Wednesday, February 22, 2012

Grubb and Ellis Co. assets sold in Chapter 11 bankruptcy

Blog Publisher’s comment:

Until I saw this article, I had no idea that Grubb & Ellis was going down for the count. (It’s hard to stay up with everything that’s been going on during the recession that’s rocked the real estate industry in the U.S.) A once venerable firm, a pillar of the real estate industry, Grubb & Ellis’ assets to be sold in a fire sale. Note that in 2007 – as mentioned in the article below – NNN Realty Advisors (of Santa Ana, CA) paid $725 million for the stock of Grubb & Ellis! Wow, that was certainly a big chunk of change – and, what’s that investment worth now?

"Grubb & Ellis Co. assets sold in Chapter 11 bankruptcy"

By Roger Vincent (L.A. Times)

February 21, 2012, 12:34 p.m.

Venerable commercial real estate brokerage Grubb & Ellis Co. will sell its assets to the parent company of rival Newmark Knight Frank as part of a prepackaged bankruptcy, the firms said Tuesday.

BGC Partners Inc., a New York financial services firm that acquired Newmark Knight Frank in October, agreed to buy essentially all the assets of Santa Ana-based Grubb & Ellis for an undisclosed price.

Grubb & Ellis will conduct its asset sale under Section 363 of the U.S. Bankruptcy Code and has commenced Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York.

BGC said it will provide financing to support the company’s operation during the sale process, which must be approved by a federal judge.

The firms did not reveal whether the Grubb & Ellis name would survive the takeover. The company’s yellow and black signs are a common sight on offices, warehouses and other commercial buildings available for sale or lease.

Grubb & Ellis was formed in Oakland in 1958 by Bill Grubb and Hal Ellis, and grew into what was once the largest independently owned, publicly traded real estate firm in the United States. It borrowed heavily to expand, however, and had trouble turning a profit after the real estate industry crashed in the early 1990s.

The company was acquired in 2007 by NNN Realty Advisors Inc., a privately held real estate services and management company in Santa Ana. NNN kept the Grubb & Ellis brand after the stock-only transaction valued at $725 million.

In recent years, the recession and real estate crash further stressed the company. In its bankruptcy filing, Grubb & Ellis listed $150 million in assets and $167 million in debt at the end of last year.

“Following a thorough and rigorous process and the evaluation of all available options, we determined that a partnership with BGC provides the best platform for our brokerage professionals, employees and clients,” said Thomas P. D'Arcy, chief executive of Grubb & Ellis.

“We believe the transaction will be seamless for our clients and we expect no disruption to the company's operations. Furthermore, we believe our professionals and clients will benefit greatly by being part of the BGC organization, which, with its recent acquisition of Newmark Knight Frank, will bring together two strong brands to create a powerhouse in the commercial real estate space.”

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