Soros, Deutsche Bank said to be in on 90-story building
October 28, 2004|By Thomas A. Corfman, Tribune staff reporter.
Donald Trump has lined up three New York hedge funds, including money from billionaire George Soros, to invest $160 million in his Chicago skyscraper, a key piece in perhaps the largest construction financing in the city's history, according to real estate sources and public documents.
Despite reports about the project's record-breaking sales, most of them from Trump himself, many Chicago real estate developers and lenders have expressed doubts about whether the 90-story tower would ever be built.
"It is such a huge project, and the prices he said he was getting were so outside the norm," said Robert Glickman, president and chief executive of Chicago-based Corus Bank.
"It was reasonable to say, `Is this real?'" he said.
Much of the skepticism springs from Trump's own hype. "Chicago developers are much less flamboyant," said Glickman.
The massive financing, which sources say also will include a $650 million construction loan from Deutsche Bank, should quell those doubts.
Trump flies to Chicago Thursday morning for a ceremonial demolition of the former home of the Chicago Sun-Times, 401 N. Wabash Ave., which will be replaced by his 2.5 million-square-foot tower. The demolition is expected to begin for real in January.
On Wednesday Trump declined to comment on the financing, emphasizing instead the luxury project's record-breaking sales.
The chief executive of New York-based Trump Organization said he has agreements to sell three-fourths of the 461 condominiums and 227 hotel-condo units for a combined $515 million.
"Nobody to my knowledge anywhere in the United States has ever sold more than $500 million worth of apartments prior to construction," he said. "It's a great tribute to Chicago, to the location and to a great design.
"And, I guess, to Trump, when you think of it," he added.
The investor trio is led by Fortress Investment Group LLC, according to a financing statement filed Oct. 19 with the Cook County recorder's office.
Fortress, which manages more than $10 billion in investments, is familiar with the downtown Chicago condominium market after providing a key $26 million loan on the River East mixed-use development last year.
The document does not identify the other participants, but a key member is Grove Capital LLP, according to sources familiar with the transaction.
The firm manages most of the multibillion-dollar real estate portfolio of the $13 billion Soros Fund Management, from which Grove Capital was spun off last month.
The third investor is Blackacre Institutional Capital Management LLC, the real estate arm of hedge fund Cerberus Capital Management LP, which manages assets totaling $14 billion.
Executives with the three hedge funds could not be reached for comment.
The $160 million investment is in the form of a mezzanine loan, a kind of second mortgage that typically charges a much higher interest rate than a first-mortgage construction loan.
Unlike the mezzanine loan, which has closed, terms of the $650 million construction loan have not yet been finalized, sources said.
Frankfurt, Germany-based Deutsche Bank, an active commercial real estate lender in the U.S., is expected to split up the loan with other banks.
Chicago developer Steven Fifield admits he was a "total skeptic" about the project, which initially included a large portion of office space.
But the elimination of the office space and the steadily climbing condo sales helped change Fifield's view about Trump's chances to get financing.
"I thought it was a given with the number of presales he had," said Fifield, president of Fifield Cos.
After 13 months of marketing, condo prices at Trump International Hotel & Tower Chicago have exceeded $900 a square foot, while hotel-condo units cost nearly $1,100 a square foot, according to an analysis of 53 units by Appraisal Research Counselors, a residential consulting firm.
Trump's marketing firm recently put those units, including six hotel-condo units, on the Multiple Listing Service of Northern Illinois.
Almost two weeks ago Trump completed a buyout of his former joint venture partner in the project, Hollinger International Inc., the troubled parent of the Sun-Times.
Although lining up the financing was a big step for Trump, he still has hurdles to overcome, including avoiding construction delays and cost overruns.
Still, he expressed no concern about the doubts harbored by some local real estate executives.
"It's a very expensive building to build because of the quality we are putting into it," he said. "So people of course would say, `Gee, that's a lot of money to raise.'
"But for me, it's not a lot of money. You understand," he said.
Did George Soros forgive Trump of a $312 million debt?
Did George Soros forgive Trump of a $312 million debt?
In 2005 Donald Trump started construction on the Trump International Hotel and Tower in Chicago.
To build the tower, Trump received several loans primarily from Deutsche Bank for $650 million, but he also lined up a $160 million mezzanine loan* from a group of private investors, Fortress Investment Group, Blackacre Capital, and support from billionaire George Soros, who invested $160 million to help build the Chicago skyscraper. Soros was a key piece in what was the largest construction financing in the city’s history, according to real estate sources and public documents.
The investor trio was led by Fortress Investment Group LLC, according to a financing statement filed Oct. 19 with the Cook County recorder’s office. Fortress, which manages more than $10 billion in investments, is familiar with the downtown Chicago condominium market after providing a key $26 million loan on the River East mixed-use development project. The document does not identify the other participants, but a key member is Grove Capital LLP, according to sources familiar with the transaction.
The firm manages most of the multibillion-dollar real estate portfolio of the $13 billion Soros Fund Management, from which Grove Capital was spun off in 2006.
The third investor was Blackacre Institutional Capital Management LLC, the real estate arm of hedge fund Cerberus Capital Management LP, which currently handles about $14 billion dollars in assets primary real estate.
The $160 million investment was in the form of a mezzanine loan, a kind of second mortgage that typically charges a much higher interest rate than a first-mortgage construction loan.
By October 2008, Trump had sold nearly $600 million in condo and condo-hotel units, more than half of the total value of all the units in his tower.
After seven years (2005-2012) Trump was on his way to paying off his main construction loan to Deutsche Bank For reasons unexplained to the public, the majority of Trump’s mezzanine loan was quietly forgiven by the loan’s original lenders.
No media outlet which covered the deal put together the pieces and told the public that George Soros let Trump off the hook for a loan which has been valued at between $82 and $312 million dollars.
Why would Soros give what amounts to a massive debt relief to Trump during a financially successful period in Trump’s life? Are these men friends, enemies or business partners?
We have come across information related to a long and bizarre financial deal between Donald J. Trump, George Soros, Fortress Investment Group and Blackacre Capital, a deal discovered by following a specific on-going money trail and likely partnership between these entities.
In 2005, when Trump began financing the construction of the tallest residential tower on the North American continent the Trump International Hotel and Tower (Chicago), he needed more than just the basic loan he had received from Deutsche Bank. Trump needed a “mezzanine loan”, a loan which is far more expensive than a regular bank loan. This kind of loan needs to be paid off more quickly to avoid high interest payments. It also needs to be paid back in full to keep the lender from taking ownership of the underlying asset.
“Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full…
…Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range.”
Soros along with Fortress and Blackacre came to Trump with just such a loan at a costly $160 million principal*. The The Wall Street Journal had valued the loan at as much as $360 million, depending on the length of time it accrued interest.
“Donald Trump Lined up three New York hedge funds, including money from billionaire George Soros, to invest $160 million in his Chicago skyscraper, a key piece in perhaps the largest construction financing in the city’s history, according to real estate sources and public documents… The massive financing, which sources say also will include a $650 million construction loan from Deutsche Bank…”
“A public loan document said that Trump could end up having to pay Fortress as much as $360 million, depending on how long the loan accrues interest. Combined with the Deutsche Bank senior loan, he would owe more than $1 billion in total.” “In Chicago, Trump Hits Headwinds” The Wall Street Journal – October 29, 2008
By October 2008, the tower was almost complete and Trump had sold nearly $600 million in condo and condo-hotel units, more than half of the total value of all units in the tower.
“So far, Mr. Trump has lined up buyers for a bit less than $600 million of condo units and condo-hotel units in a residential market that has virtually seized up… He has closed around $200 million in sales so far, with roughly $380 million still in contract.”
In 2012, Trump continued to owe money to his lenders but sales of his condominiums had picked up and his tower had a 69% occupancy rate. As Crain’s Chicago put it: “The region’s housing and condo market is still mired in a historic slump. But when it comes to buying and selling in Chicago’s high-end condo market, life is surprisingly good… Condominium owners at the $850 million Trump International Hotel & Tower and other newer top-end buildings have, more often than not, experienced value appreciation when they sold in recent years.”
While Trump was not yet making a profit on his tower, his sales and value appreciations were such that his building was generating significant revenue, more than enough revenue to pay back to his lenders large portions of his loans. As former New York real estate developer David Rose writes in his article “How to pay off a Skyscraper”:
“After a number of years have passed, several things are likely to have happened: 1) the mortgage has been significantly paid down; 2) the value of the underlying building has increased; and 3) the owner has waited for a time in the economic cycle where mortgage rates are low. At that point [they] will ‘refinance’ the original mortgage, and put the balance to work somewhere else where it can make even more money.” “How Long Does It Take To Pay Off a Skyscraper?” Slate – July 12, 2012
Some how Trump did not have to worry about paying back the majority of his mezzanine loan. A special group of lenders came in and erased a significant portion of this obligation.
That group was the original mezzanine loan lenders: Soros, Fortress and Blackacre; all of whom decided to forgive Trump’s future interest payments on the loan, selling it to him at the massively reduced price of $48 million. To put that in starker terms, Soros and the others effectively gave Trump possibly hundreds of millions of dollars in debt forgiveness, while cutting down the principal of his loan by $82 million**.
Soros and the others forgave Trump as much as $312 million for no apparent reason.
“Donald Trump has paid $48 million to buy out junior creditors on his 92-story Chicago condominium and hotel project… The New York developer says he bought the debt, which had a face value of $130 million, back from a group of creditors led by Fortress Investment Group.” “Trump buys out tower creditors” Crain’s Chicago Business– March 28, 2012
Trump tied to Soros – Glenn Beck
This shows us that in 2012 Trump had already paid off most of the Deutsche Bank loan before Soros, etc. came in and wiped out most of his mezzainine debt. This raises the question, why wasn’t Trump expected by Soros, Fortress and Blackacre to pay back their riskier, high-interest mezzanine loan? Also, how was Trump able to pay down his Deutsche Bank loan – demonstrating the means to pay off all his loans – yet still have Soros and the others give him somewhere between $82 million and $312 million in debt forgiveness?
Additionally to that, why have we heard almost nothing about this gigantic giveaway to Trump? And why were Soros and Blackacre, two of the three main investors in the mezzanine loan, scrubbed from media’s coverage of the final debt forgiveness deal? What possible backroom agreements were made concerning this mezzanine loan?
As Trump is now a leading candidate for the presidency of the United States, the American public deserves to know the details behind this deal.
And indeed, not only was this deal made in a cloaked manner, it may have been the most generous amount of debt forgiveness ever given on a mezzanine loan to a borrower who was in good financial health and who had a steadily appreciating asset, as was Trump and his Chicago tower.
*Two articles quote the total for the mezzanine loan at $130 million, however due to the limited coverage of the deal we do not know at this time which is the true figure. 6 7
**Given the original figure of the $160 million principal, this would be an approximate $112 million giveaway on the loan’s principle to Trump
George Soros on Donald Trump: Donald is ISIS | Fortune
There aren’t many people on this planet with more money than Donald Trump, but George Soros is one of them.
And Trump’s fellow billionaire took aim at the Republican presidential candidate in an interview with Bloomberg TV saying that he, and fellow presidential hopeful Ted Cruz, “are doing the work of ISIS.”
“ISIS, and before that Al Qaeda, discovered the Achilles heel of Western Civilization: the fear of death,” according to Soros. “It interferes with reason, and people do things out of fear that is actually harmful. By fear mongering, Donald Trump, and the others, Cruz and so on, are doing the work of ISIS. ”
Soros, the Hungarian-American investor and philanthropist, is known for his support of Democratic causes. He has used a small portion of the many billions of dollars he’s made as an investor to support politicians on the left here in America, but he is more famous around the globe for spending billions in support of open societies and for his work in helping Eastern Europe peacefully transition from communism.
The fight against radical Islamic terrorism then, is perhaps one area where his work in America intersects with his projects in Europe. Soros isn’t the first to argue that terrorism is a means to an end, rather than an end itself. ISIS and Al Qaeda don’t just want to kill Americans, but they do want to provoke Americans into support policies, like a total ban on Muslims entering the country. That would create more global conflict and enmity, which would then enable them to gain more power.
Fortune reached out to the Trump and Cruz campaigns and will update the story if they respond.
Soros, Alarmed by Trump, Pours Money into 2016 Race - Bloomberg
Is GOP Running Out of Options to Stop Donald Trump?
The liberal New York financier George Soros, whose effort to unseat President George W. Bush in 2004 shattered political spending records, is returning to big-ticket giving after an 11-year hiatus.
Soros has spent or committed more than $13 million to support Hillary Clinton and other Democrats this election cycle, already more than his total disclosed spending in the last two presidential elections combined.
QuickTake U.S. Campaign Finance
Soros has expressed alarm over the past few months at the candidacies of Republicans Donald Trump and Ted Cruz. In a statement last week about a new group he's funding to increase voting by Latinos and immigrants in the election, he again mentioned the two candidates by name.
"The intense anti-immigrant and anti-Muslim rhetoric that has been fueled by the Republican primary is deeply offensive," Soros said in the statement. "There should be consequences for the outrageous statements and proposals that we've regularly heard from candidates Trump and Cruz."
Michael Vachon, a spokesman and political adviser to Soros, said there was no single cause for the increase in spending. "His support of Clinton is one reason. The tone of the other candidates is the other," Vachon said. The Clinton, Cruz and Trump campaigns, which face crucial primary contests in Ohio and Florida today, didn't respond to requests for comment.
Soros's importance to Clinton goes beyond the checks he writes, since other major Democratic donors sometimes follow his lead. At the same time, it's likely that in a general election, Trump would pillory Clinton for her reliance on Soros and other wealthy hedge-fund managers. The billionaire real-estate developer has spent months portraying his Republican rivals as the tools of their donors.
Soros, 85, a Hungarian-born speculator who made billions betting on price swings in currencies and other assets, has long been one of the right wing's favorite bogeymen and a magnet for conspiracy theories.
Last weekend, some Trump supporters and conservative media organizations blamed Soros for demonstrations in Chicago that caused Trump to cancel a planned rally, pointing to his past support for one of the groups that organized protests, MoveOn.org. In fact, MoveOn hasn't gotten funding from Soros since 2004, according to both Vachon and MoveOn spokesman Brian Stewart.
Soros's personal fortune stands at about $24 billion, according to the Bloomberg Billionaires Index. Soros handed off day-to-day management of his hedge fund business in the late 1980s to focus on his charitable pursuits, many of which seek to promote democracy around the world. The Open Society Foundations say they have spent some $13 billion over the past three decades.
Soros spent an unprecedented $27 million trying to defeat Bush's re-election in 2004, much of it through independent groups known as 527s that could accept donations of unlimited size. While the groups Soros funded knocked on doors and tried to boost voter turnout, a conservative 527 group aired a powerful series of ads questioning Democrat John Kerry's war record, helping Bush win a second term. "They were in-your-face distortions of the truth," a frustrated Soros told the New York Times Magazine in 2006. "People don't care about the truth."
Soros signed on as an early backer of Obama during the 2008 campaign, but spent only about $5 million on political causes that cycle, according to a tally by Bloomberg that doesn't include undisclosed donations to political nonprofits. He spent even less in 2012, even though the Supreme Court's Citizens United ruling prompted a flood of new seven-figure contributions that year.
At the World Economic Forum in Davos, Switzerland that January, he remarked to Reuters that some hard-right candidates would provide a big contrast with Obama but "there isn't all that much difference" between the president and Mitt Romney, the eventual Republican nominee. He also remarked that "a lot of the talent has left" Obama's administration.
A few months later, Soros told a Clinton confidant that he wished he hadn't backed Obama in the primary four years earlier.
"He said he's been impressed that he can always call/meet with you on an issue of policy and he hasn't met with the president ever," Neera Tanden said in a 2012 e-mail to Clinton, who was then serving as Obama's Secretary of State. "He regretted his decision in the primary -- he likes to admit mistakes when he makes them and that was one of them."
The e-mail was one of thousands of Clinton's messages that the State Department later made public, several of which show what a warm reception Soros got from her office. They show him planning a meeting with Clinton to request funding for a university he supports; recommending a few names of potential mediators for a crisis in Albania; and having a long talk with one of her aides about the situation in Burma. Over the past few years, Soros' charities have given between $1.5 million and $6 million to the Clinton Foundation.
Soros's biggest contribution this year is a total of $7 million to Priorities USA, the main super-PAC supporting Clinton. Another $1 million went to American Bridge, an opposition-research group. And last week, he announced he was putting $5 million into a new super-PAC known as Immigrant Voters Win. The group is part of a coordinated $15 million voter-turnout effort, first reported in the New York Times, that is targeting Latinos and immigrants in Colorado, Nevada and Florida.
The $13 million total puts Soros near the top of the list of this election cycle's biggest donors, and it doesn't include the $5 million he's pledged to another effort, led by Democratic lawyer Marc Elias, to challenge new voter-identification laws and other restrictions at the state level.
In an era of super-PACs, Soros's giving doesn't stand out like it used to. Thomas Steyer, the former San Francisco hedge-fund manager, spent more than $70 million in 2014, and the casino mogul Sheldon Adelson gave more than $90 million in 2012.
At Davos in January, Soros remarked that Trump and Cruz are engaging in "fear mongering." But he predicted that neither of them would prevail in the November election. "Here I have to confess to a little bit of bias, so take that into account," he told Bloomberg Television. "I think it's going to lead to a landslide for Hillary Clinton."
Some would say, that because certain people opposed trump during the election, that must mean trump is doing something right.
Wrong, its called reverse psychology, and most certainly not 3d chess.
Gilad Atzmon in NYC: Jewish Controlled Opposition - YouTube