US$109 million the former Celino South Beach in Miami Beach with plans to reopen a 132-key Gabriel-branded property this year under Hilton’s Curio Collection soft brand. The deal closed weeks after the reopening of The Gabriel Miami, another Curio Collection affiliation in downtown Miami.

In March, CGI also announced a US$30 million investment in Atlanta, Georgia’s Morris Brown College to convert existing facilities into a 150-key upscale hotel and hospitality management training complex.

Alex Rodriguez, the former New York Yankees MVP turned businessman and Miami resident, is participating in the fund that also includes participation from Adi Chugh, founder of the New York-based Maverick Commercial Properties.