CHICAGO (CBS) — President Donald Trump’s lenders have forgiven around $287 million in debt that he didn’t pay back, and most of it was related to Chicago’s Trump Tower, according to a New York Times report released Tuesday.
The report by New York Times writers David Enrich, Russ Buettner, Mike McIntire, and Susanne Craig said when Mr. Trump traveled to Chicago in late September 2008 to mark the near-completion of the tower at 401 N. Wabash Ave., he was overjoyed even though the 2008 financial crisis was raging.READ MORE: Chicago Weather: Colder And Blustery Sunday Night
But construction dragged the Trump International Hotel & Tower, built between 2005 and 2009 on the site of the old Chicago Sun-Times building, and condos proved hard to sell while retail space remained empty, the Times reported.
When the Chicago Trump Tower project left Mr. Trump in debt, he tried to walk away, the Times reported. But tax return data and other records and interviews obtained by the Times showed that lenders cut him slack and ended up giving him years more time to try to repay his debts, the Times reported.
Mr. Trump even sued his largest lender and accused it of preying upon him, but that bank agreed to lend him another $99 million so he could pay back what he owed on a defaulted loan for the Chicago tower, the Times reported. That was more than twice the figure previously known, the Times reported.
The forgiven debts are part of a wider investigation into Mr. Trump’s business by New York Attorney General Letitia James, as Mr. Trump appears to have paid almost no federal income tax on the money, the Times reported.
Mr. Trump unveiled plans for his Chicago tower in 2001. Some of the condos would be priced at $4 million, and rooms for the hotel were also to be for sale, the Times reported.
The Trump Organization was to profit from selling the units and parking spaces and operating the building, the Times reported.
Mr. Trump had two of his limited liability corporations – 401 North Wabash Venture and its parent company 401 Mezz Venture – borrow more than $700 million, the Times reported. He went to Deutsche Bank for most of the money and ensured the bank that it was guaranteed to be profitable, the Times reported. He also said his daughter Ivanka would be in charge, the Times reported.
Deutsche Bank agreed to lend $640 million to 401 North Wabash Avenue, and Mr. Trump agreed to guarantee $40 million that the bank could collect if Mr. Trump defaulted, the Times reported.
Mr. Trump also borrowed $130 million from the hedge fund and private equity company Fortress Investment Group in a mezzanine loan – meaning it would be repaid only after the Deutsche Bank debt had been fulfilled, the Times reported. The 401 Mezz Venture had to pay a $49 million exit fee when repaying the loan, the Times reported.
In that instance, the lenders could seize the building if Mr. Trump defaulted, the Times reported.
The loans were due in May 2008, the Times reported. But the financial crisis had begun and selling the pricey apartments had become a challenge, so Mr. Trump asked Deutsche Bank for an extension and they gave him six months, the Times reported.
By September of that year amid the worst of the financial crisis, at least 159 units in Trump Tower still had not been sold, and New York court records many more were under contract but had not closed, the Times reported. So Mr. Trump asked for another extension, and Deutsche Bank refused, the Times reported.READ MORE: 5 Killed, 19 Wounded In Chicago Weekend Shootings
Mr. Trump went on to accuse sue Deutsche Bank, Fortress, and other financial institutions, accusing Deutsche Bank of “predatory lending practices,” the Times reported. Deutsche Bank also sued Mr. Trump, demanding repayment of the defaulted loans, the Times reported.
But the lenders did not seize the building. Instead, Mr. Trump and the two lenders reached a private settlement in July 2010. The Times said Mr. Trump’s federal tax returns and loan documents filed in Cook County indicate that Mr. Trump was “let off the hook for about $270 million.”
Fortress had expected to receive $300 million from Mr. Trump’s company, but settled for $48 million, the Times reported. The forgiven debts appeared in Mr. Trump’s tax returns, the Times reported.
Meanwhile, Mr. Trump’s companies were given a pass on what they owed on the Deutsche Bank loan for Trump Tower, the Times reported. The Trump organization came up with $235 million to repay the assorted institutions in several countries to which Deutsche Bank had sold the loan, the Times reported.
But Mr. Trump still owed $99 million, and even though Deutsche Bank had vowed it would not do business with him anymore, his son-in-law, Jared Kushner, introduced his personal wealth manager at the same bank, Rosemary Vrablic, the Times reported. Vrablic’s division at Deutsche Bank made two loans that were secured by the Chicago Trump Tower – one for $54 million and the other for $45 million, to repay that $99 million loan that Mr. Trump owed to another division of the very same bank. the Times reported.
Mr. Trump repaid the $54 million, with the $45 million left outstanding, the Times reported. But after that, Deutsche Bank lent Mr. Trump another $24 million and extended the due date to 2024, the Times reported. He had repaid the $24 million by 2016, the Times reported.
The Times also reported that Mr. Trump reported $40 million of forgiven debt as income in 2010. But losses from his businesses, including $30.8 million from the Chicago Trump Tower, meant Mr. Trump had no taxable income in 2010, the Times reported.
Losses in other parts of Mr. Trump’s businesses also wiped out Mr. Trump’s federal tax bill on income he received in other years, the newspaper reported.
As for Trump Tower, most of its retails space has never been occupied at all, and its revenue dropped from $67 million in 2014 to $50 million in 2018, while profits in the same time span dropped from $16.3 million to $1.8 million, the Times reported.
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