CHICAGO-In addition to a foreclosure auction now scheduled for Jan. 22 involving nearly 8 million shares of Prime Group Realty Trust stock, the REIT has another financial deadline looming next month. Beginning Jan. 15, Chicago-based Security Capital Preferred Growth Inc. could force Prime Group to redeem $40 million of preferred shares upon 10 days notice during a two-year window.

Prime Group officials say they are in negotiations with “various parties” on possible loans or repurchases of the preferred stock. As a result, the REIT is holding off on declaring its fourth-quarter common stock dividend until next month. Meanwhile, Prime Group has been attempting to sell properties, including 770,191-sf 180 N. LaSalle St.

Prime Group stock closed at $9.30 per share Monday, a one-day loss of 3.1% and 37.5% off its 52-week high. At $1.35 per share, the yield on Prime Group stock is 14.5%.

Meanwhile, Paramus, NJ-based Vornado Realty Trust has received a green light from a Delaware judge to proceed with its foreclosure auction involving 7.9 million shares of Prime Group Realty Trust stock. The foreclosure stems from the default of Prime Group chairman Michael W. Reschke’s Primestone Investment Partners, L.P. on two loans totaling $106 million. Collateral is partnership units convertible into nearly 8 million shares of Prime Group stock, a one-third stake in the REIT. A bankruptcy action by Primestone was deemed to have been filed in bad faith.

Half of the debt is now held by Montreal-based Cadim inc., which was involved in talks this summer about a possible purchase of Prime Group’s common stock. Those talks fell through, and Reschke has sued the Canadian real estate company claiming it negotiated in bad faith.

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