Since Donald Trump came down that golden escalator and Trump Tower and announced he was running for president, his company's finances have been under scrutiny. There have been questions about how much money the Trump organization makes, how much it pays in taxes, whether it's ever inflated the value of its properties.

But recently there's been a new focus.

Trump's debts we now know Donald Trump owes and is in debt for four hundred million dollars.

And just so everyone is clear, when we say in debt, it means you owe money to somebody. That's Kamala Harris in last week's vice presidential debate. Trump's debts have recently emerged as a campaign issue.

This is really a new lens, a new window for us to kind of look at the Trump organization, how much debt the Trump organization have and how well are they managing that debt. That's our colleague Brian Spiegel.

He covers the Trump organization and he says these questions are becoming increasingly important because over the next several years, the Trump organization has over four hundred million dollars of debt coming due.

That's over four hundred million dollars that will have to be repaid or refinanced.

And I think this is going to be if Donald Trump wins a second term, it's going to be something that's going to be headline news for the next several years.

If Trump is re-elected, will witness a financial drama unlike anything before in American history, a president facing hundreds of millions of dollars in debt payments while he's still in office.

Welcome to the journal, our show about money, business and power. I'm Caitlin Moore. It's Tuesday, October 13th. Coming up on the show, the Trump Organization's debts and how they could impact a possible second term for Trump. At Facebook, we've taken critical steps to prepare for the US elections. We've more than tripled our safety and security teams, implemented five step add verification and launched a new voting information center. Learn more at FT.com about elections. Donald Trump's presidency has raised plenty of questions about how presidents should handle their business affairs while in office, but something that Trump didn't face in his first term.

Questions about debt coming due.

The refinancing of all this debt. Figuring out what the company is going to do with all this debt. That is something that would be completely new and really uncharted territory for a sitting president of the United States.

The debt that the Trump organization will have to repay in the next few years goes back. Almost a decade after the financial crisis, the Trump organization took out a number of loans on different properties. One big loan was in 2012. The Trump organization borrowed one hundred million dollars from a lender called Ladder Capital.

That's Trump Tower and that's obviously the Trump Organization signature property. It's where they have their headquarters. They're building a 100 million dollar debt coming due on that. And that's the first one that we're going to need to watch.

The Trump organization took out two more loans in 2013 and in 2014, one was for one hundred and twenty five million dollars and the other up to 170 million dollars. This time the lender was Deutsche Bank.

Those debts are for the golf resort that Trump has near Miami called Trump National Doral, Miami Golf Resort, and the other one's for his Washington, D.C. hotel.

These loans are coming due in twenty, twenty three and twenty twenty four, four years. This debt wasn't in the spotlight. That's partially because it actually isn't that big of a debt load, at least not when you compare it to the value of the Trump organization's properties. But it's also because the Trump organization hasn't had to pay back the principal on some of these loans. It's mostly been paying interest, which is generally how commercial real estate loans work.

You and me, if we buy a house, we're going to pay down the principal of that debt. We're going to take it from five hundred thousand dollars to zero over the course of thirty years. That's not how property developers tend to work. These are interest only loans where you're basically just paying the bare minimum that you have to pay. And that's a key distinction to remember. When we think about the Trump organization's debt loads, he's not paying down principal.

But pretty soon the Trump organization will have to pay off the principal over 400 million dollars on a bunch of properties. And that's why people have started to pay attention to these debts. These loans will start coming due in twenty, twenty two, which could be smack in the middle of Trump's second term. And Trump is directly tied to this debt because of his relationship to his businesses.

So when President Trump took office in twenty seventeen, he put the ownership of the businesses effectively into a trust that he owns, but that he does not have day to day management over the businesses operations. That responsibility falls to his sons, and in particular, it falls to Eric Trump, his second eldest sons of Don Junior. His little brother, Eric, is the one who's responsible for basically managing the revenues, the hotel properties, those sorts of things.

And he what he says when you speak to him and he said publicly, is that President Trump does not run the day to day at these businesses. He is not making the decisions over the of the Trump organization. But the truth is he still owns the businesses.

These debts ultimately go back to Trump when the Trump organizations debts start coming due in 2022.

The company has a few options for coming up with all that money. Option one is to sell some of its assets like properties or land. But the more common option is to refinance.

The most common thing that's going to happen is the debt is going to be rolled over. So you have a hundred million dollar loan on Trump Tower coming. Do what you're going to do. You're going to go back to the lenders and you say, can I get another hundred million dollars to cover that debt?

In this scenario, the Trump organization would borrow a new one hundred million dollars. With that money, it would pay off its old debt and then it would continue only paying the interest on its new debt. Basically, it would be continuing the status quo. But getting a lender to give the Trump organization all that money could be a hard sell.

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As the Trump Organization's loans start to come due, it'll need to find a lender to refinance them and it'll probably go back to one of its existing lenders like Deutsche Bank. Deutsche Bank has given the Trump organization big loans before, including loans for two properties that are now coming due, the Doral Golf Resort and the Washington Hotel. But Brian says there are signs that Deutsche Bank might be rethinking its relationship to Trump, the first sign came in 2016.

What we know is back when Donald Trump was running for president, the first time he approached Deutsche Bank and he asked for some more money for the Durao project and they turned him down. They said, you know, we don't want to deepen our relationship with you and your brand effectively.

Right. So I think that was a really strong signal to all of us that Deutsche Bank's got some hesitancy.

And since Trump was elected, Deutsche Bank's dealings with him have come under scrutiny. Congressional investigators and the Manhattan D.A. have subpoenaed the bank for information on Trump's finances.

The relationship with the Trump organization has become this huge political liability for Deutsche Bank, particularly from a reputational perspective. You know, it's really tough to overstate how big of a cloud its relationship with the Trump organization has cast over the bank. And what we know about big banks is they really don't like these sorts of distractions and they don't like the sort of political scrutiny.

So if the Trump Organization comes to Deutsche Bank asking for a refinancing, what options does the bank have?

Deutsche Bank could effectively double down its relationship with the Trump organization, brushing aside the critics and say we're going to do business in the way that we want, I guess the other option would be Deutsche Bank informs the Trump organization that they're not going to refinance their loans.

That second option? Well, I think it's probably less likely.

It would be far more dramatic, because what it would do is it would force the Trump Organization to go out and find a new creditor, potentially during a tough economic period.

The economic environment is tough right now for a lot of businesses, including the Trump Organization, which has been hit hard by covid.

Any potential lender will have to consider whether Trump's businesses are a good investment right now to big parts of his business are hotels, and of each of those has been really hard hit by covid in particular, golf courses were shut down and hotels are still basically shut down. The Washington hotel occupancy has been down. How quickly is that going to bounce back? And is a lender going to stand up and say, do I even want to be giving money to a hotel?

Right now, the Trump Organization is also exposed to retail, restaurants and office space, none of which are doing well. Now, take Trump Tower this year. It's net cash flow is down 40 percent from one of its lenders originally expected.

So when we're thinking about Trump Tower, it's effectively two different components that the debt covers. One is office space and Trump Tower. There's some big tenants in there still and the other is basically a shopping mall.

Retail is not a place that's doing very well from a from a commercial real estate finance perspective. It's actually something where you kind of want to run away from, if you can. If you're a lender looking at that, you probably don't want to engage in that conversation with Donald Trump right now. And I think that's what he's going to have to face. Some of his assets are not very desirable to finance.

And if Trump is re-elected, lenders will have another thing to consider optics. When you're lending to the company of a sitting president, it's almost inevitable that people will question your motives.

The question is going to be, will lenders, when they approach President Trump, will they be making black and white calculations based on his reliability as a borrower, or will there be ulterior motives, political things that they're looking to get out of the president?

So I talked to George W. Bush's former chief ethics attorney. And what he says is there's no one who's going to refinance Donald Trump who doesn't have an ulterior motive. They're going to want something else from the president out of this relationship.

Is there any question of whether or not the Trump organization can repay this debt?

So the short answer is it has some wiggle room. There are very few people out there. If you ask kind of serious folks in the market, how deep is the challenge for Donald Trump from a financial perspective right now? They're not going to tell you that he's at risk of kind of defaulting on the whole empire because he actually has some properties that are doing pretty well. So take a couple of cases of commercial office space he owns in San Francisco, in New York.

So one of the buildings is called 555 California Street in San Francisco. And the other one is 12 Dinty Avenue of the Americas in midtown Manhattan. So in each of those cases, the Trump organization owns a 30 percent stake in those. They've been really lucrative cash generators for the Trump Organization.

And if he ever did run into financial trouble, he could sell those properties to raise cash.

If Trump were re-elected, would you say it's a net positive or negative in terms of dealing with these debts? Oh, it's a net negative hands down. From the Trump organization's perspective, it would complicate things like a ton.

If he wins a second term, it's going to be exponentially more complex to get banks to refinance with him compared to him not being in the White House. The amount of scrutiny that's over this thing is going to be just something that's going to drag on for years. And there's going to be headlines going up every year. Right, about the state of negotiations. And is there something nefarious going on behind the scenes or what really it's going to create a lot of headlines at the Trump organization would rather we not have.

On the flip side, I think there are a lot of benefits at a much higher level that President Trump and his businesses are receiving from the fact that he's president. Just think about the doors that are not only opening up today, the access around the world that the Trump family is going to receive. That's not something that ends whenever President Trump leaves the White House. That's something that's going to continue on for so many years to come, the access to world leaders and the most influential people on earth.

However, the Trump Organization deals with its debts, Brian says there's very little chance it wouldn't get a new loan, might just have to shop around and possibly sell some assets.

No one's going to foreclose on a sitting president. No one expects them to go and take Trump Tower out from under him.

But a real possibility is that we are looking at a slimmed down Trump organization. I think that is something we could see during the second term, potentially, if particularly if kind of some of the economic uncertainty that's facing the company today continue. So golf courses. Is he going to continue to hold the number of golf courses he has or is he going to sell some of them to raise some money? So I think there's a lot of different levers that they can pull on.

And I think what we know from Donald Trump is he'll pull on every lever he has to kind of keep himself above water. But look, these are serious challenges for the Trump organization. It'll be really fascinating to watch how his kids deal with it. So we're three weeks out from an election, do you think this is a story that should be on voters minds? Yeah, absolutely.

It's going to be such a hot button issue in Washington and frankly, on Wall Street as well, given the magnitude of the debts, the hundreds of millions of dollars of debts that are going to come due over the next four years, who are the lenders that are giving him money, giving his companies money?

What are the terms of the loans to the Trump organization? And is the Trump Organization getting special treatment because Donald Trump is president?

And I can imagine the amount of scrutiny that it's going to receive.

That's all for today, Tuesday, October 13th, The Journal is a co-production of Gimblett and The Wall Street Journal, thanks to Cesari Pot call for his reporting on this story.

Thanks for listening to you tomorrow.