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Grubb & Ellis Board Fight Coming to Head Next Week

One of the noisier board fights Orange County has seen in years comes to a head next week some 2,500 miles away in Washington, D.C., at the annual meeting for Santa Ana-based Grubb & Ellis Co.

At stake is the board makeup and strategic direction of a real estate brokerage and investment company that’s suffered losses and seen its stock drop nearly 80% this year.

The board battle has its roots in 2007’s acquisition of Chicago-based brokerage Grubb & Ellis by Santa Ana real estate investor NNN Realty Advisors Inc.

The deal, a reverse merger for privately held NNN, was valued at about $700 million at the time. Now the company, which kept the better known Grubb name, has a market value of about $80 million.

The shareholder meeting stands to be a referendum on whether the company’s decline is due more to the widespread real estate downturn or because of poor management decisions.

Three seats on Grubb’s eight-person board are up for grabs Wednesday.

The company’s former chairman, Tony Thompson, has accused Grubb’s directors and executives of mismanaging the company since his departure early this year.

He’s looking to rejoin the board and bring along two hand-picked candidates.

Grubb’s management opposes Thompson’s slate and has accused him of running a decidedly self-serving campaign.

Thompson is Grubb’s second largest shareholder with a 14% stake.

Voting for Thompson’s slate could force Grubb to install an unqualified chief executive backed backed by Thompson, the company claims.

Management also contends a Thompson win could pressure Grubb to acquire his latest venture, Irvine-based real estate investor Thompson National Properties.

Both sides have dismissed the other’s claims in a series of pointed letters to shareholders. Both express confidence that they’ll emerge victorious.

Grubb officials point to a trio of independent proxy voting and corporate governance advisory firms that have recommended its preferred trio of existing directors up for re-election.

The company’s largest institutional investor is Boston-based Wellington Management Co., which had a 7.5% stake at the end of September, according to regulatory filings.

Other major institutional investors include Barclays PLC, Goldman Sachs Group Inc. and Vanguard Group Inc. None of the institutional investors could be reached for comment for this story.

Grubb’s largest shareholder is C. Michael Kojaian, a real estate developer who was the company’s chairman before the combination with NNN.

A Detroit native, Kojaian once owned 70% of Grubb and now holds 23% of the combined company. He may side with management and play kingmaker in the board battle.

Kojaian is a Grubb director who isn’t up for re-election.


For more on this story, see the Dec. 1 edition of the Business Journal.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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