Prime Group Realty Trust Closes on Refinancing of 330 North Wabash Avenue

CHICAGO, Aug. 23, 2012 /PRNewswire/ -- Prime Group Realty Trust (OTC PINK: PMGEP) (the "Company" or "PGRT") announced today that it has refinanced its 330 North Wabash Avenue property in Chicago, Illinois with the proceeds of a $200 million first mortgage loan from Landesbank Hessen-Thuringen Girozentrale (Helaba Bank) and New York Life Insurance Company.

The borrower under the loan is 330 N. Wabash Avenue, L.L.C. ("Borrower"), which is owned by a joint venture between subsidiaries of PGRT and Five Mile Capital Partners LLC, a Connecticut-based commercial real estate and alternative investment firm ("Five Mile").  Subsidiaries of PGRT are the property and redevelopment manager and leasing agent for the property. 

"330 North Wabash is one of Chicago's significant architectural icons, and this refinancing reaffirms and builds upon the success we have had repositioning this asset in the marketplace," said Jeffrey Patterson, chairman, president and chief executive officer of Prime Group Realty Trust. "Today, the building is approximately 88 percent leased and is in the final stages of being fully modernized. Through this transaction, we will be even better positioned to fund additional tenant and other capital improvements and maintain the asset's strong position in the Chicago CBD office market and the flourishing River North area."   

The loan consists of a $111.9 million initial advance to repay the existing first mortgage loan on the property and $88.1 million in subsequent advances for tenant and capital improvements and other costs, including interest expense, relating to recent leases that have increased the project's leased percentage to 88% from 35%. These major leases include leases with American Medical Association, Latham & Watkins LLP, SmithBucklin Corporation, and BDO USA, LLP.

The loan has a three year term with a one year extension option subject to the satisfaction of certain customary conditions.

The loan is secured by, among other things, a first mortgage on floors 13 – 52 of the building which are owned by the Borrower, as well as on the Borrower's long-term leasehold interest in an adjacent 902 space parking garage.  The interest rate on the loan is 30 day LIBOR plus 2.85 percent, and interest only payments are due monthly in arrears. 

All remaining equity required by the loan to be funded by affiliates of Five Mile was contributed at closing, bringing Five Mile's total equity contribution to the joint venture to $69.7 million to date, which when combined with PGRT's equity contributions, total approximately $82.2 million.

The Borrower utilized the mortgage banking services of Draper and Kramer in the transaction.

330 North Wabash is a 52-story, 1.5 million square feet, Class A tower located on the Chicago River that was completed in 1971.  Designed by famed architect Ludwig Mies van der Rohe, the iconic Chicago building earned Class L landmark status in 2008.   It was also designated with landmark status by the City of Chicago in 2008.  PGRT is near completing a comprehensive redevelopment of the building, which includes upgraded state of the art fire and life safety systems, restrooms, elevator cabs, a modernized HVAC system, and asbestos abatement.  Other tenant amenities under construction include a new fitness center, food service cafe and conference center.

330 North Wabash will also house The Langham Chicago, a new five-star luxury hotel on floors 2-13.  The hotel is owned and managed by affiliates of Great Eagle Holdings Limited, one of Hong Kong's leading property companies. Scheduled to open in the second quarter of 2013, the hotel will feature approximately 316 rooms and suites and will include a full service restaurant (including private dining facilities), elegant and sophisticated meeting and conference facilities, as well as a fitness facility and Langham's award-winning wellness retreat, Chuan Spa.

About Prime Group Realty Trust

Prime Group Realty Trust is a self-administered and self-managed real estate investment trust (REIT) which owns, manages, leases, develops and redevelops office and industrial real estate in metropolitan Chicago.  The Company currently owns 1 office property containing an aggregate of 167,756 net rentable square feet and interests in two joint ventures that own two office properties comprised of approximately 1.24 million net rentable square feet.  The Company leases and manages approximately 1.31 million square feet comprising all of its wholly-owned properties and its 330 N. Wabash Avenue joint venture property.  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. 

About Five Mile Capital Partners

Five Mile Capital Partners LLC is an alternative investment and asset management company established in 2003.  The Firm specializes in investment opportunities in real estate, debt products, structured finance, asset-based lending and financial services private equity. Five Mile's Principals have significant experience, knowledge and skills relevant to the financial services industry and believe the cyclical and dynamic nature of the sector continually provides a broad opportunity for investments across the capital structure. The Firm's headquarters are based in Stamford, Connecticut with an office in New York City.  Five Mile has approximately $2 billion in assets under management.  For more information, visit www.fivemilecapital.com.

Notice To Investors

This press release is provided for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any securities of the Company.

This press release contains certain forward-looking statements which involve known or unknown risks, uncertainties or other factors not under the Company's control which may cause the actual results, performance or achievement of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. 

SOURCE Prime Group Realty Trust