It was 1998, and Mike Offit, fresh off the trading floor of Goldman Sachs for a new job at Deutsche Bank, was hired to put Deutsche Bank’s real estate lending business on the map. To do that, Mr. Offit knew he had to snag big name developers.
That moment arrived when Rob Horowitz, with the real estate firm Cooper-Horowitz, approached him with an idea: Would he work with Mr. Trump, who at the time had a tarnished reputation after several of his casinos landed in bankruptcy?
“My reaction was, why wouldn’t I?” Mr. Offit recalled in a recent interview.
To Mr. Offit, there was little downside to hearing Mr. Trump’s pitch. A short time later, Mr. Trump came by Mr. Offit’s Midtown Manhattan office to discuss a loan for renovations at his 40 Wall Street building. Unlike other developers who arrived with their entourages, Mr. Trump showed up alone, Mr. Offit said, and despite a reputation for bluster, he knew the financials of the deal cold.
“There was some resistance from management because of Donald’s reputation, but I told them that our loan would be wildly overly collateralized even in the worst-case scenario,” Mr. Offit said.
More deals followed. Later in the year, Mr. Trump needed $300 million to build Trump World Tower near the United Nations. But he required a construction loan, which, at the time, Deutsche did not have the right staff to manage. Determined to get the deal nonetheless, Mr. Offit found another German bank to make the loan with the commitment that Deutsche Bank would take possession once the building was constructed.
But as the deal was being finalized, the other German bank had second thoughts because of worries of a labor strike. Just as the deal seemed to be falling apart, Mr. Trump produced a signed commitment from all the major construction unions promising not to strike.
“We were all amazed he managed to get that,” said Mr. Offit, who retired from the bank in 1999.
In the mid 2000s, Mr. Trump was in need of another construction loan. But this time, the loan — up to $640 million to build Trump International Hotel and Tower in Chicago — did not go as well.
A few years after the project began, the 2008 financial crisis upended the global economy and Mr. Trump fell behind on loan payments. According to a person briefed on the deal, Deutsche Bank was discussing a possible extension, when Mr. Trump sued it to avoid paying $40 million that he had personally guaranteed.
His argument, as detailed in a letter to the bank, was novel: “Deutsche Bank is one of the banks primarily responsible for the economic dysfunction we are currently facing,” Mr. Trump wrote.
With the help of a lawyer — Steven Schlesinger of Garden City, N.Y. — Mr. Trump argued that the financial crisis allowed him to invoke the extraordinary event clause in his contract with the bank. Mr. Trump argued Deutsche Bank should pay him $3 billion in damages.
The bank filed its own action against Mr. Trump, demanding he make good on the loan. In a legal filing, Deutsche Bank, which had distributed the loan to a number of other banks, called the lawsuit “classic Trump.”
The standoff culminated with a meeting in Trump Tower, Mr. Schlesinger said.
At the meeting, Mr. Trump threatened to remove his name from the building if he did not get more time to pay. That move, Mr. Trump suggested, would reduce the value of the building.
Ultimately, the bank granted Mr. Trump additional time to repay. And when he did, it was through the Wall Street equivalent of borrowing from one parent to repay the other.
Mr. Trump received a loan from Deutsche Bank’s wealth management unit to pay off the debt he owed the bank’s real estate lending division, according to two people briefed on the transaction. The wealth management unit later issued another loan for the Chicago project that is valued at $25 million to $50 million.
