Property magnate is sued after defaultig on loan for Chicago hotel and tower
It seems nobody is safe from the credit crunch, even if you are a billionaire property magnate, as Donald Trump experienced last week in what became a black Friday for the property magnate.
Deutsche Bank Trust Co. Americas announced its decision to sue the developer, claiming it was owed $40m after Trump defaulted on a $640m construction loan for Chicago's Trump International Hotel and Tower.
The suit, the second to be filed in a month over the project, was filed on Friday by Deutsche, the main lender on Trump's development, in New York State Supreme Court in Manhattan.
It demands Trump to keep his promise on the personal payment guarantee he signed in February 2005 for the building should he fail to make loan payments on time, and claims the property magnate failed to pay the more than $300m due on 7 November.
Despite the suits, on Saturday, Trump announced the building's construction would be completed within five months, though he said more than 50% but less that 60% of the units had been sold.
Trump filed his own suit against Deutsche last month, seeking to excuse a repayment of more than $330m due on 7 November. He also wished to extend the construction loan for an unknown period as a result of the economic slump which he described as a “once-in-a-lifetime credit tsunami2.
The day continued from bad to worse as Trump Entertainment Resorts Inc announced it would not make a $53.1m bond interest payment due today.
The decision was made in a bid to “maintain sufficient liquidity”. Trump said a 30-day grace period would be applied to the missed interest payment and would use the time to pursue discussions with lenders to restructure the company's capital structure.
The casino company said there was no assurance any agreement would be reached.
It's shares fell from $5.70 last December to a close of 31 cents on Friday.
Early last month Trump won permission to go ahead with his plans for a £1bn golf course in Aberdeenshire.
The plans had been put on hold for two years when the Scottish Government called them in after they were rejected by an Aberdeenshire Council Committee. The resort will feature two golf courses and accommodation though Trump has been told no more than 500 private homes can be built.
In an interview with Building in late October, Trump said he had learned how to cope with an economic slump from his experiences in the early 1990s when he had £520m of personal debt and £2bn of business debt.
“I am sure the time will come when Manhattan experiences a downturn. And I have learned how to deal with that the hard way.”
However, he added at the time that things were still looking up: “The economic situation is severe and will be around for a while. But I have been fortunate as a lot of my latest developments were completed and sold just before the crunch, like my property in SoHo, New York. I even sold a house in Palm Beach for $100m (£58m) six weeks ago - very lucky.”
What a difference a month makes.