Orange County Business Journal

Grubb & Ellis Strikes Financing Deal with Island Capital Unit

Mark Mueller Monday, October 17, 2011

Santa Ana-based Grubb & Ellis Co. said on Monday it had struck a financing deal with Irving, Texas-based C-III Capital Partners LLC, and is in negotiations with the real estate investor “regarding a strategic transaction” with the commercial brokerage.

C-III Capital is an affiliate of Island Capital Group LLC, a New York-based real estate merchant bank that earlier this year announced a deal to buy another commercial brokerage, Princeton, N.J.-based NAI Global.

The deal calls for a C-III affiliate to invest $10 million in Grubb & Ellis through the expansion of an existing $18 million credit facility the brokerage inked with Santa Monica-based hedge fund Colony Capital LLC earlier this year.

The C-III affiliate also will buy $4 million of Colony’s existing credit facility, which will give both C-III and Colony Capital $14 million stakes in Grubb & Ellis.

Details of any other potential investment in Grubb & Ellis by C-III or Colony, including the possibility of an outright sale, were not immediately disclosed.

“Partnering with these firms offers significant growth opportunities for Grubb & Ellis," said C. Michael Kojaian, Grubb & Ellis chairman, in a statement.

The CEO of C-III Capital, and the founder of Island Capital, is Andrew Farkas, the former chairman of Insignia Financial Group Inc. and one of New York’s better-known real estate executives.

Farkas founded Island Capital after Insignia merged with Los Angeles-based CB Richard Ellis Group Inc. in 2003.

Grubb & Ellis has struggled to remain profitable through much of the commercial real estate downturn. It has been eyeing potential financing deals and exploring a potential merger or sale since March.