Trump's best option for $540 million is “clean” real estate and private lenders

Donald Trump is racing to avoid a pair of civil penalties totaling about $540 million, without having to pay the full amounts in cash or bonds.

The former president's lawyers claim he would face “irreparable” harm if he were required to fully secure his judgments in order to prevent them from vesting, and he may even be forced to sell properties that cannot be quickly repurchased.

They also say Trump can't simply make a cash deposit — at least not in a civil commercial fraud case in New York, where he faces just $454 million in fines and interest.

“Nobody, including Jeff Bezos, Elon Musk, and Donald Trump, has $500 million,” Trump lawyer Chris Case told an appeals court judge last week.

But legal experts say there is another option that Trump's lawyers did not mention in court filings: Trump could offer some of his assets as collateral to borrow what he needs — perhaps from private equity sources.

“There are plenty of private lenders in the debt markets and private equity markets who could lend to Trump,” said Eric Talley, a Columbia University law professor.

“In all cases, the loans will likely be secured by Trump properties, but if there is enough equity in some of them, he should be able to get credit secured, even on a compressed timeline,” Talley said.

The professor stressed the irony of Trump using his real estate to fight a lawsuit in which he was convicted of fraudulently inflating the value of his properties for financial gain.

Talley said any loans “would themselves involve making declarations of the value of the property – which of course is what got him into this mess to begin with.”

But an accurate assessment of the value of Trump's assets does not pose a serious obstacle. As Trump's lawyers noted during the fraud trial, the institutions that loaned him money actually conducted their own analyzes of Trump's finances, and did not rely solely on the claims in question in his financial statements.

Law professor John Coffey said the most important factor is whether Trump's real estate assets are actually mortgaged.

“He's going to have to come up with clean real estate that doesn't actually secure something held by another bank,” Coffey said.

“Does he have that property? I can't tell you.”

As of late January, the Trump Organization had 415 entities, according to Barbara Jones, a retired federal judge charged with overseeing the company's finances.

Of these entities, Jones identified 70 operating entities that generate revenue. This includes long-term leases for buildings such as 40 Wall Street, commercial office space on 13 floors of the 58-story Trump Tower, as well as the Trump National Doral Miami resort.

In New York City, Trump's real estate holdings are worth $690 million, according to Forbes estimates in September 2023. Some of the most prominent buildings bearing the Trump name in the city are largely owned by other entities.

New York Attorney General Letitia James, who brought the fraud case, said she would seize Trump's real estate assets if he was unable to pay his civil penalty.

“There is absolutely no reason for the New York prosecutor to be nice and nice to him if he doesn't post bail,” Coffey said.

Trump testified last year that he had “significantly over $400 million in cash.” But his lawyers claimed last week that if Trump were forced to secure the full $454 million fine, “there would likely be a need to sell properties to raise capital under urgent circumstances.”

They instead offered to pay a $100 million bond, but New York Court of Appeals Judge Anil Singh rejected the proposal.

Unless the full appeals court overturns Singh's decision, Trump has until March 25 to post a “bond” – in cash or bonds – covering the entire sentence in order to prevent it from taking effect during his appeal.

Trump also asked a federal judge to postpone another rapidly approaching deadline to pay an $83.3 million fine in the civil defamation case brought by E. Jean Carroll.

Carroll's lawyers said Trump's request “sums up to little more than 'trust me.'”

If Trump tries to sell assets to fulfill his pledges, he will not have much time to accomplish this.

Neil Pedersen, owner of New York-based bond agency Pedersen & Sons, said he would have to hire a broker to market his holdings, and any deal would have to be closed to free up cash for use in the bonds.

“It is possible that there are opportunistic buyers approaching it as well,” Pedersen noted.

So far, Trump has given no indication that he is moving in this direction.

“There are no sales planned or anticipated,” Casey told CNBC in an email before Singh's ruling. “So no appraisers were hired, no steps were taken, etc.”

After Singh ordered Trump to pay the full penalty, Casey and Trump's other lawyers did not respond to questions about whether they were now preparing to sell the properties.

Coffey said Trump was “very likely” to get a loan to help him fulfill his pledges. That's partly because Singh temporarily halted another penalty that would have barred Trump from applying for loans from lenders registered in New York.

Moreover, Trump is well known within New York financial circles, so he “wouldn't go into the market with strangers,” Coffey said.

“The real problem is, can he give the banks enough guarantees to keep them satisfied?”

Talley agreed. “There is a lot of ‘dry powder’ – not just in banks, but also in non-banks,” he said.

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