Collateral for the mezzanine debt is Prime Aurora Business Park, a 185-acre development site at I-88 and Orchard Road at the far end of the East-West Corridor. The property consists of a 258,000-sf building at 1455 Sequoia Dr. which is nearly 40% vacant.
Friedman Billings Ramsey tells the SEC the loan, which originally matured Sept. 30, has been paid down to $8 million. In addition to 16% interest on the debt, Prime Group has paid Friedman Billings Ramsey $200,000 – two extension fees of 1 percentage point of the outstanding balances -- to buy additional time.
Although it has granted Prime Group two extensions, Friedman Billings Ramsey raises the possibility of declaring the loan in default if negotiations are unsuccessful.
Also looming for Prime Group are a $40-million preferred stock debt to Security Capital Inc. as well as the foreclosure auction, set for Jan. 22 but cancelled by Vornado Realty Trust and Cadim inc. The two companies would hold a one-third stake in Prime Group if the foreclosure sale to satisfy $104 million in loans goes through.
Meanwhile, LaSalle National Bank has helped Prime Group by issuing $25.2 million of letters of credit at 2.35% over five-year term. The letters of credit back up industrial development revenue bonds for 2.47 million sf of manufacturing buildings here and in Indiana.
The letters of credit replaces paper originally issued for $48.15 million at 5.17%.
"The replacement of the letters of credit was an important accomplishment for us this quarter, and we appreciate LaSalle Bank's efforts in helping us to reach this goal," says said co-president and chief financial officer Louis G. Conforti.
The company is buying all but $1.9 million of the industrial revenue bonds.
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