Lawmakers Want to Know More About the Trump Hotel Sale
They are questioning the “premium” $375 million price for the lease acquisition.
Top House lawmakers would like to know more about the firm poised to take over the lease for the Trump Hotel in Washington, D.C., which has been met with scrutiny and criticism over the years.
The Trump Organization is in the process of transferring the lease for the hotel, located in the Old Post Office building, to the Miami-based investment group CGI Hospitality Opportunity Fund I, LP. The General Services Administration, which manages the lease, finished its review of the proposed sale in March, as outlined in a 21-page document. Officials determined that CGI was a “qualified transferee,” based on an internal and third-party review. The reported price of the lease is $375 million.
“While the review examined the proposed buyer’s financial capacity and other factors such as its business reputation, experience in owning and operating hotels, and capability to manage historic properties, it did not fully explore the identities of all the investors in the CGI Hospitality Opportunity Fund or former President Trump’s potential conflicts of interest related to the sale,” House Oversight and Reform Committee Chairwoman Rep. Carolyn Maloney, D-N.Y., and Gerry Connolly, D-Va., chairman of the committee’s government operations panel, wrote to Raoul Thomas, CEO of CGI Merchant Group, on May 6. CGI Merchant Group manages CGI Hospitality Opportunity Fund I, which plans to turn the Trump Hotel into a Waldorf Astoria, which is a luxury hotel brand from Hilton.
Certain experts previously indicated that the $375 million price tag “represents a significant premium over market rates for a hotel that, according to documents obtained by the committee, reported losing tens of millions of dollars since it opened in 2016,” the lawmakers wrote. “Notably, this sale price is 10% higher—on a per-room, or ‘per-key,’ basis—than the highest price ever recorded for a Washington, D.C., hotel.”
Additionally, “even accounting for the Trump Organization’s prior investments into the property, the sale price will reportedly yield the Trump Organization a profit of at least $100 million, of which approximately three quarters would flow to former President Trump,” they wrote.
Maloney and Connolly requested a list of information from CGI by May 20, including the identities of individual investors in CGI Hospitality Fund and a list of all members of the Trump family who were either directly or indirectly involved in any part of the negotiations for the lease sale.
"GSA values its relationship with Congress and looks forward to continuing to work with the committee on this and other matters," Christina Wilkes, GSA spokesperson, told Government Executive, when asked for comment. CGI did not respond for comment by the time of this article’s publication.
Additionally, the Trump Organization did not respond immediately for comment. Eric Trump, the former president’s son who is an executive vice president at the Trump Organization, “repeatedly pointed out that the hotel donated to the U.S. Treasury any profits collected as a result of stays by foreign government officials at the hotel, and took other steps to avoid ethics questions, such as not actively soliciting business from foreign governments,” The New York Times reported last month. In an interview with the Times he said he couldn’t discuss the details of the sale, but that he was proud of the work the Trump family did with the hotel.
Maloney and Connolly said their concerns “have only increased” following the news last week that the Trump Organization and Trump's inaugural committee agreed to pay $750,000 to settle a lawsuit brought by the D.C. attorney general, which alleged that the committee overpaid the hotel illegally for the 2017 presidential inauguration. AG Karl Racine said the funds will be redirected to two nonprofit organizations that promote civic engagement for youth in D.C.
Trump said in a statement released by his office there was “absolutely no admission of liability or guilt” and claimed this was “yet another example of weaponizing law enforcement against the Republican party.”
Virginia Canter, chief ethics counsel at Citizens for Responsibility and Ethics in Washington, told Government Executive on Monday that the oversight committee is justified with this inquiry not only for learning about the “premium sale price” for the hotel that has been losing money, but also to find any potentially national security issues due to the location of the hotel on Pennsylvania Ave in between the U.S. Capitol and White House. Additionally, it must be determined if any sanctioned Russian individuals, because of Russia’s invasion of Ukraine, or other “bad actors” were involved at all in the sale, she said.
Canter suggested that the House committee also investigate the other bidders on the hotel and their offers to see if “the sale price offered by CGI represented a fair market value or an inexplicable premium payout to President Trump and his family members as he exited office.”
The Trump Hotel has attracted much criticism and scrutiny for allegations of conflicts of interest with then-President Trump and violations of the Emoluments Clause because he never fully divested from his businesses interests as well as its financial woes.
Last month, Canter told Government Executive that overall “there’s no question he should have never been permitted, as president, to retain an interest in the hotel and it was a failure on the part of the GSA not to police that more effectively.”
In his newsletter on May 5, Walter Shaub, who served as Office of Government Ethics director from January 2013 until July 2017 and now is at the Project on Government Oversight, wrote, “It’s too late to go back and change the past, but Congress has done little to prevent a repeat of this travesty in the future.”
The House passed the Protecting Our Democracy Act, which would prohibit presidents from contracting with the federal government and further clarify the Emoluments Clause, but now the Senate must act, said Shaub.
This article has been updated with comment from GSA.