Just How Did Trump Borrow All That Money?
Watching Empires of New York on CNBC (good series by the way) and one of the features is Donald Trump in the 80's.
He bought fancy hotels (Plaza Hotel), built over-the-top casinos (Taj Mahal), developed condos and office buildings (Trump Tower and 40 Wall St) using junk bonds with interest rates as high as 14%.
He made risky and unsustainable investment bets. He didn't seem phased to walk away when shit hit the fan.
How did Trump have confidence to do this if he had equity (i.e. something to lose) in the project (or was it 100% debt financing)? How was he able to borrow so much money that big banks [at the time] literally couldn't allow him to fail?
I have some investment properties, but my banks required 25-40% equity with a personal guarantee. No non-recourse. And my properties are multifamily and small office buildings, nothing volatile like hotels, restaurants, or retail.
Have you seen some of the LBOs that were done over the same period? You said it yourself, junk bonds which were in their hayday and the real estate market rules were completely different.
RJR Nabisco is the first that comes to mind. Any other good ones to read about?
Carl Ichan’s TWA takeover was pretty cool.
My personal favorite due to it being such a blatant yet awe-inspiring abuse of government connections is William E. Simon's LBO of Gibson Greetings. Guy abused his connections from being the Secretary of the Treasury under Nixon to get absurd loans approved, ones that would probably make even Trump envious. From the wiki:
I don’t know, it was the 80’s I guess.
Same reason why there are a shit ton of skyscrapers in Downtown Dallas that were built in the 80s. Cocaine was a helluva drug.
Don't quite follow. Are you saying the skyscrapers in Dallas are made of cocaine?
Depends, have you tried to gummy a skyscraper in Dallas?
Hic atque autem quasi dicta. Est et ducimus laudantium id ipsa. Sapiente vero rerum repellat ipsa. Modi quas porro et unde iste.
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