Fu ck are you delusional....
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Donald Trump has had no trouble getting big loans at competitive rates
Published: June 23, 2017 9:39 a.m. ET
The idea that banks won’t lend to Trump because of his bankruptcy history is the equivalent of fake news: MarketWatch analysis
President Trump signs an executive order in the Roosevelt Room of the White House.
Contrary to countless reports portraying President Donald Trump’s relationship with banks as toxic, a new MarketWatch analysis shows Trump has virtually no trouble getting loans on good terms these days. Big banks like BarclaysBCS, -0.51% also welcome Trump’s money in brokerage accounts and one of the biggest, J.P. Morgan Chase JPM, +1.05% , oversees his family trusts, according to a recent presidential disclosure.
Trump signed his first financial-disclosure form as president on Flag Day, June 14 — also Trump’s birthday. The 98-page document shows assets of at least $1.4 billion and income of almost $600 million for the 2016 calendar year and into the early stages of 2017. Trump reported that he owes at least $310 million to banks and financial-services firms, including at least $130 million to Deutsche Bank.
The ranking member of the House Financial Services Committee, Democrat Maxine Waters of California, is leading a group of four House members that’s pressed Deutsche Bank to disclose the results of an internal review of its business relationship with Trump and his family. The Waters-led group wants to determine whether loans made to Trump and members of his family were backed by guarantees from the Russian government or were in any way connected to Russia. Deutsche Bank DB, +2.54% has so far declined to cooperate with congressional inquiries into its Trump-linked business.
The MarketWatch analysis shows a variety of lenders, all big banks or listed specialized finance companies like Ladder Capital, that have provided lots of money to Trump over the years in the forms of short-, medium- and long-term loans and at competitive rates, whether fixed or variable.
“The Treasury yield that matches the term of the loan is the closest starting benchmark for Trump-sized commercial real estate loans,” said Robert Thesman, a certified public accountant in Washington state who specializes in real estate tax issues. The 10-year Treasury swap rate is also used and tracks the bonds closely, according to one expert.
Trump’s outstanding loans were granted at rates between 2 points over and under the matching Treasury-yield benchmark at inception. That’s despite the well-documented record of bankruptcy filings that dot Trump’s history of casino investment.
The Deutsche Bank credits all carry 10-year terms with variable rates — LIBOR or prime, per the disclosures—that also still track close to 2 points more than the Treasury yield. On the same day Trump signed the recent disclosure, the Federal Open Market Committee announced it would increase the benchmark federal funds rate by 25 basis points, bringing it to a target range of 1% to 1.25%.
A note from J.P. Morgan indicated the Fed rate hike “should signal to investors that the U.S. economy is in a strong place. “[A]nd when the broader economy is doing well—with expanding businesses, higher wages and extra discretionary income—commercial real estate investors do well.”
That’s good news for Trump, who said he had signed his business over to his two sons to manage in a revocable trust but who still personally enjoys the benefit of his investments’ success, as his financial disclosures document — and his tax returns, if disclosed — would show.
Trump’s properties are still vulnerable on the Deutsche variable-rate loans if no interest caps were included in the loan terms. Trump may have already bought swap contracts from another bank that would exchange his variable-rate interest payment commitment for a fixed-rate one for a price.
A spokesman for Deutsche Bank declined to comment on its business relationship with Trump, citing client confidentiality requirements.
Without knowing all the deal terms, “it’s hard to know if Trump has been getting market rates, sweetheart deals or punitive terms given his history of bankruptcies,” said Thesman.
Ladder Capital LADR, +0.47% — a listed real estate investment trust, or REIT, that lends for commercial mortgages, mezzanine financing and preferred and direct equity to partners — originated two mortgages and one loan with a high value of $125 million, per the disclosure, for Trump-related properties. Ladder Capital also recently refinanced another mortgage originated by UBS Real Estate Investments Inc. in 2006 with a high value of $25 million, per the disclosure. Ladder’s CEO is Brian Harris, a former UBS commercial real estate executive, and his firm is filled with real estate veterans from big banking organizations including UBS, Bank of America and Credit Suisse.
A spokesman for Ladder Capital declined to comment on its business relationship with Trump, citing client confidentiality requirements.
Ladder Capital no longer holds the loans, according to a person familiar with the transactions. That person also said all of the credits are nonrecourse — meaning the lender or investors in the collateralized mortgage debt securities, or CMBS, can pursue the collateral, in this case the properties, but not the borrower in case of default — and have been securitized. The CMBS that includes the Trump Tower note was rated triple-A.
Said Thesman: “It’s the collateral, and the underlying economics of the deals, not the character of the borrower, that ultimately drives the deala terms.”