Trump Tower suit on hold

Real estate developer Donald Trump and a unit of Deutsche Bank AG agreed to suspend legal action over financing to build Trump's 92-story luxury hotel and condominium tower in downtown Chicago.

"I see this as a very positive development," Trump said in an e-mail statement today. "This agreement is evidence of the open and active dialogue that has continued between Deutsche Bank and the Trump Organization and the parties' combined interest in the success of this outstanding project."

Trump sued Deutsche Bank Trust Co. Americas in November seeking to extend the term of a $640 million construction loan for Trump International Hotel & Tower Chicago. Deutsche Bank then sued Trump for a $40 million guarantee Trump made on the project.

Condo, retail and office building developments are being delayed or canceled in New York, Los Angeles and Chicago as builders find it difficult to lure tenants or buyers and to obtain loans. Funding for commercial mortgages has dried up as well.

Of $894 million in commercial mortgages bundled and sold as bonds that matured in February, only $342 million paid off, Barclays Plc said in a Feb. 27 report. The 62 percent one-month extension rate is more than double the monthly average in the first three quarters of 2008, according to the report.

'Unprecedented Financial Crisis'

Deutsche Bank and other lenders have continued to fund construction of Trump's Chicago tower, according to today's statement by the Trump Organization. The hotel portion of the building has already opened and the rest is scheduled to be completed this year.

Downtown Chicago condo sales plunged 84 percent in 2008, according to Appraisal Research Counselors, a Chicago-based real estate valuation firm. That's the lowest number of sales since Appraisal Research began publishing its quarterly residential report in 1998.

Trump said in his November suit the "unprecedented financial crisis in the credit markets" constituted a major event that should have prompted the lenders to ease their requirements on the construction loan.

Deutsche Bank spokesman John Gallagher declined to comment today.

The cases are Trump v. Deutsche Bank Trust Co. Americas, 26841/08, Supreme Court of New York (Queens); and Deutsche Bank Trust Co. Americas v. Trump, 603483/08, Supreme Court of New York (Manhattan).