November 29, 2008 – The Deutsche Bank Trust Company has filed a $40 million lawsuit against Donald Trump over the loan that came due on November 7th. This suit is hot on the heels of Trump filing his own suit against the bank because they refused to extend the loan. In that suit Trump claims that the bank has made it more difficult to sell the remaining units in the 92 story Trump Tower by not allowing Trump to market the Chicago condos for a lower price and that the global financial meltdown is an extenuating circumstance that should allow a payback extension, according to Crain’s.

The original amount of the 2005 loan was $640 million, of which some $334.2 million came due. Trump had personally guaranteed $40 million of that himself. Other construction funds came in the form of Trump putting up $64 million in equity and also $12.8 million more as work progressed. Another lender, Fortress Credit from New York also financed $130 million for the project.

Sales are still at around 75%, and Trump has offered to purchase the remaining units himself but Deutsche won’t agree on a price. Total sales of the condos and hotel units amount to around $200 million and Trump says another $353.1 million is under contract. Competition from buyers who are selling their investment units in the Chicago real estate project for as much as 30% below developer prices have slowed sales for Trump.

Deutsche is also trying to have Trump’s lawsuit thrown out, reasoning that Trump’s continuing construction projects are evidence that he is able to repay the personal guarantee. Trump was quoted in a Scottish newspaper as saying that, “we are doing very well as a company and we are in a very, very strong cash position.” The comment was made in reference to a large golf course with time shares he is building there. Trump’s attorney, Mr. Schlesinger, said in reference to the Deutsche suit that, “we’ll have a knock-down, drag-out for the next six months over this.”

The outcome of this legal battle could really influence other disputes between lenders and developers of Chicago Luxury Condos.

[tags]Trump Tower, Chicago Condos, Chicago Real Estate[/tags]

This entry was posted on Saturday, November 29th, 2008 at 4:27 pm and is filed under Uncategorized.