November 10, Trump Towers, Chicago IL

Luxury hotel and resort developer Donald Trump sued Deutsche Bank and several other banks on Monday, demanding $3 billion in damages, claiming they broke agreements in the construction and financing of Trump International Hotel and Tower in Chicago.

The unfinished 92-story complex that would be the second-tallest building in the United States behind Chicago's Sears Tower was due for completion in mid-2009.

Trump has been trying to extend a $640 million construction credit from a group of lenders led by Deutsche Bank, The Wall Street Journal reported last Friday.

They include a unit of Merrill Lynch & Co, Union Labor Life Insurance Co, real-estate investment trust iStar Financial Inc, and a division of Highland Capital Management LP.

All were identified among more than two dozen defendants in Trump's lawsuit filed in New York State Supreme Court in the New York City borough of Queens.

Deutsche Bank spokesman John Gallagher declined to comment on the lawsuit.

"We have filed a lawsuit that clearly outlines the bad conduct of Deutsche Bank in connection with Trump Tower in Chicago and we believe the court will clearly vindicate our position," said Trump's lawyer, Steven Schlesinger.

"The fact that the bank group are acting in a dysfunctional manner in connection with big loans is a sign of the times," the lawyer said.

Original story - Reuters.com

Update Story - March 3, 2009

Lawsuits suspended in Trump Tower development

Donald Trump and Deutsche Bank Trust Cos. Americas shelve suits to try to settle differences

Donald Trump and Deutsche Bank Trust Cos. Americas announced Tuesday that they have temporarily suspended lawsuits filed against each other four months ago over Trump International Hotel and Tower's finances and will try to settle their differences out of court, a move designed to allay concerns of potential buyers who are jittery about the Tower's future in a morose real estate market.

"It certainly didn't help," Trump said of the lawsuits. "Now this totally resolves questions in anybody's mind."

While the project has seen a recent uptick in sales, both sides agreed that sidelining the lawsuits that generated headlines nationally would assist in marketing the 92-story tower at 401 N. Wabash Ave. The skyscraper is likely to be the last new high-rise in Chicago for some time, and Trump has lamented for months that restrictions put on him by a consortium of lenders led by Deutsche have thwarted his efforts to sell units in the trophy building.

Trump and Deutsche filed suits against each other in November. Trump first sued Deutsche and other lenders in New York State Supreme Court in Queens, seeking to excuse a repayment of more than $330 million due Nov. 7 and extend the $640 million construction loan for an unspecified amount of time. In that suit, Trump claimed that the global economic crisis was a "once-in-a-lifetime credit tsunami" affecting his ability to sell units at the Tower and repay the loan. He also sought $3 billion in damages.

A few weeks later, Deutsche filed its own lawsuit in New York State Supreme Court in Manhattan, claiming Trump personally owed the bank $40 million after defaulting on the loan.

Several issues need to be resolved. Among them is Trump's assertion that the minimum selling prices of the units, set in 2005 during the market's zenith, are no longer realistic and Deutsche needs to agree to lower them. Some of the building's earliest buyers already are marketing units for resale at prices substantially below the prices at which Trump can sell units.

Also still to be negotiated is a maturity date on the $640 million construction loan and a price by which Trump could fulfill his desire to buy the unsold hotel condo units hotel condo portion of the project. In November, Trump offered $96.6 million for those units but Trump acknowledged Tuesday the market has changed dramatically since his initial offer last fall.

Some parts of the dispute may be moot. Deutsche has continued to cover the building's construction costs and there is less than $50 million left to fund on the loan; construction is expected to be completed in late May or early June. The suits will be shelved for an undisclosed period of several months, a "very nice chunk of time," said Trump attorney Jason Greenblatt. That means construction of the tower could be finished, and theoretically some of the issues resolved, long before the parties ever get back to court.

"I think it's going to sell nicely," said Trump, noting that construction on the city's two other high-profile skyscrapers, Waterview Tower and Shangri-La Hotel and Chicago Spire, has shut down. "We're doing better than anybody else in Chicago."

About 75 percent of the residential condos and 67 percent of the hotel condo units have been sold, according to Appraisal Research Counselors. Contracts recently have been signed on three units that ranged in price from $2.4 million to more than $3 million, Greenblatt said.

"If the closing pace continues, we'll be in good shape," he added.

The effort to end the public, legal wrangling comes as one report after another show a deepening slide in the housing market. Tuesday, the National Association of Realtors said pending home sales in January, that is contracts signed on previously owned homes but not yet closed, were at their lowest level since the group began tracking them in 2001.

A spokesman for Deutsche did not return a call seeking comment.

Update Story - Chicago Tribune