Prime Group Stake Headed For Auction

CHICAGO-Paramus, NJ-based Vornado Realty Trust could auction a one-third stake in Prime Group Realty Trust Jan. 9 after a bankruptcy proceeding by Primestone Investment Partners, LP was dismissed by a Delaware judge. Primestone, which is controlled by Prime Group chairman Michael W. Reschke, put up 7.9 million Prime Group shares as collateral for more than $100 million in loans.

The bankruptcy case, which delayed one earlier scheduled auction, was dismissed because it had been filed in bad faith, according to a Security and Exchange Commission filing by Vornado, owner of the 3.5-million-sf Merchandise Mart here.

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. It also includes 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. In the suburbs, Prime Group’s holdings include the three-building Continental Towers along the Northwest Tollway in Rolling Meadows.

Meanwhile, Reschke is suing former suitor Cadim inc. for $150 million, alleging the Montreal-based company forced Primestone into bankruptcy through bad-faith negotiations, then teamed with Vornado by buying 50% of the debt that now is the subject of foreclosure proceedings.