Trump to Lenders: You're Sued!

As goes "The Donald", so goes the country ... apparently.

The papers have been full of stories in recent days about New York real estate developer Donald Trump who may soon put to the test his theory that he is included in the group of borrowers who are "too big to fail".

So far, not so good.

Over the weekend, this WSJ story recounted the trouble brewing in Chicago and the lawsuit that has followed, seeing fit to include one of the creepiest sketches in recent memory (admittedly, the hair must be a challenge for any artist).

Trump Files Suit Against Lenders
Donald Trump filed suit against the lenders on his unfinished Chicago skyscraper, plunging the project into legal turmoil and highlighting the credit crunch's pervasive effects on real estate.

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 host of NBC's erstwhile hit show The Apprentice - as good a fading symbol as any of the real estate glory days of just a few years ago - has put some $77 million of his own money into the Chicago project.

That could prove to have been a big mistake.

Comments

[panocha man:]

why doesn't he top off the building at its current height and go on with life selling what is currently there. if he can't sell what is there now how is he going to sell the rest. A NO BRAINER.

2008 Nov 12 10:30 AM

[evergreen16:]

With too much ego, there is no such option. Everybody needs to listen what he says, or else ... he goes bankrupt.

2008 Nov 12 12:41 PM

[hurls111:]

The report I want to see is one that itemizes every vendor and amount by which they got screwed in each of his bankruptcies. You deserve what you get lending to this guy.

2008 Nov 12 01:48 PM

[Urbane Gori...:]

Paying attention to 'The Donald' on an investor's blogsite is like picking up the SF Chronicle and finding that Paris Hilton is front page news. I was hoping for a little more substance, even given the article's title.

jegan

2008 Nov 12 04:34 PM

[Engineer:]

Now that you are resorting to suing them, good luck finding lenders for your next project.

Talk about killing the golden goose.

2008 Nov 12 05:32 PM

[henarl:]

Future lenders will likely tell him "Your Fired!"

2008 Nov 12 11:39 PM

[Takayama:]

: Talk about killing the golden goose.
: Future lenders will likely tell him "Your Fired!"

Not likely to happen. What the lenders want is a real juicy deal. A chance to make serious money, everybody will jump in. GREED is the word.

2008 Nov 13 05:54 AM