Jones Lang LaSalle


Grubb & Ellis Realty Advisors Lists on AmEx
February 28, 2006
By Suzann D. Silverman, Editor-in-Chief

Dennis Yeskey
A new company formed by Grubb & Ellis Co. today listed on the American Stock Exchange. Grubb & Ellis Realty Advisors Inc. is structured as a blank-check company and is intended for acquisition of commercial real estate assets "through a purchase, asset acquisition or other business combination," according to a release from the already public real estate services company, which declined to elaborate further because it is in a quiet period.

At the end of its first day of trading, the company had sold a volume of 1.5 million shares, closing at $6.10 per share. It had expected to list 20.8 million shares at $6 per share, for a total of about $125 million (although 1.7 million of those shares were to be offered to Kojaian Ventures L.L.C., an affiliate of Grubb & Ellis chairman Michael Kojaian), according to its prospectus. While Grubb & Ellis provided the capital needed to go public, according to the prospectus, Grubb & Ellis Realty Advisors will have, for investment only, the capital it raises in the public markets, plus a revolving credit facility with Deutsche Bank Trust Co. Americas for $150 million. For that reason, it expects at least initially to make just one investment, the prospectus specified.

The entity represents an unusual approach to investment for a service provider, according to Deloitte & Touche national director of real estate capital markets Dennis Yeskey (pictured). While many other service providers or their personnel invest directly in real estate, some alongside clients, such investments are structured as private transactions. "It's the first one I've heard of as an IPO," he told CPN this afternoon. But then, Grubb & Ellis has a history of being a more "unusual" play, he said. "At one point, it was the hottest stock on the stock exchange."
The company, which claimed not to have any potential investments targeted, stated as its focus industrial or office property in secondary or tertiary markets or the suburban areas surrounding major metropolitan CBDs. For the time being, it will be operated by Grubb & Ellis personnel, with deals transacted by Grubb & Ellis brokers and acquired assets managed by affiliated Grubb & Ellis Management Services Inc.

Deutsche Bank Securities Inc. was lead manager and sole bookrunner on the deal.