Prime Group Realty TrustAcquires Interest in Extended Stay Hotels

Posted by Illinois RealEstateRama

July 12, 2007

CHICAGO — Prime Group Realty Trust (NYSE: PGEPRB) (the “Company”) announced today that on June 29, 2007 the Company, through its wholly-owned qualified REIT subsidiary PGRT ESH, Inc. (“PGRT ESH”), purchased a $120 million membership interest in BHAC Capital IV, L.L.C., an entity which owns 100% of Extended Stay Hotels, Inc. (“ESH”), from Lightstone Holdings LLC (“Lightstone Holdings”), an affiliate of The Lightstone Group, LLC (“Lightstone LLC”). ESH and its affiliates own mid-price extended-stay properties in the United States and Canada. The Company, and its operating partnership Prime Group Realty, L.P., are owned by affiliates of Lightstone LLC and the acquisition of the membership interest was approved unanimously by the Company’s independent Trustees.

The $120 million membership interest has a liquidation preference of $120 million, a 12% preferred dividend rate per annum payable monthly, and is entitled to receive a 15.14% residual profits interest. The purchase price was financed by a $120 million non-recourse loan to PGRT ESH from Citicorp USA, Inc., which loan is secured by a pledge of the membership interest and any proceeds from such interest. The loan has a maturity date of June 10, 2008, and an interest rate of 4% above LIBOR or 1.50% above Citicorp’s base interest rate, as selected by PGRT ESH from time to time. The loan is guaranteed by Lightstone Holdings and David Lichtenstein.

Additional information regarding the foregoing transaction can be found in the Company’s current Report on Form 8-K filed with the United States Securities and Exchange Commission on or about the date of this press release. A copy of the Form 8-K can be found at the Company’s web site at www.pgrt.com.

About the Company
Owned by one of the largest private real estate owners in the country, The Lightstone Group, Prime Group Realty Trust is a fully-integrated, self-administered, and self-managed real estate investment trust (REIT) which owns, manages, leases, develops, and redevelops office and industrial real estate, primarily in metropolitan Chicago. The Company owns 9 office properties containing an aggregate of 3.8 million net rentable square feet, one industrial property comprised of approximately 120,000 square feet and joint venture interests in two office properties totaling approximately 1.1 million net rentable square feet. It leases and manages 4.9 million square feet comprising all of the wholly-owned properties and one joint venture property. In addition, the Company is also the managing and leasing agent for the 1.5 million square foot Citadel Center office building located at 131 South Dearborn Street in Chicago, Illinois, which it sold in November 2006.

For more information about Prime Group Realty Trust, contact the company’s Chicago headquarters at (312) 917-1300 or visit its website at www.pgrt.com.

Founded in 1988, The Lightstone Group is ranked among the 25 largest real estate companies in the industry with a diversified portfolio of over 18,000 residential units as well as office, industrial and retail properties totaling approximately 29 million square feet of space in 27 states, the District of Columbia and Puerto Rico. Headquartered in Lakewood, New Jersey, The Lightstone Group has over 1,000 employees and maintains regional offices in New York, Maryland and Illinois. The Lightstone Group has acquired in excess of $2 billion in real estate over approximately the past 24 months, and in addition recently closed on the $8 billion acquisition of Extended Stay Hotels.

For more information on The Lightstone Group, contact the company’s Lakewood, New Jersey headquarters at (800) 347-4078 or visit www.lightstonegroup.com.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current views with respect to future events and financial performance. The words “believes”, “expects”, “anticipates”, “estimates”, and similar words or expressions are generally intended to identify forward-looking statements. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to, changes in general economic conditions, adverse changes in real estate markets as well as other risks and uncertainties included from time to time in the Company’s filings with the Securities and Exchange Commission.

Source: dBusinessNews

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