The Lightstone Group offer is for $7.25 per share, topping a $6.70-per-share offer by Prime-Mansur Investment Partners, which includes former chairman Michael Reschke. Both deals involve assuming the REIT's debt, which in the Lightstone offer is pegged at $595.4 million. Unlike the Prime-Mansur offer, however, the Lightstone Group offer is not subject to any financing condition.

Although Prime-Mansur Investment Partners got a $122-million commitment, the would-be buyers and REIT are arguing in a Maryland court whether the financing complied with terms of their October 2004 agreement. Prime Group Realty Trust says it will continue to fight Prime-Mansur Investment Partners in court, but its new deal transfers its position in the lawsuit to Lightstone Group.

While privately held Lightstone Group is involved in the multifamily, industrial, office and retail sectors in 25 states, Prime Group Realty Trust has pared its portfolio to 7.4 million sf of city and suburban office space, and just one 120,000-sf industrial property. Lightstone Group's only holding in the Chicago market is the Prime Outlet in northwest suburban Huntley.

"An element of our business strategy is to acquire companies with good management teams and high quality assets in locations that we believe provide opportunities as markets recover," says Lightstone Group chairman and principal David Lichtenstein. "We believe the acquisition of Prime Group Realty Trust fits this strategy."

While Prime Group Realty Trust shares jumped 7% Thursday to $7.04, president and chief executive officer Jeffrey A. Patterson notes the Lightstone Group offer represents a 12.8% premium over the stock's 30-day average price. Meanwhile, holders of the REIT's Series B preferred stock will get nearly $3 per share in accrued dividends, according to the deal, just as they would under the Prime-Mansur deal.

The deal is not expected to close until the second quarter at the earliest.

Instant Insights /

GlobeSt.com UPDATE: Lightstone Offers $889M for Prime Group

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