Grubb & Ellis Provides Update on Strategic Process

SANTA ANA, Calif., May 31, 2011 /PRNewswire/ -- Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today issued the following update regarding the strategic process currently being conducted.

As previously disclosed, the Board of Directors of Grubb & Ellis initiated a process in the first quarter of 2011 to explore strategic alternatives for the company, with the goals of maximizing value for all stakeholders and strengthening the company's competitive position.  This process included hiring JMP Securities to explore the potential sale or merger of the company and engaging FBR Securities to market for sale the company's wholly owned but separately managed subsidiary, Daymark Realty Advisors.  

The company received initial indications of interest from numerous strategic and financial buyers after hiring JMP Securities on March 21, and on March 30 it announced the signing of a loan agreement with Colony Capital LLC, which included a 60-day exclusivity period for Colony to explore a larger strategic transaction.  As of May 29, Colony's exclusivity period ended, which allows Grubb & Ellis to actively engage in discussions with additional parties, while continuing discussions with Colony.

In addition, the company has made significant progress in the Daymark process and expects to complete a transaction with respect to Daymark.  Daymark is a full service property and asset management company and is responsible for the management of the company's tenant-in-common portfolio, which consists of 30 million square feet of commercial real estate, including 8,700 apartment units and nearly 5,000 investors.  

"We have already made significant progress with both initiatives and now that we have expanded the pool of potential strategic partners the Board and management are intent on bringing the strategic process to conclusion in a manner that creates value for all of our stakeholders," said Thomas P. D'Arcy, president and chief executive officer of Grubb & Ellis.  "The market reaction to our core real estate services and non-traded REIT business – with its broad platform, talented professionals and deep client and investor base – has been very strong.  At the same time, Daymark has attracted strong interest from a range of potential buyers."

There can be no assurances that the company will reach an agreement for the sale of Daymark or successfully conclude negotiations with a strategic investor.  The company will continue to provide updates on both initiatives as appropriate.

About Grubb & Ellis Company

Grubb & Ellis Company (NYSE: GBE) is one of the largest and most respected commercial real estate services and investment companies in the world. Our 5,200 professionals in more than 100 company-owned and affiliate offices draw from a unique platform of real estate services, practice groups and investment products to deliver comprehensive, integrated solutions to real estate owners, tenants and investors. The firm's transaction, management, consulting and investment services are supported by highly regarded proprietary market research and extensive local expertise. Through its investment management business, the company is a leading sponsor of real estate investment programs. For more information, visit www.grubb-ellis.com.

Forward-Looking Statements  

Certain statements included in this press release may constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause the company's actual results and events in future periods to be materially different from those anticipated, including risks and uncertainties related to the financial markets. Such factors which could adversely affect the company's ability to obtain these results include, among other things: (i) a continued or further weakness in the company's Investment Management and/or Transaction Services businesses, including the velocity and volume of equity raised with respect to the Investment Management business and insufficient margins with respect to its Transaction Services business; (ii) the general economic pressures on transaction values of sales and leasing transactions and businesses in general; (iii) a continued weakness in real estate markets and values; (iv) the unavailability of credit to finance real estate transactions in general and the company's tenant-in-common programs, in particular; (v) the success of current and new investment programs; (vi) the success of new initiatives and investments; (vii) the inability to attain expected levels of revenue, performance, brand equity in general, and in the current macroeconomic and credit environment, in particular; (viii) the inability of the company's subsidiary, NNN Realty Advisors, Inc. to come into compliance with the contractually specified net worth requirements with respect to approximately 30 percent of the tenant-in-common programs managed by the company; (ix) the nature and amount of the net intercompany balance between the company and its wholly-owned subsidiary, Daymark Realty Advisors, Inc., (x) the occurrence of bankruptcies by unaffiliated, individual investor entities in the company's tenant-in-common programs which may result in demands for payments on certain non-recourse/carve-out guaranty and indemnification obligations issued by the company's subsidiaries, which may, in turn, in the event such guaranty or indemnification obligations cannot be met, result in a cross-default under the company's issued and outstanding Convertible Senior Notes; (xi) the ultimate outcome in various legal proceedings concerning tenant-in-common programs sponsored by the company's subsidiaries, including the arbitration proceeding with respect to the Met 10 Center in Texas; and (xii) other factors described in the company's annual report on Form 10-K for the fiscal year ending December 31, 2010 and Form 10-Q for the quarter ended March 31, 2011, and in other Current Reports on Form 8-K filed by the company from time to time with the Securities and Exchange Commission. The company does not undertake any obligation to update forward-looking statements.

SOURCE Grubb & Ellis Company

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