A $375 million ground lease transformed Washington's Old Post Office into a Waldorf Astoria; 2 years after acquisition, foreclosure ended the investor's control of the property

Major real estate projects can reshape the identity of a landmark property while also reshaping the financial fortunes of the investors behind them. The shift of Washington, D.C.’s Old Post Office building into a Waldorf Astoria is one such. What started as a significant acquisition that involved CGI Merchant Group and the Trump Organization finally became a significant investment for Miami-based investor Raoul Thomas and his company.

A Major Hotel Investment

In 2021, Raoul Thomas visited Donald Trump’s New Jersey country club.He planned to pay no over $350 million for the Old Post Office building in Washington, D.C., which was then occupied by the Trump International Hotel.

Thomas was the founder of Miami-based investment firm CGI Merchant Group. The organization had raised a $650 million hotel investment fund the earlier year, which had the backing from former Yankees superstar Alex Rodriguez.


Rodriguez, explained in the supplied details as the “all-time leader” in amount earned on the baseball diamond, introduced Thomas to Donald Trump, as per Robert Festinger, CGI’s former senior vice president of asset management.

For Thomas, the transaction featured a significant move. The agreement was scheduled to become the biggest transaction he had undertaken.

The $375 Million Deal

The Trump Organization had been looking to sell the rights to its Washington hotel for some time. The organization had reportedly been pursuing a sale from 2019, when it floated an asking price of over $500 million, as per the Bloomberg News.

The transaction involved CGI Merchant Group acquiring the hotel lease for $375 million. The property was situated on Pennsylvania Avenue, less than 1.6km from the White House.

At the time of the proposed transaction, individuals familiar with the matter stated CGI planned to remove the Trump name and convert the hotel into a Waldorf Astoria handled by Hilton Worldwide Holdings. The Wall Street Journal reported the agreement on Nov. 14.

The deal was anticipated to be completed in the initial quarter of the following year.

From Trump International Hotel to Waldorf Astoria

In 2012 Donald Trump obtained rights to develop the hotel in the Old Post Office building. The property was leased from the federal government. The Trump Organization subsequently developed the property as a hotel.

The hotel became an important asset for the Trump Organization. The shift in ownership also meant a transformation in the property’s identity. CGI Merchant Group planned to remove the Trump name and introduce the Waldorf Astoria brand via an agreement with Hilton.

CGI Merchant Group and Alex Rodriguez

CGI Merchant Group got into the transaction with an established hotel investment amount. The firm had raised $650 million in the year before the Old Post Office deal, with former Yankees superstar Alex Rodriguez among its backers.

Rodriguez’s link to the transaction was also important as he introduced Thomas to Trump, as per Robert Festinger, CGI’s former senior vice president of asset management.

The Beginning of a Difficult Chapter

Although the $375 million acquisition shafted the property into a Waldorf Astoria, it also became a turning point for CGI Merchant Group.

The deal that primarily featured a significant opportunity finally preceded the loss of Thomas’ control of the property. Two years after the acquisition, foreclosure concluded the investor’s control of the property.

The Old Post Office transaction therefore stands as a major example of how a landmark real estate investment can generate dramatically different results for the building and the investor behind it.

A New Identity for a Historic Property

The shift from the Trump International Hotel to the Waldorf Astoria featured a significant change in the building's branding and ownership.

The Trump Organization had held the lease following the winning of the development rights in 2012, while CGI Merchant Group later agreed to get the lease for $375 million. CGI intended to remove the Trump name and operate with Hilton to establish the Waldorf Astoria identity.

For the property itself, the transaction signified another chapter in its long commercial history. For CGI Merchant Group and Raoul Thomas, however, the investment became a much more consequential chapter, one that started with plans for a significant hotel acquisition and concluded with foreclosure ending the investor’s control of the property.

FAQs:

1. What is the Old Post Office building in Washington, D.C.?
Washington, D.C., property that housed the Trump International Hotel

2. What was the value of the hotel transaction?
$375 million.