The sale of the new stock is expected to close on or about Nov.6. The company is selling the preferred shares, which carry a 12%coupon, through "definitive agreements with qualified institutionalbuyers and accredited investors." Grubb & Ellis has alsogranted the initial purchaser and placement agent a 45-day optionto purchase up to an additional 100,000 shares of preferred stock,which would raise an additional $10 million if the purchaserexercises the option. JMP Securities acted as the initial purchaserand sole placement agent on the preferred equity offering.

Pehlke tells GlobeSt.com that the new capital will enable Grubb& Ellis to pay off its credit line in full under a specialone-time option that it has negotiated with Deutsche Bank TrustCompany Americas that allows the company to settle the entire debtby paying 65% of the amount due. Grubb & Ellis owes $63 millionon the credit line, so 65% of the amount due would be about $41million.

The one-time option requires Grubb & Ellis to pay off thecredit line by Nov. 30. "It is our intention to do that," Pehlkesays. "There will be some transaction costs, of course, but we willhave a considerable amount of working capital available to us"after paying off the credit line, he says. Once the transaction iscompleted, Grubb & Ellis "will have a much improved balancesheet, with minimal debt obligations," he says.