In the nine years before he ran for president, Donald Trump’s company spent more than $400 million in cash on new properties — including 14 transactions paid for in full, without borrowing from banks — during a buying binge that defied real estate industry practices and Trump’s own history as the self-described “King of Debt.”
Trump’s vast outlay of cash, tracked through public records and totaled publicly here for the first time, provides a new window into the president’s private company, which discloses few details about its finances.
It shows that Trump had access to far more cash than previously known, despite his string of commercial bankruptcies and the Great Recession’s hammering of the real estate industry.
Why did the “King of Debt,” as he has called himself in interviews, turn away from that strategy, defying the real estate wisdom that it’s unwise to risk so much of one’s own money in a few projects?
And how did Trump — who had money tied up in golf courses and buildings — raise enough liquid assets to go on this cash buying spree?
From the outside, it is difficult to assess how much cash the Trump Organization has on hand.
Eric Trump, a son of the president who helps manage the company, told The Washington Post that none of the cash used to purchase the 14 properties came from outside investors or from selling off major Trump Organization assets.
Instead, Eric Trump said, the firm’s existing businesses — commercial buildings in New York, licensing deals for Trump-branded hotels and clothes — produced so much cash that the Trumps could tap that flow for spending money.
“He had incredible cash flow and built incredible wealth,” Eric Trump said. “He didn’t need to think about borrowing for every transaction. We invested in ourselves.”
He added: “It’s a very nice luxury to have.”
The cash purchases began with a $12.6 million estate in Scotland in 2006. In the next two years, he snapped up two homes in Beverly Hills. Then five golf clubs along the East Coast. And a winery in Virginia.
The biggest cash binge came last, in the year before Trump announced his run for president. In 2014, he paid a combined $79.7 million for large golf courses in Scotland and Ireland. Since then, those clubs have lost money while Trump renovated them, requiring him to pump in $164 million in cash to keep them running.
Trump’s lavish spending came at a time when his business was leaning largely on one major financial institution for its new loans — Deutsche Bank, which provided $295 million in financing for big projects in Miami and Washington.
Eric Trump said his father wasn’t forced to turn to a cash-heavy strategy. Trump could have borrowed more if he wanted, he said. But he had soured on borrowing in general, Eric Trump said, after contending with unpaid debts in the early 1990s.
“Those lessons undoubtedly shaped his business approach and the conservative nature of how we conduct business today,” Eric Trump said.
Real estate investors typically don’t buy big properties with their money alone. They find partners to invest and banks to lend alongside them. That allows the investors to amplify their buying power, and it increases the odds of earning higher returns.
“For privately held real estate firms, basically they like to use as much debt as they can. The only brakes are put on by the lending institutions, who don’t want to lend too much,” said David Geltner, a professor of real estate finance at the Massachusetts Institute of Technology.
Industry experts said avoiding loans can alleviate risk for real estate companies and allow them to maneuver more quickly.
But they said that approach is typically undertaken by cash-rich investors that aren’t focused on maximizing the money they make off a property or by companies that aren’t trying to minimize their tax bills, because interest payments on mortgages are often tax-deductible. Companies that have trouble obtaining loans would also turn to cash, they noted.
Particularly when pursuing major projects, private real estate firms usually borrow. “I still think at the end of the day, you want some debt,” said Ed Walter, a Georgetown University real estate professor and former chief executive of Host Hotels, which owns more than 100 hotels under various brands.
Trump himself embraced that philosophy — extolling the virtues of borrowing big, even more enthusiastically than other real estate executives. Until, suddenly, he didn’t.
To total up Trump’s cash payments in