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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): DECEMBER 15, 1997
PRIME GROUP REALTY TRUST
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13589 36-4173047
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
77 West Wacker Drive, Suite 3900, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
(312) 917-1300
(Registrant's telephone number, including area code)
N/A
(Former name or former address,
if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 15, 1997, Prime Group Realty Trust (the "Company") acquired the
first mortgage note encumbering the office property known as Continental Towers,
which consists of three Class A, 12-story office towers that contain 916,000
square feet of rentable space (approximately 98% leased), located in Rolling
Meadows, Illinois. The first mortgage note, which has a current face value of
$163.0 million and an interest rate of 12.5% (6.5% pay rate and an additional
6.0% accrual rate), was purchased for $108.0 million from an institutional
lender with borrowings from the Company's $235.0 million line of credit with
various financial institutions ("Credit Facility"). An affiliate of the Company
will assume management and leasing responsibility for the property pursuant to a
15-year management, redevelopment and leasing contract that provides the Company
with operating control of the property.
On December 16, 1997, the Company acquired the first mortgage note
encumbering the office property known as 180 North LaSalle Street, which is a
39-story building that contains 729,000 square feet of rentable space, including
15,000 square feet of retail space, is currently approximately 83% leased and is
located in Chicago, Illinois. The first mortgage note, which has a current face
value of $63.0 million and an interest rate of 8.25%, was purchased from a third
party for approximately $51.2 million in cash from the Credit Facility and $5.0
million in common units of Prime Group Realty, L.P. (the "Operating
Partnership"). In addition, the Company purchased an option, exercisable until
July 30, 2000, to buy the existing $85.0 million second mortgage on the property
for 220,000 common units of the Operating Partnership (subject to certain
adjustments) and has an option to purchase the equity ownership of the property
beginning after February 15, 2004. The Company will also provide property
management and leasing services for the property pursuant to a 10-year
management and leasing contract.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements Under Rule 3-14 of Regulation S-X
The Company has determined that it is impractical at this time to file audited
financial statements of Continental Towers and 180 N. LaSalle for the year ended
December 31, 1996 and the nine months ended September 30, 1997, as prescribed by
Rule 3-14 of Regulation S-X. Such statements will be filed by amendment as soon
as practicable, but in any event not later than February 27, 1998.
(b) Pro Forma Financial Statements
The Company has determined that it is impractical at this time to file pro forma
financial statements for the Company as prescribed by Article 11 of Regulation
S-X. Such statements will be filed by amendment as soon as practicable, but in
any event not later than February 27, 1998.
(c) Exhibits
Exhibit
No. Description
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*2.1 Loan Purchase Agreement by and between General Electric
Capital Corporation and Great Oak LLC, as Sellers, and
Prime Group Realty, L.P., as Purchaser
*2.2 Loan Purchase Agreement by and between Prime Group Realty,
L.P., as Purchaser, and Allstate Life Insurance Company, as
Seller
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* To be filed by amendment
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIME GROUP REALTY TRUST
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Registrant
/s/ William M. Karnes
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William M. Karnes
Executive Vice President and
Chief Financial Officer
Date: December 29, 1997
