1042798--4/9/2010--PRIME_GROUP_REALTY

related topics

{stock, price, share}

{investment, property, distribution}

{debt, indebtedness, cash}

{loan, real, estate}

{stock, price, operating}

{tax, income, asset}

{cost, contract, operation}

{control, financial, internal}

{regulation, change, law}

{acquisition, growth, future}

{operation, international, foreign}

{loss, insurance, financial}

{operation, natural, condition}

{cost, regulation, environmental}

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. 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 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. 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. 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. 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. 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 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 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 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. 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 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.

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1042798--4/9/2010--PRIME_GROUP_REALTY_TRUST