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Analysis: How the heck did Donald Trump refinance a Trump Tower mortgage with a $100 million loan?

Our conversation, conducted via email and edited lightly for flow, is below.

Cillizza: Let’s start simple: What is the loan in question? When did Trump take it out? And when is it coming due?

Scannell: The new loan is a refinancing of a commercial mortgage the Trump Organization took out on Trump Tower in 2012. That was a 10-year loan with an interest rate of 4.2% that came due this year, according to a financial disclosure filed by Trump.

The lender of the original mortgage loan was Ladder Capital, a New York firm where the son of Trump’s longtime chief financial officer, Allen Weisselberg, is a senior executive. The new lender is Axos Bank of California. The documents for the new loan don’t say what the financial terms are, so we can’t evaluate if the interest rate is at, above or below average. (Weisselberg and the Trump Organization were indicted last year on charges they were involved in a 15-year tax fraud scheme. Weisselberg and the company have pleaded not guilty.)

Cillizza: Earlier this year, his longtime accounting firm — Mazars — walked away from the veracity of the last decade of his financial records. Does that factor into this loan at all?

Scannell: This new loan was signed by Eric Trump on February 15, one day after the New York attorney general made public Mazars’ letter stating that the Trump Organization and its lenders should no longer rely on those past financial statements. The NYAG’s and Manhattan district attorney’s investigations into the Trump Organization, and specifically the accuracy of its financial statements, have been publicly known for some time. The NYAG levied allegations of possible fraud in a January court filing and specifically alleged misstatements and omissions in the financial statements.

It’s very likely the new lender was aware of these public documents and would have come across them while doing its own due diligence and credit analysis before authorizing the loan. Banks do their own research about the creditworthiness of borrowers and make decisions based on multiple factors. Axos has declined to comment on the loan.

Cillizza: What do we know about the bank that agreed to refinance the loan?

Scannell: Axos Bank is based in San Diego. It was formerly known as the Bank of the Internet, and its president for more than a decade has been Greg Garrabrants, a Trump supporter who previously worked at Goldman Sachs and McKinsey. He and the chief credit officer, who signed the loan agreement, have donated thousands of dollars to Republicans, Trump and Trump-related campaigns in recent years.

Cillizza: Why would they do it given Trump’s financial and legal peril?

Scannell: For banks, it’s about risk, reward and getting repaid.

Big Wall Street banks stopped lending to the Trump Organization more than a decade ago following Trump’s bankruptcies and litigation — apart from German lender Deutsche Bank, which was trying to make a mark in the US. Deutsche Bank, which has loaned the company more than $300 million, said after the January 6, 2021, attack on the US Capitol that it would no longer do any future business with Trump.

With that history, Trump has gone to smaller lenders, who have been willing to finance deals based on terms that they’ve negotiated, whether it’s personal guarantees, high interest rates or other security. Collateral for the loans are Trump properties, which in this case is a towering Fifth Avenue condo and office building, with a prime location and Gucci as its flagship tenant. Eric Trump said the company is sound financially despite the legal pressures it’s facing. “We have incredibly low debt, have a tremendous amount of cash and have an extremely profitable company. We had no problem refinancing,” he said.

Cillizza: Finish this sentence: “This refinancing does ________ for Trump’s overall finances.” Now, explain.

Scannell: The deal shows there are still lenders willing to finance the Trump brand even while the parent company is under criminal indictment and there are open investigations into the business and its founder.

Based on Trump’s disclosure, it’s the only loan due in 2022 so it alleviates, for now, any pressure facing the company related to existing debt. The Deutsche Bank loans for his Miami golf course, Trump National Doral, are due next year.

Trump has been raising money since his presidency, tapping funds from the Republican National Committee to pay for some of his legal defense, and expanding into books and other projects to bankroll his lifestyle. He also launched a social media platform, Truth Social, which is funded by a publicly traded blank-check company called Digital World Acquisition Corp. His focus appears to have shifted away from the real estate business, which he transferred day-to-day operations of to his sons Eric Trump and Donald Trump Jr. in 2017, and to post-presidency business ventures that can capitalize on his popularity.

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