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CHICAGO-Real estate investment trusts usually trade at a discount to net asset value, but rarely loose change on the dollar. Even before this summer’s stock market meltdown, though, Prime Group Realty Trust’s book value was $16.80 per share, nearly four times Tuesday’s close of $4.40.

Although Prime Group shares hit bottom in April at $4.05 per share, the stock was trading at $14.75 in late August 2001 amid discussions by Montreal-based Cadim, inc. to buy out the REIT’s common shares in a deal with former chairman Michael W. Reschke.

“You ultimately trade at the value of your real estate,” says co-president and chief financial officer Louis G. Conforti, a member of the REIT’s new management team charged with righting a ship that ran into a liquidity crisis as well as lender lack of confidence in the previous regime.

“We did a poor job of managing expectations,” Conforti offers to GlobeSt.com, adding the REIT’s current strategy to bring the stock price in line with the value of its real estate holdings is based on a quiet, measured, conservative approach. “(Chairman Stephen) Nardi is super about managing expectations.”

However, Wall Street has yet to raise its expectations despite two significant recent capital events—a $133-million suburban office portfolio sale to Blackstone Real Estate Advisors, LP that resulted in $19 in net proceeds, as well as settling a $40-million preferred stock debt to Security Capital Group in a deal that gave Prime Group another $15-million loan.

In addition, Prime Group reduced administrative expenses by $3 million a year largely through a 13% reduction in the REIT’s staff.

“There’s an arbitrage to the stock, and the goal is to have it inure to the shareholders,” Conforti says.

It hasn’t helped that Prime Group’s largest tenant is embattled accounting and consulting firm Andersen. While monitoring the former audit giant’s progress daily and lining up potential replacement tenants, Conforti can’t help but to have sympathy for the firm that has long been prominent on the Chicago business scene. “They’ve been corporate and civic gentlemen and gentlewomen for a long time,” he says.

Earlier this year, Ernst & Young inserted a “going concern” clause in its audit of Prime Group, noting the REIT had much less cash on hand than lenders required, as well as operating under what Conforti terms “a sword of Damacles” with the $40-million preferred debt Security Capital could have called in on 10 days notice.

With that short-term liquidity crunch solved, Conforti believes Prime Group can begin operating from a position of strength. By shedding suburban properties that no longer fit its core portfolio, the REIT can focus on its Downtown office properties–including Dearborn Center, which is nearing completion with occupancy hovering around 60%–and the remaining suburban portfolio that includes 950,000-sf Continental Towers in Rolling Meadows.

“Our real estate people in Chicago are as good as anybody else’s,” Conforti says.

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