Bank of China contributes $211 million USD to a $950 million USD syndicated loan for the 1290 Avenue of the Americas 2012 Refinancing Project

Project narrative

On November 8, 2012, a syndicate of four lenders — the Bank of China (BOC), German American Capital Corporation (GACC) (a subsidiary of Deutsche Bank AG), UBS Real Estate Securities Inc., and Goldman Sachs Mortgage Company — entered into a $950,000,000 USD syndicated loan agreement with HWA 1290 III LLC — a Delaware-incorporated special purpose vehicle (SPV) and wholly-owned subsidiary of Delaware-incorporated Hudson Waterfront Associates III, L.P., which is jointly owned by The Donald J. Trump Revocable Trust (30% equity stake) and by Hudson Waterfront III Corporation (1% equity stake), and Hudson Westside Associates III, L.P. (69% stake equity stake), both entities of Vornado Realty Trust, a Maryland-incorporated real estate investment trust headquartered in New York City and listed on the New York Stock Exchange — and HWA 1290 IV LLC — a Delaware-incorporated SPV wholly-owned by Delaware-incorporated Hudson Waterfront Associates IV, L.P., which is jointly owned by The Donald J. Trump Revocable Trust (30% equity stake) and by Hudson Waterfront IV Corporation (1% equity stake), and Hudson Westside Associates IV, L.P. (69% stake equity stake), both entities of Vornado Realty Trust — and HWA 1290 V LLC — a Delaware-incorporated SPV wholly-owned by Delaware-incorporated Hudson Waterfront Associates V, L.P., which is jointly owned by The Donald J. Trump Revocable Trust (30% equity stake) and by Hudson Waterfront V Corporation (1% equity stake) and Hudson Westside Associates V, L.P. (69% stake equity stake), both entities of Vornado Realty Trust — for the 1290 Avenue of the Americas 2012 Refinancing Project. This loan carried a maturity period of 10 years and a final maturity date in November 2022 and a fixed rate of 3.34% and was interest-only. This loan was secured by (i.e. collateralized against) a mortgage on 1290 Avenue of the Americas, an assignment of leases and rents, and fixtures charged by HWA 1290 III LLC. The loan was designed to be a commercial mortgage-backed security (CMBS) that could be packaged into bonds. The proceeds were to be used by the borrower to repay an existing loan for the 1290 Avenue of the Americas, a 43-story 2.1 million square foot office building between West 51st and West 52nd Streets in Midtown Manhattan, New York City, New York; the sponsors received net proceeds after the existing loan was repaid and all closing costs were covered. BOC contributed about $211 million USD to the loan syndicate. Within 22 days, BOC's portion loan was securitized and entirely sold into the CMBS, leaving it with no ownership interest in the loan, though was only publicized in 2020. This was the first time a Chinese bank had participated in an U.S. CMBS. In August 2016, during the 2016 presidential campaign, the New York Times published an article that drew attention to the BOC loan as an example of Trump's business dealings. After Trump was elected U.S. President, Mother Jones published an article with quotes from former White House ethics lawyer Richard Painter noting that, under the Emoluments Clause of the U.S. Constitution, which prohibits a U.S. President from directly benefiting from payments from foreign powers, could make debt to state-owned BOC an issue. Then, in April 2020, during the 2020 presidential campaign, POLITICO posted an article that was widely disseminated about Trump's interest in the BOC loan amidst Trump's attacks that former U.S. Vice President Joe Biden would give China major influence over the United States based on, among other things, allegations of improper influence on his son Hunter Biden's dealings with Chinese businessmen (and a deal involving BOC). POLITICO reported that the loan was still outstanding and that Trump was still liable for the debt in what would be his second term. The story of the 1290 Avenue of the Americas loan spurred criticism of Trump for his dealings with China. In response to the article, BOC issued a statement explaining how it had sold its interest in the loan in late November 2012, well before Trump's presidency or campaign. POLITICO issued a correction that the debt was no longer owed to BOC. Additionally, BOC called attention to the fact that a 2017 document which listed BOC as having a financial interest in the fixtures of the building in case of a loan's default filed by Wells Fargo was incorrect and that Wells Fargo was working to update it. In November 2021, the loan was refinanced with a new $950 million USD loan. The BOC loan was relevant to the State of New York's case against Donald Trump for civil fraud; among other allegations in that case, the state alleged that from 2011 to 2021, Trump calculated the value of his interest in the partnership with Vornado, net of debt (the debt thus including the loan supported by BOC), without considering that Trump's interest was a limited partnership interest, making them false and misleading and that Trump used a capitalization rate (value of the building) for the building that was also false in 2012 and 2013 and from 2016 to 2019 as part of a wider pattern of mischaracterizing his net worth on financial statements given to banks, insurers, and other entities to make more favorable deals and loans. In February 2024, a New York judge ordered Trump to pay a $454 million USD penalty for such acts.