Chicago : Trump Files Suit Against Lenders

[ErickMontreal]

Trump Files Suit Against Lenders

Developer Seeks to Extend $640 Million Loan on a Chicago Skyscraper

 

 

Wsj.com

By ALEX FRANGOS

 

Tall Trouble: Donald Trump's Chicago skyscraper project, the Trump International Hotel & Tower, during construction in July.

 

Mr. Trump is suing to extend a $640 million senior construction loan on the 92-story Trump International Hotel & Tower from a group of lenders led by Deutsche Bank AG and including a unit of Merrill Lynch & Co., Union Labor Life Insurance Co., iStar Financial Inc., a publicly traded real-estate investment trust, and Highland Funds, a unit of Highland Capital Management LP.

 

The tower, which contains 339 hotel rooms and 486 condominiums, will be the second-tallest building in the U.S. behind Chicago's Sears Tower and is expected to be completed in mid-2009. The hotel, on the lower floors, opened earlier this year. But sales of both the hotel rooms and the condominiums have come in below original estimates and the project's current projected revenue remains short by nearly $100 million needed to pay off the senior lenders.

 

The lawsuit, filed in New York State supreme court in Queens, is a further indication of the dysfunction in the real-estate lending markets as borrowers and lenders struggle to resolve troubled projects. People familiar with the matter say the lender group, which is made up of more than a dozen institutions, was unable to agree on the extension.

 

The suit demands -- among other things -- that an extension provision in the original loan agreement be triggered because of the "unprecedented financial crisis in the credit markets now prevailing, in part due to acts Deutsche Bank itself participated in." This so-called force majeure provision is common in contracts and can be applied to acts of war and natural disasters. Mr. Trump already extended the loan once in May.

From the Archives

 

Mr. Trump asked for $3 billion in damages. The suit won't affect construction of the project, according to people familiar who say there is enough money to complete the $90 million work that is left.

 

The suit says Mr. Trump attempted to resolve the impasse by offering to buy the project's unsold hotel units for $97 million. That money would be used to pay down the construction loan, along with the $204 million in proceeds from closed units and the $353 million that is expected from units that close in the next six months. A Deutsche Bank spokesman declined to comment.

 

Mr. Trump has put $77 million of his own equity into the tower, which he would stand to lose in a potential foreclosure. Other than a $40 million guarantee to complete the project, Mr. Trump has no recourse obligations to the project. A Trump spokesman declined to comment.

[Trump, Donald]

 

Deutsche Bank originated the construction loan in 2005 and sold off most of it to others, retaining less than $10 million of exposure on that loan. The suit alleges that Deutsche Bank compromised the senior construction loan by selling pieces off to "so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along," that the lending group is unable to come to a consensus on how to deal with the matter.

 

It also alleges Deutsche Bank created a "serious conflict of interest" by taking a separate stake in the project's so-called mezzanine loan that was originated by private-equity firm Fortress Investment Group. The mezzanine loan, which is junior to the senior construction loan, had an original principal of $130 million but will eventually accrue to $360 million. Deutsche Bank purchased roughly one-quarter of the mezzanine loan, according to people familiar with the matter.

 

The suit names the mezzanine lenders as defendants, including Fortress and its affiliates, Newcastle Investment Corp. and Drawbridge Special Opportunities Fund, as well as Dune Capital Management and Blackacre Institutional Capital Management, the real-estate arm of Cerberus Capital Management. Fortress didn't respond to a request for comment. The other lenders declined to comment.

 

Unless sales of the condo and hotel units restart despite the worst housing market in generations, and quickly generate $400 million in new sales, it will be difficult for the project to pay off the mezzanine loan, which comes due in May 2009.

[LindbergMTL]

Trump Files Suit Against Lenders

Developer Seeks to Extend $640 Million Loan on a Chicago Skyscraper

 

 

Wsj.com

By ALEX FRANGOS

 

 

The tower will be the second-tallest building in the U.S. behind Chicago's Sears Tower

 

 

Really?

[francely57]

^ yes, with its spire the total height is 415 m ( = old World Trade Center Tower 2).

 

Sinon c'est un immeuble de 360 m (un peu plus haut que John Hancock) si on s'arrête au toit.

[MARTY]

Talk about giant egos!!!!

 

 

http://www.nbcchicago.com/blogs/ward-room/Jon-Stewart-Weighs-in-on-Emanuel-Trump-Sign-Fight-263658081.html

 

Wading into the controversy over Donald Trump's new sign in Chicago, Jon Stewart joked the city should have known what it was getting into.

 

"I gotta say Chicago, I think this is on you," the host of "The Daily Show" said Tuesday night. "Did you not think Donald Trump was going to put his name on the building you let him build? It's what he does. Have you been to New York City? Or as you think it would be called from the buildings, New Trump City?"

 

"He put up a string of apartment buildings that literally block the sun from the entire Upper West Side of Manhattan," Stewart said.

 

The 20-foot illuminated letters spelling TRUMP on the side of Trump International Hotel over the Chicago River prompted criticism from Mayor Rahm Emanuel, who called the sign "architecturally tasteless."

 

Source: http://www.nbcchicago.com/blogs/ward-room/Jon-Stewart-Weighs-in-on-Emanuel-Trump-Sign-Fight-263658081.html#ixzz3512xTr6o

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