Grubb & Ellis, once the largest independently owned, publicly traded commercial real estate brokerage firm in the country, has filed for bankruptcy protection and will sell all its assets in a court-sanctioned 363 sale to BGC Partners, Inc., a New York financial services company that recently acquired Grubb & Ellis’s rival, Newmark Knight Frank. The sale is part of a prepackaged bankruptcy plan, which will be filed in the U.S. Bankruptcy Court for the Southern District of New York. This sale, along with the Newmark Knight Frank acquisition, will make BGC Partners one of the industry’s largest brokerage and service companies.
Grubb & Ellis was founded in 1958 by Bill Grubb and Hal Ellis and became at one time the leading real estate broker in the US. However, in its efforts to expand, it borrowed heavily, and ran into trouble when the industry crashed in the early 1990s. Although it survived the 90’s, it was weakened, and was acquired in 2007 by NNN Realty Advisors Inc., a privately held real estate services and management company headquartered in Santa Ana, California, in a stock-only purchase valued at $725 million. The company foundered under the recent recession, and lost its market share. In its bankruptcy filing, Grubb & Ellis disclosed that it had a total of only $150 million in assets compared to $167 million in debt at the end of 2011. Grubb & Ellis was delisted by the New York Stock Exchange in January, 2012 when its shares fell below $1.
Quoted in the Los Angeles Times, Thomas P. D’Arcy, chief executive of Grubb & Ellis, said “We believe the transaction will be seamless for our clients, and we expect no disruption to the company’s operations. Furthermore, 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.” It is unknown whether BGC Partners will keep the Grubb & Ellis name after the acquisition.
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