The rights to control a landmark Washington, D.C., hotel have traded hands in a foreclosure auction just two years after they were sold by The Trump Organization.
The leasehold interest in the Waldorf Astoria hotel, formerly the Trump International Hotel, was sold to its lender, BDT & MSD Partners, for $100 million Monday, a spokesperson for Alex Cooper Auctioneers told CoStar News.
The auction and sale come after reports that the owner of the leasehold, global investment manager CGI Merchant Group, had defaulted on a $285 million loan from BDT & MSD Partners tied to the property. Local media reported that the merchant bank placed the single bid in the auction.
The property is owned by the federal government but leased under a long-term contract lasting nearly 100 years.
A spokesperson for BDT & MSD Partners said the first material event of default was in 2023.
Since then, the bank “actively engaged with CGI in a constructive manner, allowing ample time for them to explore financing and alternative options,” the spokesperson said in a statement to CoStar News. “We have now taken control of the Waldorf Astoria Washington DC via foreclosure and remain dedicated to our partnership with Hilton and confident in the future of the asset.”
Miami-based CGI still intends on gaining back control of the property's leasehold.
The firm said that “despite the extremely challenging interest rate environment and the hotel’s slower than anticipated ramp up,” the investment firm had secured “the necessary financing to cure the loan default” ahead of Monday’s auction, according to a statement shared with CoStar News.
“The lender, BDT & MSD Partners, and other parties were made aware of this prior to Monday’s auction, yet the process proceeded at their behest,” the firm said.
“Although this represents a disappointing development, we never walk away from a property — and we are not done fighting for the Waldorf Astoria,” CGI said in its statement. “Even though the auction has occurred, we remain in intense discussions with BDT & MSD Partners and still have a finalized capital solution on the table to cure the loan default and recapitalize the asset.”
DC Landmark
CGI purchased the 100-year lease at 1100 Pennsylvania Ave. NW from The Trump Organization for $385 million in 2022. At the time of the sale, it was reported that the investment firm’s offer was tens of millions of dollars more than the next-highest offer.
In 2012, The Trump Organization was chosen to develop the property that previously served as the U.S. Postal Building. Two years later, former President Donald Trump's real estate company broke ground on its $200 million project to redevelop the property into a 263-room hotel.
During Trump’s presidency, the hotel became a hot spot for Republican meetings, local media reported at the time. But the building’s affiliation with the then-president also made it sometimes difficult to attract various organizations and businesses.
In 2022, The Trump Organization moved to offload the property, selling the leasehold to CGI, which partnered with Hilton to rebrand the building as a Waldorf Astoria.
“This acquisition marks a major milestone for CGI in our quest to rewrite the meaning of return on investment,” Raoul Thomas, CEO and founder of CGI, said in a statement at the time of the sale. “We are thrilled to partner with our friends at Hilton to bring the Waldorf Astoria brand to an iconic landmark in the nation’s capital and look forward to working closely together to have a lasting and positive impact on the Washington, D.C. community.”