Vornado's loan to Primestone Investment Partners is subordinate to an unrelated $40-million debt. However, terms of the loan, in addition to 20% interest, give Vornado the ability to get 7.9 million shares of Prime Group stock.
Primestone Investment Partners is an affiliate of PGI, Prime Group Realty Trust's largest shareholder, says REIT President Richard Curto. PGI's majority owner is Prime Group Chairman Michael Reschke, who was involved in the bid with Cadim to buy most of the REIT's common stock.
The default also would give Vornado one seat on the Prime Group board. "That's fine with us," Curto tells GlobeSt.com.
While Vornado's most prominent holding here is the Merchandise Mart, Prime Group's Downtown portfolio includes the 1.35-million-sf One IBM Plaza at 330 N. Wabash Ave.; 944,556-sf 77 W. Wacker Dr.; 874,742-sf 208 S. LaSalle St.; 846,759-sf 33 W. Monroe St.; and 770,191-sf 180 N. LaSalle St. However, the prize in the portfolio is considered to be the 1.5-million-sf, $350-million Dearborn Center joint venture development that is more than 60% pre-leased a year before its scheduled completion.
Prime Group was unsuccessful earlier this year in attempts to sell off its suburban office and industrial portfolio. However, Curto says talks are continuing on one of the REIT's Central Business District properties, despite a tougher sales environment in the wake of Sept. 11. "We've had one property on the market for a short period of time, and we've had a lot of activity," Curto says. "Before 9/11, we would've had a lot more prospects."
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