Hunt has been acting CEO since the resignation July 10 of ScottD. Peters, who remains with the firm as chairman and CEO of Grubb& Ellis Healthcare REIT and as executive vice president ofGrubb & Ellis Apartment REIT. Hunt said that Grubb & Ellisis in the early stages of its search for a permanent CEO.

|

Commenting on the $5.1 million quarterly loss, Hunt said, "It isextremely important to put these numbers into context in light ofcurrent market conditions." The interim Grubb & Ellis CEO citedthe economic slowdown and "tightening credit conditions that havebrought the capital markets to a virtual halt." Before the slowdownin the commercial real estate markets began about a year ago, Huntsaid, "Grubb & Ellis and NNN Realty Advisors, like their peers,were benefiting from a robust commercial real estate and capitalmarkets environment."

|

Hunt pointed out that commercial real estate investment volumewas down 69% industry-wide in the first half of this year versuslast year, with cap rates rising, vacancies rising and softeningrental markets. Those conditions, he said, are likely to producesome forced asset sales, especially for owners who bought in thepast several years with high debt and overly optimisticexpectations.

|

Regarding the credit crunch, the interim Grubb & Ellis CEOnoted that the industry continues to struggle with "thenon-issuance of CMBS." Loans are available from banks and insurancecompanies, he pointed out, but he added, "Many banks are focused onmaintaining their capital reserves to guard against further lossesin their residential loan portfolios, and insurance companies arealready said to be bumping up against their annual allocations toreal estate."

|

The upshot of these conditions is that, while capital fordevelopment and investment transactions remains available, "It ismore difficult to obtain, with lower loan-to-value ratios and moreonerous terms, such as the return of recourse lending," Huntsaid.

|

Richard Pehlke, the company's executive vice president and CFO,said that Grubb & Ellis remains on track with its integrationprocess following the NNN Realty Advisors merger. "We are a muchstronger organization, both operationally and financially, than wewere a year ago," Pehlke said.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.