Grubb & Ellis, Thompson Wage Proxy Fight

[IMGCAP(1)]SANTA ANA, CA-Grubb & Ellis Co. and its former chairman, Tony Thompson, are waging a proxy battle with the two sides proposing competing slates of directors to be elected at the firm’s annual meeting next week. Each side has sent letters to shareholders urging them to vote for its slate of candidates.

Three of the seats on the eight-member Grubb & Ellis board are up for election at the shareholders’ meeting, which is scheduled for Wednesday, Dec. 3 at the Four Seasons Hotel in Washington, DC. Grubb & Ellis is asking shareholders to re-elect directors Harold H. Greene, Devin I. Murphy and D. Fleet Wallace. Thompson’s slate, which he calls the “reform slate,” includes Thompson, Harold A. Ellis Jr. and Stuart A. Tanz.

[IMGCAP(2)]Both Grubb & Ellis and Thompson, in filings with the SEC, list a host of details in presenting arguments in favor of their own board candidates and in opposition to the other side’s slate. In addition, Grubb & Ellis has received support for its board candidates from three proxy advisory firms: RiskMetrics Group (formerly Institutional Shareholder Services or ISS), Glass Lewis & Co. and Egan-Jones Proxy Services. “The analyses and recommendations of RiskMetrics, Glass Lewis and Egan-Jones are relied upon by hundreds of major institutional investment firms, mutual funds and fiduciaries throughout the United States,” Grubb & Ellis stated in an announcement today.

Thompson, who has criticized Grubb & Ellis management for some time after leaving the company early this year, has mailed a letter to Grubb & Ellis stockholders that says, “We have watched in dismay over the past nine months as Grubb & Ellis has, in our view, lost its way.”Thompson, now the chairman and CEO of Irvine, CA-based Thompson National Properties, states in his letter to shareholders that Grubb & Ellis’ stock price “has shed in excess of 82% of its value” since he left the firm.

Thompson charges that Grubb & Ellis is “significantly underperforming its competitors in earnings,” citing its net loss of $55 million for the nine months ended Sept. 30. He also takes the company to task for not naming a permanent CEO to succeed interim CEO Gary Hunt.

Grubb & Ellis, in its letter to shareholders, calls Thompson’s efforts “a blatant attempt by Mr. Thompson to ultimately take control of your company and install one of his nominees, Stuart Tanz, as CEO of Grubb & Ellis.” Among other statements, the Grubb & Ellis letter says, “We believe Mr. Thompson may intend to cause your company to either buy or absorb his fledgling company.”

The Grubb & Ellis letter says that the company’s management has “taken aggressive actions to increase productivity, reduce costs and position the company for profitable and sustainable growth and success.” It cites today’s “volatile and turbulent economy,” saying that the real estate market “is facing unprecedented challenges.”

Greene has served as a director of Grubb & Ellis since December 2007 and is a 40-year veteran of the commercial and residential real estate lending industry. Murphy has served as a director of Grubb & Ellis since July 2008 and is a managing partner of Coventry Real Estate Advisors LLC; Wallace has served on the board since December 2007 and is a principal and co-founder of McCann Realty Partners LLC.

Thompson, one of the pioneers of the tenant-in-common industry, served as chairman of Grubb & Ellis until shortly after its merger with NNN Realty Advisors, a firm that he founded. Harold A. Ellis Jr. co-founded Grubb & Ellis Co. in 1958 and served as its chairman and CEO until 1992. Tanz serves as the CEO of United Income Properties, a position he has held since October 2006.