Market Conditions: Trump Sues to Get a Loan Extension

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Donald Trump had a November deadline to pay off a $640 million senior construction loan on Trump Tower Chicago, at 401 N. Wabash in River North, and couldn’t meet the deadline.

According to the WSJ and Crain’s, Trump already obtained one six-month extension on the loan and now wanted another. The lending group, led by Deutsche Bank, has refused it.

From Crain’s:

Sales of the unfinished tower’s condominium and hotel units have been stuck in roughly the same place for more than two years as the condo market has fallen into a deep slump and the credit markets have frozen up. So far, the developer has sold condo and hotel units valued at $204.1 million, with another $353.1 million in purchase contracts yet to close, the complaint says.

Mr. Trump didn’t have the money to pay off the construction loan by its original May 7 maturity date, but the lenders granted the developer a six-month extension, according to the complaint. So far, however, they have been unwilling to extend the due date a second time, unless Mr. Trump agrees to unspecified “financial concessions.”

The lawsuit was filed in New York supreme court in Queens.

From the Wall Street Journal:

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.

The lawsuit won’t affect the completion of the building. According to the WSJ, Trump has the roughly $90 million in order to complete it.

The Donald attempted to resolve the financing problems, according to the lawsuit, by offering to buy the unsold hotel units for $97 million

From Crain’s:

One of the developer’s biggest problems is that the project’s hotel units are overpriced. In the suit, Mr. Trump says he wants to cut prices below a minimum amount specified in his loan agreement, but his lenders won’t let him.

But a slew of investors have put their units back on the market, undercutting prices on the development’s remaining unsold condo-hotel units by 30% in some cases. For instance, an investor-owned unit on the 18th floor is currently listed for $799,900, vs. $975,000 for a comparable unit. The competition is making it hard for Mr. Trump to sell out the hotel.

Buyers had either purchased or signed contracts for 180, or 53%, of the hotel units by the end of July, according to a court document.

By not signing off on price cuts, the lenders “have effectively prevented (Mr. Trump) from making any additional sales of hotel units, even though, had defendants consented to the sales of unsold hotel units at current market values, such lower prices would not have impaired the ability” of the lenders to get paid back in full, the complaint says.

The $97 million from the hotel/condos would be used to pay down the construction loan along with the $204 million from the already closed units.

That leaves $353 million from units expected to close in the next 6-months (if those even close in this market environment – which is a whole other question.)

Even if they resolve this financing issue, there will also be problems next year with the mezzanine loan (the secondary loan.)

From  the WSJ:

The lawsuit 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.

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.

Stay tuned. Trump Tower will be a big story for months to come.

Trump sues lenders for more time to pay off loan on Tower [Crain’s Chicago Business, Nov 7, 2008]

Trump files suit against lenders [Wall Street Journal, Nov 8, 2008]

Selling 2 Years Later in Southport: 3842 N. Southport

These townhouses at 3842 N. Southport were new construction in 2006 and sold at the peak of the boom.

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This 3-bedroom unit is one of the first re-sales in the complex.

What will these sell for 2-years later in a much different market?

Here’s the listing:

Located In The Heart Of The Southport Corridor Within The Blaine School District, This 2 Year Old Townhome Is In Immaculate Condition & Features A 2 Car Attached Garage, 3 Large Bedrooms Plus Den & Family Room.

Stunning Brookhaven Kitchen W/granite Countertops & Double Oven, Beautifully Detailed Natural Stone Baths-master W/whirlpool, 2 Decks, Custom Closets & Window Treatments. Perfect Condition.

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Jeffrey Lowe at Century 21 Sussex & Reilly has the listing. See more pictures and a virtual tour here.

Unit #L: 3 bedrooms, 3.5 baths, 2650 square feet, 2.5 car garage

  • Sold in August 2006 for $760,000
  • Currently listed for $849,900
  • Assessments of $107 a month
  • Taxes are “new”

Some Sellers Throwing in the Towel: 722 W. Buckingham in Lakeview

This 4-bedroom single family home at 722 W. Buckingham in Lakeview had been on the market since June 2008 and was recently withdrawn.

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It hadn’t had any price reductions.

Thanks to the tipster who sent me information about this listing.

Just before it was withdrawn at the end of November, the agent had this interesting listing:

Will be cancelling this listing so that my clients can have work done on property before the Holidays. Call for more infomation. Property will go back on the market after the Holidays if acceptable contract isn’t reached.

Kudos to the agent for being honest.

How many other sellers will be withdrawing properties now- only to re-list in 2009? Will the market be better in 3-months time?

I’ll be watching for this property to re-appear on the MLS next year.

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Thomas Lavelle at Coldwell Banker had the listing. 

722 W. Buckingham: 4 bedrooms, 2 baths, no square footage given

  • I couldn’t find an original sales price
  • Originally listed in June 2008 for $900,000
  • Was listed in October 2008 for $900,000
  • Listing canceled as of Nov 1, 2008
  • Taxes of $10726
  • No parking
  • No central air- window units

How Do You Price in Lincoln Square? 2455 W. Leland

Lincoln Square was once considered an “affordable” up and coming neighborhood before the housing boom- and now- not so much.

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This 2-bedroom duplex at 2455 W. Leland has been on the market since June 2008 and has had three price reductions.

This duplex seems to have it all (central air/fireplace/w/d)- except a deeded parking space.

What’s it worth in this changing market?

Here’s the listing:

Third price drop! Amazing Lincoln Square location on a beautiful block! This stunning duplex features hardwood floors, newer stainless steel appliances, fireplace, and in-unit laundry.

Cozy sun room, extra storage, and plenty of deck space make this a must see just a block away from Brown line, restaurants, and shopping. Rental parking available behind building.

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Laura Topp at Koenig & Strey has the listing. See more pictures here.

Unit#1: 2 bedrooms, 2 baths, no square footage listed

  • Sold in October 1999 for $156,000
  • Sold in April 2003 for $243,000
  • Sold in July 2005 for $305,000
  • Originally listed in June 2008 for $365,000
  • Reduced in August 2008 to $360,000
  • Reduced in September 2008 to $355,000
  • Reduced in October 2008 to $349,900
  • Currently listed at $349,900
  • Assessments of $223 a month
  • Taxes of $2,214
  • No parking (but available for $50 a month behind the building)
  • W/D in the unit
  • Central Air

Is Modern for You? 3124 N. Leavitt in West Lakeview

We’ve chattered about new construction modern style homes before. This 7000-square foot new construction single family home at 3124 N. Leavitt in West Lakeview is certainly intriguing.

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It has also been reduced $740k since February 2008.

Here’s the listing:

MOD. ARCHITECTURE AT ITS BEST. LINK DEVELOPMENT’S FINEST PROJECT 7000+SF ON OVERSIZE CORNER LOT,BEST FINISH & CRAFTSM, RADIANT HEAT CONC. FLRS 4 LEVELS, SNOWMELT IN SIDEWALKS. 60 TONS OF NAT STONE FACADE 2,500+SF OF EXT. SPACE & ROOFTOP.

HOT TUB, EXT FP, BBQ, WET BAR LOUNGE PYRAMID SHAPE SKYLIGHT & CURTAIN WALL POGGENPOHL KIT, DORNBRACHT FIXT, MIELE & SUBZERO APPL, $130K SMART HOME BREEZEWAY TO 4 CAR 800SF HEAT GAR

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@Properties has the listing. See more pictures here.

3124 N. Leavitt: 6 bedrooms, 4.5 baths, 7000 square feet, 4 car heated garage

  • Originally listed in November 2007 for a few days at $2.99 million
  • Canceled
  • Re-listed in January 2008February 2008 for $2.99 million
  • Canceled
  • Re-listed in June 2008 for $2.49 million
  • Reduced in July 2008 to $2.25 million
  • Currently still listed at $2.25 million
  • Taxes are listed as the prior property taxes on the property of $7,455
  • OR you can rent it for $9,900 a month

Selling One Year Later in River North: 154 W. Hubbard

We last chattered about this 18-unit new loft building at 154 W. Hubbard in River North in September 2007 when it was 50% sold.

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It looks like the developer has sold all the remaining units. But one 2-bedroom has now come back on the market as a resale.

Will this seller see any appreciation after owning only a year?

Here’s the listing:

THIS IS A WOW! FIRST RESALE OF THE STUDIO DWELL ARCHITECTS PROJECT LOCATED JUST BLOCKS FROM MICHIGAN AVE. ONE OF A KIND CONDO W/ STUNNING FINISHES: OVERSIZED SOLID CORE DOORS W/ BRUSHED CHROME, CUSTOM ITALIAN CABINETRY BY COPAT, JENN-AIRE APPLIANCES DOUBLE OVEN, OVERSIZED SHOWER W/ BODY SPRAYS.

AN OPEN FLOOR PLAN W/ EXPOSED BRICK DETAIL, WIDE PLANK HARDWOOD FLOORS THROUGHOUT, A BALCONY & MORE, GAR PKG $35K. PETS OK

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@Properties has the listing. See more pictures here.

Unit #404: 2 bedrooms, 2 baths, no square footage listed

  • Sold in October 2007 for $577,000
  • Currently listed for $599,000 (plus $35k for parking)
  • Assessments of $168 a month
  • Taxes are “new”

In No Hurry to Sell in the Marina Towers: 300 N. State

Are the Marina Towers, the iconic corn cob buildings on the Chicago River at 300 N. State, “hot” now that Trump Tower is built nearly next door?

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Some sellers in the building seem to think so. Take this 1-bedroom unit on the 31st floor.

It’s been listed since 2006 and hasn’t had a price reduction in almost a year.

Here’s the listing:

Redesigned condo has floor to ceiling windows, two huge private terraces and one common. Unchangeable lake and river views.

Chicago view kitchen has granite countertops, stainless steel appliances, washer, dryer and utility sink. 1.1 custom baths with soaking tub/shower. Ornately with mosaic tile and hardwood floors, wet bar, wine cooler, soundproof walls, surround sound. One of a kind air exchange.

A tipster familiar with the building told me that this was a 1-bedroom and studio combination (hence why it has 1.5 baths and the washer/dryer in the unit.)

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Homeowners Advantage has the listing. See more pictures here.

Unit #3130: 1 bedroom, 1.5 baths, 725 square feet

  • I don’t have the original sales price
  • Originally listed in May 2006 for $490,000
  • Withdrawn in September 2006 at $447,000
  • Re-listed in June 2007 for $480,000
  • Reduced
  • Listed in December 2007 for $437,000
  • Currently still listed at $437,000
  • Assessment of $316 a month
  • Taxes of $2610
  • W/D in the unit
  • Central air

Waiting for a Buyer in North Center: 4112 N. Claremont

How many empty new construction million dollar homes are there on the north side of the city?

Someone should tabulate them because it’s got to be several hundred.

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This is another one that is empty and waiting for a buyer at 4112 N. Claremont in the North Center neighborhood. It’s been on the market since January 2008.

It’s been reduced $56,000.

Here’s the listing:

Award winning, R. James Kinsloe, Master Home Builder presents this home featuring the highest quality finishes & smart floor plan producing timeless a design. ‘Hardi-Plank’ exterior. 21X25 yard.

20X20 garage roof deck & outdoor fireplace. 4,000+-SF. 1 blk semi-private tree lined street. Compare apples to apples, there is nothing better on the market. We build homes to last for centuries not to be the next tear down!

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Potala Real Estate has the listing. See more pictures and a virtual tour here.

4112 N. Claremont: 5 bedrooms, 3.5 baths, 2.5 car garage

  • Originally listed in January 2008 for $1.4 million
  • Reduced several times
  • Currently listed at $1.344 million
  • Taxes are “new”

Steals and Deals: Looking to Rent? Run to One Museum Park

One Museum Park at 1211 S. Prairie was supposed to be the epitome of luxury in the South Loop.

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It has stellar views of Grant Park and the Lake.

Closings started last spring on the 286 units.

Flippers have been trying to flip since last April. As sales have dried up, many have been trying to rent out the units instead.

But what if you can’t sell AND you can’t rent?

The situation is looking pretty interesting in the building as rents seem to be plunging. Looking for a deal? There are plenty.

We’ve chattered about Unit #1203, a 1460-square foot 2-bedroom twice before. Both the price and the rental price have been reduced since we last checked in on it in July.

Is this a steal at this rental price?

And what does this rental price say about what sales prices should ultimately be in the building?

Here’s the rental listing:

YOU WILL BE AMAZED BY THE VIEWS OF THE LAKE FRONT & MUSEUM CAMPUS IN THIS DELUXE TWO BEDROOM/TWO BATH PLUS DEN. ENJOY THE UNOBSTRUCTED VIEWS FROM EVERY ROOM & BALCONY. HIGHLY UPGRADED THROUGHOUT WITH MARBLE BATHS, GRANITE KITCHEN, WOODMODE CABINETS, FLOOR TO CEILING WINDOWS.

LUXURIOUS AMENITIES INCLUDE INDOOR & OUTDOOR POOL, COMMUNITY ROOM, EXERCISE ROOM, SAUNA. PARKING AVAILABLE FOR $200/MONTH.

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Alberto Michel at Coldwell Banker has the listing. See more pictures here.

Unit #1203: 2 bedrooms, 2 baths, den, 1460 square feet

  • Sold in April 2008 for $627,000
  • Was listed in July 2008 at $869,000 (parking extra)
  • Reduced
  • Currently listed for $850,000 (parking $40k extra)
  • OR– you can rent it
  • Was listed in April 2008 for $4000 a month
  • Reduced
  • Was listed in July 2008 for $3000 a month plus $200 a month for parking
  • Reduced
  • Currently listed for $2500 a month plus $200 a month for parking
  • Assessments of $414 a month
  • Taxes are “new”

If a 1-bedroom is more your style, why not rent a 987-square foot one on the 45th floor and wake up every morning with these views?

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Unit #4502: 1 bedroom, 1 bath, den, 987 square feet

  • Available for rent for $2200 a month plus $200 for parking
  • Anita Constant at Coldwell Banker has the listing. See more pictures here.

Currently, the cheapest 1-bedroom rental is $2095 a month plus $150 for parking on the 43rd floor.

Indoor pool. Exercise room.

Sounds like a deal to me.

Market Conditions: Options Not Good for Waterview Tower

Crain’s has an update on the status of Waterview Tower, the luxury hotel/condo building on Wacker in the Loop, which stopped construction several months ago.

The Export-Import Bank of China which was apparently going to ride to the rescue of the project with a $400-million construction loan- has now pulled out of the deal.

Crain’s reports that this refusal to approve the loan increases the chances that Bank of America, which took over the loan from LaSalle when it acquired that bank, will foreclose on the project.

What are the options for the building?

The bank’s decision leaves Mr. Dvorak in a tough spot. He has been courting equity partners for the $500-million project for some time, and more recently has been trying to sell off its hotel, condo and parking components separately, according to people familiar with the development.

Under one scenario, the developer would finish the hotel and sell the rights to build the condos later, when the condo market recovers. But running a luxury hotel while construction is under way on the building’s upper floors would be extremely disruptive and a potential deal-killer. Another option: Convert the current structure, a 26-story concrete shell, into apartments.

“They’re looking for anything, any option for a transaction,” says one person aware of Mr. Dvorak’s plans.

One positive development is that Shangri-La Hotels is apparently still onboard for the project.

Buyers have signed contracts for 156, or 67%, of the residential condos in the building, according to Chicago-based consulting firm Appraisal Research Counselors. With an average price of more than $800 a square foot, the condos are among the most expensive in new buildings in the city.

The tower’s 200 hotel units are also being sold off individually as condos; buyers have signed contracts for 80 of the condo-hotel units, or 40%, according to Appraisal Research.

Shangri-La Hotels & Resorts, the Hong Kong-based luxury hotel chain that would run the hotel, remains committed to the development, according to an executive.

The developer “has fulfilled its obligations to us,” says Shangri-La Regional Vice-president Stephen Darling. “We’re excited about the project and we hope that everything will materialize as it should.”

Let’s hope something gets built at this location. It’s awful for the city to have a half-completed shell of a building at that prominent location.

Construction loan on hold for Waterview Tower [Crain’s Chicago Business, Nov 5, 2008]