The future of the Boston office of Grubb & Ellis, as well as the company itself, hangs in the balance after the commercial real estate firm filed for bankruptcy protection yesterday.
The company is facing $30 million in debt set to mature March 1, and the firm does not have the cash reserves needed to push through the first quarter of the year.
As a result, BGC Partners Inc. agreed to purchase the cash-strapped Grubb & Ellis with a $30 million credit bid along with $4.8 million in bankruptcy financing. BGC Partners acquired brokerage Newmark Knight Frank in October.
"We believe this transaction enhances our value proposition to our clients and strengthens our position in the commercial real estate marketplace," said Thomas P. D’Arcy, Grubb’s president and CEO, said in a prepared statement. "BGC’s strong capital base, robust technology and deep commitment to its brokers provide Grubb & Ellis with scale along with the resources needed by our professionals to deliver exceptional service to our clients. We are confident this will be a seamless transition for our clients and that becoming part of BGC is an extremely attractive opportunity for our brokerage professionals and employees."
Even before the filing, Grubb’s Boston office was already falling apart as brokers jumped ship to other firms. The most high-profile exit involved Jack Kerrigan, a 30-year Grubb veteran, taking his team to rival brokerage Avison Young last summer. And about a week before that, former Grubb brokers Paul Delaney and John Coakley joined CresaPartners in Boston.
Beyond Boston, Grubb has lost "hundreds" of brokers across the country, according to multiple industry sources.
Grubb & Ellis employs 3,000 people in 90 offices across the country. The firm claimed $150 million in assets with $167 million in liabilities, according to court documents obtained by Banker & Tradesman. The California-based Grubb said that losing its largest property-management contract, valued $40 million in 2011; a merger with real-estate investment firm NNN Realty Advisors Inc. in 2007 that resulted in $10 million in losses in 2011; and continued operating losses from the recession combined to force it to seek bankruptcy protection.
