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Grubb Secures 11% Loan Secured by Accounts Receivable

March 31, 2011

Been a while since I posted anything, but this was too good to pass up:

Grubb & Ellis Company (GBE: N/A N/A) announced that it has received an $18 million financing commitment from private equity firm Colony Capital, LLC. In turn, the Los Angeles-based international investment firm has secured the right to negotiate exclusively for 60 days with Grubb & Ellis to evaluate a “potential larger strategic investment” in the Santa Ana, CA-based real estate services firm…

According to a term sheet included in a filing by GBE with the Securities and Exchange Commission, the senior loan facility, secured by Grubb’s accounts receivables, has a starting interest rate of 11% which would step up by an additional 50 basis points at the end of each quarter following the May 1, 2011 closing date on outstanding loan funds.

Not looking too hot. Does this mean that brokerage commissions being paid out are now subordinate to interest payments to Colony Capital? If so, yikes.

At Grubb’s current valuations, it seems any investment firm with a giant portfolio of real estate assets should be looking at this deal. Seems like there might be quite a bit of value to pick up here, particularly if you can throw a bunch of business your own way once you control/own a large piece of Grubb. In any event, I’d rather have Tom Barrack in my corner than not.

[via CoStar]

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Categories: Commercial Finance and Lending | Miscellaneous
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Joshua March 31, 2011

TOTAL mess. I thought the same thing. I hope those TIC deals are providing large sponsor fees every quarter cause they are gonna need it. I think it’s safe to say Colony takes over G&E in due time.

Joshua March 31, 2011

Oh, and sells almost everything off once they do.

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