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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 or
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 1-13589
 PRIME GROUP REALTY TRUST
  Maryland
    
    36-4173047(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)330 North Wabash Avenue, Suite 2800,Chicago, Illinois
    
    60611(Address of principal executive offices)
    
    (Zip Code)
 (312) 917-1300
  Title of each class
    
    Name of each exchange on which registeredSeries B  Cumulative Redeemable
    
    New York Stock ExchangePreferred Shares of Beneficial Interest,$0.01 par value per share
  o Yes þ No
 o Yes þ No
 þ o
 o Yes
 o No
 þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
    
    Smaller Reporting Company o
 o þ




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##### 



INDEX
 PAGEPART IItem 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    12Item 1B. Unresolved Staff Comments
    
    
    25Item 2. Properties
    
    
    25Item 3. Legal Proceedings
    
    
    27Item 4. Removed and Reserved
    
    
    28PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    29Item 6. Selected Financial Data
    
    
    31Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    51Item 8. Financial Statements and Supplementary Data
    
    
    51Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    51Item 9A. Controls and Procedures
    
    
    52Item 9B. Other Information
    
    
    52PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    53Item 11. Executive Compensation
    
    
    59Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    66Item 13. Certain Relationships and Related Transactions
    
    
    67Item 14. Principal Accountant Fees and Services
    
    
    68PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    69Signatures
    
    
    80Exhibit 21.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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Forward-Looking Statements
   
    
    future economic and market conditions which may impact the demand for office and
industrial space either at current or increased levels;
 
    
    the extent of any tenant bankruptcies or defaults that may occur;
 
    
    our ability or inability to renew existing tenant leases and lease up vacant space;
 
    
    prevailing interest rates;
 
    
    the effect of inflation and other factors on operating expenses and real estate taxes;
 
    
    our ability to minimize various expenses as a percentage of our revenues; and
 
    
    the availability of financing and capital.
   3




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PART I
 
 ITEM 1. BUSINESS
 Background and General
       4




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Tax Status
  Business Strategy
  Ongoing Operations
  
    
    engaging in pro-active leasing programs and effective property management;
 
    
    managing operating expenses through the use of in-house management expertise;
 
    
    maintaining and developing long-term relationships with a diverse tenant group;
 
    
    attracting and retaining motivated employees by providing financial and other incentives;
and
 
    
    emphasizing value-added capital improvements to maintain and enhance our properties
competitive advantages in their submarkets.
  5




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Liquidity and Capital Requirements .
        6




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Recent Developments
 Dispositions .
 Net
    
    
    
    
    
    
    MortgageRentable
    
    
    Sales Price
    
    
    Debt
    
    
    MonthProperty
    
    Location
    
    Square Feet
    
    
    (in millions)
    
    
    (in millions)
    
    
    Disposed800-810 Jorie
Boulevard (1)
    
    Oak Brook, IL
    
    
    193,688
    
    
    
    N/A
    
    
    $
    21.3
    
    
    July
 (1)
    
    On July 28, 2009, we conveyed the property to the lender in exchange for a release of the
loan. The Company recorded an asset impairment charge of $6.9 million in the second quarter
to reduce the net book value of the property to its estimated fair value and recorded a gain
on extinguishment of debt of $8.3 million representing the difference between the extinguished
loan balance and accrued interest and the carrying value of the property. Indebtedness.
 LoanPrincipalAmount
    
    
    Interest
    
    
    Transaction
    
    
    MaturityCollateral
    
    Type of Loan
    
    (in millions)
    
    
    Rate
    
    
    Date
    
    
    DateIndebtedness Retirement800-810 Jorie Boulevard (1)
    
    First Mortgage
    
    $
    21.3
    
    
    
    13.33
    %
    
    
    7/09
    
    
    
    12/10PGRT ESH, Inc./Citicorp
    
    Non-recourse
    
    $
    80.0
    
    
    Various
    
    
    
    7/09
    
    
    
    6/09Loans (2)Principal PaymentsPGRT ESH, Inc./Citicorp Loan
    
    Non-recourse
    
    $
    1.5
    
    
    Various
    
    
    Various
    
    
    
    6/09Amortization
    
    Various
    
    $
    1.8
    
    
    Various
    
    
    Various
    
    
    Various
 (1)
    
    Default rate of interest since October 20, 2008. Due to the property generating negative cash flows, debt
service payments were discontinued as of September 1, 2008. Property conveyed to lender on July 28, 2009 in
exchange for a release of the loan.(2)
    
    PGRT ESH, Inc. assigned its membership interest in BHAC Capital IV, L.L.C. to an affiliate of the Companys
Chairman of the Board and our parent company, Prime Office. PGRT ESH, Inc. was released from liability for the
obligations under the Citicorp Loan.  Shareholders and Board of Trustees Developments.
  7




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Competition
  Services Company
  Government Regulations
 Environmental Matters .
   8




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Costs of Compliance with Americans with Disabilities Act of 1990 (the ADA) .
 Other Regulations .
  9




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Insurance
      10




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Employees
  Available Information
   11




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ITEM 1A. RISK FACTORS
 Investment in us presents risks. If any of the risk events described below actually occurs,
our business, financial condition or results of operations could be adversely affected. Some
statements in the following risk factors discussion, constitute forward-looking statements.
Please refer to the section above entitled Forward-Looking Statements.
 The current economic crises has resulted in a substantial loss in the value of office
properties in general across the United States and in our portfolio in particular
  Our properties depend upon the Chicago metropolitan area economy and its demand for office
space.
   12




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Our debt level reduces cash available for operations, capital expenditures and dividends to
holders of our Series B Shares and our common shareholder, and has exposed us to the risk of
default under our debt obligations.
  
    
    our cash flow has been with respect to certain properties and may be in the
future with respect to additional properties insufficient to meet our required
principal and interest payments on the debt encumbering such properties;
 
    
    we may be unable to borrow additional funds as needed or on favorable terms;
 
    
    we may be unable to refinance our existing or future indebtedness at maturity
or the refinancing terms may be less favorable than the terms of our existing
indebtedness;
 
    
    because a portion of our debt bears interest at variable rates, increases in
interest rates could increase our interest expense;
 
    
    we may be forced to dispose of one or more of our properties, possibly on
disadvantageous terms;
 
    
    we have defaulted on our obligations on certain properties and may in the
future default on our obligations on additional properties and the lenders or
mortgagees may foreclose on our affected properties that secure their loans and
receive an assignment of rents and leases, or we may convey the affected
properties to the lenders or mortgagees pursuant to a deed in lieu of foreclosure
or similar transaction;
 
    
    we may violate restrictive covenants in our loan agreements, which would
entitle the lenders to accelerate our debt obligations; and
 
    
    one of our subsidiaries that owns a parcel at the Continental Towers complex
has defaulted on its indebtedness, which has triggered a cross-default provision
in the indebtedness of a separate subsidiary that owns a parcel at the Continental
Towers complex and the relevant lender has accelerated the maturity date of both
loans.
    13




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Domestic and international financial markets have experienced unusual volatility and
uncertainty and financing has become difficult to obtain on satisfactory terms.
  One or more of our properties may face foreclosure by our lenders or we may voluntarily decide
to convey one or more of our properties to a lender if a propertys cash flow is not enough to
service its debt, operating expenses and capital requirements or if we cannot refinance a property
upon debt maturity
   14




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Our Operating Losses for the last several years have been significant and we project them to
continue for the foreseeable future, which has and will in the future significantly adversely
impact our ability to continue operating our business.
  We may be unable to renew leases, lease vacant space or re-lease space as leases expire.
  Our performance and value are subject to risks associated with real estate assets and with the
real estate industry.
  
    
    poor economic conditions in general, including high unemployment resulting in a
need by tenants of less office space;
 
    
    local oversupply, increased competition or reduction in demand for office
space;
  15




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
    
    inability to collect rent from tenants;
 
    
    vacancies or our inability to rent space on favorable terms;
 
    
    increased operating costs, including insurance premiums, utilities and real
estate taxes, due to inflation and other factors which may not necessarily be
offset by increased rents;
 
    
    costs of complying with changes in governmental regulations;
 
    
    the relative illiquidity of real estate investments; and
 
    
    changing submarket demographics.
  The current economic recession and weakness in the debt and capital markets may adversely
affect our tenants ability to pay rent, our ability to lease space and our ability to obtain
capital and refinance our existing debt as it becomes due.
  We face significant competition, which may decrease or prevent increases of the occupancy and
rental rates of our properties.
   16




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Covenants in our debt instruments could adversely affect our financial condition and restrict
our range of operating activities.
  There can be no assurance that we will be able to resume the payment of cash dividends to
holders of Series B Shares or our common shareholder or pay a significant portion of the amount due
holders of the Series B Shares upon redemption of such shares.
    17




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Only our Series B Shares are currently listed on the NYSE and, therefore, we are entitled to
rely on exemptions from certain corporate governance requirements.
  The average daily trading volume of our Series B Shares is relatively small, thus making it
difficult to buy or sell significant numbers of shares without affecting the market price.
 .
 Our filing of financial statements and other reports with the SEC are scheduled to cease and
our Series B Shares are in the process of being delisted from the New York Stock Exchange.
   18




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Lightstone controls us, and will continue to control us, so long as one or more of its
affiliates own a majority of our common shares.
  Lightstone and its designees on our Board may have interests that conflict with our interests .
  We may sell or acquire additional assets which could adversely affect our operations and
financial results
   19




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The redevelopment of certain of our existing properties that we may undertake could be costly
and involve substantial risk.
  We depend on significant tenants
    Failure to qualify as a REIT would have significant adverse consequences to us.
  
    
    we would not be allowed a deduction for dividends to shareholders in computing
our taxable income and would be subject to federal income tax at regular corporate
rates;
  20




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
    
    we also could be subject to the federal alternative minimum tax and possibly
increased state and local taxes; and
 
    
    unless we are entitled to relief under applicable statutory provisions, we
could not elect to be taxed as a REIT for four taxable years following the year
during which we were disqualified.
    We are required to include in our annual reports a report of our management on our internal
controls over our financial reporting under Section 404 of the Sarbanes Oxley Act of 2002. Any
adverse results from future evaluations could result in a loss of investor confidence in our
financial reports and have an adverse effect on the stock price of our Series B Shares and the
value of our common shares
   21




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Internal Control -
Integrated Framework.
 Other regulations could adversely affect our financial condition
  Failure to hedge effectively against interest rate changes may adversely affect our results of
operations
  Potential losses may not be covered by insurance.
   22




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The completion of new developments adjacent to or near certain of our existing properties has
and will in the future adversely affect the leasing, operation and value of those properties.
  Book losses that have been recognized and that may be recognized in the future have eroded,
and may in the future erode, our book value.
   We may incur significant costs of complying with the Americans with Disabilities Act and
similar laws
   23




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Liabilities for environmental matters could adversely affect our financial condition
  Future terrorist attacks in the United States could harm the demand for, and the values of,
our properties.
  Our current and future joint venture investments could be adversely affected by our lack of
sole decision-making authority, our reliance on our joint venture partners financial condition and
any disputes that may arise between us and our joint venture partners.
   24




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 General
      25




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Properties
  Net
    
    
    PercentageYear Built/
    
    Rentable
    
    
    Occupied asLocation
    
    Renovated
    
    Square Feet
    
    
    of 12/31/09Wholly-Owned Properties:330 N. Wabash Avenue (1)
    
    Chicago, IL
    
    1971
    
    
    1,141,760
    
    
    
    83.4
    %Continental Towers
    
    Rolling Meadows, IL
    
    1977 thru
    
    
    910,796
    
    
    
    72.3
    %1981/2001180 North LaSalle Street
    
    Chicago, IL
    
    1982/1999
    
    
    770,191
    
    
    
    78.8
    %4343 Commerce Court
(Olympian Office Center)
    
    Lisle, IL
    
    1989
    
    
    167,756
    
    
    
    72.3
    %Brush Hill Office Court
    
    Westmont, IL
    
    1986
    
    
    110,299
    
    
    
    90.0
    %280 Shuman Blvd.
(Atrium Building)
    
    Naperville, IL
    
    1979
    
    
    69,077
    
    
    
    88.2
    %Enterprise Center II
    
    Westchester, IL
    
    1999
    
    
    62,580
    
    
    
    100.0
    %7100 Madison Avenue
    
    Willowbrook, IL
    
    1999
    
    
    50,157
    
    
    
    100.0
    %Portfolio total
    
    
    
    
    
    
    3,282,616
    
    
    
    79.6
    %Unconsolidated Joint Venture
Properties:Thistle Landing (2)
    
    Phoenix, AZ
    
    1999
    
    
    101,006
    
    
    
    54.7
    %
 (1)
    
    The land underlying a portion of this property, related to the parking garage, is leased
for a term expiring on April 30, 2019 with options to extend the term for an additional
forty years. On March 18, 2008, we sold floors 2 through 13 of this office property to a
third party that intends to construct a luxury hotel on these floors.(2)
    
    We own a 23.1% common ownership interest in a joint venture that owns this office
property.  26




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ITEM 3. LEGAL PROCEEDINGS
       27




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ITEM 4. REMOVED AND RESERVED
  28




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PART II
 
 ITEM 5.
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES    CashDividendsPaid (per share)Year 2008First quarter
    
    
    0.112255Second quarter
    
    
    0.561275Third quarter
    
    
    Fourth quarter
    
    
    Year 2009First quarter
    
    
    Second quarter
    
    
    Third quarter
    
    
    Fourth quarter
    
    
    
    29




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Equity Compensation Plans . Item 12  Security
 Recent Sales of Unregistered Securities
  Purchases of Equity Securities by Issuer and Affiliated Purchasers
   30




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ITEM 6. SELECTED FINANCIAL DATA
  December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(dollars in thousands)Balance Sheet DataReal estate assets before
accumulated depreciation
    
    $
    379,561
    
    
    $
    475,103
    
    
    $
    499,050
    
    
    $
    482,447
    
    
    $
    471,892Total assets
    
    
    393,184
    
    
    
    521,658
    
    
    
    671,916
    
    
    
    649,928
    
    
    
    771,921Mortgage notes and notes payable
    
    
    341,750
    
    
    
    447,871
    
    
    
    567,910
    
    
    
    453,695
    
    
    
    452,965Total liabilities
    
    
    389,454
    
    
    
    515,690
    
    
    
    635,559
    
    
    
    524,868
    
    
    
    530,668Noncontrolling interest
    
    
    (82,109
    )
    
    
    
    
    
    
    
    
    
    
    20,770
    
    
    
    135,853Total equity  Prime Group
Realty Trust
    
    
    3,730
    
    
    
    5,968
    
    
    
    36,357
    
    
    
    104,375
    
    
    
    105,400
 Post-Acquisition
    
    
    Pre-AcquisitionSix months
    
    
    Six monthsended
    
    
    endedFor the years ended December 31,
    
    
    December 31,
    
    
    June 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2005(dollars inthousands,except per(dollars in thousands, except per share amounts)
    
    
    
    
    
    
    share amounts)Operation DataTotal revenue
    
    $
    77,915
    
    
    $
    82,743
    
    
    $
    86,874
    
    
    $
    92,693
    
    
    $
    45,420
    
    
    $
    44,718Operating (loss) income
    
    
    (63,314
    )
    
    
    7,506
    
    
    
    2,401
    
    
    
    122
    
    
    
    (1,544
    )
    
    
    (5,174
    )Loss from continuing operations
    
    
    (88,316
    )
    
    
    (58,295
    )
    
    
    (94,915
    )
    
    
    (50,158
    )
    
    
    (18,875
    )
    
    
    (12,947
    )Net loss
    
    
    (88,280
    )
    
    
    (61,567
    )
    
    
    (93,920
    )
    
    
    (50,391
    )
    
    
    (15,814
    )
    
    
    (23,878
    )Net loss available to common
shareholders
    
    
    (8,481
    )
    
    
    (82,336
    )
    
    
    (68,018
    )
    
    
    (353
    )
    
    
    (181
    )
    
    
    (24,071
    )Basic and diluted loss
attributable to common
shareholders per common share:Loss from continuing operations
    
    $
    (35.86
    )
    
    $
    (348.05
    )
    
    $
    (287.66
    )
    
    $
    (1.48
    )
    
    $
    (0.88
    )
    
    $
    (0.61
    )Net loss attributable to common
shareholders per common share
 basic and diluted
    
    
    (35.86
    )
    
    
    (348.17
    )
    
    
    (287.62
    )
    
    
    (1.49
    )
    
    
    (0.76
    )
    
    
    (1.02
    )Weighted average common shares
outstanding  basic and diluted
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
    
    
    
    23,658,579Dividends paid per common share
    
    
    
    
    
    
    0.67353
    
    
    
    
    
    
    
    2.8438
    
    
    
    1.1225
    
    
    
    Dividends paid per preferred share
    
    
    0.5625
    
    
    
    2.25
    
    
    
    2.8125
    
    
    
    1.6875
    
    
    
    4.50
    
    
    
    1.125Cash Flow and Operating DataCash flow provided by (used in):Operating activities
    
    $
    3,906
    
    
    $
    1,763
    
    
    $
    7,301
    
    
    $
    638
    
    
    $
    1,236
    
    
    $
    (6,659
    )Investing activities
    
    
    (8,008
    )
    
    
    79,341
    
    
    
    (135,867
    )
    
    
    70,603
    
    
    
    (60,044
    )
    
    
    2,258Financing activities
    
    
    559
    
    
    
    (103,578
    )
    
    
    106,348
    
    
    
    (28,739
    )
    
    
    6,773
    
    
    
    2,314Office Properties:Square footage
    
    
    3,282,616
    
    
    
    3,476,304
    
    
    
    3,800,567
    
    
    
    3,865,828
    
    
    
    3,772,482
    
    
    
    4,636,918Occupancy (%)
    
    
    79.6
    
    
    
    78.1
    
    
    
    74.1
    
    
    
    79.0
    
    
    
    83.7
    
    
    
    82.8Industrial Properties:Square footage
    
    
    
    
    
    
    
    
    
    
    120,004
    
    
    
    120,004
    
    
    
    120,004
    
    
    
    120,004Occupancy (%)
    
    
    
    
    
    
    
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Unconsolidated Joint Venture
Properties:Square footage
    
    
    101,066
    
    
    
    101,066
    
    
    
    1,060,264
    
    
    
    1,060,725
    
    
    
    2,554,866
    
    
    
    2,833,068Occupancy (%)
    
    
    54.7
    
    
    
    54.7
    
    
    
    83.7
    
    
    
    76.4
    
    
    
    77.6
    
    
    
    80.9
  31




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ITEM 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS Overview
        Portfolio OccupancyDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,
    
    
    December 31,2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008Portfolio Total
    
    
    79.6
    %
    
    
    81.2
    %
    
    
    79.8
    %
    
    
    78.5
    %
    
    
    78.1
    %Unconsolidated
Joint Venture
Property
    
    
    54.7
    %
    
    
    54.7
    %
    
    
    54.7
    %
    
    
    54.7
    %
    
    
    54.7
    %
  32




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Key Performance Indicators
    33




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Results of Operations
 Comparison of the year ended December 31, 2009 to the year ended December 31, 2008
  (Dollars in thousands)
    
    2009
    
    
    2008
    
    
    $ ChangeProperty revenues
    
    $
    76,934
    
    
    $
    81,580
    
    
    $
    (4,646
    )Services Company revenues
    
    
    981
    
    
    
    1,163
    
    
    
    (182
    )Total revenues
    
    
    77,915
    
    
    
    82,743
    
    
    
    (4,828
    )Property operating expenses
    
    
    41,524
    
    
    
    42,982
    
    
    
    (1,458
    )Depreciation and amortization
    
    
    27,619
    
    
    
    23,898
    
    
    
    3,721General and administrative
    
    
    6,211
    
    
    
    6,873
    
    
    
    (662
    )Services Company operations
    
    
    1,063
    
    
    
    1,484
    
    
    
    (421
    )Provision for asset impairment
    
    
    63,013
    
    
    
    
    
    
    
    63,013Loss on tax indemnification
    
    
    1,799
    
    
    
    
    
    
    
    1,799Total expenses
    
    
    141,229
    
    
    
    75,237
    
    
    
    65,992Operating (loss) income
    
    
    (63,314
    )
    
    
    7,506
    
    
    
    (70,820
    )Interest and other income
    
    
    4,948
    
    
    
    1,394
    
    
    
    3,554Income (loss) from investments in unconsolidated joint
ventures
    
    
    84
    
    
    
    (60,343
    )
    
    
    60,427Provision for asset impairment from unconsolidated joint
ventures
    
    
    
    
    
    
    (5,633
    )
    
    
    5,633Interest:Expense
    
    
    (25,790
    )
    
    
    (32,098
    )
    
    
    6,308Amortization of deferred financing costs
    
    
    (4,244
    )
    
    
    (2,244
    )
    
    
    (2,000
    )Recovery of distributions and losses to noncontrolling
interest in excess of basis
    
    
    
    
    
    
    14,222
    
    
    
    (14,222
    )Distributions and losses to noncontrolling interest in
excess of basis
    
    
    
    
    
    
    (20,293
    )
    
    
    20,293Gain on sales of real estate and joint venture interest
    
    
    
    
    
    
    39,194
    
    
    
    (39,194
    )Loss from continuing operations
    
    
    (88,316
    )
    
    
    (58,295
    )
    
    
    (30,021
    )Discontinued operations
    
    
    36
    
    
    
    (3,272
    )
    
    
    3,308Net loss
    
    $
    (88,280
    )
    
    $
    (61,567
    )
    
    $
    (26,713
    )
 Property Revenues.
 Property Operating Expenses.
  34




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##### Table of Contents



Depreciation and Amortization.
 General and Administrative.
 Provision for Asset Impairment.
   Loss on Tax Imdemnification.
 Interest and Other Income.
 Income (loss) from Investments in Unconsolidated Joint Ventures.
 Provision for Asset Impairment from Unconsolidated Joint Ventures.
  35




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##### Table of Contents



Interest Expense.
 Amortization of Deferred Financing Costs.
 Recovery of Distributions and Losses to Noncontrolling Interest in Excess of Basis.
 Distributions and Losses to Noncontrolling Interest in Excess of Basis.
 Gain on Sales of Real Estate and Joint Venture Interests.
 Discontinued Operations
  36




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##### Table of Contents



Results of Operations
 Comparison of the year ended December 31, 2008 to the year ended December 31, 2007
  (Dollars in thousands)
    
    2008
    
    
    2007
    
    
    $ ChangeProperty revenues
    
    $
    81,580
    
    
    $
    83,515
    
    
    $
    (1,935
    )Services Company revenues
    
    
    1,163
    
    
    
    3,359
    
    
    
    (2,196
    )Total revenues
    
    
    82,743
    
    
    
    86,874
    
    
    
    (4,131
    )Property operating expenses
    
    
    42,982
    
    
    
    45,225
    
    
    
    (2,243
    )Depreciation and amortization
    
    
    23,898
    
    
    
    30,203
    
    
    
    (6,305
    )General and administrative
    
    
    6,873
    
    
    
    6,210
    
    
    
    663Services Company operations
    
    
    1,484
    
    
    
    2,835
    
    
    
    (1,351
    )Total expenses
    
    
    75,237
    
    
    
    84,473
    
    
    
    (9,236
    )Operating (loss) income
    
    
    7,506
    
    
    
    2,401
    
    
    
    5,105Interest and other income
    
    
    1,394
    
    
    
    2,928
    
    
    
    (1,534
    )Loss from investments in unconsolidated joint ventures
    
    
    (60,343
    )
    
    
    (49,687
    )
    
    
    (10,656
    )Provision for asset impairment from unconsolidated joint
ventures
    
    
    (5,633
    )
    
    
    
    
    
    
    (5,633
    )Interest:Expense
    
    
    (32,098
    )
    
    
    (35,425
    )
    
    
    3,327Amortization of deferred financing costs
    
    
    (2,244
    )
    
    
    (910
    )
    
    
    (1,334
    )Recovery of distribution and losses to noncontrolling
interest in excess of basis
    
    
    14,222
    
    
    
    
    
    
    
    14,222Distributions and losses to noncontrolling interest in
excess of basis
    
    
    (20,293
    )
    
    
    (14,222
    )
    
    
    (6,071
    )Gain on sales of real estate and joint venture interests
    
    
    39,194
    
    
    
    
    
    
    
    39,194Loss from continuing operations
    
    
    (58,295
    )
    
    
    (94,915
    )
    
    
    36,620Discontinued operations
    
    
    (3,272
    )
    
    
    995
    
    
    
    (4,267
    )Net income (loss)
    
    $
    (61,567
    )
    
    $
    (93,920
    )
    
    $
    32,353
 Property Revenues.
 Services Company Revenues
  37




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##### Table of Contents



Property Operating Expenses.
 Depreciation and Amortization.
 General and Administrative.
 Services Company Operations.
 Loss From Investments in Unconsolidated Joint Ventures.
 Provision for Asset Impairment from Unconsolidated Joint Ventures.
 Interest and Other Income.
 Interest Expense.
  38




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##### Table of Contents



Amortization of Deferred Financing Costs
 Recovery of Distributions and Losses to Noncontrolling Interest in Excess of Basis.
 Distributions and Losses to Noncontrolling Interest in Excess of Basis.
 Gain on Sales of Real Estate and Joint Venture Interests.
 Discontinued Operations.
  39




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##### Table of Contents



Liquidity and Capital Resources
 Recent Developments .
 Dividends.
   180 North LaSalle Street Sale.
    40




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##### Table of Contents



7100 Madison Avenue Sale.
 180 North LaSalle Street Sale in 2010.
   Continental Towers Loan Default.
     41




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##### Table of Contents



Liquidity
      42




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##### Table of Contents



Payments Due by Period(dollars in thousands)2011/
    
    
    2013/
    
    
    2015 andContractual Obligations (A)
    
    Total
    
    
    2010
    
    
    2012
    
    
    2014
    
    
    ThereafterMortgage notes payable (B)
    
    $
    341,673
    
    
    $
    127,725
    
    
    $
    154,223
    
    
    $
    59,725
    
    
    $
    Interest expense on mortgage notes
payable
    
    
    73,074
    
    
    
    20,611
    
    
    
    24,458
    
    
    
    14,883
    
    
    
    13,122Operating lease obligations
    
    
    2,092
    
    
    
    245
    
    
    
    450
    
    
    
    441
    
    
    
    956Tenant improvement
allowances (C)
    
    
    744
    
    
    
    744
    
    
    
    
    
    
    
    
    
    
    
    Liabilities for leases
assumed and 
lease reimbursement
obligations (D)
    
    
    25,795
    
    
    
    10,921
    
    
    
    14,874
    
    
    
    
    
    
    
    Total contractual cash
obligations
    
    $
    443,378
    
    
    $
    160,246
    
    
    $
    194,005
    
    
    $
    75,049
    
    
    $
    14,078
 (A)
    
    We anticipate funding these obligations from operations, cash on hand, escrowed funds,
proceeds of equity, and debt or asset sale(s) transaction(s).(B)
    
    These totals represent the face value of our mortgage notes payable. The 2010 obligations
include $115.0 million due on two loans relating to our Continental Towers property which
loans were in default subsequent to December 31, 2009. The Lender accelerated the debt
maturity to be due immediately on March 5, 2010. The 2011/2012 obligations include: $88.0
million due on our 330 N. Wabash Avenue property in 2011, for which we have two one-year
extension options, and $60.0 million due on our 180 N. LaSalle Street property.On January 14, 2010, we received a notice of maturity date default from the special
servicer of the non-recourse mortgage note on our Brush Hill property. The loan matured on
January 1, 2010 and was not paid off. This loan is non-recourse,
subject to customary non-recourse carve-outs. We are currently in the process of renegotiating the
terms of a
loan extension with the special servicer and the lender. Since the Brush Hill loan extension
has not been finalized the principal amount of this mortgage note payable, approximately $7.47
million, is included as a 2010 obligation.  43




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##### Table of Contents



(C)
    
    We have escrows of $0.5 million that may be utilized to fund these obligations.(D)
    
    These obligations would be offset by any receipts from subleasing of the related space. We
currently have executed subleases that we estimate will provide subleasing receipts of
$22.9 million consisting of base rent and the pro-rata share of operating expenses and real
estate taxes. In addition, we have escrowed reserves totaling $4.3 million to fund a portion
of this contractual amount at December 31, 2009. Amount of Commitment Expiration Per Period(dollars in thousands)Other Commercial
    
    Total
    
    
    
    
    
    
    2011/
    
    
    2013/
    
    
    2015 andCommitments
    
    Committed
    
    
    2010
    
    
    2012
    
    
    2014
    
    
    ThereafterEnvironmental
remediation (A)
    
    $
    9,676
    
    
    $
    9,205
    
    
    $
    174
    
    
    $
    31
    
    
    $
    266Series B Shares (B)
    
    
    9,000
    
    
    
    (B
    )
    
    
    (B
    )
    
    
    (B
    )
    
    
    (B
    )Total commercial
commitments
    
    $
    18,676
    
    
    $
    9,205
    
    
    $
    174
    
    
    $
    31
    
    
    $
    266
 (A)
    
    This represents a liability for asbestos abatement at our 330 N. Wabash Avenue property. See
Note 14  Commitments and Contingencies  Environmental to our consolidated financial
statements included in this report for further information.(B)
    
    Dividends are cumulative and payable at a 9.0% annual rate each quarter that our
Series B Shares remain outstanding. On January 7, 2009, our Board declared and set apart for
payment a quarterly dividend on our Series B Shares of $0.5625 per share for the fourth
quarter of 2008 dividend period. The quarterly dividend had a record date of January 19, 2009
and was paid on January 30, 2009. Our Board decided not to declare any quarterly dividends
for 2009. The total arrearage in payment of dividends on the Series B Shares is $9.0 million
for the period through December 31, 2009, and has subsequently increased to $11.25 million
through March 31, 2010.With respect to the payment of the dividends referred to above, there can be no assurance as
to the timing and amounts of any future dividends. Management and our Board review the
Companys cash position, the status of potential capital events, market conditions, debt
levels and the Companys requirements for cash reserves each quarter prior to making any
decision with respect to paying dividends.The holders of our Series B Shares have the right to elect two additional members to our
Board if six consecutive quarterly dividends on our Series B Shares are not made. The term
of any trustees elected by the Series B shareholders will expire whenever all dividends in
arrears on the Series B Shares have been paid and current dividends declared and set apart
for payment. 
  44




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##### Table of Contents



Tenant Concentration.
 GrossTenant
    
    
    % Of Our Total
    
    
    LeaseTenant
    
    Revenue
    
    
    Revenue
    
    
    Expiration(dollars in thousands)Jenner & Block (1)
    
    $
    12,739
    
    
    
    16.3
    %
    
    April 2010Accenture
    
    
    5,337
    
    
    
    6.9
    
    
    July 2015Fifth Third Holdings, LLC
    
    
    3,124
    
    
    
    4.0
    
    
    March 2012Aon Consulting, Inc. (2)
    
    
    2,833
    
    
    
    3.6
    
    
    December 2009Komatsu America Corp.
    
    
    2,584
    
    
    
    3.4
    
    
    July 2021$
    26,617
    
    
    
    34.2
    %
 (1)
    
    We have been informed that this tenant will not be renewing their lease upon expiration
and has vacated their space.(2)
    
    This tenant vacated its premises upon lease expiration.  
    
    the nature of the financial difficulties;
 
    
    our ability to obtain control of the space for re-leasing;
 
    
    market conditions;
 
    
    the length of time it would require for us to re-lease the tenants space; and
 
    
    whether the tenants rent was above or below market.
 Property Dispositions.
  Preferred Shares .
    45




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##### Table of Contents



Indebtedness .
 Debt Activity
  Capital Improvements
 Off-Balance Sheet Arrangements
   46




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##### Table of Contents



Historical Cash Flows
 Year ended December 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change(dollars in thousands)Net cash provided by operating activities
    
    $
    3,906
    
    
    $
    1,763
    
    
    $
    2,143
    
    
    
    121.6
    %Net cash (used in) provided by investing
activities
    
    $
    (8,008
    )
    
    $
    79,341
    
    
    $
    (87,349
    )
    
    
    (110.1
    )%Net cash provided by (used in) financing
activities
    
    $
    559
    
    
    $
    (103,578
    )
    
    $
    104,137
    
    
    
    100.5
    %
 Cash Flows from Operating Activities.
 Cash Flows from Investing Activities.
 Cash Flows from Financing Activities.
  47




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##### Table of Contents



Year ended December 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(dollars in thousands)Net cash provided by operating activities
    
    $
    1,763
    
    
    $
    7,301
    
    
    $
    (5,538
    )
    
    
    (75.9
    )%Net cash provided by (used in) investing
activities
    
    $
    79,341
    
    
    $
    (135,867
    )
    
    $
    215,208
    
    
    
    158.4
    %Net cash (used in) provided by financing
activities
    
    $
    (103,578
    )
    
    $
    106,348
    
    
    $
    (209,926
    )
    
    
    (197.4
    )%
 Cash Flows from Operating Activities.
 Cash Flows from Investing Activities.
 Cash Flows from Financing Activities.
  48




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##### Table of Contents



Critical Accounting Policies
 General
  Consolidation
  49




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##### Table of Contents



Tenant Reimbursements
 Accounts Receivable and Allowance for Doubtful Accounts .
 Assumed Lease Liabilities .
 Depreciation and Amortization
 Impairment of Long-Lived Assets .
 Property Held for Sale.
  50




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##### Table of Contents



Inflation
   
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate SensitivityPrincipal (Notional) Amount by Expected MaturityAverage Interest Rate2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    TotalLiabilitiesMortgage notes payable (1):Fixed rate amount  Face Value
    
    $
    127.3
    
    
    $
    153.4
    
    
    $
    
    
    
    $
    50.0
    
    
    $
    330.7Weighted-average
interest rate 
Face Value
    
    
    6.1
    %
    
    
    5.8
    %
    
    
    
    
    
    
    8.0
    %
    
    
    Fixed rate amount  Carrying Value
    
    $
    127.4
    
    
    $
    153.4
    
    
    $
    
    
    
    $
    50.0
    
    
    $
    330.8Weighted-average interest rate 
Carrying Value
    
    
    6.1
    %
    
    
    5.8
    %
    
    
    
    
    
    
    8.0
    %
    
    
    Variable rate amount
    
    $
    0.4
    
    
    $
    0.4
    
    
    $
    0.4
    
    
    $
    9.8
    
    
    $
    11.0Weighted-average interest rate
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    
 (1)
    
    Based upon the rates in effect at December 31, 2009, the weighted-average interest rates on
our mortgage notes payable at December 31, 2009 was 6.2%. If interest rates on our variable
rate debt increased by one percentage point, our annual interest incurred would increase by
$0.1 million. 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE   51




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##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES
      Internal Control -
Integrated Framework.
     
 ITEM 9B. OTHER INFORMATION
   52




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 Trustees
  Principal
    
    Year Term of
    
    Served as aOccupation and
    
    Office Will
    
    TrusteeName
    
    Age
    
    Positions Held
    
    Expire
    
    SinceDavid Lichtenstein
    
    49
    
    Chairman of the Board
    
    2010
    
    2005Jeffrey A. Patterson
    
    50
    
    President and Chief Executive Officer, Trustee
    
    2010
    
    2005Peyton Owen, Jr.
    
    52
    
    Trustee
    
    2010
    
    2007John M. Sabin
    
    55
    
    Independent Trustee
    
    2010
    
    2005Shawn R. Tominus
    
    51
    
    Independent Trustee
    
    2010
    
    2005Bruno de Vinck
    
    64
    
    Trustee
    
    2010
    
    2005George R. Whittemore
    
    60
    
    Independent Trustee
    
    2010
    
    2005
 David Lichtenstein
 Jeffrey A. Patterson
  53




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##### Table of Contents



Peyton (Chip) Owen, Jr.
 John M. Sabin
 Shawn R. Tominus
 Bruno de Vinck
  54




---



##### Table of Contents



George R. Whittemore
 Certain Proceedings Regarding Trustees
  Executive Officers
  Name
    
    Age
    
    PositionDavid Lichtenstein
    
    49
    
    Chairman of the BoardJeffrey A. Patterson
    
    50
    
    President and Chief Executive Officer, TrusteeJames F. Hoffman
    
    47
    
    Senior Executive Vice PresidentGeneral Counsel and SecretarySteven R. Baron
    
    61
    
    Executive Vice PresidentLeasingPaul G. Del Vecchio
    
    45
    
    Executive Vice PresidentCapital MarketsVictoria A. Cory
    
    45
    
    Senior Vice PresidentLoan Administration, Real Estate Tax and Due DiligenceAnita T. Pallardy
    
    51
    
    Senior Vice PresidentLeasing
 David Lichtenstein
  55




---



##### Table of Contents



Jeffrey A. Patterson
 James F. Hoffman
 Steven R. Baron
  56




---



##### Table of Contents



Paul G. Del Vecchio
 Victoria A. Cory
 Anita T. Pallardy.
  57




---



##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
   Code of Ethics
 www.pgrt.com
 Information Regarding Audit Committee
 www.pgrt.com
 Information Regarding Compensation Committee (or equivalent)
    58




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ITEM 11. EXECUTIVE COMPENSATION
 Compensation Discussion and Analysis
        59




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Base Salaries
 Annual Cash Bonuses
 Summary Compensation Table
  All OtherOption
    
    
    Compen-Salary
    
    
    Bonus
    
    
    Awards
    
    
    sationName and Principal Position
    
    Year
    
    
    ($) (1)
    
    
    ($) (1)(2)
    
    

($) (3)
    
    
    ($) (4)
    
    
    Total ($)Jeffrey A. Patterson
    
    
    2009
    
    
    
    463,710
    
    
    
    0
    
    
    
    0
    
    
    
    5,500
    
    
    
    469,210President and Chief
    
    
    2008
    
    
    
    449,657
    
    
    
    250,000
    
    
    
    106,000
    
    
    
    5,500
    
    
    
    811,157Executive OfficerJames F. Hoffman
    
    
    2009
    
    
    
    260,075
    
    
    
    0
    
    
    
    0
    
    
    
    5,500
    
    
    
    265,575Senior Executive Vice
    
    
    2008
    
    
    
    252,083
    
    
    
    110,000
    
    
    
    0
    
    
    
    5,500
    
    
    
    367,583PresidentGeneral
Counsel and SecretaryPaul G. Del Vecchio
    
    
    2009
    
    
    
    206,000
    
    
    
    0
    
    
    
    0
    
    
    
    5,500
    
    
    
    211,500Executive Vice President
    
    
    2008
    
    
    
    199,167
    
    
    
    60,000
    
    
    
    0
    
    
    
    5,500
    
    
    
    264,667Capital MarketsSteven R. Baron
    
    
    2009
    
    
    
    170,000
    
    
    
    30,383
    
    
    
    0
    
    
    
    4,521
    
    
    
    204,904Executive Vice
    
    
    2008
    
    
    
    170,000
    
    
    
    178,175
    
    
    
    0
    
    
    
    5,500
    
    
    
    353,675PresidentLeasingAnita T. Pallardy
    
    
    2009
    
    
    
    132,500
    
    
    
    53,080
    
    
    
    0
    
    
    
    3,211
    
    
    
    188,791Senior Vice President
    
    
    2008
    
    
    
    132,500
    
    
    
    188,045
    
    
    
    0
    
    
    
    3,312
    
    
    
    323,857Leasing
 
 (1)
    
    Amounts shown include cash and non-cash compensation or bonuses, as applicable, as reported
in the year in which the service was performed, even if such compensation or bonuses, as
applicable, were paid or vested in a subsequent year.(2)
    
    Bonus amounts for 2008 include cash bonuses paid in the ordinary course in early 2009 for
services performed in 2008. Further, Ms. Pallardy and Mr. Barons bonuses consisted of
leasing bonuses received during the years indicated above.  60




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##### Table of Contents



(3)
    
    Consisting of grants of options to acquire either directly or through equity interests in
Prime Office a 3.5% ownership interest in the Operating Partnership and us on substantially
the same economic terms as Prime Offices other initial equity investors. The option award in
the 2008 row expired on December 31, 2008 without being exercised and the option award in the
2009 row expired on December 31, 2009 without being exercised. No new option agreement has
been issued in 2010.(4)
    
    Includes employer matching to the Operating Partnerships 401(k) Plan. Employment Agreements
       61




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##### Table of Contents



62




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##### Table of Contents



Option Grants, Exercises and Holdings
   63




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##### Table of Contents



Compensation of Trustees
  FeesEarned orPaid inCash ($)Name
    
    (1)David Lichtenstein
    
    $
    John M. Sabin
    
    
    55,500Peyton Owen, Jr.
    
    
    31,000Shawn R. Tominus
    
    
    45,500Bruno de Vinck
    
    
    31,000George R. Whittemore
    
    
    50,500
 (1)
    
    We pay our trustees who are not our employees or affiliated with us a fee for their
services as trustees. Such persons receive annual compensation of $26,000 plus a fee of
$1,000 for attendance at each meeting of the Board and $500 for attendance at each
committee meeting. Members of the audit committee receive an additional $10,000 per year
(which is currently being paid to Messrs. Whittemore, Sabin and Tominus), plus an
additional $5,000 per year for the chairman of the audit committee (Mr. Whittemore). In
addition, Mr. Sabin received a $10,000 fee for serving on a special committee of the
Board. Compensation Committee Interlocks and Insider Participation
  Compensation Report
    64




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##### Table of Contents



Our Compensation Policies and Practices as they relate to Our Risk Management
   65




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##### Table of Contents



ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS. Principal Security Holders Of The Company
   Number of Common Units ofPrime GroupName and Address of
    
    Realty L.P. Beneficially
    
    
    Percent of All Common UnitsBeneficial Owner
    
    Owned(1)
    
    
    of Prime Group Realty, L.P.David Lichtenstein (2)
    
    
    26,724,872
    
    
    
    100
    %Jeffrey A. Patterson
    
    
    
    
    
    
    James F. Hoffman
    
    
    
    
    
    
    Steven R. Baron
    
    
    
    
    
    
    Paul G. Del Vecchio
    
    
    
    
    
    
    Anita T. Pallardy
    
    
    
    
    
    
    Peyton Owen, Jr.
    
    
    
    
    
    
    John M. Sabin
    
    
    
    
    
    
    Shawn R. Tominus
    
    
    
    
    
    
    Bruno de Vinck
    
    
    
    
    
    
    George R. Whittemore
    
    
    
    
    
    
    Our trustees and
executive officers as
a group ([11]
persons)
    
    
    26,724,872
    
    
    
    100
 (1)
    
    The ownership of common units of our Operating Partnership presented in this table is derived
from the transfer records maintained by the Operating Partnership based on information
provided by the limited partners.(2)
    
    Mr. Lichtenstein controls (i) Prime Office which owns 99.1% of the common units of limited
partner interest in the Operating Partnership and 100% of our common shares and (ii) PGRT
currently owns 0.9% of the outstanding common units of limited partner interest in the
Operating Partnership.Except for the dispute described herein relating to a terminated option to acquire a 1.0%
ownership interest in the Operating Partnership and us previously held by Ms. Fendley, none of
our trustees or executive officers own any shares of any other class of our equity securities
or equity securities of any of our parent or our subsidiaries.  66




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##### Table of Contents



Equity Compensation Plan Information
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Transactions with Related Persons
 BHAC Capital IV, L.L.C.
 Review, Approval or Ratification of Transaction with Related Persons
  Director Independence
   67




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 Audit And Non-Audit Fees
  Ernst & Young LLP
    
    
    Grant Thornton LLP
    
    
    Total2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Audit Fees
    
    $
    363,000
    
    
    $
    
    
    
    $
    35,310
    
    
    $
    412,028
    
    
    $
    398,310
    
    
    $
    412,028Audit-Related Fees
    
    
    37,800
    
    
    
    
    
    
    
    44,273
    
    
    
    273,934
    
    
    
    82,073
    
    
    
    273,934Tax Fees
    
    
    9,933
    
    
    
    108,904
    
    
    
    91,602
    
    
    
    232,840
    
    
    
    101,535
    
    
    
    341,744$
    410,733
    
    
    $
    108,904
    
    
    $
    171,185
    
    
    $
    918,802
    
    
    $
    581,918
    
    
    $
    1,027,706
    68




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##### Table of Contents



PRIME GROUP REALTY TRUST
 
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Reports of Independent Registered Public Accounting Firms
    
    F-2Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    F-4Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    F-5Consolidated Statements of Changes in Equity for the years ended December 31, 2009, 2008 and 2007
    
    F-6Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    F-7Notes to Consolidated Financial Statements
    
    F-9Financial Statement ScheduleSchedule III  Real Estate and Accumulated Depreciation as of December 31, 2009
    
    F-36
   69




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##### Table of Contents



(3) Exhibits
 ExhibitNumber
    
    Description2.1
    
    
    Purchase Agreement dated as of August 2, 2004 by and between
CenterPoint Properties Trust and Prime Group Realty, L.P., as
filed as exhibit 99.2 to our Current Report on Form 8-K (filed
August 6, 2004, File No. 001-13589) and incorporated herein by
reference.2.2
    
    
    First Amendment to Purchase Agreement dated as of October 8, 2004
by and between Prime Group Realty, L.P. and CenterPoint Properties
Trust, as filed as exhibit 99.3 to our Current Report on Form 8-K
(filed October 15, 2004, File No. 001-13589) and incorporated
herein by reference.2.3
    
    
    Agreement and Plan of Merger dated as of February 17, 2005 by and
among Prime Office Company, LLC, Prime Office Merger Sub LLC,
Prime Office Merger Sub I, LLC, Prime Group Realty Trust and Prime
Group Realty, L.P., as filed as exhibit 10.1 to our Current Report
on Form 8-K (filed February 17, 2005, File No. 001-13589) and
incorporated herein by reference.3.1
    
    
    Articles of Amendment and Restatement of Declaration of Trust of
Prime Group Realty Trust, as amended by Articles Supplementary to
the Articles of Amendment and Restatement of Declaration of Trust
and the First Amendment to Amended and Restated Declaration of
Trust as filed as exhibit 3.1 to our Annual Report on Form 10-K
for the year ended December 31, 2005 and incorporated herein by
reference.3.2
    
    
    Amended and Restated Bylaws of Prime Group Realty Trust, as
amended by the First Amendment to Amended and Restated Bylaws and
the Second Amendment to Amended and Restated Bylaws as filed as
exhibit 3.2 to our Annual Report on Form 10-K for the year ended
December 31, 2005 and incorporated herein by reference.3.3
    
    
    Second Amended and Restated Agreement of Limited Partnership of
Prime Group Realty, L.P. dated as of July 1, 2005, as filed as
exhibit 3.9 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2005 and incorporated herein by reference.10.1
    
    
    Environmental Escrow Agreement dated as of October 8, 2004 by and
among Prime Group Realty, L.P., CenterPoint Properties Trust and
Chicago Title and Trust Company, as filed as exhibit 99.4 to our
Current Report on Form 8-K (filed October 15, 2004, File No.
001-13589) and incorporated herein by reference.10.2
    
    
    Escrow Agreement dated as of October 8, 2004 by and among
CenterPoint Properties Trust and Prime Group Realty, L.P. and
Chicago Title and Trust Company, as filed as exhibit 99.5 to our
Current Report on Form 8-K(filed October 15, 2004, File No.
001-13589) and incorporated herein by reference.10.3
    
    
    Settlement and Release dated as of May 18, 2005 by and among
Prime/Mansur Investment Partners, LLC, Cumberland Blues Merger
Sub, LLC, Cumberland Blues, LLC, The Prime Group, Inc. Prime
Partners, LLC, Prime Group Realty Trust, and Prime Group Realty,
L.P., as filed as exhibit 10.6 to our Quarterly Report on Form
10-Q for the quarter ended June 30, 2005 and incorporated herein
by reference.
  70




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ExhibitNumber
    
    Description10.4
    
    
    Thistle Interest Option
Agreement dated as of May
18, 2005 by and between
Phoenix Office, L.L.C. and
Prime/Mansur Investment
Partners, LLC, as filed as
exhibit 10.8 to our
Quarterly Report on Form
10-Q for the quarter ended
June 30, 2005 and
incorporated herein by
reference.10.5
    *
    
    Amended and Restated
Employment Agreement dated
as of May 31, 2005 by and
between Prime Office
Company, LLC and Jeffrey
A. Patterson, as filed as
exhibit 10.1 to our
Quarterly Report on Form
10-Q for the quarter ended
September 30, 2005 and
incorporated herein by
reference.10.6
    *
    
    Employment Agreement dated
as of May 31, 2005 by and
between Prime Office
Company, LLC and James F.
Hoffman, as filed as
exhibit 10.2 to our
Quarterly Report on Form
10-Q for the quarter ended
September 30, 2005, and
incorporated herein by
reference.10.7
    
    
    Guarantee of Interest and
Recourse Obligations dated
as of December 30, 2005
between Prime Group
Realty, L.P. and IPC
Investments Holdings
Canada, Inc., as filed as
exhibit 10.5 to our
Current Report on Form 8-K
(filed January 11, 2006,
File No. 001-13589) and
incorporated herein by
reference.10.8
    
    
    Amended and Restated Tax
Indemnity Agreement dated
as of January 10, 2006 by
and among Prime Group
Realty, L.P., Roland E.
Casati, Richard A. Heise,
CTA General Partner, LLC
and Continental Towers,
L.L.C., as filed as
exhibit 10.5 to our
Current Report on Form 8-K
(filed January 18, 2006,
File No. 001-13589) and
incorporated herein by
reference.10.9
    
    
    Assumption Agreement dated
as of January 10, 2006
among Prime Group Realty,
L.P. Chicago Title Land
Trust Company, as trustee
under Land Trust Numbers
40935 and 5602,
Continental Towers
Associates-I, L.P.,
Continental Towers,
L.L.C., Richard A. Heise
and Roland E. Casati, as
filed as exhibit 10.7 to
our Current Report on Form
8-K (filed
January 18, 2006, File No.
001-13589) and
incorporated herein by
reference.10.10
    
    
    Promissory Note dated as
of November 21, 2006 from
Continental Towers
Associates III, LLC, and
Continental Towers, L.L.C,
jointly and severally,
payable to the order of
CWCapital LLC in the
original principal amount
of $115.0 million., as
filed as exhibit 10.1 to
our Current Report on Form
8-K (filed November 28,
2006, File No. 001-13589)
and incorporated herein by
reference.10.11
    
    
    Mortgage, Security
Agreement and Fixture
Financing Statement dated
as of November 21, 2006 by
Continental Towers
Associates III, LLC and
Continental Towers,
L.L.C., jointly and
severally, in favor of
CWCapital LLC., as filed
as exhibit 10.2 to our
Current Report on Form 8-K
(filed November 28, 2006,
File No. 001-13589) and
incorporated herein by
reference.10.12
    
    
    Guaranty dated as of
November 21, 2006 by Prime
Group Realty, L.P. for the
benefit of CWCapital LLC.,
as filed as exhibit 10.3
to our Current Report on
Form 8-K (filed November
28, 2006, File No.
001-13589) and
incorporated herein by
reference.
  71




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ExhibitNumber
    
    Description10.13
    
    
    Subordination and Standstill Agreement dated as of November 21,
2006 by PGRT Equity LLC for the benefit of CWCapital LLC., as
filed as exhibit 10.4 to our Current Report on Form 8-K (filed
November 28, 2006, File No. 001-13589) and incorporated herein by
reference.10.14
    
    
    First Amendment to Amended and Restated Tax Indemnity Agreement
dated as of November 21, 2006 by and among Prime Group Realty,
L.P., Richard A. Heise, CTA General Partner, LLC and Continental
Towers, L.L.C., as filed as exhibit 10.6 to our Current Report on
Form 8-K (filed November 28, 2006, File No. 001-13589) and
incorporated herein by reference.10.15
    
    
    Amended and Restated Promissory Note dated as of November 21, 2006
from Continental Towers, L.L.C. and Continental Towers Associates
III, LLC payable to the order of PGRT Equity, L.L.C., as filed as
exhibit 10.7 to our Current Report on Form 8-K (filed November 28,
2006, File No. 001-13589) and incorporated herein by reference.10.16
    
    
    Second Amended and Restated Loan Agreement dated as of November
21, 2006 by and between PGRT Equity, LLC, and Continental Towers
Associates III, LLC and Continental Towers, L.L.C., as filed as
exhibit 10.8 to our Current Report on Form 8-K (filed November 28,
2006, File No. 001-13589) and incorporated herein by reference.10.17
    
    
    Amended and Restated Mortgage and Security Agreement dated as of
November 21, 2006 by Continental Towers, L.L.C. and Continental
Towers Associates III, LLC, in favor of and for the benefit of
PGRT Equity, L.L.C., as filed as exhibit 10.9 to our Current
Report on Form 8-K (filed November 28, 2006, File No. 001-13589)
and incorporated herein by reference.10.18
    
    
    Indemnification Agreement dated as of November 8, 2006 between
Prime Group Realty, L.P. and 131 South Dearborn LLC as filed as
exhibit 10.59 to our Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference.10.19
    
    
    Reciprocal Easement Agreement dated as of December 29, 2006, by
and between Continental Towers, L.L.C. and Continental Towers
Associates III, LLC as filed as exhibit 10.62 to our Annual Report
on Form 10-K for the year ended December 31, 2006 and incorporated
herein by reference.10.20
    
    
    Management Agreement dated as of December 29, 2006, by and between
Continental Towers, L.L.C. and Prime Group Management, L.L.C. as
filed as exhibit 10.63 to our Annual Report on Form 10-K for the
year ended December 31, 2006 and incorporated herein by reference.10.21
    
    
    Management Agreement dated as of December 29, 2006, by and between
Continental Towers Associates III, LLC and Prime Group Management,
L.L.C. as filed as exhibit 10.64 to our Annual Report on Form 10-K
for the year ended December 31, 2006 and incorporated herein by
reference.
  72




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ExhibitNumber
    
    Description10.22
    
    
    Amended and Restated Promissory Note dated as of December 29,
2006, from Continental Towers Associates III, LLC to Wells Fargo
Bank, N.A., as trustee for the registered holders of Cobalt CMBS
Commercial Mortgage Trust 2006-C1, Commercial Mortgage
Pass-through Certificates, Series 2006-C1 as filed as exhibit
10.65 to our Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference.10.23
    
    
    Amended and Restated Mortgage, Security Agreement and Fixture
Financing Statement dated as of December 29, 2006, from
Continental Towers Associates III, LLC to Wells Fargo Bank, N.A.,
as trustee for the registered holders of Cobalt CMBS Commercial
Mortgage Trust 2006-C1, Commercial Mortgage Pass-through
Certificates, Series 2006-C1, c/o CWCapital LLC as filed as
exhibit 10.66 to our Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference.10.24
    
    
    Amended and Restated Guaranty dated as of December 29, 2006, by
Prime Group Realty, L.P. to Wells Fargo Bank, N.A., as trustee for
the registered holders of Cobalt CMBS Commercial Mortgage Trust
2006-C1, Commercial Mortgage Pass-through Certificates, Series
2006-C1, regarding the loan to Continental Towers Associates III,
LLC as filed as exhibit 10.67 to our Annual Report on Form 10-K
for the year ended December 31, 2006 and incorporated herein by
reference.10.25
    
    
    Amended and Restated Environmental and Hazardous Substance
Indemnification Agreement dated as of December 29, 2006, from
Continental Towers Associates III, LLC to Wells Fargo Bank, N.A.,
as trustee for the registered holders of Cobalt CMBS Commercial
Mortgage Trust 2006-C1, Commercial Mortgage Pass-through
Certificates, Series 2006-C1 as filed as exhibit 10.68 to our
Annual Report on Form 10-K for the year ended December 31, 2006
and incorporated herein by reference.10.26
    
    
    Amended and Restated Promissory Note dated as of December 29,
2006, from Continental Towers, L.L.C. to Wells Fargo Bank, N.A.,
as trustee for the registered holders of Cobalt CMBS Commercial
Mortgage Trust 2006-C1, Commercial Mortgage Pass-through
Certificates, Series 2006-C1 as filed as exhibit 10.69 to our
Annual Report on Form 10-K for the year ended December 31, 2006
and incorporated herein by reference.10.27
    
    
    Amended and Restated Mortgage, Security Agreement and Fixture
Financing Statement dated as of December 29, 2006, from
Continental Towers, L.L.C. to Wells Fargo Bank, N.A., as trustee
for the registered holders of Cobalt CMBS Commercial Mortgage
Trust 2006-C1, Commercial Mortgage-Pass through Certificates,
Series 2006-C1, c/o CWCapital LLC as filed as exhibit 10.70 to our
Annual Report on Form 10-K for the year ended December 31, 2006
and incorporated herein by reference.10.28
    
    
    Amended and Restated Guaranty dated as of December 29, 2006, by
Prime Group Realty, L.P. to Wells Fargo Bank, N.A., as trustee for
the registered holders of Cobalt CMBS Commercial Mortgage Trust
2006-C1, Commercial Mortgage Pass-through Certificates, Series
2006-C1, regarding the loan to Continental Towers, L.L.C as filed
as exhibit 10.71 to our Annual Report on Form 10-K for the year
ended December 31, 2006 and incorporated herein by reference.
  73




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ExhibitNumber
    
    Description10.29
    
    
    Amended and Restated Environmental and Hazardous Substance
Indemnification Agreement dated as of December 29, 2006, from
Continental Towers, L.L.C. to Wells Fargo Bank, N.A., as trustee
for the registered holders of Cobalt CMBS Commercial Mortgage
Trust 2006-C1, Commercial Mortgage Pass-through Certificates,
Series 2006-C1 as filed as exhibit 10.72 to our Annual Report on
Form 10-K for the year ended December 31, 2006 and incorporated
herein by reference.10.30
    
    
    Second Amended and Restated Promissory Note dated as of December
29, 2006, from Continental Towers Associates III, LLC to PGRT
Equity, L.L.C. as filed as exhibit 10.73 to our Annual Report on
Form 10-K for the year ended December 31, 2006 and incorporated
herein by reference.10.31
    
    
    Second Amended and Restated Environmental Indemnification
Agreement dated as of December 29, 2006, from Continental Towers
Associates III, LLC to PGRT Equity, L.L.C. as filed as exhibit
10.74 to our Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference.10.32
    
    
    Third Amended and Restated Loan Agreement dated as of December 29,
2006, between Continental Towers Associates III, LLC and PGRT
Equity, L.L.C. as filed as exhibit 10.75 to our Annual Report on
Form 10-K for the year ended December 31, 2006 and incorporated
herein by reference.10.33
    
    
    Second Amended and Restated Mortgage and Security Agreement dated
as of December 29, 2006, from Continental Towers, L.L.C. to PGRT
Equity, L.L.C. as filed as exhibit 10.76 to our Annual Report on
Form 10-K for the year ended December 31, 2006 and incorporated
herein by reference.10.34
    
    
    Second Amended and Restated Promissory Note dated as of December
29, 2006, from Continental Towers, L.L.C. to PGRT Equity, L.L.C.
as filed as exhibit 10.77 to our Annual Report on Form 10-K for
the year ended December 31, 2006 and incorporated herein by
reference.10.35
    
    
    Third Amended and Restated Loan Agreement dated as of December 29,
2006, by and between Continental Towers, L.L.C. and PGRT Equity,
L.L.C. as filed as exhibit 10.78 to our Annual Report on Form 10-K
for the year ended December 31, 2006 and incorporated herein by
reference.10.36
    
    
    Second Amended and Restated Mortgage and Security Agreement dated
as of December 29, 2006, from Continental Towers Associates III,
LLC to PGRT Equity, L.L.C. as filed as exhibit 10.79 to our Annual
Report on Form 10-K for the year ended December 31, 2006 and
incorporated herein by reference.10.37
    
    
    Second Amended and Restated Environmental Indemnification
Agreement dated as of December 29, 2006, from Continental Towers,
L.L.C. to PGRT Equity, L.L.C. as filed as exhibit 10.80 to our
Annual Report on Form 10-K for the year ended December 31, 2006
and incorporated herein by reference.
  74




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ExhibitNumber
    
    Description10.38
    
    
    Amended and Restated Subordination and Standstill Agreement dated
as of December 29, 2006, by PGRT Equity LLC to Wells Fargo Bank,
N.A., as trustee for the registered holders of Cobalt CMBS
Commercial Mortgage Trust 2006-C1, Commercial Mortgage
Pass-through Certificates, Series 2006-C1, regarding the loan to
Continental Towers, L.L.C. as filed as exhibit 10.81 to our Annual
Report on Form 10-K for the year ended December 31, 2006 and
incorporated herein by reference.10.39
    
    
    Amended and Restated Subordination and Standstill Agreement dated
as of December 29, 2006, by PGRT Equity LLC to Wells Fargo Bank,
N.A., as trustee for the registered holders of Cobalt CMBS
Commercial Mortgage Trust 2006-C1, Commercial Mortgage
Pass-through Certificates, Series 2006-C1, regarding the loan to
Continental Towers Associates III, LLC as filed as exhibit 10.82
to our Annual Report on Form 10-K for the year ended December 31,
2006 and incorporated herein by reference.10.40
    
    
    Promissory Note A, dated as of March 18, 2008, from 330 N. Wabash
Avenue, L.L.C. (330 N. Wabash), payable to the order of ING USA
Annuity and Life Insurance Company, in the original principal
amount of $88.0 million, as filed as exhibit 10.1 to our Current
Report on Form 8-K (filed March 24, 2008, File No. 001-13589) and
incorporated herein by reference.10.41
    
    
    Promissory Note B, dated as of March 18, 2008, from 330 N. Wabash,
payable to the order of General Electric Capital Corporation, in
the original principal amount of $100.0 million, as filed as
exhibit 10.2 to our Current Report on Form 8-K (filed March 24,
2008, File No. 001-13589) and incorporated herein by reference.10.42
    
    
    Loan Agreement (Loan B), dated as of March 18, 2008, among 330 N.
Wabash, the lenders party thereto and General Electric Capital
Corporation, as collateral agent (in such capacity, the Agent),
as filed as exhibit 10.3 to our Current Report on Form 8-K (filed
March 24, 2008, File No. 001-13589) and incorporated herein by
reference.10.43
    
    
    Mortgage, Assignment of Leases, Security Agreement and Fixture
Filing, dated as of March 18, 2008, by 330 N. Wabash in favor of
the Agent, as filed as exhibit 10.4 to our Current Report on Form
8-K (filed March 24, 2008, File No. 001-13589) and incorporated
herein by reference.10.44
    
    
    Leasehold Mortgage, Assignment of Leases, Security Agreement and
Fixture Filing, dated as of March 18, 2008, by 330 N. Wabash in
favor of the Agent, as filed as exhibit 10.5 to our Current Report
on Form 8-K (filed March 24, 2008, File No. 001-13589) and
incorporated herein by reference.10.45
    
    
    Guaranty of Non-Recourse and Environmental Indemnity Obligations,
dated as of March 18, 2008, by Prime Group Realty, L.P. (the
Operating Partnership) in favor of the Agent, as filed as
exhibit 10.6 to our Current Report on Form 8-K (filed March 24,
2008, File No. 001-13589) and incorporated herein by reference.10.46
    
    
    Completion Guaranty, dated as of March 18, 2008, by the Operating
Partnership in favor of the Agent, as filed as exhibit 10.7 to our
Current Report on Form 8-K (filed March 24, 2008, File No.
001-13589) and incorporated herein by reference.
  75




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ExhibitNumber
    
    Description10.47
    *
    
    Form of Letters regarding Retention Program, dated as of June 12,
2008 as filed as exhibit 10.1 to our Quarterly Report on Form
10-Q/A (filed March 27, 2008, File No. 001-13589) and incorporated
herein by reference.10.48
    
    
    Amended and Restated Loan Agreement dated as of June 6, 2008 by
and between PGRT ESH, Inc. and Citicorp USA, Inc. 2008 as filed as
exhibit 10.2 to our Quarterly Report on Form 10-Q/A (filed March
27, 2009, File No. 001-13589) and incorporated herein by
reference.10.49
    
    
    Amended and Restated Guaranty dated as of June 6, 2008, by
David Lichtenstein in favor of Citicorp USA, Inc. 2008 as filed as
exhibit 10.3 to our Quarterly Report on Form 10-Q/A (filed March
27, 2009, File No. 001-13589) and incorporated herein by
reference.10.50
    
    
    Amended and Restated Pledge Agreement dated as of June 6, 2008 by
PGRT ESH, Inc. in favor of Citicorp USA, Inc. 2008 as filed as
exhibit 10.4 to our Quarterly Report on Form 10-Q/A (filed March
27, 2009, File No. 001-13589) and incorporated herein by
reference.10.51
    
    
    Amended and Restated Promissory Note dated as of June 6, 2008 by
PGRT ESH, Inc. to Citicorp USA, Inc. 2008 as filed as exhibit 10.5
to our Quarterly Report on Form 10-Q/A (filed March 27, 2009, File
No. 001-13589) and incorporated herein by reference.10.52
    *
    
    Equity Purchase Agreement dated as of December 31, 2007, by and
between Jeffrey A. Patterson, and Prime Office Company LLC as
filed as exhibit 10.81 to our Annual Report of Form 10-K/A for the
year ended December 31, 2007 (filed March 27, 2009, File No.
001-13589) and incorporated herein by reference.10.53
    
    
    180 N. LaSalle Purchase and Sale Agreement dated as of August 12,
2008 between 180 N. LaSalle II, L.L.C. and Younan Properties, Inc.
as filed as exhibit 10.1 to our Quarterly Report on Form 10-Q
(filed March 27, 2009, File No. 001-13589) and incorporated herein
by reference.10.54
    
    
    First Amendment to Purchase and Sale Agreement dated as of August
29, 2008 between 180 N. LaSalle II, L.L.C. and Younan Properties,
Inc. as filed as exhibit 10.2 to our Quarterly Report on Form 10-Q
(filed March 27, 2009, File No. 001-13589) and incorporated herein
by reference.10.55
    
    
    Second Amendment to Purchase and Sale Agreement dated as of
September 3, 2008 between 180 N. LaSalle II, L.L.C. and Younan
Properties, Inc. as filed as exhibit 10.3 to our Quarterly Report
on Form 10-Q (filed March 27, 2009, File No. 001-13589) and
incorporated herein by reference.10.56
    
    
    Third Amendment to Purchase and Sale Agreement dated as of
September 30, 2008 between 180 N. LaSalle II, L.L.C and Younan
Properties, Inc. as filed as exhibit 10.4 to our Quarterly Report
on Form 10-Q (filed March 27, 2009, File No. 001-13589) and
incorporated herein by reference.
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ExhibitNumber
    
    Description10.57
    
    
    Fourth Amendment to Purchase and Sale Agreement dated as of
October 15, 2008 between 180 N. LaSalle II, L.L.C and YPI 180 N.
LaSalle Owner, LLC as filed as exhibit 10.63 to our Annual Report
on Form 10-K for the year ended December 31, 2008 (filed March 31,
2009, File No. 001-13589) and incorporated herein by reference.10.58
    
    
    First Amendment to Loan Agreement dated as of October 31, 2008
between PGRT ESH, Inc., Lightstone Holdings, LLC, David
Lichtenstein and Citicorp USA, Inc. as filed as exhibit 10.64 to
our Annual Report on Form 10-K for the year ended
December 31, 2008 (filed March 31, 2009, File No. 001-13589) and
incorporated herein by reference.10.59
    
    
    First Amendment to Amended and Restated Guaranty dated as of
October 31, 2008 between David Lichtenstein and Citicorp USA, Inc.
as filed as exhibit 10.65 to our Annual Report on Form 10-K for
the year ended December 31, 2008 (filed March 31, 2009, File No.
001-13589) and incorporated herein by reference.10.60
    
    
    Fifth Amendment to Purchase and Sale Agreement dated as of
November 20, 2008 between 180 N. LaSalle II, L.L.C and YPI 180 N.
LaSalle Owner, LLC. as filed as exhibit 10.66 to our Annual Report
on Form 10-K for the year ended December 31, 2008 (filed March 31,
2009, File No. 001-13589) and incorporated herein by reference.10.61
    
    
    Sixth Amendment to Purchase and Sale Agreement dated as of
December 9, 2008 between 180 N. LaSalle II, L.L.C and YPI 180 N.
LaSalle Owner, LLC. as filed as exhibit 10.67 to our Annual Report
on Form 10-K for the year ended December 31, 2008 (filed March 31,
2009, File No. 001-13589) and incorporated herein by reference.10.62
    
    
    Second Amendment to Loan Agreement dated December 31, 2008 among
PGRT ESH, Inc., Lightstone Holdings LLC, David Lichtenstein and
Citicorp USA, Inc. as filed as exhibit 10.68 to our Annual Report
on Form 10-K for the year ended December 31, 2008 (filed March 31,
2009, File No. 001-13589) and incorporated herein by reference.10.63
    *
    
    Amendment to the Amended and Restated Employment
Agreement dated as of December 31, 2008 by and
between Prime Group Realty Trust, Prime Group
Realty, L.P. and Jeffrey A. Patterson as filed as
exhibit 10.69 to our Annual Report on Form 10-K
for the year ended December 31, 2008 (filed March
31, 2009, File No. 001-13589) and incorporated
herein by reference.10.64
    *
    
    First Amendment to Employment Agreement dated as
of December 31, 2008 by and between Prime Group
Realty Trust, Prime Group Realty, L.P. and James
F. Hoffman as filed as exhibit 10.70 to our Annual
Report on Form 10-K for the year ended
December 31, 2008 (filed March 31, 2009, File No.
001-13589) and incorporated herein by reference.10.65
    *
    
    Equity Purchase Agreement dated as of December 31,
2008, by and between Jeffrey A. Patterson, and
Prime Office Company LLC as filed as exhibit 10.71
to our Annual Report on Form 10-K for the year
ended December 31, 2008 (filed March 31, 2009,
File No. 001-13589) and incorporated herein by
reference.
  77




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##### Table of Contents



ExhibitNumber
    
    Description10.66
    
    
    Letter Agreement dated December 31, 2008 among
PGRT ESH, Inc., Lightstone Holdings LLC,
David Lichtenstein and Citicorp USA, Inc. as
filed as exhibit 10.72 to our Annual Report on
Form 10-K for the year ended December 31, 2008
(filed March 31, 2009, File No. 001-13589) and
incorporated herein by reference.10.67
    
    
    Forbearance Extension dated as of January 30,
2009 among PGRT ESH, Inc., Lightstone Holdings
LLC, David Lichtenstein and Citicorp USA, Inc. as
filed as exhibit 10.1 to our Quarterly Report on
Form 10-Q (filed May 15, 2009, File No.
001-13589) and incorporated herein by reference.10.68
    
    
    Third Amendment to Loan Agreement dated as of
January 30, 2009 among PGRT ESH, Inc., Lightstone
Holdings LLC, David Lichtenstein and Citicorp
USA, Inc. as filed as exhibit 10.2 to our
Quarterly Report on Form 10-Q (filed May 15,
2009, File No. 001-13589) and incorporated herein
by reference.10.69
    
    
    Forbearance Extension dated as of March 2, 2009
among PGRT ESH, Inc., Lightstone Holdings LLC,
David Lichtenstein and Citicorp USA, Inc. as
filed as exhibit 10.3 to our Quarterly Report on
Form 10-Q (filed May 15, 2009, File No.
001-13589) and incorporated herein by reference.10.70
    
    
    Waiver and Fourth Amendment to Loan Agreement
dated as of March 2, 2009 among PGRT ESH, Inc.,
Lightstone Holdings LLC, David Lichtenstein and
Citicorp USA, Inc. as filed as exhibit 10.4 to
our Quarterly Report on Form 10-Q (filed May 15,
2009, File No. 001-13589) and incorporated herein
by reference.10.71
    
    
    Letter dated as of July 20, 2009 from Grant
Thornton to the U.S. Securities and Exchange
Commission as filed as Exhibit 16.1 to our
Current Report on Form 8-K (filed July 20, 2009,
File No. 001-13589) and incorporated herein by
reference.10.72
    
    
    Forbearance Extension dated as of April 30, 2009
among PGRT ESH, Inc., Lightstone Holdings LLC,
David Lichtenstein and Citicorp USA, Inc. as
filed as exhibit 10.1 to our Quarterly Report on
Form 10-Q (filed August 14, 2009, File No.
001-13589) and incorporated herein by reference.10.73
    
    
    Fifth Amendment to Loan Agreement dated as of
April 30, 2009 among PGRT ESH, Inc., Lightstone
Holdings LLC, David Lichtenstein and
Citicorp USA, Inc. as filed as exhibit 10.2 to
our Quarterly Report on Form 10-Q (filed August
14, 2009, File No. 001-13589) and incorporated
herein by reference.10.74
    
    
    Assignment and Assumption effective as of July
16, 2009, by PGRT ESH, Inc. and LSG-ESH LLC. as
filed as exhibit 10.1 to our Quarterly Report on
Form 10-Q (filed November 12, 2009, File No.
001-13589) and incorporated herein by reference.21.1
    
    
    Subsidiaries of Registrant.31.1
    
    
    Rule 13a-14(a) Certification of Jeffrey A. Patterson, President and
Chief Executive Officer of Registrant.31.2
    
    
    Rule 13a-14(a) Certification of Paul G. Del Vecchio, Executive Vice
President Capital Markets of Registrant.
  78




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##### Table of Contents



ExhibitNumber
    
    Description32.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 of Jeffrey A.
Patterson, President and Chief Executive Officer of the Board of
Registrant.32.2
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 of Paul G. Del
Vecchio, Executive Vice President Capital Markets of Registrant.
 
 *
    
    Management contracts or compensatory plan or arrangement required to be filed as an exhibit to
this Report on Form 10-K pursuant to Item 15(b) of the Report on Form 10-K.  79




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##### Table of Contents



SIGNATURES
  PRIME GROUP REALTY TRUSTBy:
    
    /s/ Jeffrey A. PattersonName:
    
    Jeffrey A. PattersonTitle:
    
    President and Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ Jeffrey A. Patterson

Jeffrey A. Patterson
    
    President, Chief Executive Officer and Trustee (Principal
Executive Officer)
    
    April 9, 2010/s/ Paul G. Del Vecchio

Paul G. Del Vecchio
    
    Executive Vice President Capital Markets (Principal
Financial Officer)
    
    April 9, 2010/s/ Jeremy Zednick

Jeremy Zednick
    
    Vice President -Corporate Accounting (Principal
Accounting Officer)
    
    April 9, 2010/s/ Bruno de Vinck

Bruno de Vinck
    
    Trustee
    
    April 9, 2010/s/ David Lichtenstein

David Lichtenstein
    
    Chairman of the Board of Trustees
    
    April 9, 2010/s/ Peyton (Chip) Owen, Jr.

Peyton (Chip) Owen, Jr.
    
    Trustee
    
    April 9, 2010/s/ John M. Sabin

John M. Sabin
    
    Trustee
    
    April 9, 2010/s/ Shawn R. Tominus

Shawn R. Tominus
    
    Trustee
    
    April 9, 2010/s/ George R. Whittemore

George R. Whittemore
    
    Trustee
    
    April 9, 2010
  80




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##### Table of Contents



PRIME GROUP REALTY TRUST
 PART IV
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Reports of Independent Registered Public Accounting Firms
    
    
    F2Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F4Consolidated Statements of Operations for the years ended
December 31, 2009, 2008 and 2007
    
    
    F5Consolidated Statements of Changes in Equity for the
years ended December 31, 2009, 2008 and 2007
    
    
    F6Consolidated Statements of Cash Flows for the years ended
December 31, 2009, 2008 and 2007
    
    
    F7Notes to Consolidated Financial Statements
    
    
    F9Financial Statement ScheduleSchedule III  Real Estate and Accumulated Depreciation as of December 31, 2009
    
    
    F36
   F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Consolidation,
   
  F-3




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##### Table of Contents



PRIME GROUP REALTY TRUST
 
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands, except share and per share amounts)
 December 31,2009
    
    
    2008AssetsReal estate:Land
    
    $
    75,236
    
    
    $
    81,865Building and improvements
    
    
    255,559
    
    
    
    334,280Tenant improvements
    
    
    47,891
    
    
    
    57,799Furniture, fixtures and equipment
    
    
    875
    
    
    
    1,159379,561
    
    
    
    475,103Accumulated depreciation
    
    
    (69,747
    )
    
    
    (61,651
    )309,814
    
    
    
    413,452In-place lease value, net
    
    
    5,580
    
    
    
    10,445Above-market lease value, net
    
    
    6,905
    
    
    
    11,901322,299
    
    
    
    435,798Cash and cash equivalents
    
    
    11,876
    
    
    
    15,419Investments in unconsolidated joint ventures
    
    
    53
    
    
    
    6Receivables, net of allowance for doubtful accounts of
$1,566 and $846 at December 31, 2009 and 2008,
respectively:Tenant
    
    
    241
    
    
    
    1,388Deferred rent
    
    
    13,814
    
    
    
    13,072Other
    
    
    488
    
    
    
    1,043Restricted cash escrows
    
    
    29,825
    
    
    
    37,254Deferred costs, net
    
    
    13,755
    
    
    
    16,859Other
    
    
    833
    
    
    
    819Total assets
    
    $
    393,184
    
    
    $
    521,658Liabilities and EquityMortgage and notes payable
    
    $
    341,750
    
    
    $
    447,871Accrued interest payable
    
    
    1,806
    
    
    
    2,945Accrued real estate taxes
    
    
    17,130
    
    
    
    18,244Accrued tenant improvement allowances
    
    
    744
    
    
    
    6,884Accrued environmental remediation liabilities
    
    
    9,676
    
    
    
    7,839Accounts payable and accrued expenses
    
    
    5,562
    
    
    
    9,409Liabilities for leases assumed
    
    
    2,709
    
    
    
    3,279Below-market lease value, net
    
    
    3,574
    
    
    
    5,450Other
    
    
    6,503
    
    
    
    13,769Total liabilities
    
    
    389,454
    
    
    
    515,690Commitments and contingenciesShareholders equity:Preferred Shares, $0.01 par value; 30,000,000
shares authorized:Series B  Cumulative Redeemable Preferred
Shares, 4,000,000 shares designated, issued and
outstanding
    
    
    40
    
    
    
    40Common Shares, $0.01 par value; 100,000,000 shares
authorized; 236,483 shares issued and outstanding
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    243,688
    
    
    
    155,396Retained deficit
    
    
    (157,891
    )
    
    
    (149,470
    )Total equity  Prime Group Realty Trust
    
    
    85,839
    
    
    
    5,968Noncontrolling interest
    
    
    (82,109
    )
    
    
    Total equity
    
    
    3,730
    
    
    
    5,968Total liabilities and equity
    
    $
    393,184
    
    
    $
    521,658
   F-4




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##### Table of Contents



PRIME GROUP REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (dollars in thousands, except per share amounts)
 Year ended December 31,2009
    
    
    2008
    
    
    2007Revenue:Rental
    
    $
    41,793
    
    
    $
    44,176
    
    
    $
    46,523Tenant reimbursements
    
    
    30,588
    
    
    
    31,304
    
    
    
    30,307Other property revenues
    
    
    4,553
    
    
    
    6,100
    
    
    
    6,685Services Company revenue
    
    
    981
    
    
    
    1,163
    
    
    
    3,359Total revenue
    
    
    77,915
    
    
    
    82,743
    
    
    
    86,874Expenses:Property operations
    
    
    26,020
    
    
    
    27,116
    
    
    
    27,534Real estate taxes
    
    
    15,504
    
    
    
    15,866
    
    
    
    17,691Depreciation and amortization
    
    
    27,619
    
    
    
    23,898
    
    
    
    30,203General and administrative
    
    
    6,211
    
    
    
    6,873
    
    
    
    6,210Services Company operations
    
    
    1,063
    
    
    
    1,484
    
    
    
    2,835Provision for asset impairment
    
    
    63,013
    
    
    
    
    
    
    
    Loss on tax indemnification
    
    
    1,799
    
    
    
    
    
    
    
    Total expenses
    
    
    141,229
    
    
    
    75,237
    
    
    
    84,473Operating (loss) income
    
    
    (63,314
    )
    
    
    7,506
    
    
    
    2,401Interest and other income
    
    
    4,948
    
    
    
    1,394
    
    
    
    2,928Income (loss) from investments in
unconsolidated joint ventures
    
    
    84
    
    
    
    (60,343
    )
    
    
    (49,687
    )Provision for asset impairment
from unconsolidated joint ventures
    
    
    
    
    
    
    (5,633
    )
    
    
    Interest:Expense
    
    
    (25,790
    )
    
    
    (32,098
    )
    
    
    (35,425
    )Amortization of deferred
financing costs
    
    
    (4,244
    )
    
    
    (2,244
    )
    
    
    (910
    )Recovery of distributions and
losses to noncontrolling interest
in excess of basis
    
    
    
    
    
    
    14,222
    
    
    
    Distributions and losses to
noncontrolling interest in excess
of basis
    
    
    
    
    
    
    (20,293
    )
    
    
    (14,222
    )Gain on sales of real estate and
joint venture interests
    
    
    
    
    
    
    39,194
    
    
    
    Loss from continuing operations
    
    
    (88,316
    )
    
    
    (58,295
    )
    
    
    (94,915
    )Discontinued operations
    
    
    36
    
    
    
    (3,272
    )
    
    
    995Net loss
    
    
    (88,280
    )
    
    
    (61,567
    )
    
    
    (93,920
    )Net (income) loss attributable to
noncontrolling interest
    
    
    79,879
    
    
    
    (11,769
    )
    
    
    34,902Net loss attributable to Prime
Group Realty Trust
    
    
    (8,401
    )
    
    
    (73,336
    )
    
    
    (59,018
    )Net income allocated to preferred
shareholders, net of
noncontrolling interest of $8,920
in 2009
    
    
    (80
    )
    
    
    (9,000
    )
    
    
    (9,000
    )Net loss available to common
shareholders
    
    $
    (8,481
    )
    
    $
    (82,336
    )
    
    $
    (68,018
    )Basic and diluted earnings (loss)
attributable to common
shareholders per common share:Loss from continuing operations
    
    $
    (35.86
    )
    
    $
    (348.05
    )
    
    $
    (287.66
    )Discontinued operations
    
    
    
    
    
    
    (0.12
    )
    
    
    0.04Net loss attributable to common
shareholders per common
share  basic and diluted
    
    $
    (35.86
    )
    
    $
    (348.17
    )
    
    $
    (287.62
    )
  F-5




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##### Table of Contents



PRIME GROUP REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
 (dollars in thousands, except for share/unit and per share amounts)
 (DistributionsSeries B
    
    
    
    
    
    
    Additional
    
    
    in Excess of)
    
    
    Non-Preferred
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    controllingShares
    
    
    Shares
    
    
    Capital
    
    
    Deficit
    
    
    Interest
    
    
    TotalBalance at January 1, 2007
    
    $
    40
    
    
    $
    2
    
    
    $
    105,539
    
    
    $
    (1,206
    )
    
    $
    20,770
    
    
    $
    125,145Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,018
    )
    
    
    (34,902
    )
    
    
    (93,920
    )Series B  preferred share dividends declared ($2.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,000
    )
    
    
    
    
    
    
    (9,000
    )Distributions and losses to noncontrolling interest in excess of basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,222
    
    
    
    14,222Other comprehensive loss  interest rate protection agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    (90
    )Balance at December 31, 2007
    
    
    40
    
    
    
    2
    
    
    
    105,539
    
    
    
    (69,224
    )
    
    
    
    
    
    
    36,357Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,336
    )
    
    
    11,769
    
    
    
    (61,567
    )Series B  preferred share dividends declared ($1.6875 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,750
    )
    
    
    
    
    
    
    (6,750
    )Common share dividends declared ($0.67353 per common share/unit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (160
    )
    
    
    (17,840
    )
    
    
    (18,000
    )Contributions from parent company
    
    
    
    
    
    
    
    
    
    
    49,857
    
    
    
    
    
    
    
    
    
    
    
    49,857Recovery of distributions and losses to controlling interest in
excess of basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,222
    )
    
    
    (14,222
    )Distributions and losses to noncontrolling interest in excess of basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,293
    
    
    
    20,293Balance at December 31, 2008
    
    
    40
    
    
    
    2
    
    
    
    155,396
    
    
    
    (149,470
    )
    
    
    
    
    
    
    5,968Stock option expense (1)
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    106Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,401
    )
    
    
    (79,879
    )
    
    
    (88,280
    )Series B  preferred share dividends declared
($0.5625 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (2,230
    )
    
    
    (2,250
    )Contributions from parent company
    
    
    
    
    
    
    
    
    
    
    88,186
    
    
    
    
    
    
    
    
    
    
    
    88,186Balance at December 31, 2009
    
    $
    40
    
    
    $
    2
    
    
    $
    243,688
    
    
    $
    (157,891
    )
    
    $
    (82,109
    )
    
    $
    3,730
 (1)
    
    Grant of options to Prime Group Realty L.P. employee to acquire a 3.5% ownership interest
in Prime Office Company LLC which have expired unexercised and are no longer outstanding.   F-6




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##### Table of Contents



PRIME GROUP REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (dollars in thousands)
 Year ended December 31,2009
    
    
    2008
    
    
    2007Operating activitiesNet loss
    
    $
    (88,280
    )
    
    $
    (61,567
    )
    
    $
    (93,920
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Accretion of mortgage notes payable
    
    
    (747
    )
    
    
    (1,106
    )
    
    
    (1,326
    )Amortization of above/below-market lease value (included in rental
revenue)
    
    
    3,386
    
    
    
    2,592
    
    
    
    2,222Amortization of in-place lease value
    
    
    4,865
    
    
    
    4,505
    
    
    
    9,919Provision for doubtful accounts
    
    
    772
    
    
    
    204
    
    
    
    996Gain on sales of real estate and unconsolidated joint venture interests
    
    
    
    
    
    
    (39,700
    )
    
    
    (2,220
    )Gain on earnest deposit from cancellation of sale of real estate
    
    
    (5,339
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    27,491
    
    
    
    22,726
    
    
    
    23,704Provision for asset impairment
    
    
    69,873
    
    
    
    1,600
    
    
    
    Provision for asset impairment from unconsolidated
joint ventures
    
    
    
    
    
    
    5,633
    
    
    
    Gain on extinguishment of debt
    
    
    (8,323
    )
    
    
    
    
    
    
    Net equity in (income) loss from investments in unconsolidated joint
ventures
    
    
    (84
    )
    
    
    60,343
    
    
    
    49,687Recovery of distributions and losses to noncontrolling interest in
excess of basis
    
    
    
    
    
    
    (14,222
    )
    
    
    Distributions and losses to noncontrolling interest in excess of basis
    
    
    
    
    
    
    20,293
    
    
    
    14,222Net changes in operating assets and liabilities:Accounts receivable
    
    
    (108
    )
    
    
    (4,155
    )
    
    
    (3,090
    )Other assets
    
    
    873
    
    
    
    (180
    )
    
    
    684Accrued interest payable
    
    
    1,628
    
    
    
    839
    
    
    
    (67
    )Accrued real estate taxes
    
    
    (925
    )
    
    
    (601
    )
    
    
    (1,056
    )Accounts payable and accrued expenses
    
    
    (668
    )
    
    
    (654
    )
    
    
    470Other liabilities
    
    
    (545
    )
    
    
    5,213
    
    
    
    909Distribution as a return on investment from unconsolidated joint
venture
    
    
    37
    
    
    
    
    
    
    
    6,167Net cash provided by operating activities
    
    
    3,906
    
    
    
    1,763
    
    
    
    7,301Investing activitiesCapital expenditures for real estate and equipment
    
    
    (11,092
    )
    
    
    (23,976
    )
    
    
    (17,410
    )Proceeds from sales of real estate and unconsolidated joint venture
interests
    
    
    
    
    
    
    101,099
    
    
    
    4,685Investments in unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    (120,000
    )Change in restricted cash escrows
    
    
    4,247
    
    
    
    4,442
    
    
    
    2,295Leasing costs (includes lease assumption costs and leasing commissions)
    
    
    (1,163
    )
    
    
    (2,224
    )
    
    
    (5,437
    )Net cash (used in) provided by investing activities
    
    
    (8,008
    )
    
    
    79,341
    
    
    
    (135,867
    )Financing activitiesFinancing costs
    
    
    
    
    
    
    (7,502
    )
    
    
    (644
    )Proceeds from mortgages and notes payable
    
    
    
    
    
    
    149,600
    
    
    
    120,000Repayment of mortgages and notes payable
    
    
    (3,277
    )
    
    
    (231,274
    )
    
    
    (1,758
    )Dividends paid to Series B-preferred shareholders
    
    
    (2,250
    )
    
    
    (9,000
    )
    
    
    (11,250
    )Dividends paid to common shareholder
    
    
    
    
    
    
    (160
    )
    
    
    Contributions from parent company
    
    
    6,086
    
    
    
    12,598
    
    
    
    Distributions paid to common unit holder
    
    
    
    
    
    
    (17,840
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    559
    
    
    
    (103,578
    )
    
    
    106,348Net decrease in cash and cash equivalents
    
    
    (3,543
    )
    
    
    (22,474
    )
    
    
    (22,218
    )Cash and cash equivalents at beginning of year
    
    
    15,419
    
    
    
    37,893
    
    
    
    60,111Cash and cash equivalents at end of year
    
    $
    11,876
    
    
    $
    15,419
    
    
    $
    37,893Supplemental information:Interest paid
    
    $
    26,057
    
    
    $
    33,600
    
    
    $
    38,600Income taxes paid
    
    
    
    
    
    
    27
    
    
    
    200
  F-7




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##### Table of Contents



PRIME GROUP REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
 Supplemental cash flow information for net assets sold
 Year ended December 31,2009
    
    
    2008
    
    
    2007Real estate, net
    
    $
    
    
    
    $
    33,400
    
    
    $
    5,513Investments in unconsolidated joint ventures
    
    
    
    
    
    
    21,759
    
    
    
    Mortgage notes payable assumed by buyer
    
    
    
    
    
    
    
    
    
    
    (2,701
    )Deferred costs, net
    
    
    
    
    
    
    5
    
    
    
    48Accrued real estate taxes
    
    
    
    
    
    
    (1,136
    )
    
    
    (369
    )Other assets and (liabilities), net
    
    
    
    
    
    
    7,371
    
    
    
    (26
    )Net assets sold
    
    
    
    
    
    
    61,399
    
    
    
    2,465Proceeds from sale of real estate
    
    
    
    
    
    
    101,099
    
    
    
    4,685Gain on sales of real estate and
unconsolidated joint venture interests
    
    $
    
    
    
    $
    39,700
    
    
    $
    2,220
 Supplemental schedule of non-cash activities:
 Year ended December 31,2009
    
    
    2008
    
    
    2007Tenant improvement allowances
    
    $
    372
    
    
    $
    2,031
    
    
    $
    1,488Environmental remediation costs
    
    $
    2,144
    
    
    $
    6,481
    
    
    $
    2,696Assignment of interest in unconsolidated joint
venture:Increase in additional paid-in capital
    
    $
    82,100
    
    
    $
    
    
    
    $
    Decrease in mortgage and notes payable
    
    $
    (80,000
    )
    
    $
    
    
    
    $
    Decrease in accounts payable and accrued interest
    
    $
    (2,100
    )
    
    $
    
    
    
    $
    Conveyance of real estate in exchange for
release from mortgage and notes payable:Decrease in mortgage and notes payable
    
    $
    21,251
    
    
    $
    
    
    
    $
    Decrease in real estate, net
    
    
    (14,492
    )
    
    
    
    
    
    
    Decrease in restricted cash escrows
    
    
    (1,685
    )
    
    
    
    
    
    
    Decrease in accrued interest payable
    
    
    2,767
    
    
    
    
    
    
    
    Other, net
    
    
    482
    
    
    
    
    
    
    
    Gain on early extinguishment of debt
    
    $
    8,323
    
    
    $
    
    
    
    $
    
   F-8




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##### Table of Contents



Prime Group Realty Trust
 
 Notes to Consolidated Financial Statements
 1. Business
 Formation and Organization of the Company
        F-9




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##### Table of Contents



1. Business (continued)
 Basis of Presentation
      2. Summary of Significant Accounting Policies
 Real Estate
  Buildings
    
    40 years weighted average lifeBuilding improvements
    
    10 to 30 yearsTenant improvements
    
    Term of related leasesFurniture and equipment
    
    310 years
  Impairment of Long-Lived Assets
   F-10




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##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
   Sales of Real Estate
   2009
 180 North LaSalle Street Sale.
   F-11




---



##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
  Property Held for Sale
   Intangible Assets
   December 31, 2009Carrying
    
    
    Accumulated
    
    
    CarryingIntangible Asset Category
    
    AmountGross
    
    
    Amortization
    
    
    Amount  Net(dollars in thousands)In-place lease value
    
    $
    19,852
    
    
    $
    (14,272
    )
    
    $
    5,580Above-market lease value
    
    
    26,756
    
    
    
    (19,851
    )
    
    
    6,905Below-market lease value
    
    
    (8,591
    )
    
    
    5,017
    
    
    
    (3,574
    )$
    38,017
    
    
    $
    (29,106
    )
    
    $
    8,911
  December 31, 2008Carrying
    
    
    Accumulated
    
    
    CarryingIntangible Asset Category
    
    AmountGross
    
    
    Amortization
    
    
    Amount  Net(dollars in thousands)In-place lease value
    
    $
    33,573
    
    
    $
    (23,128
    )
    
    $
    10,445Above-market lease value
    
    
    30,136
    
    
    
    (18,235
    )
    
    
    11,901Below-market lease value
    
    
    (13,540
    )
    
    
    8,090
    
    
    
    (5,450
    )$
    50,169
    
    
    $
    (33,273
    )
    
    $
    16,896
  F-12




---



##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
  InPlace
    
    
    Abovemarket
    
    
    BelowmarketYear ending December 31,
    
    Lease Value
    
    
    Lease Value
    
    
    Lease Value(dollars in thousands)2010
    
    $
    1,989
    
    
    $
    2,235
    
    
    $
    (1,009
    )2011
    
    
    1,209
    
    
    
    1,124
    
    
    
    (783
    )2012
    
    
    825
    
    
    
    1,084
    
    
    
    (416
    )2013
    
    
    666
    
    
    
    997
    
    
    
    (300
    )2014
    
    
    553
    
    
    
    927
    
    
    
    (284
    )Thereafter
    
    
    338
    
    
    
    538
    
    
    
    (782
    )$
    5,580
    
    
    $
    6,905
    
    
    $
    (3,574
    )
 Cash Equivalents
  Restricted Cash
  Deferred Costs
 Financing Costs.
 Leasing Costs.
 Allowance for Doubtful Accounts
   F-13




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##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
 Leases Assumed
  Revenue Recognition
   Noncontrolling Interest in Consolidated Real Estate Partnerships
     F-14




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##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
   Pro formaYearendedDecember 31,2009Net income (loss) attributable to Prime Group Realty Trust
    
    $
    (88,280
    )Net income allocated to preferred shareholders
    
    
    (9,000
    )Net loss attributable to common shareholders
    
    $
    (97,280
    )Pro forma earnings attributable to common shareholders
per common share  basic and diluted:Net loss attributable per common share  basic and diluted
    
    $
    (411.36
    )
 Earnings Per Share
  Income Taxes
    F-15




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##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
  Fair Value Measurements
    Level 1
    
    Valuation is based upon quoted prices for identical assets or liabilities in
active markets.
 Level 2
    
    Valuation is based upon quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or liabilities in markets
that are not active, and model-based valuation techniques for which all significant
assumptions are observable in the market.
 Level 3
    
    Valuation is based on unobservable and significant assumptions to the fair
value measurement.
   Recent Issued Accounting Pronouncements
   F-16




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##### Table of Contents



2. Summary of Significant Accounting Policies (continued)
      F-17




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##### Table of Contents



3. Asset Impairments
  Year ended December 31,2009
    
    
    2008
    
    
    2007Properties (1)
    
    $
    69,873
    
    
    $
    1,600
    
    
    $
    Investment in unconsolidated joint ventures (2)
    
    
    
    
    
    
    5,633
    
    
    
    $
    69,873
    
    
    $
    7,233
    
    
    $
    
 (1)
    
    The Company evaluated its operating properties for indicators of permanent
impairment and deemed it necessary to write-down six properties totaling $69.9
million (including $6.9 million in discontinued operations) in 2009 and one
property for $1.6 million in 2008 which is included in discontinued operations.
The impairment indicators were based on operational performance, current and
expected cash flows, and market conditions.In the fourth quarter of 2009, our Continental Towers property was
considered impaired based on the property generating negative cash flows,
a decline in occupancy and forecasted future losses. The Company recorded
an asset impairment of $59.9 million which represents the difference
between the carrying value and estimated fair value of this property. The
carrying value of this property is approximately $65.3 million, which is
less than the debt balance of $115.0 million at December 31, 2009. The
Company is currently in discussions with the Lender on a potential deed
in lieu of foreclosure transaction with the lender (see Note 17 -
Subsequent Events). If this transaction materializes, the difference
between the loan balance and carrying value of the property would be
recognized as a gain on extinguishment of debt in the period the
transaction closes.The other properties that were impaired during the fourth quarter of 2009
consisted of Brush Hill Office Court ($1.8 million), 7100 Madison Avenue
($0.5 million), Enterprise Center II ($0.1 million) and Atrium Building
($0.7 million).The Company may in the future have to take additional impairment charges on these and/or other properties to the extent market conditions continue to deteriorate or for other specific reasons applicable to a particular property.(2)
    
    During 2008, we recorded an asset impairment of $5.6 million related to the
write-down of the remaining balance of our investment in the membership
interest in BHAC as the investment was deemed to be other than temporary due to
past and expected future inability to sustain earnings at a level which would
justify the carrying value. 4. Deferred Costs
  December 31,2009
    
    
    2008(dollars in thousands)Financing costs
    
    $
    6,321
    
    
    $
    10,264Leasing costs
    
    
    13,124
    
    
    
    13,39619,445
    
    
    
    23,660Less: Accumulated amortization
    
    
    (5,690
    )
    
    
    (6,801
    )$
    13,755
    
    
    $
    16,859
  F-18




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##### Table of Contents



5. Mortgage Notes Payable
  December 31,2009
    
    
    2008(dollars in thousands)Mortgage Notes Payable(1), (2):Mortgage notes payable to various
financial institutions, collateralized by
various properties, interest at fixed
rates ranging from 5.43% to 8.76% per
annum, with principal and interest payable
monthly through December 1, 2016. The
weighted average rates at December 31,
2009 and 2008 were 6.26% and 6.71%,
respectively (See Note 17 - Subsequent
Events)
    
    $
    330,775
    
    
    $
    354,979Mortgage notes payable to various
financial institutions, collateralized by
various properties, interest at variable
rates based on an index rate of 2.50% at
December 31, 2009 plus 200 basis points
with interest payable monthly through June
4, 2013. The weighted average rates at
December 31, 2009 and 2008 were 4.50% and
10.47%, respectively
    
    
    10,975
    
    
    
    92,892Total mortgage notes payable
    
    $
    341,750
    
    
    $
    447,871
 (1)
    
    The mortgage notes payable are subject to various operating and
financial covenants. In addition, we are required to periodically fund
and maintain escrow accounts to make future real estate tax and
insurance payments, as well as to fund certain tenant releasing costs
and capital expenditures. These are included in restricted cash
escrows.(2)
    
    Our mortgage notes payable are secured by our real estate assets. BHAC Capital IV, L.L.C.
    F-19




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##### Table of Contents



5. Mortgage Notes Payable (continued)
   800-810 Jorie Boulevard.
  Amortization of Principal
  F-20




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##### Table of Contents



5. Mortgage Notes Payable (continued)
  Year Ending December 31,
    
    Amount(dollars in thousands)2010 (1)
    
    $
    127,7252011
    
    
    153,8062012
    
    
    4172013
    
    
    59,725$
    341,673
 (1)
    
    On March 5, 2010, the Lender accelerated the maturity date to be
immediately payable on the $115.0 million loan on Continental Towers
due to the loan being in default (see Note 17  Subsequent Events).  6. Debt Covenants
   F-21




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##### Table of Contents



7. Leases
   Year Ending December 31,
    
    Amount(dollars in thousands)2010
    
    $
    34,8902011
    
    
    27,3582012
    
    
    23,0162013
    
    
    21,1032014
    
    
    18,615Thereafter
    
    
    48,686$
    173,668
   Gross
    
    
    Executed
    
    
    NetYear Ending December 31,
    
    Amount
    
    
    Subleases
    
    
    Amount(dollars in thousands)2010
    
    $
    6,179
    
    
    $
    5,204
    
    
    $
    9752011
    
    
    5,076
    
    
    
    4,378
    
    
    
    6982012
    
    
    3,439
    
    
    
    2,929
    
    
    
    510$
    14,694
    
    
    $
    12,511
    
    
    $
    2,183
 8. Noncontrolling Interests
    F-22




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##### Table of Contents



9. Preferred Shares
      10. Discontinued Operations
    F-23




---



##### Table of Contents



10. Discontinued Operations (continued)
  Year ended December 31,2009
    
    
    2008
    
    

2007(dollars in thousands)Revenue
    
    $
    929
    
    
    $
    2,224
    
    
    $
    6,277Operating expenses
    
    
    1,130
    
    
    
    2,806
    
    
    
    5,743Provision for asset impairment
    
    
    (6,860
    )
    
    
    (1,600
    )
    
    
    Operating loss
    
    
    (7,061
    )
    
    
    (2,182
    )
    
    
    534Interest expense, net
    
    
    (1,226
    )
    
    
    (1,596
    )
    
    
    (1,759
    )Gain on extinguishment of debt
    
    
    8,323
    
    
    
    
    
    
    
    Gain on sale of real estate
    
    
    
    
    
    
    506
    
    
    
    2,220Net gain (loss) from discontinued operations
    
    $
    36
    
    
    $
    (3,272
    )
    
    $
    995
 11. Earnings Per Share
  Year ended December 31,2009
    
    
    2008
    
    
    2007Numerator:Loss from continuing operations attributable to
Prime Group Realty Trust
    
    $
    (8,401
    )
    
    $
    (82,227
    )
    
    $
    (67,947
    )Net income allocated to preferred shareholders
net of noncontrolling interest
    
    
    (80
    )
    
    
    (80
    )
    
    
    (80
    )Loss from continuing operations attributable
to common shareholders
    
    
    (8,481
    )
    
    
    (82,307
    )
    
    
    (68,027
    )Discontinued operations attributable to common
shareholders
    
    
    
    
    
    
    (29
    )
    
    
    9Net loss attributable to common shareholders
    
    $
    (8,481
    )
    
    $
    (82,336
    )
    
    $
    (68,018
    )Denominator  basic and dilutedCommon shares
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483Basic and diluted earnings (loss) attributable
to common shareholders per common share:Loss from continuing operations
    
    $
    (35.86
    )
    
    $
    (348.05
    )
    
    $
    (287.66
    )Discontinued operations
    
    
    
    
    
    
    (0.12
    )
    
    
    0.04Net loss attributable to common shareholders
per common share  basic and diluted
    
    $
    (35.86
    )
    
    $
    (348.17
    )
    
    $
    (287.62
    )
  F-24




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##### Table of Contents



12. Investments in Unconsolidated Joint Ventures
  Thistle Landing.
 Extended Stay Hotels.
     F-25




---



##### Table of Contents



12. Investments in Unconsolidated Joint Ventures (continued)
  December 31,2008(dollars inthousands)Real estate, at cost (net):
    
    $
    5,406,059Other assets
    
    
    1,024,647Total assets
    
    $
    6,430,706Mortgage notes and other loans payable
    
    $
    7,411,073Other liabilities
    
    
    100,600Total members capital
    
    
    (1,080,967
    )Total liabilities and members capital
    
    $
    6,430,706
 For the periodJune 29, 2007throughDecember 31,
    
    
    December 31,2008
    
    
    2007(dollars in thousands)Total revenue
    
    $
    860,482
    
    
    $
    515,364Total expenses
    
    
    (2,236,266
    )
    
    
    (705,338
    )Net loss
    
    $
    (1,375,784
    )
    
    $
    (189,974
    )
  13. Related Party Transactions
    F-26




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##### Table of Contents



14. Commitments and Contingencies
       F-27




---



##### Table of Contents



14. Commitments and Contingencies (continued)
   Environmental.
  F-28




---



##### Table of Contents



14. Commitments and Contingencies (continued)
    Tax Indemnity Agreements.
   F-29




---



##### Table of Contents



14. Commitments and Contingencies (continued)
 Lease Liabilities
     F-30




---



##### Table of Contents



15. Property Dispositions
  MonthProperty
    
    Location
    
    Sales Price
    
    
    Sold/Disposed(dollars inthousands)2009 Dispositions800-810 Jorie Boulevard (1)
    
    Oak Brook IL
    
    
    N/A
    
    
    July2008 SalesOffice:The United Building (2)
    
    Chicago, IL
    
    $
    50,000
    
    
    January330 N. Wabash Avenue (3)
    
    Chicago, IL
    
    $
    46,000
    
    
    March1051 N. Kirk Road (4)
    
    Batavia, IL
    
    $
    4,080
    
    
    May2007 SalesOffice:Narco River Business Center (5)
    
    Calumet City, IL
    
    $
    7,400
    
    
    May
 (1)
    
    On July 28, 2009, we conveyed the Jorie Boulevard property to the lender in exchange
for a release of the loan. The Company recorded a gain on extinguishment of $8.3 million
which is included in discontinued operations on the consolidated statement of operations in
the third quarter of 2009 representing the difference between the extinguished loan balance
and accrued interest and the carrying value of the property.(2)
    
    On January 7, 2008, we completed the sale of our 50.0% common joint venture interest in The
United Building located at 77 West Wacker Drive in Chicago, Illinois to our joint venture
partner. The sale price was $50.0 million, subject to customary pro-rations and adjustments.
We recognized a gain of $29.4 million and we used $18.8 million of the net proceeds to retire
the outstanding balance on two Citicorp mezzanine loans.(3)
    
    On March 18, 2008, one of our subsidiaries, 330 LLC, completed the sale of Floors 2 through
13 of our 330 N. Wabash Avenue property for the purchase price of $46.0 million, subject to
customary prorations and adjustments as provided in the purchase and sale agreement. We
recognized a book gain on the sale of approximately $9.8 million.(4)
    
    On May 2, 2008, we closed on the sale of this property. The net proceeds from the sale of
$4.1 million were used to retire the outstanding debt on the property. We recognized a book
gain of $0.5 million in the second quarter of 2008.(5)
    
    On May 22, 2007, we closed on the sale of our Narco River Business Center property located in
Calumet City, Illinois, for a sales price of $7.4 million. We recognized a gain of $2.2
million and retired debt of $2.7 million related to this property. 16. Interim Financial Information (unaudited)
   F-31




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##### Table of Contents



16. Interim Financial Information (unaudited) (continued)
 2009First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(dollars in thousands, except per share amounts)Total revenue
    
    $
    19,392
    
    
    $
    19,726
    
    
    $
    19,740
    
    
    $
    19,057Operating (loss) income
    
    $
    (2,824
    )
    
    $
    2,101
    
    
    $
    (820
    )
    
    $
    (61,771
    )Loss from continuing operations
    
    $
    (7,860
    )
    
    $
    (6,289
    )
    
    $
    (6,814
    )
    
    $
    (67,353
    )Discontinued operations
    
    $
    (666
    )
    
    $
    (7,425
    )
    
    $
    8,129
    
    
    $
    (2
    )Net (loss) income
    
    $
    (8,526
    )
    
    $
    (13,714
    )
    
    $
    1,315
    
    
    $
    (67,355
    )Net loss available to common shareholders
    
    $
    (4,496
    )
    
    $
    (2,996
    )
    
    $
    (372
    )
    
    $
    (617
    )Basic and diluted earnings (loss)
attributable to common shareholders per
common share:Loss from continuing operations
    
    $
    (18.99
    )
    
    $
    (12.39
    )
    
    $
    (1.88
    )
    
    $
    (2.61
    )Discontinued operations
    
    
    (0.02
    )
    
    
    (0.28
    )
    
    
    0.31
    
    
    
    0.00Net loss to common shareholder per
common share  basic and diluted
    
    $
    (19.01
    )
    
    $
    (12.67
    )
    
    $
    (1.57
    )
    
    $
    (2.61
    )Weighted average common
shares outstanding  basic and diluted
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
 2009First
    
    
    SecondQuarter
    
    
    QuarterTotal revenues previously reported in
Form 10-Q
    
    $
    19,774
    
    
    $
    20,151Total revenues subsequently reclassified to discontinued operations
    
    
    (382
    )
    
    
    (425
    )Total revenues disclosed in Form 10-K
    
    $
    19,392
    
    
    $
    19,726Operating loss previously reported in Form 10-Q
    
    $
    (2,898
    )
    
    $
    (4,839
    )Operating income subsequently reclassified to discontinued
operations
    
    
    74
    
    
    
    6,940Operating (loss) income disclosed in
Form 10-K
    
    $
    (2,824
    )
    
    $
    2,101Loss from continuing operations previously reported in Form 10-Q
    
    $
    (8,484
    )
    
    $
    (13,786
    )Loss from continuing operations subsequently reclassified to
discontinued operations
    
    
    624
    
    
    
    7,497Loss from continuing operations disclosed
in Form 10-K
    
    $
    (7,860
    )
    
    $
    (6,289
    )Discontinued operations previously reported in Form 10-Q
    
    $
    (42
    )
    
    $
    72Discontinued operations subsequently reclassified to discontinued
operations
    
    
    (624
    )
    
    
    (7,497
    )Discontinued operations disclosed in
Form 10-K
    
    $
    (666
    )
    
    $
    (7,425
    )
  F-32




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##### Table of Contents



16. Interim Financial Information (unaudited) (continued)
 2008First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(dollars in thousands, except per share amounts)Total revenue
    
    $
    21,324
    
    
    $
    20,634
    
    
    $
    21,120
    
    
    $
    19,665Operating income
    
    $
    670
    
    
    $
    1,153
    
    
    $
    4,859
    
    
    $
    824Loss from continuing operations
    
    $
    (14,571
    )
    
    $
    (19,420
    )
    
    $
    (9,790
    )
    
    $
    (14,514
    )Discontinued operations
    
    $
    (487
    )
    
    $
    63
    
    
    $
    (2,271
    )
    
    $
    (577
    )Net loss
    
    $
    (15,058
    )
    
    $
    (19,357
    )
    
    $
    (12,061
    )
    
    $
    (15,091
    )Net loss available to common
shareholders
    
    $
    (48,209
    )
    
    $
    (15,306
    )
    
    $
    (8,460
    )
    
    $
    (10,361
    )Basic and diluted earnings (loss)
attributable to common shareholders
per common share:Loss from continuing operations
    
    $
    (203.84
    )
    
    $
    (64.72
    )
    
    $
    (35.69
    )
    
    $
    (43.79
    )Discontinued operations
    
    
    (0.02
    )
    
    
    0.00
    
    
    
    (0.08
    )
    
    
    (0.02
    )Net loss to common shareholder per
common share  basic and diluted
    
    $
    (203.86
    )
    
    $
    (64.72
    )
    
    $
    (35.77
    )
    
    $
    (43.81
    )Weighted average common
shares outstanding  basic and diluted
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
    
    
    
    236,483
 2008First
    
    
    SecondQuarter
    
    
    QuarterTotal revenues previously reported in
Form 10-Q
    
    $
    22,026
    
    
    $
    21,209Total revenues subsequently reclassified to discontinued operations
    
    
    (702
    )
    
    
    (575
    )Total revenues disclosed in Form 10-K
    
    $
    21,324
    
    
    $
    20,634Operating income previously reported in Form 10-Q
    
    $
    445
    
    
    $
    986Operating income subsequently reclassified to discontinued operations
    
    
    225
    
    
    
    167Operating income disclosed in
Form 10-K
    
    $
    670
    
    
    $
    1,153Loss from continuing operations previously reported in Form 10-Q
    
    $
    (15,080
    )
    
    $
    (19,870
    )Loss from continuing operations subsequently reclassified to
discontinued operations
    
    
    509
    
    
    
    450Loss from continuing operations disclosed
in Form 10-K
    
    $
    (14,571
    )
    
    $
    (19,420
    )Discontinued operations previously reported in Form 10-Q
    
    $
    22
    
    
    $
    514Discontinued operations subsequently reclassified to discontinued
operations
    
    
    (509
    )
    
    
    (451
    )Discontinued operations disclosed in
Form 10-K
    
    $
    (487
    )
    
    $
    63
  F-33




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##### Table of Contents



17. Subsequent Events
   180 North LaSalle Street Sale.
   Continental Towers Loan Default.
  F-34




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##### Table of Contents



17. Subsequent Events (continued)
       F-35




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##### Table of Contents



PRIME GROUP REALTY TRUST
 
 SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2009
(dollars in thousands)
 Gross Amount Carried atCost Capitalized
    
    
    Close of Period
    
    
    AccumulatedInitial Cost
    
    
    Subsequent to Acquisition
    
    
    12/31/09
    
    
    DepreciationEncumbrances(1)
    
    
    
    
    
    
    Buildings
    
    
    
    
    
    
    Buildings
    
    
    
    
    
    
    Building
    
    
    
    
    
    
    at
    
    
    Date ofDecember 31,
    
    
    
    
    
    
    and
    
    
    
    
    
    
    and
    
    
    
    
    
    
    and
    
    
    
    
    
    
    December 31,
    
    
    Original2009
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    2009 (2)
    
    
    Acquisition280 Shuman Boulevard
(Atrium Building)
    
    $
    
    
    
    $
    2,092
    
    
    $
    3,642
    
    
    $
    (269
    )
    
    $
    164
    
    
    $
    1,823
    
    
    $
    3,806
    
    
    $
    5,629
    
    
    $
    1,082
    
    
    Nov. 1997Continental Towers
    
    
    115,000
    
    
    
    12,166
    
    
    
    122,980
    
    
    
    363
    
    
    
    (57,159
    )
    
    
    12,529
    
    
    
    65,821
    
    
    
    78,350
    
    
    
    20,146
    
    
    Dec. 19974343 Commerce Court
(Olympian Office Center)
    
    
    10,975
    
    
    
    2,370
    
    
    
    13,572
    
    
    
    (8
    )
    
    
    833
    
    
    
    2,362
    
    
    
    14,405
    
    
    
    16,767
    
    
    
    2,346
    
    
    Nov. 1997330 N. Wabash Avenue
    
    
    137,999
    
    
    
    45,582
    
    
    
    126,397
    
    
    
    (8,013
    )
    
    
    16,257
    
    
    
    37,569
    
    
    
    142,654
    
    
    
    180,223
    
    
    
    25,899
    
    
    Dec. 1999Brush Hill Office Court
    
    
    7,470
    
    
    
    3,456
    
    
    
    10,295
    
    
    
    (491
    )
    
    
    (106
    )
    
    
    2,965
    
    
    
    10,189
    
    
    
    13,154
    
    
    
    2,402
    
    
    Dec. 1999Enterprise Center II
    
    
    5,573
    
    
    
    1,659
    
    
    
    5,272
    
    
    
    (44
    )
    
    
    844
    
    
    
    1,615
    
    
    
    6,116
    
    
    
    7,731
    
    
    
    1,074
    
    
    Jan. 20007100 Madison Avenue
    
    
    3,590
    
    
    
    1,268
    
    
    
    3,663
    
    
    
    (2
    )
    
    
    (476
    )
    
    
    1,266
    
    
    
    3,187
    
    
    
    4,453
    
    
    
    612
    
    
    Apr. 2000180 N. LaSalle Street
    
    
    61,143
    
    
    
    15,245
    
    
    
    55,497
    
    
    
    (138
    )
    
    
    2,383
    
    
    
    15,107
    
    
    
    57,880
    
    
    
    72,987
    
    
    
    16,010
    
    
    Aug. 2000Other Corporate Assets
    
    
    
    
    
    
    
    
    
    
    464
    
    
    
    
    
    
    
    (197
    )
    
    
    
    
    
    
    267
    
    
    
    267
    
    
    
    176Total
    
    $
    341,750
    
    
    $
    83,838
    
    
    $
    341,782
    
    
    $
    (8,602
    )
    
    $
    (37,457
    )
    
    $
    75,236
    
    
    $
    304,325
    
    
    $
    379,561
    
    
    $
    69,747
  F-36




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##### Table of Contents



PRIME GROUP REALTY TRUST
SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION (continued)
AS OF DECEMBER 31, 2009
 (1)
    
    See Note 5  Mortgage Notes Payable for a description of our mortgage notes payable.
 (2)
    
    Depreciation is calculated on the straight-line method over the estimated useful lives of
assets, which are as follows:
 Buildings
    
    40 years weighted average lifeBuilding improvements
    
    10 to 30 yearsTenant improvements
    
    Term of related leasesFurniture and equipment
    
    310 years
   Year ended December 31,2009
    
    
    2008
    
    
    2007(dollars in thousands)Balance, beginning of period
    
    $
    475,103
    
    
    $
    499,050
    
    
    $
    482,447Additions
    
    
    3,978
    
    
    
    9,896
    
    
    
    21,602Disposals including asset impairments
    
    
    (99,520
    )
    
    
    (33,843
    )
    
    
    (4,999
    )Balance, close of period
    
    $
    379,561
    
    
    $
    475,103
    
    
    $
    499,050
  Year ended December 31,2009
    
    
    2008
    
    
    2007(dollars in thousands)Balance at beginning of period
    
    $
    61,651
    
    
    $
    52,627
    
    
    $
    31,366Depreciation and amortization
    
    
    20,904
    
    
    
    12,671
    
    
    
    21,629Disposals
    
    
    (12,808
    )
    
    
    (3,647
    )
    
    
    (368
    )Balance, close of period
    
    $
    69,747
    
    
    $
    61,651
    
    
    $
    52,627
  F-37