Trump, scumbag
http://www.chicagobusiness.com/cgi-bin/article.pl?article_id=27082
Dumped by Trump At The Donald’s tower, ‘friends and family’ buyers see deals nixed
By Alby Gallun
The Donald wants it all.
So say some buyers in Donald Trump’s downtown condominium tower who
are in a standoff with the celebrity developer over his plan to
cancel their purchase contracts and take back their condos, along
with millions of dollars in paper profits.
The move allows Mr. Trump to recapture profits he gave up by selling
the units at a discount through a special “friends and family”
program back in 2003.
It was an opportunity for people who worked on the 90-story project —
mostly lawyers, architects and brokers — to buy in early at a
discount, with the chance to sell for a big gain as condo prices
rose. And prices in the building have soared, in some cases doubling
over the past three years. Total condo sales at the tower are
expected to top $1 billion.
“This guy is just jerking us around,” says Nathan Diamond-Falk, who
signed a contract to buy a condo with his wife, an interior designer
who worked on the project’s sales center. “It’s just tacky. It may be
the way they do business in New York, but I certainly don’t think
it’s the way they do business in Chicago.”
Mr. Trump is presenting the discount buyers with a stark choice: pay
more for their condos or give them up. He makes no apology for the
hardball move.
“They are profits we’re entitled to,” says Mr. Trump, who contends
that he can legally terminate the deals.
One disgruntled buyer who asked not to be named agreed to buy a condo
for about $1.3 million in 2003 and estimates it is now worth $2.2
million, based on recent sales. In a letter last summer, the Trump
Organization told the buyer that the contract was “null and void” and
that Trump was returning the down payment, erasing a nearly million-
dollar gain.
Trump sold 32 condos and 11 condo-hotel units through the friends and
family program in 2003, when it began marketing the 758-unit high-
rise at 401 N. Wabash Ave. A letter to prospective buyers called the
program “our way of thanking you for your continued hard work,”
offering a 10% discount off list prices and a rare opportunity to
“flip” units to another buyer even before closing.
PROMINENT BUYERS
Buyers included David Radler, former president and COO of Hollinger
International Inc., then-parent of the Chicago Sun-Times, which owned
the development site and was once a partner in the project; prominent
real estate attorney Theodore Novak, whose firm, DLA Piper,
represents the Trump project; several brokers at Koenig & Strey GMAC,
the brokerage firm hired to market the development, and several
architects at Skidmore Owings & Merrill, the architecture firm that
designed the skyscraper. Efforts to reach Mr. Novak, Skidmore
Managing Partner Richard Tomlinson and Mr. Radler’s attorney were
unsuccessful.
It looked like a good deal for both sides. Buyers got a price break
and Mr. Trump got early sales needed to land bank loans for the
project. With the help of the friends and family plan, Trump sold
enough units to secure financing and break ground in 2005. Buyers
have signed contracts for 79% of the 472 residential condos and 77%
of the hotel units, according to Tere Proctor, the Koenig & Strey
broker in charge of sales.
Yet Trump executives last year started notifying friends and family
buyers that their contracts would be cancelled or renegotiated at a
higher price. Some buyers agreed to pay more, while others, like Mr.
Diamond-Falk, are still considering their legal options.
Ms. Proctor, who signed a contract for a condo and a hotel unit,
declines to discuss her situation, other than to say she still has
contracts to buy both and has no complaints. She and most of the
other friends and family buyers still count Mr. Trump as a business
client, giving them incentive to accede to his wishes.
So far about three-quarters of the 43 contracts either have been
terminated or renegotiated, estimates Jason Greenblatt, the project’s
in-house attorney. Only “a couple of bitter people” have complained,
he says. Trump’s other buyers are unaffected, he says.
“Why should we sell things for a lower price when the project is so
successful?” Mr. Greenblatt says. The original buyers are “not
entitled to a huge windfall. They understood that from day one.”
Chicago developer Daniel McLean says he’s “never heard of” developers
canceling early contracts with friends and family.
“It seems to me that they’re not going to be your friends and family
anymore if you throw them out of the deal,” he says.
January 16th, 2007 at 4:02 pm
Holy smokes. I guess that’s what separates us from the scumbags. I realize that the folks who bought early had a few bucks themselves, but using their money, while they cover any interest on it, or at least not earning anything on their money, seems pretty underhanded. Pre-construction deals are common. I never realized they could be cancelled if the market turns the developer’s way. What if the market tanked? Could the buyers cancel? Well, it’s just another reason to dislike Trump and the scumbags in his category. If that’s how one gets there, I’m happy right here.