CGI Merchant Group's $650M Fund Fails After Pennsylvania Ave Loss
The firm bought the Old Post Office ground lease for $375 million in 2022 with $285 million in floating-rate debt, then lost it two years later.
CGI Merchant Group’s $650 million hospitality fund, backed by retired baseball star Alex Rodriguez through A-Rod Corp, has effectively wound down after the Miami-based firm lost its highest-profile asset, the former Trump International Hotel in Washington, D.C., to foreclosure. The firm, run by Raoul Thomas, raised the fund in late 2020 to buy and reposition roughly 20 hotels for Hilton’s portfolio, then paid $375 million in May 2022 for the Old Post Office ground lease and rebranded the property as a Waldorf Astoria.
Why it matters
The deal is a live case study in underwriting trophy hospitality assets with short-dated, floating-rate debt during a rate cycle that turned against borrowers. CGI financed the $375 million purchase with a $285 million loan from Michael Dell’s MSD Partners, now BDT & MSD Partners, on top of a $35 million District of Columbia transfer tax bill that ran nearly four times the firm’s internal $9 million budget. For a sponsor evaluating a similar trophy-asset acquisition today, the sequence shows how a marquee name and a marquee lender do not substitute for a debt structure that can survive a downturn.
The numbers
CGI defaulted on the loan in February 2024. A foreclosure notice filed with the D.C. Recorder of Deeds put the balance owed at $256.6 million as of that July, according to Commercial Observer’s review of the filing. BDT & MSD took the leasehold at an August 5, 2024 auction with a $100 million bid and no competing bidders. A Form D that CGI Merchant GP, LLC filed with the SEC, reviewed directly by this outlet, shows the fund’s first sale of interests dated Dec. 4, 2020, with Thomas signing as manager, consistent with the firm’s public account of the fund’s origin. By November 2025, CGI Merchant had lost or sold every asset in the fund and ceased operations; Thomas has since started a new venture, Alice Group, in Abu Dhabi.
What’s next
The Old Post Office building itself changed hands again in June 2026, when BDT & MSD Partners bought the underlying fee interest from the federal government for $80 million, a separate transaction from the 2024 leasehold foreclosure. For developers watching the broader national distress cycle in hospitality, CGI’s collapse sits alongside other private-credit-driven hotel foreclosures as a marker of which deals from the 2021-2022 vintage are still working their way through workout.