SANTA ANA, CA-Grubb & Ellis Co. has signed an agreement to sell substantially all its assets to BGC Partners Inc. Upon completion, Grubb & Ellis believes the acquisition by BGC will bring the much-needed scale and resources the company had been seeking through its strategic process, according to a prepared statement.
BGC owns Newmark Knight Frank. The partnership with BGC, a financially strong and respected organization with a deep commitment to the commercial real estate markets, will position Grubb & Ellis to become part of a well-capitalized global platform, according to the Grubb & Ellis statement.
According to Thomas D’Arcy, president and CEO of Grubb & Ellis, “Following a thorough and rigorous process and the evaluation of all available options, we determined that a partnership with BGC provides the best platform for our brokerage professionals, employees and clients. We believe the transaction will be seamless for our clients and we expect no disruption to the company's operations.”
Furthermore, he says, “we believe our professionals and clients will benefit greatly by being part of the BGC organization, which, with its recent acquisition of Newmark Knight Frank, will bring together two strong brands to create a powerhouse in the commercial real estate space.”
According to D’Arcy, “BGC's purchase of the company's senior debt and its willingness to provide incremental financing to ensure the smooth execution of the sale process demonstrate its commitment to the success of the Grubb & Ellis business.”
As GlobeSt.com reported back in November, the news of the sale shouldn’t come of any surprise. In a special report, GlobeSt.com reported that the company was going through a review process on whether to sell or merge and had furloughed for 90 days about two dozen employees at the large commercial real estate brokerage firm’s headquarters here, sources say.
An unidentified source, not involved in the transaction, tells GlobeSt.com that BGC acquired the senior secured debt held by Colony Financial and C-III on Friday for around $25 million to $30 million. "The rest of the debt stack will be wiped out," the source says, "including common stock holders."
Grubb & Ellis intends to implement the transaction as an asset sale under Section 363 of the US Bankruptcy Code. To that end, the company has commenced Chapter 11 proceedings in the US Bankruptcy Court for the Southern District of New York.
Grubb & Ellis says it expects business to continue without disruption as it completes the "363" sale process as expeditiously as possible. The company has simultaneously filed motions requesting that the Court, among other things, approve sale procedures and fix a hearing date and time to approve a sale, according to a statement. Additionally, the company has filed a series of motions to facilitate ongoing operations.
D'Arcy adds that “We thank our outstanding team of professionals and our clients for the faith and loyalty they have shown in Grubb & Ellis through this process, and we are pleased to have found such a strong partner who can provide our company with financial stability and deeply enhanced opportunities. Our track record for exceptional client service will continue, and we look forward to future growth and success under new ownership.”
BGC has committed to provide Grubb & Ellis with "debtor-in-possession" financing to support the company's operations throughout the "363" sale process. Following Court approval, the DIP financing, combined with funds generated by the company's ongoing operations, will be used to support the business through the consummation of the sale.
GlobeSt.com will follow this story and post updates as more information becomes available.
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