Orange County Business Journal

Grubb Still Seeks Financing in Absence of BGC Deal

REAL ESTATE: Brokerage had been in exclusive talks Mark Mueller Saturday, February 4, 2012
Grubb & Ellis: talking to investors

Grubb & Ellis: talking to investors

Grubb & Ellis Co. is still on the lookout for a buyer or investor, after the struggling Santa Ana-based commercial real estate brokerage was unable to reach a deal with another potential white knight last month.

Grubb has been eyeing potential financing deals and exploring a merger or sale since March. The brokerage announced in mid-January it had entered exclusive negotiations with New York-based investor BGC Partners LP regarding a financing deal until Jan. 31. A deal failed to gel, according to a Securities and Exchange Commission filing last week.

Grubb said in the filing it “continues to be engaged in discussions with interested parties regarding the strategic process.”

It’s unknown if BGC or others previously interested in Grubb are among those parties.

Led by Chief Executive Howard Lutnick, BGC has a market value of almost $840 million. It bought one of Grubb’s competitors in the fall—Newmark Knight Frank, a New York-based brokerage—for $63 million and stock.

It’s believed BGC was talking to Grubb about working capital or senior-debt refinancing.

Grubb’s market value has fallen under $5 million in recent weeks. Then-Chicago-based Grubb was valued at closer to $300 million when it completed a merger with Santa Ana-based NNN Realty Advisors Inc. in late 2007.

The merged company kept the better-known Grubb name while consolidating headquarters in Santa Ana.

C-III Moves On

Prior to BGC, Grubb had been negotiating a possible deal with Irving, Texas-based C-III Capital Partners LLC—an affiliate of Island Capital Group LLC—and Santa Monica-based hedge fund Colony Capital LLC. An exclusive negotiating agreement between those parties expired in mid-January without a deal being struck.

Andrew Farkas, former chairman of Insignia Financial Group Inc. and one of New York’s better-known real estate executives, is chief executive of C-III, which on Jan. 25 closed on the acquisition of another brokerage, Princeton, N.J.-based NAI Global.

NAI Global will continue to operate as a separate company under current management, officials said.

NAI’s Newport Beach office counts about 30 brokers and ranked as Orange County’s 6th largest commercial brokerage in 2010 with $576 million of lease and sales deals, according to the Business Journal’s most recent data.

Grubb was No. 3 on the Business Journal’s list of top local brokerages last year with about $1.4 billion in revenue and 82 brokers in its Newport Beach and Orange offices.