COMMERCIAL
Getting through the rest of 2009 unscathed could prove tricky for Santa Ana-based Grubb & Ellis Co.
The brokerage and investment company isn’t expecting a pickup in commercial real estate before next year, company officials told analysts during their second-quarter earnings call earlier this month.
Prices for offices and industrial buildings are projected to fall another 1.5% to 2% nationally by the end of the year, they said. Rents are likely to fall another 3% to 5% by the end of 2009.
Any improvement in leasing or sales seen in 2010 is likely to be gradual, interim Chief Executive Gary Hunt said.
Of more pressing concern, the company’s on the clock with a potentially crippling debt payment due at the end of September, according to a filing Grubb made with the Securities and Exchange Commission.
In May, Grubb reworked a $38 million revolving credit line it had with a unit of Deutsche Bank AG. Among other provisions, the lender is requiring Grubb to pay back at least 72% of the credit line,a little more than $27 million,by the end of September.
The amount due isn’t as staggering as some looming debt faced by other Orange County companies. But it’s big for Grubb: It had $14.8 million in cash and investments as of June 30, plus $17.8 million in restricted cash.
The company hopes to rework its finances and pay off the credit line. If that doesn’t happen, the $38 million credit line and another related $29 million line could come fully due by January.
The outstanding balance on the two credit lines was $66 million as of June 30.
Difficulty in finding alternative sources of funding to pay those debts could prove to be troublesome in light of the current economic environment, the company said in its most recent quarterly report.
That in turn could “create substantial doubt about the company’s ability to continue,” Grubb said.
Officials said earlier this month they’re working with an outside adviser on financing but declined to detail much more of the process.
“Needless to say, we’re pretty focused on it,” Chief Financial Officer Rich Pehlke said on the company’s most recent call with analysts.
“It’s a pretty short window” until the September deadline, he said.
The Michelson
A few months after getting a new owner, the 3161 Michelson office tower in Irvine’s Park Place campus has a new leasing director,and a new name.
New York’s Emmes Group of Cos., which bought the 19-story tower from Maguire Properties Inc. in June for $160 million, recently named Brian Harnetiaux as its regional director of leasing.
Prior to joining Emmes, Harnetiaux held similar positions at RREEF Funds LLC and McCarthy Cook & Co. He’s handled more than 1.6 million square feet of leases in his career.
Emmes also is renaming the 531,000-square-foot property, which should be getting anchor tenant Hyundai Motor Co.’s name placed on top of the building later this year. Hyundai’s finance arm is moving in to the building.
The new name drops the “3161” and now just goes by “The Michelson.”
Two nearby towers had similar names to the office’s old description: Hines Interest LP’s 2211 Michelson and Maguire’s 2600 Michelson, which is going back to the bank, Maguire said last week.
Auctioneers
A handful of smaller local commercial properties are among a batch of buildings being sold via a new online auction site.
Marina del Rey-based AuctionPoint Inc. just started the site. The goal is to help brokers create a customized online auction site for their building where they can configure the parameters to address the needs of the specific property and seller.
Five properties,all in the $2 million or less range,are currently up for sale, with auctions ending next month.
Four of them are in OC. Brokers listing those properties include CB Richard Ellis Group Inc.’s David Bost and Gary Stache, Cushman & Wakefield Inc.’s Jeff Chiate, and Voit Commercial Brokerage’s Walter Frome.
