Lender Takes Control Of D.C. Waldorf Astoria At Foreclosure Auction For $100M

An iconic hotel on Pennsylvania Avenue has been taken over by the lender at a foreclosure auction just two years after The Trump Organization sold it. 

The leasehold interest in the Waldorf Astoria hotel at the Old Post Office building, formerly the Trump International Hotel, sold to the lender, BDT & MSD Partners, for $100M at Alex Cooper’s auction house Monday morning. But the owner that defaulted on its loan said after the auction it isn't done fighting to hold on to the property.

There were no other bidders for the property. After a 10-minute reading of the terms, auctioneer Matthew Cooper opened bidding at $100M. He called the price three times before getting approval from the lender’s substitute trustee, Carol Blumenthal, to close.

The historic property is owned by the federal government. But CGI Merchant Group was the owner of the leasehold interest on the 263-room hotel.

BDT & MSD Partners filed a foreclosure notice in May after CGI defaulted on its loan in February.

A BDT & MSD spokesperson told Bisnow it plans to take the title to the property and operate it with Hilton.

“Since the first material event of default on the loan in July 2023, we have actively engaged with CGI in a constructive manner, allowing ample time for them to explore financing and alternative options,” the spokesperson said in an email.

“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,” the spokesperson added.

CGI Merchant Group told Bisnow in a statement Monday afternoon that it had secured the necessary financing to cure its default and informed the lender prior to the auction, but the process still went forward.

“Although this represents a disappointing development, we never walk away from a property — and we are not done fighting for the Waldorf Astoria,” CGI's statement says. “CGI is fully committed to protecting the interests of its partners and investors, and we will utilize all resources at our disposal to prevail in this flawed auction process. 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.”

Although there were no other offers, a dozen individuals filled the four small rows in the Alex Cooper Auctioneers space in Upper Northwest near American University.

Raj Dua, who heads McLean-based SRR LLC, a $50M company, said he would have bid up to $30M through a pool of individual investors. 

“We were looking for the deal if there is a possibility of a deal,” Dua told Bisnow after the auction. “Because you already know, offices are the worst commercial investment right now and hotels are the second worst. And it's just tough. So if you can get a steal and we can handle our carrying costs and maintain it for a few years as the market goes up, then that's where the value is.”

A team from Arlington-based CRC Cos. sat in the back row but told Bisnow that they were just there to witness the proceedings.

Miami-based CGI took over the lease on the historic property from The Trump Organization in March 2022, paying $375M, a price The Wall Street Journal later reported was tens of millions of dollars more than the next-highest competing offer. 

To purchase the lease, CGI took out a $285M loan from Michael Dell’s MSD Partners, which has since merged with another company to create BDT & MSD Partners. CGI owed $256.6M on the loan as of July 3, according to the foreclosure notice filed with the D.C. Recorder of Deeds.

The auction had been previously scheduled for June but was postponed. 

The historic property was converted to a hotel by former President Donald Trump’s company in 2016, opening just months before its namesake was elected to the highest office in the country. The White House sits five blocks from the hotel.

The hotel has a 150-seat ground-floor restaurant from José Andrés, The Bazaar, which opened in 2023. The property also houses Michelin-starred omakase restaurant Sushi Nakazawa, which has been open since 2018.

UPDATE, AUG. 5, 2:30 P.M. ET: This story has been updated with a statement from CGI Merchant Group.