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Loan Fight: Deutsche Bank Vs. Donald Trump

Once again, Donald Trump is going toe-to-toe with his banker.

Deutsche Bank, a major backer of Trump's mammoth new condominium/hotel tower in downtown Chicago, is demanding the real estate mogul pay a $40 million personal guarantee connected to a $640 million construction loan the German bank made in 2005. That loan came due Nov. 7 with an outstanding balance of $334 million, according to a lawsuit filed last week in New York state court.

Trump has a long history of playing hard ball with creditors, especially during the economic and commercial real estate downturn of the 1990s. During that span, Trump doggedly reworked and renegotiated terms of lender and creditor agreements in order to keep his real estate and gaming concerns up and running.
The high-profile Chicago project, a 92-story glass tower scheduled for completion this year, is no exception. A few weeks ago, Trump sued Deutsche Bank seeking to excuse a repayment of more than $330 million due Nov. 7 and pushing to extend his firm's construction loan for an unknown period of time.

In his lawsuit, Trump blames the worldwide economic crisis, noting it was an "once-in-a-lifetime credit tsunami." On top of that claim, Trump is also seeking $3 billion in damages from Deutsche for allegedly breaking agreements in the construction and financing of Trump International Hotel and Tower in Chicago. Trump argues the bank's actions has hurt condo sales.

Last week, Deutsche Bank moved to have that case dismissed.

While Trump is more famous than most real estate developers, he is not the only one of them to run into cash flow problems and strained realtions with his lenders.

In fact, commercial real estate delinquencies are on the rise, jumping to 3.1 percent in October from 2.3 percent in September, according to Fitch Ratings.

Meanwhile The Donald's Trump Entertainment, a New Jersey casino concern, is skipping a $53.1 million interest payment to bondholders and lenders. Trump Entertainment is looking to renegotiate terms of its lending agreements.

Trump is non-executive chairman and the largest shareholder of Trump Entertainment which operates three Atlantic City casinos: The Trump Taj Mahal, Trump Plaza and the Trump Marina . The last project is being sold to Coastal Development for $270 million. The closing deadline for that deal has been delayed.

After his casinos twice ran into bankruptcy, Trump was removed from having any operating role in them as part of the deal that brought the company out of Chapter 11 the last time around, according to financial web site Marketwatch.com.

The casino holdings are reportedly separate from his privately-held real estate and other Trump-sanctioned business entities, which includes TV shows, personal appearances and motivational speaking efforts, and even a business blog.
He's also co-authored a book entitled, "Trump: The Art of The Deal".
Considering the amount of renegotiating his empire is doing, The Donald may soon be ready to pen a few new chapters.


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