October 29 (Reuters) – Former US President Donald Trump’s drastic rhetorical style and divisive policies enabled him to essentially take over the Republican Party. His supporters are so devoted that most believe his false claim that he lost the 2020 election to election fraud.

But the same tactics that have led to fierce political loyalty have undermined Trump’s business, which is built on real estate development and branding deals that have allowed him to make millions by licensing his name.

Trump’s business brand was once synonymous with wealth and success, an image that now clashes sharply with a political brand rooted in the anger of its predominantly rural working-class constituency. His presidency is now linked in the minds of many to its violent end when supporters stormed the U.S. Capitol on Jan. 6.

These burning images, along with years of bitter rhetoric, cost Trump money. Revenue from some of its high-end properties has declined, vacancy in office buildings has increased, and its lenders warn the company’s revenues may not be enough to cover its debt payments, according to Trump’s financial disclosures as president to government agencies and company reports tracking real estate company finances.

Potential tenants in New York avoid its buildings, a real estate agent said in order not to be associated with Trump. Golf tournament organizers have pulled events from their courses.

Trump’s focus on the political brand has increasingly overtaken his identity as a real estate mogul, says a veteran of the hospitality industry.

“Before his political career, the Trump brand was about luxury – the casinos, the golf resorts,” said Scott Smith, former hotel manager and hospitality professor at the University of South Carolina. “When he entered politics, he steered the Trump brand in a completely different direction.”

Trump’s business also remains beneath the cloud of a joint Manhattan and New York Attorney General’s investigation into criminal fraud cases. The company and longtime chief financial officer Allen Weisselberg have been charged with a wage tax evasion scheme, and investigators are continuing to investigate whether Trump or his agents committed fraud by misrepresenting financial information on loan applications and tax returns. Weißelberg and the company deny wrongdoing and deny the allegations.

While his development business is struggling, Trump has announced his first big deal since leaving office – and it has nothing to do with real estate. On October 20, he said he would build a new social media platform, some of which will provide him with a political forum, after he was banned from Facebook and Twitter who said Trump had their platforms after the riot in the U.S. Capitol used to incite violence.

That deal could prove lucrative for Trump, regardless of whether the platform is successful. Investors rushed to buy shares in Digital World Acquisition Corp, the publicly traded blank check acquisition company that plans to merge with the newly announced Trump Media and Technology Group. Digital World stocks are up sharply and are valued at approximately $ 2 billion. Trump’s new media company will own at least a 69% stake in the combined company, but Trump has not disclosed his stake in Trump Media.

Trump has also raised money for his political operation, which started on Jan.

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Eric Trump, the former president’s middle son and a senior executive with the Trump Organization, said in an interview that the company is now in “a phenomenal position.” He cited a refinancing on a loan for San Francisco office buildings that raised approximately $ 162 million in cash for the Trump business, according to loan documents and a release from Vornado Realty Trust (VNO.N), the company’s majority owner.

“We’re sitting on an enormous amount of cash,” Eric Trump told Reuters.

In an email, a Donald Trump spokesman denied the business had collapsed since he entered politics.

“The real estate company is doing extremely well and this is evident in Florida and elsewhere,” Liz Harrington said in a statement emailed. “Given the coronavirus pandemic, which has hit the hotel industry particularly hard, Mr Trump’s company is doing phenomenally well.”

Financial records show that Trump’s real estate business is in decline. The family’s income, which is heavily burdened on golf courses and hotels, was hit in 2020 amid the coronavirus pandemic. His Las Vegas hotel revenue, for example, fell from $ 22.9 million in 2017 to $ 9.2 million in 2020 and in the first 20 days of 2021, according to Trump’s financial statements.

Trump is now making a second attempt to sell his lease on a high profile property, the Trump International Hotel, in a former federal building in Washington, DC, after failing to find a buyer at the original price of $ 500 million. Meanwhile, the company pays the federal government $ 3 million annually in leases, according to documents released earlier this month by the House Oversight Committee of the US Congress. These records show that Trump’s Washington hotel has lost more than $ 73 million since 2016.

The image damage for Trump began early in his presidency. An adviser to Trump, who argued for a lower tax bill at his Doral golf resort in a 2017 public hearing, said Trump’s policies had harmed his business model.

“It’s not really about the property, it’s about the brand,” said consultant Jessica Vachiratevanurak at a hearing for the Miami-Dade Value Adjustment Board in December 2017 in a video recording verified by Reuters. She cited a meeting she attended where top executives from the Trump Organization described “a serious impact” on his golf business, such as the cancellation of tournaments and charity events by organizations trying to avoid association with Trump.

The resort saw revenue drop from $ 92 million in 2015 to $ 75 million in 2017, she said at another hearing the following year. Trump’s financial disclosure from the president listed Doral’s earnings at $ 44 million last year.

Vachiratevanurak declined a Reuters request for comment.

“This is obviously wrong as Doral is doing very well,” said Trump spokesman Harrington.

In Trump’s home base in New York, the name Trump has become increasingly toxic. A high profile property, the Trump SoHo Hotel in Lower Manhattan, was renamed Dominick in 2017. New York City canceled its leases for a golf course, two ice rinks in Central Park, and a carousel in January; Trump has sued the city for unlawfully terminating its golf course lease.

On 40 Wall Street, the 72-story skyscraper that was one of Trump’s proudest acquisitions, problems that began before the pandemic have worsened, according to reports from companies tracking real estate performance. After the January 6 riots in the U.S. Capitol, some of Trump’s major tenants, including the Girl Scouts and a nonprofit called the TB Alliance, said they were looking to get out of their leases. A commercial real estate agent says many potential tenants would not consider the building because of Trump’s name on it.

The Girl Scouts did not respond to requests for comment, and the TB Alliance said they would “explore all options” to exit the Trump building.

“Most New York tenants do not want anything to do with it, and that has been the case for five years now,” says Ruth Colp-Haber, who has referred seven customers to the building over the years but cannot be of interest to anyone now. “It’s the biggest bargain, but you won’t be looking at it.”

According to Mike Brotschol, Managing Director of KBRA Analytics LLC, the occupancy rate in March 2021 was 84%, well below the average of around 89% for the office market in downtown New York. The rents Trump could ask are also lower – between $ 38 and $ 42 per square foot in a market where the average is closer to $ 50, he said.

The property’s financials are in risky territory, the reports say.

Trump took out a $ 160 million loan to refinance 40 Wall Street in 2015 – with a personal guarantee of $ 26 million. Last year, the building was placed on an industry watchlist for default-prone mortgage-backed commercials, according to reports from KBRA and Trepp, which also monitor real estate loans. In the first quarter of the year, according to the KBRA report, the debt service coverage ratio monitored by banks fell to a level that suggests the building’s cash flow cannot cover its debt payments.

In the Trump statement, Harrington blamed “the disastrous policies of Bill de Blasio,” the mayor of New York, for the downturn in the city’s office market. “Despite all of these serious headwinds, Mr. Trump has very little debt for value and the company is doing very well,” she said.

The Doral Resort and Washington Hotel, as well as a hotel in Chicago, are secured with loans of around 340 million US dollars from Deutsche Bank AG (DBKGn.DE), Trump’s largest lender. But the bank has no appetite for more business with Trump and has no plans to extend the loans after they mature in 2023 and 2024, a senior Deutsche Bank source told Reuters on condition of anonymity.

When asked about the unwillingness of the bank to work with Trump, his spokeswoman said: “So what?”

Experts say the prospect of new development under the Trump brand is fraught with great opportunities. A hotel industry executive said hotel developers – worried about closing themselves off from the millions of customers who have been turned away by Trump – are likely to think twice before signing branding deals to put the Trump name on their homes.

“People have a choice. You can go to the Ritz Carlton, you can go to the Four Seasons and not bring politics in one way or another, ”said Vicki Richman, chief operating officer of HVS Asset Management, a consultancy and real estate manager for the hospitality industry.

The Trump Organization attempted to launch its premium luxury hotel brand with two new brands: Scion, a mid-range offering, and American Idea for budget travelers. The company ditched plans for both in 2019, citing difficulties doing business in a controversial political environment.

Harrington said nothing was off the table for Trump’s business.

“We have many, many things in view,” she said. “But we also have an eye on politics.”

(This story is being resubmitted to correct typos in the additional reporting line of credit.)

Reporting by Joseph Tanfani; additional reporting from Peter Eisler, Greg Roumeliotis, and Matt Scuffham; Adaptation by Jason Szep and Brian Thevenot

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