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GlobeSt.com EXCLUSIVE: Fresh Suitor May Have Prime Realty in Its Crosshairs

CHICAGO-On the block for two years now, the troubled Prime Group Realty Trust may be sold to David Lichtenstein's Lightstone Group--provided the REIT's former chairman Micheal Reschke isn't going to get it after all.

By Dees Stribling | Updated on January 04, 2005

CHICAGO-GlobeSt.com has learned that a bid of $750 million may be made by New Jersey-based Lightstone Group, perhaps as soon as Wednesday morning, for locally based Prime Group Realty Trust. Prime owns and operates 11 office properties totaling 4.6 million sf and one industrial property, located primarily in metro Chicago. It also owns JV interests in three other office properties in Chicago’s CBD.

Lightstone’s best-known deal in this league was the 2003 purchase of Prime Retail, which it acquired for $115.5 million and the assumption of $510 million in debt. “David Lichtenstein’s a turnaround artist and he’s done pretty well with Prime Retail,” a source familiar with the bid for Prime Group Realty tells GlobeSt.com. “He’s accomplished at buying distressed entities and making something out of them.”

Certainly Prime Group Realty fits the bill as something of a distressed entity. In 2002, major shareholders demanded that then-chairman Michael Reschke be given the boot because he allowed a default on $100 million in loans held by Vornado Realty Trust and Cadim Inc., with a subsequent drop in Prime Group stock of 40%. Later, the REIT saw one of its larger tenants in Downtown Chicago–Arthur Andersen–simply vanish, leaving enormous vacancies.

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