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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
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.
As reported on Form 8-K filed with the Securities and Exchange Commission on
December 15, 1997, Prime Group Realty Trust (the "Company") acquired the first
mortgage note encumbering the office property known as Continental Towers for
approximately $108.0 million. As also reported on Form 8-K filed with the
Securities and Exchange Commission on December 15, 1997, the Company acquired
the first mortgage note encumbering the office property known as 180 North
LaSalle Street for approximately $51.2 million in cash and $5.0 million in
common units of Prime Group Realty, L.P.
As reported on Form 8-K filed with the Securities and Exchange Commission on
December 30, 1997, the Company acquired the office property known as 2675 North
Mayfair Road for approximately $8.0 million.
Financial statements for the acquisition of Continental Towers, 180 North
LaSalle and 2675 North Mayfair were included in Form 8-K/A filed with the
Securities and Exchange Commission on February 27, 1998. Modifications have
been made to certain expenses which should have been eliminated in the pro forma
financial statements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements Under Rule 3-14 of Regulation S-X
(i) Statements of revenue and expenses of Continental Office Towers as
filed on Form 8-K/A dated February 27, 1998 and incorporated herein by
reference.
(ii) Statements of revenue and expenses of 180 North LaSalle Street as
filed on Form 8-K/A dated February 27, 1998 and incorporated herein by
reference.
(iii)Statement of revenue and expenses of 2675 North Mayfair Road as filed
on Form 8-K/A dated February 27, 1998 and incorporated herein by
reference.
(b) Pro Forma Financial Statements
The accompanying unaudited pro forma condensed consolidated statements of
operations for the nine months ended September 30, 1997 and the year ended
December 31, 1996, were prepared as if each of the following had occurred on
January 1, 1996: (i) the Company had sold 12.38 million of its common shares
of beneficial interest at $20.00 per share (the "Offering") and contributed the
net proceeds to Prime Group Realty, L.P. (the "Operating Partnership"), (ii) the
Company had sold 2.0 million shares of its cumulative convertible preferred
shares of beneficial interest at $20.00 per share (the "Private Placement") and
contributed the net proceeds to the Operating Partnership, (iii) Prime Group,
Inc. ("PGI") and other individuals had contributed certain of their respective
properties and operations, as described in the Company's Prospectus dated
November 11, 1997 as filed with the Securities and Exchange Commission on
November 13, 1997 (the "Prospectus"), to the Operating Partnership, (iv) the
Operating Partnership had issued 4.57 million common units for $85.0 million to
a partnership owned 60% by PGI and 40% by certain affiliates of Blackstone Real
Estate Advisors, L.P., (v) the Operating Partnership acquired various office
and industrial properties (including 2675 North Mayfair Road), (vi) the
Operating Partnership acquired
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Continental Office, Ltd. and Continental Offices, Ltd. Realty,
construction/property management companies, (vii) the Operating Partnership
acquired the first mortgage notes encumbering Continental Towers and 180
North LaSalle Street (the operations of Continental Towers have been
consolidated), (viii) the Operating Partnership repaid debt on certain of
its properties, as described in the Prospectus, (ix) the Operating
Partnership financed certain acquisitions with borrowings under new mortgage
notes and a line of credit facility, and (x) the Company sold 600,000 shares
of its common shares of beneficial interest pursuant to the underwriter's
over allotment option and received net proceeds therefrom of approximately
$11.25 million.
The acquisitions of Continental Towers, 180 North LaSalle Street and 2675
North Mayfair Road increased pro forma revenue, expenses and net income by
$18,747, $16,740 and $1,114, respectively, for the nine months ended
September 30, 1997 and $23,133, $20,678 and $1,362, respectively, for the
year ended December 31, 1996.
The unaudited pro forma Condensed Consolidated Statements of Operations
should be read in conjunction with unaudited Pro Forma condensed consolidated
financial statements and all of the historical financial statements contained
in the Prospectus. In management's opinion, all adjustments necessary to
reflect the effects of the Offering and the Private Placement have been made.
The unaudited Pro Forma Condensed Consolidated Statements of Operations of
the Company are not necessarily indicative of what the actual results of
operations would have been assuming the Offering and the Private Placement
had occurred at the dates indicated above, nor do they purport to represent
the future results of operations of the Company.
(c) Exhibits
Exhibit
No. Description
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
as filed as an exhibit on Form 8-K/A dated February 27, 1998 and
incorporated herein by reference.
2.2 Loan Purchase Agreement by and between Prime Group Realty, L.P., as
Purchaser, and Allstate Life Insurance Company, as Seller Purchaser as
filed as an exhibit on Form 8-K/A dated February 27, 1998 and incorporated
herein by reference.
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Prime Group Realty Trust
Pro Forma Condensed Statements of Operations
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE FOR THE YEAR
MONTHS ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
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<S> <C> <C>
REVENUE:
Rental $ 50,835 $ 62,738
Tenant reimbursements 20,805 26,432
Other 4,994 8,958
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TOTAL REVENUE 76,634 98,128
EXPENSES:
Property operations 13,390 18,587
Real estate taxes 12,736 16,282
Depreciation and amortization 14,799 19,371
Interest 15,588 19,984
General and administrative 4,578 7,161
Write-off of deferred costs - 3,081
Provision for environmental remediation 3,205 -
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TOTAL EXPENSES 64,296 84,466
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INCOME (LOSS) FROM OPERATIONS BEFORE
SHARE OF INCOME OF INVESTMENT
SUBSIDIARIES AND MINORITY INTEREST 12,338 13,662
SHARE OF INCOME OF INVESTMENT SUBSIDIARIES 170 387
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INCOME (LOSS) BEFORE PREFERRED STOCK
AND MINORITY INTEREST 12,508 14,049
PREFERRED STOCK DIVIDENDS (2,100) (2,800)
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INCOME (LOSS) BEFORE MINORITY INTEREST 10,408 11,249
MINORITY INTEREST (4,632) (5,006)
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NET INCOME (LOSS) $ 5,776 $ 6,243
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AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
OF BENEFICIAL INTEREST OUTSTANDING 12,980 12,980
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NET INCOME PER COMMON SHARE OF
BENEFICIAL INTEREST $ 0.45 $ 0.48
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</TABLE>
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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 thereunto duly authorized.
PRIME GROUP REALTY TRUST
Registrant
/s/ William M. Karnes
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William M. Karnes
Executive Vice President and
Chief Financial Officer
Date: March 31, 1997
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