The Dirt Lawyer's Blog Archive

A Trump Tower Chicago resident is apparently complaining that Jenner & Block's lights are on 24/7, and that this is disturbing her sleep, not to mention that Jenner's wasting energy. Not very green, I guess, but yhey are a BigLaw firm, and that's the way many of these folks operate. (When I was in BigLaw lights went out around 9 as I recall; after that you had to work them manually in your office.) OK, so this buyer never bothered to check out a million dollar-ish condo at night for the views or other issues? She's apparently using eyemasks now (uhhh, yeah, a good idea), but that's not good enough. But at the end of the day I don't understand why the Tribune story failed to catch a key issue here, one that hopefully makes this story a non-story soon. As I recall, Jenner is moving to new digs later this year. Hopefully that solves this "problem."

Did anyone not see this one coming? From Crain's : Donald Trump and the lenders on his Chicago skyscraper have agreed to put their legal dispute on hold as the developer wraps up construction of the 92-story tower. Mr. Trump and Deutsche Bank Trust Co. Americas sued each other last fall over a past-due $640-million construction loan on the project. The developer claimed that the financial crisis gave him the legal right not to pay back the loan, while the bank demanded that Mr. Trump honor a $40-million personal guarantee he made on the loan. But the two sides have reached an agreement “that provides for the suspension of litigation between the parties as discussions move forward,” according to a news release issued Tuesday. “This agreement is evidence of the open and active dialogue that has continued between Deutsche Bank and The Trump Organization and of the parties’ combined interest in the success of this outstanding project,” Mr. Trump said in the release. A D...

DB is not laying down in the face of Donald Trump's force majeure lawsuit . It has filed an action in Manhattan against The Donald, saying since the SPE formed to do the Trump Tower deal has failed to pay the lenders back, Trump personally owes the bank $40 million. (H/T to the HuffPo .) Apparently, then, the loan had some partial recourse to Trump, who IIRC said he would not do recourse (or perhaps it was full recourse) deals anymore. The $40 MM, at least for him, seems to be a reasonable amount for recourse to me. The other question, which a NY lawyer would have to answer, is whether Trump's lawyer will be successful in having venue moved from Manhattan to Queens, where the force majeure case is pending. And if so, then that could be a good tactical victory for Donald by getting a case filed first. Kinda reminds me of spouses racing to the more favorable venue in a divorce -- not that anyone knows anything about that.

Tom Corfman's Crain's piece today predicts: Donald Trump’s lawsuit against the menagerie of construction lenders for his riverfront tower is likely to be followed by more pre-emptive strikes by other developers. Amid the prolonged credit crisis, such lawsuits could become common. We've heard all the stories, so I won't bore you with lenders turning the screws on their borrowers. (Hey, the borrowers did it to them a few years ago, let's not forget.) There were two opinions given about the lawsuit: “We’re in an economic crisis, yes, but does that constitute force majeure?” said real estate attorney James Fox, a partner in the Chicago office of law firm Quarles & Brady LLP. “Only crazies would do that.” The force majeure claim is “a stretch in this case, but it gave him a toehold,” said Mr. [Marv] Romanek, managing director with Northbrook-based Romanek Properties Ltd. I wrote about this here on the 8th. The gut reaction was similar to Mr. Fox: economi...

Well, The Donald apparently can't get another loan extension for Trump Tower Chicago, at least not without taking a haircut, and we all know how Trump likes his hair. So he's suing his lenders and demanding more time, claiming that the global financial crisis is an event of force majeure that excuses his timely performance. I obviously haven't seen Trump's loan, so I don't know the exact wording. But I deal with these clauses all the time. Literally meaning "greater force", a force majeure clause excuses performance under contracts because of acts of God, strikes, wars, riots, natural disasters, etc. I don't have my form book in front of me, but here are some examples online. So the global financial crisis is an event of force majeure? That's an interesting and novel theory. Does it win? I can't say since I haven't read the contract and I'm not the judge, although my gut reaction is that this is a play for time to negotiate a se...

Boy, there's enough bad news this week that I am catching up on to make you want to crawl in a hole. But I won't. It is a spectacular day and as soon as I can get done with work and before trick-or-treating begins, I am going out for a nice walk or maybe even nine holes. Michael Mandel , citing a Morningstar report, tells us there's a 20% chance that CB Richard Ellis could go bankrupt. For dirt folks, that's would be as impossible as, say, Lehman going under. Oops.... I did not go to ULI, but David Bodamer did, and the mood there was pessimistic . Doug Cornelius has a link to the trends report here . On a side note, I got an email from ICSC yesterday telling me that hotels are cutting rates for next year's convention in Las Vegas. You know what that means -- fewer attendees. No wonder the store closing signs are out at Value City -- they filed a BK the other day and plan to liquidate. Don't laugh, but maybe I should go check out the furniture outlets th...

Grandpa will forgive me. He always liked computers. And I have this thing for writing about the Spire. So, Calatrava and Perkins & Will have stopped their work on the building . (See also here, here , here and here .) If I were going to be the PR person, I'd say (as I have before), "Well, you have to do this in the ordinary course of business if you are providing work to the project in order to protect your rights against the property under the Illinois mechanics lien laws." Here's the problem. Their PR people have said this, in addition to what I think they should: "“The amount will be disputed,” the spokeswoman says. “These liens, both of them, are sort of the normal course of business for these companies to protect themselves. That’s fully in their right to do that, and we will work to resolve them.” That means there's more than a mere protection of rights here. There's a dispute. You do not have to be a rocket scientist to figure out this...

Eddie Baeb reports that Donald Trump has hired a broker to market/sell the four floors of retail at Trump Tower Chicago. How is this done? Vertical subdivision. You subdivide the building into smaller parts, each of which then technically becomes a separate property. You then have an agreement between the various owners spelling out how matters are dealt with among them. This happens all the time and given the structure of the building it may already be in place. It also makes sense from a property tax standpoint. Trump claims he probably won't do a retail deal but he is testing the waters. I'm sure the broker will just love to hear that. I don't always agree with them, but in this case I do concur with Dan McLean, Larry Freed and David Stone. By selling the retail prior to the initial lease-up, you do lose control over tenant mix, and that could be really important in a trophy building. (It does make great restaurant space.) I see that as a little off, and I agre...

Why do I love technology? Because the weather could not be more perfect today here in Bourbonnais (in other words, an average day in San Diego or Santa Barbara). And, it is my wife's day off. SO, that means my emails and work calls will come in on the Blackberry while we run errands, go to the golf course and otherwise find ways to enjoy the glorious weather. That being said, here are some quick thoughts for the day: JLL's paying $613 million for Staubach in a down market with fears that tenant rep services will not be as in demand as in past years. I still think it is a good bet. Staubach is a primo brand in the industry. It is hard to put a tag on that price. Plus, the net present value of the deal is apparently only $317 million. Recourse loans? We're going back to recourse loans? Good grief, that's scary. We all know about the Macklowe guaranty on his risky bridge loan, but I've been hearing about at least partial recourse quietly on some deals, espe...

You're stunningly beautiful and very smart and obviously know our biz, but I don't think you don't know the territory. Crain's moved a story stating that, according to Trump, "some of Oak Street’s high-end businesses are interested in the retail space planned for Trump International Hotel & Tower....Dressed in a wine-colored cut-down-to-there cocktail dress (similar to the one at the right?), Ms. Trump spoke to reporters before schmoozing with a crowd of 200 guests gathered for a cocktail party Thursday night on the tower’s 16th floor. " But, as the story says, "a few Oak Street retailers are calling such talk a public relations ploy. Why leave millionaire’s row just off the Mag Mile for an unknown spot on the river, they ask." Bingo. Can't see people leaving the Gold Coast because there's one building down on Wabash that has some high-rent rooms and condos. Just my humble opinion, of course. (I'm sure Trump would counter by s...

I've done a ground lease deal or two in my time. They are fun. But if you are buying a building subject to a ground lease you have to make sure you comply with the lease terms or you may have to face the consequences. Such is the case at the Drake Hotel, where the ground lessor is suing the ground lessee , alleging a default under the lease for, among other things, failing to provide the lessor with copies of financing and hotel management documents. All I can say is good grief. One thing I've always liked about being the ground lessor is the ability to just sit down, be quiet and collect rent. Obviously that isn't the case here, and I have seen and been involved with matters where the ground lessor raised a fuss. Here's an example of one. Full disclosure: the lessee is represented by my good friend and former colleague, Gene Leone . Gene is quoted in Tom Corfman's story as saying, “In 26 years of practice I have seen some very silly things, this is near t...

That's what the Sun-Times said yesterday . Since my clients are doing deals near downtown I guess that's good news for me. But the rents are going to be much pricier, with the tradeoff that there are plenty of rooftops nearby. Yet some things are not selling. According to the story retail leasing at Trump Tower is slow because of high prices being quoted. (No shock about the price there, plus 401 Wabash is not Boul Mich, the Donald notwithstanding. That does not mean it will not change, but we'll have to see.) The other interesting news here is talk about a retail repositioning at Presidential Towers, which Pete Vilim and David Schwartz at Waterton Associates LLC picked up last year. They have a first rate team doing the work so I am not surprised. And what is going on with Metra Market? I'd heard rumors the project was dead, but the story talks about the project as if it were alive, so I will go with the latter assumption until proven otherwise. (I want Metra...

Here's the Trib's latest take on people suing over the owner reneging on friends and family deals at Trump Tower. I guess the only thing worse than bad PR is no PR. One the plaintiffs is the former Sun-Times bigwig who is going to jail for a short while in the whole Conrad Black mess.

Yesterday the Tribune had a lengthy story titled "Towering Troubles?" about the Trump International Hotel & Tower going up at the former site of its competitor . It asks pointedly whether people are going to show up when The Donald gets his certificate of occupancy for the hotel floors, triggering the first round of closings for the condotel portion of the project. The story goes on to talk about throwing more equity into deals to keep lenders happy as well as the state of this high-end market in general, including the fact that two major projects are stalled for financing reasons. But they are not this far into the sky. Here's the reality, or at least my take on it. I've come out publicly to say I am no fan of Trump's tactics, especially related to dumping the friends and family buyers. (He might have another side of the story, I understand, but this is just what I read.) And even though The Trump Organization hires small firms like mine, I don...

It was bound to happen. At least one of the so-called "friends and family" who bought condos in Trump Tower, only to have the contract canceled later pursuant to a developer "out" clause in the contract, is suing for, among other things, fraud and deceptive practices. I have not read the complaint, but fraud is a tough uphill battle in many instances. A deceptive practices count is less onerous to prove, however. While I don't really agree with it personally, in a sense I see Trump's point. He wanted the right to back out of deals because they were not money-makers. I have not read his contract, but I'm sure he has an iron-clad right to back out of the deal for any or no reason, and the developer may well win because of it. On the other hand, the developer got the benefit of being able to tout pre-sales that probably (and in my opinion) either pushed the construction loan forward or got them better loan terms. (It is not my money, so it is easy -...

Most people were very happy for me when I decided to end the daily grind of working at a first-rate boutique law firm specializing in real estate. It really was one of the toughest decisions I've ever made because I truly liked the place. Some, however, said I was doomed to working on routine, even dull legal work because only the big firms got the "sexy" deals (note the use of quotes because I've yet to see an arousing real estate deal). Admittedly, I do some more mundane work these days than I used to. And that is okay. I also have some cutting edge work, too, and time to write and do other things I enjoy. Besides, clients are apparently becoming more and more interested in attorneys like me to do their legal work, both large and small. And this is all in spite -- or perhaps because -- of the mega mergers in law firms and predictions that people like me would go the way of the Model T. Why? Check out this story about small firms and solos working for compani...

As I have said here before, I am no particular fan of Donald Trump. But his acquisition of the Running Horse development in Fresno (a proposed site of a PGA Tour event if it is ever finished, IIRC ) at a deep discount (though not nearly as he originally wanted) is a sign for opportunistic investors to ramp up to take advantage of a bubble. Here's a link, courtesy of The Real Estate Bloggers (technically competition I suppose, but I don't care). I represent and have represented opportunistic investors for years, so deals like this bode actually bode well for them.