BY THOMAS A. CORFMAN
Tribune staff reporter
February 18, 2005
The real estate merger that never ends took another twist Thursday, when Prime Group Realty Trust said it had agreed to sell the company to New Jersey real estate investor David Lichtenstein, despite unfinished litigation over an earlier deal.
Although known as a bottom-fisher, the chairman of Lightstone Group LLC has agreed to pay $7.25 a share, nearly 13 percent more than the real estate investment trust’s average price over the last 30 days, said the Chicago-based REIT, which co-owns high-profile downtown skyscrapers at 131 S. Dearborn St. and 77 W. Wacker Drive.
The share price has risen in recent weeks in expectation of a new bid after the collapse in December of a sale, at $6.70 a share, to a venture controlled by Chicago investor E. Barry Mansur.
Prime Group bypassed an offer of $7.40 a share from Los Angeles-based investment firm Bentley Forbes Holdings LLC, said Michael Reschke, Prime Group’s former chairman and Mansur’s partner in the earlier deal.
If that deal had been accepted, Bentley Forbes would have divided up the REIT’s assets with the Mansur-Reschke venture, which would have immediately dropped its lawsuit that seeks to enforce the earlier agreement or be awarded $50 million in damages, Reschke said.
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The Mansur-Reschke lawsuit and a Prime Group lawsuit seeking to formally terminate their deal are pending.
Mansur, chairman and chief executive of Mansur & Co., said the venture would continue to pursue its court case.
Lightstone’s investors include Greenwood Group, a Chicago investment firm headed by Prime Group’s former chief financial officer, Louis Conforti, sources said. Greenwood’s role is not spelled out in the merger agreement and Conforti declined to comment.
In a statement, Lichtenstein praised Prime Group's management, a sign that the REIT's top executives might retain their jobs after the deal goes through.
The Lightstone agreement is not contingent on arranging financing, but it would not redeem Prime Group's $100 million in preferred shares.
The treatment of the preferred shareholders under the Mansur-Reschke deal is a point of contention in the court cases. As an alternative to its bid of $7.40 a share Bentley Forbes also offered to redeem the preferred shares but pay $7.20 for each share of common stock, sources said.
Prime Group owns 11 Chicago-area office buildings totaling 4.6 million square feet of space, not including its joint-venture properties.
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