Lender of Trump's $420m: "I want you to do me a favor though..."

[bigtree]

Link to tweet

Trump explained his $400 million dollars of debt he currently owes during Thursday night’s NBC Town Hall hosted by Savannah Guthrie, saying that “some of it, I did as favors to? institutions that wanted to loan me money.”

Guthrie asked, “The question is, on behalf of voters, who do you owe $421 million to?”

“First of all, what they did is illegal,” Trump opened by hitting the New York Times, adding “Also, the numbers are alwrong, with the numbers they released.”

Trump then explained that much of the debt is due to his real estate business but that when he decided to run, he is “very underleveraged.” Trump did admit to having ” a very, very small percentage of debt” before explaining “in fact some of it, I did as favors to institutions that wanted to loan me money.”

read: https://www.mediaite.com/trump/trump-explains-that-part-of-his-400-million-debt-were-favors-to-institutions-that-wanted-to-loan-me-money/

[global1]

1. Whaaad? Do Us A Favor And Let Us Loan You Money???...nt

[coti]

4. Sounds like money laundering. nt

[Lock him up.]

23. Exactly.

THAT.

[PaulRevere08]

2. Isn't that what all genius business men do? /s

[mahina]

3. So...he admitted to money laundering?

Why the hell else would a lender ask that, and you borrow it as a favor?

Crime or bullshit? porque no los dos?

[ProfessorGAC]

6. Back To "Under Leveraged"

I'll repeat what I said when he blurbed this originally.
There is no such thing as under leveraged.
Any successful business may use debt as growth capital, if they could do the same thing without borrowing money, they would.
Carrying leverage when an excessively high cash position when that cash is dead money. Rates are SO low on deposits, it makes no sense to acquire extra debt. The interest expense is unnecessary.
The amount of leverage is the one that makes sense given 5 other parameters. So, you're either leveraged or overleveraged. A company can't be under leveraged.
Apple is worth $1.2 trillion. The have under $90 billion in debt. This leaves a debt to equity of around 0.09. The tech industry average is around 0.8. Is Apple under leveraged? No. It's just right.
Now, that's off my chest, the debt he admitted to in 2016, was $5.4 billion on total assets of $10.2 billion.
D/E was already greater than 1. About average for commercial real estate and resorts. Except the assets were inflated, and around a billion & a half of debt was not disclosed. (Until Moody's risk assessment for creditworthiness of a privately held company. This suggests a DE of 4.
So, not only is PINO making up that term, but there was never any "under" at all.

[SergeStorms]

7. Thank you for that explanation.

Finance is confusing to me, and I imagine many others here. It's nice to have someone here on DU who can translate it into a language we can understand.

[oldsoftie]

8. And theres no way he's got 10B in real assets, so I wonder what his REAL debt is??

No independent authority on these matters, like Forbes, shows his assets anywhere near 10B as far as I know. He's always said he's "worth" 10b. Well, where I come from, you're "worth" is assets minus debt.

[ProfessorGAC]

9. Downgraded Twice

Moody's took it from $10.2 billion to a bit over $8 billion mostly due to highly inflated values of NYC real estate.
Then, Forbes lowered it due to COVID to about $7.2 billion.
That's why it's possible he could be underwater.

[oldsoftie]

11. Thats still a lot higher than Forbes had him. I didnt think it was over 3B. nt

[ProfessorGAC]

12. You're Right

After the 2nd downgrade, they set his NW at $2.8 billion.
That's still too high.
Still ignores the Deutsche Bank loans and the recently discussed $400+ million in personal debt.
I believe the number to be easily under 10 figures, which is pretty terrible for someone who inherited $400 million nearly 30 years ago. Plus, with those "loans" from daddy in the 70s, should have had around $100 million before the inheritance.
IMO, the best case is ROI of 1.8% yearly, when the average of the big indices over that time was over 10%.
I think he's been funding growth, the business, and his lifestyle with borrowed money for around 20 years.

[oldsoftie]

13. I agree. And his next source of massive funds will be his "base".

If he loses he's going to start his own TV network and charge a fee to get it. He'll make millions spreading news that makes OAN look like CNBC

[Klaralven]

14. Apple's shareholder equity was about $72 billion on its latest 10Q

Total liabilities and shareholders’ equity was about $317 billion.

https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/60465d0c-fa51-46f7-96f4-e66119cd8e2b.pdf

[ProfessorGAC]

18. Their Market Cap Is $2.06Trillion, As of Friday

I don't think we're talking about the same thing.
Open 121.28
High 121.55
Low 118.81
Mkt cap 2.06T
P/E ratio 36.18
Div yield 0.69%

[Klaralven]

21. Leverage is usually defined by the Debt-to-Equity Ratio, which doesn't involve Market Cap

What Is the Debt-To-Equity Ratio – D/E?

The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company’s financial statements.

The ratio is used to evaluate a company's financial leverage. The D/E ratio is an important metric used in corporate finance. It is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds. More specifically, it reflects the ability of shareholder equity to cover all outstanding debts in the event of a business downturn.

https://www.investopedia.com/terms/d/debtequityratio.asp

Market capitalization represents funds theoretically available to the shareholders, not to the corporation. It is important only in that a high stock price allows the company to raise new equity without dilution.

[ProfessorGAC]

22. I Know All That

My point was about the lack of a situation where someone is under leveraged.
I used Apple as an example of a company that carried scads of cash and no debt for years.
They acquired debt to supplant cash which they invested externally because rates were so low, and cash was underperforming.
This was not about the details of financial statements. You're hanging onto a detail which is merely tangential to the actual point.
Besides, their equity declaration is an accounting trick. It does not reflect the true equity value, or is even close.
They have 17.01 billion shares outstanding at $119.02 per share. That's not equity of $90 something billion.
For highly successful large companies market cap is 8 to 10 times the shares OS * price. This matches that.

[PCIntern]

16. Oooh. You sound like someone who knows what's going on

RWers must Hate you. How DARE you be knowledgeable!!!

almost every right winger I know at some point has made the statement “I don’t know much about blank but I do know…“

At that point I cut them off and say “another expert heard from…”

[malaise]

5. And yet no US banks would lend him money

Velly velly interesting!

[lonely bird]

10. Do us a favor...Vlad wants us to lend you money.

[jmowreader]

15. These institutions Trump speaks of...

They wouldn’t be the Bonanno, Colombo, Gambino, Genovese and Lucchese Families by any chance, now would they? I find it extremely strange that any legitimate banker would consider Donald Trump, the worst businessman in North America, taking out a loan big enough to buy a building in New York to be doing a favor for the bank. Come on dude, I don’t think the IRS lets you deduct intentional losses like making $250 million loans to known deadbeats.

[Firestorm49]

17. If they have his returns and have stated his personal debt,

then somebody also knows to whom the debt is owned. Just owing money is the fun headline, but I don’t doubt that Vance and his team have additional information that “ethically” (remember James Comey) they can't or shouldn’t release to the public this close to the election.

Somebody knows here, and somebody knows there.....Dutchebank??? VTB???.

[UTUSN]

19. K&R

Last edited Sun Oct 18, 2020, 10:45 PM - Edit history (2)

[NoRoadUntravelled]

20. Borrowing for business is one thing.

He is personally in debt for $421Million. He's a loser of a business owner.
His credit is so bad around the globe that he couldn't even get an American bank to loan him money.

Any institution or other human who loans money to him or his family takes a big risk in doing so.
Trump doesn't pay his bills. Ask the contractors that worked on his real estate ventures who ended up making pennies on the dollar because Trump refused to pay them putting more than family owned company out of business.