UPDATED, 5:35 p.m., May 12: The investment fund managing the wealth of tech billionaire Michael Dell funded the acquisition of the Trump Hotel in Washington, D.C., The Real Deal has learned.
Sources familiar with the $375 million acquisition of the leasehold by a fund associated with CGI Merchant Group said that MSD Partners, which manages money for Dell and other investors, provided a $285 million acquisition loan for the marquee property. The deal for the leasehold closed Wednesday.
The CGI hotel fund, whose partners are Raoul Thomas, Adi Chugh and former baseball superstar Alex Rodriguez, plans to operate the 263-key hotel as a Waldorf Astoria.
The fund, which raised $650 million in late 2020 to target struggling hotels, also owns the Gabriel in Miami Beach and the Gabriel in Downtown Miami at 1100 Biscayne Boulevard. It went into contract for the Trump property, located at the Old Post Office building near the White House, in November.
Chugh’s debt brokerage, Surya Capital Partners, arranged the financing for the Trump deal. Representatives for Surya declined to comment.
The property is owned by the General Services Administration, a federal agency, which had to approve any sale of the leasehold.
The hotel was reportedly a source of red ink for the Trump family during Donald’s Trump’s presidency, losing $70 million during his four years, according to the House Committee on Oversight and Reform. But it became a hotspot for the Republican establishment and a popular destination for foreign dignitaries, raising concerns that Trump was violating the “emoluments” clause.
The $375 million price tag will likely mean that the Trumps made a significant profit on the property — as much as $100 million, according to Bloomberg.
MSD, led by Gregg Lemkau, has become a key player in real estate finance, lending on development projects and acquisitions across several U.S. markets. It recently bankrolled a Bruce Teitelbaum-led group’s buyout of the Durst Organization’s interest in a massive Long Island City waterfront site, 44-02 Vernon Boulevard. It was also one of the lenders on the $590 million refinancing of the former Bertelsmann Building in Times Square.
This story was updated to reflect that MSD Partners, not MSD Capital, provided the financing.