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SANTA ANA, CA-Tom D’Arcy stepped into the role of president and CEO of Grubb & Ellis Co. just over six months ago and has presided over the 51-year-old real estate services firm during a time in which both the company and the commercial real estate industry have shown signs of improvement. Although Grubb & Ellis lost money in 2009 and for the first quarter of this year, the company’s revenues have been rising, its loss narrowed in the latest quarter and D’Arcy said in the company’s first-quarter conference call, “We expect Grubb & Ellis to return to profitability in 2010.” Both in the conference call and at a recent JMP Securities Research conference, as well as in a recent interview with GlobeSt.com, D’Arcy has outlined the steps that Grubb & Ellis has taken to take advantage of what the Santa Ana-based company sees as an incipient real estate recovery that offers opportunities. He has also pointed out that the company recently raised $30 million of new capital in a debt offering designed primarily to fund the company’s growth, which he cites as a sign of confidence from investors.

GlobeSt.com: What was it about the Grubb & Ellis job that convinced you to take it?

D’Arcy: There were three main factors. First, there was the brand, which I think is fair to say is one of the more recognizable in commercial real estate. Then there is the platform itself and the reach of 126 offices with 6,500 employees. And then there was the recovering market, so those three added up to a pretty good opportunity.

GlobeSt.com: When in your view did the market turn?

D’Arcy: If you look back now at when the commercial real estate values hit bottom, it was in the third quarter of 2009, so even then, we had a sense that the market was recovering. Grubb & Ellis is offering guidance of $550 million to $575 million of revenue that we expect in 2010, and EBITDA of $10 million to $15 million, based on the recovering market and what the senior management of the company has done in terms of recruiting productive talent to the company over the past 18 months. The recovering markets are benefiting all of the real estate services companies, ourselves included. (Grubb & Ellis transaction services revenue increased 26% year-over-year in the first quarter, and management services revenue grew by 11% during the same period.)

GlobeSt.com: What are some of the specific steps that Grubb & Ellis is taking to improve its performance and take advantage of the recovering market?

D’Arcy: We are working on increasing the scale and productivity of our brokerage operations by migrating less productive brokers out of our shop and bringing in more productive brokers. We have migrated 176 less productive brokers out of the company and brought in 118 more productive brokers (since July 2008), including 19 in the first quarter of this year. We are intently focused on management services. We are the seventh-largest manager of properties in the country, with approximately 290 million square feet, and we would like to grow that to 400 million or 500 million.

GlobeSt.com: What new areas are you expanding into in order to grow?

D’Arcy: We’re expanding into the mortgage banking business (with the hiring of Jeff Majewski as executive managing director to direct the company’s commercial mortgage brokerage practice), and we are also looking at the appraisal business, the institutional investment management business and other areas that are clearly within the competency of our company that we are not into right now that we will be moving into as we move forward.

GlobeSt.com: Do you have stated goals for increasing market share?

D’Arcy: That’s really difficult to do because we have multiple lines of business, so we’re working on increasing the scale and productivity of our brokerage operations, management services and other areas that are in keeping with the skill sets we have at the company. We have clearly defined goals, and we think that if we really focus on our core competencies, we will expand our platform.

GlobeSt.com: Do you have a growth goal in terms of the size of the company?

D’Arcy: We’re not the biggest, but the best. Our focus is on making sure that we are delivering great service to our clients. That is something that we can control. With a recapitalized balance sheet, squarely focused on growth, with the $30 million of new capital we have raised in a recovering market, we feel very comfortable about where we sit and our ability to be able to drive our company going forward.

GlobeSt.com: What, if anything, has surprised you about Grubb & Ellis since you joined the company?

D’Arcy: I would not say that I am surprised, but the opportunity is even greater than when I first took on the job. There is an unbelievable opportunity to add value for the employees as well as the shareholders, so we are bullish on Grubb & Ellis.

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