CHICAGO — The chairman of Prime Group Realty Trust affirmed his company’s commitment Wednesday to rebuilding Chicago’s Union Station but said he must find a deep-pocketed partner if the project is to start anytime soon, according to the Chicago Sun-Times.
“Union Station is not dead. We have a great plan for a beautiful building,” said Stephen Nardi, who succeeded developer Michael Reschke in Prime Group’s top job last April after investors grew alarmed over the company’s financial state. But he warned that “we need something to happen” in the economy or in partnership talks.
“We will not proceed with the redevelopment solely on a speculative basis,” he said. “However, we will proceed if we have a joint venture partner” who could fund the project ‘step by step by step.’ ”
Prime Group, a real estate investment trust, proposed the roughly $200 million renovation with Amtrak, owner of Union Station.
The project won praise from city planners and landmark agencies, but its prospects have been battered by a souring economy and financial troubles of its sponsors.
Demand is virtually moribund for new hotels and only slightly better for office space, two of the main components of the renovation. Meanwhile, Chicago-based Prime Group’s troubles worsened shortly after the project got publicity earlier this year. With its share price wilting, the company sold properties and struck a deal with a holder of preferred debt to raise cash.
Amtrak is fighting for its life in Congress as the national rail carrier looks for money to continue service beyond September.
Nardi, a veteran developer in the Chicago area, said Amtrak’s situation hasn’t diverted its attention from Union Station. Sally Bellet, Amtrak’s vice president for real estate development, did not return calls.
Despite a slower economy and a plummeting stock market, investment groups from around the country have expressed interest in Union Station, Nardi said. Calling the proposal “an exceptional plan for an historic building,” Nardi said “people like its long-term potential.”
The plan calls for adding an 18-story tower to the existing eight-story structure, completing the design envisioned in the 1920s by the firm that Daniel Burnham started. Care would be taken to match the addition to its Neo-classical base, with its thick limestone columns.
The Great Hall waiting room with its ornate skylight would be preserved, courtesy of a hollow center hidden in the massive tower.
When the plan was presented in February, Prime executives said they hoped work could start by year-end.
Now, Nardi can’t commit to a timetable.
He said any REIT such as Prime Group should find a partner to fund new development. That way, REITs that need to please Wall Street with quarterly earnings don’t take undue risks with their cash, Nardi said.
Prime Group’s shares closed Wednesday at $4.64, up 24 cents, but have lost 65 percent of their value in the last year.
Investors criticized Reschke for running up debt to fund property acquisitions in a mistaken bet that values would continue appreciating.