D’Arcy sees efficiencies of scale.
SANTA ANA-Grubb & Ellis, which has been exploring a sale or merger since March, has entered into exclusive negotiations with New York City-based C-III Capital Partners and an affiliate of Santa Monica, CA-based Colony Capital LLC. A C-III affiliate also has agreed to invest $10 million in Grubb & Ellis through the expansion of Grubb’s existing $18 million credit facility with Colony Capital, a move that “will establish both C-III and Colony Capital as significant stakeholders in Grubb & Ellis,” according to a statement this morning by the Santa Ana-based firm.
The talks with C-III and Colony are the latest in a series of moves that Grubb & Ellis has made to smooth the way for a sale or merger since the company, in March, hired JMP Securities as its financial adviser to explore strategic alternatives. Earlier this month, Grubb sold its Alesco Global Advisors unit to Lazard Asset Management LLC, and in August the company sold its TIC business, called Daymark Realty Advisors, to buyers in New York City and San Diego. Both moves were considered keys to the possible sale of Grubb & Ellis, the company said.
Grubb & Ellis would not comment on the talks with C-III and Colony beyond its formal statement.
Barrack
Grubb & Ellis was previously in exclusive negotiations with Colony Capital, but that exclusive negotiating period expired. C-III’s entrance into negotiations and its investment in Grubb introduce a new player into the Santa Ana-based company’s efforts to find a buyer or a merger partner.
C-III Capital is an affiliate of New York City-based Island Capital Group LLC and is headed by Andrew Farkas, the former chairman and CEO of Insignia Financial Group. Farkas is the founder of Island Capital as well as the chairman and CEO of C-III. Island owns controlling interests in a number of businesses that oversee more than $150 billion in assets, including C-III Capital Partners, which is one of the largest special servicers in the US.
Farkas, in a statement that was part of the Grubb & Ellis announcement this morning, said: “We share (Grubb & Ellis) management’s vision of strengthening the platform and growing the company. C-III Capital Partners and Colony have the capital base and industry expertise necessary to bolster Grubb & Ellis’ client offerings and position the company for long-term success.” Thomas D’Arcy, president and CEO of Grubb & Ellis, said in the statement that, “A transaction with these two highly regarded firms would provide the scale for us to more efficiently and effectively serve our clients and broker-dealer partners.”
Colony Capital is a private investment firm is headed by chairman and CEO Thomas Barrack Jr. that provided Grubb & Ellis with $18 million in financing in March in exchange for a 60-day negotiating period to evaluate a larger strategic investment in Grubb & Ellis. C-III, in addition to its $10 million in Grubb & Ellis, will purchase $4 million of Colony’s existing facility, Grubb & Ellis said in its statement this morning.
The talks with C-III and Colony are the first exclusive negotiations that Grubb & Ellis has announced since that previous 60-day period expired. Grubb & Ellis did not conduct a conference call for its most recent quarterly earnings period, saying that it did not want to make any comments, other than its quarterly filing with the SEC, because of its ongoing effort to "explore strategic alternatives."
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