(Reuters) - Grubb & Ellis Co GRBE.PK filed for bankruptcy protection amid a slower-than-expected recovery in the commercial property market, and agreed to sell nearly all its assets to the financial services brokerage BGC Partners Inc (BGCP.O).
Howard Lutnick, chief executive of BGC and also of the boutique investment bank Cantor Fitzgerald LP, said in a statement the purchase reflects BGC’s desire to “build a premier position” in real estate services.
BGC in October bought Newmark Knight Frank, a New York real estate services company that employs more than 7,000 people.
Founded in 1958, Grubb & Ellis said it manages in excess of 250 million square feet (23.2 million square meters) of property, and employs more than 3,000 people.
Its services include tenant representation, property leasing and sales, commercial property and corporate facilities management, appraisals and commercial mortgage brokerage.
Chief Financial Officer Michael Rispoli said in a court filing Grubb & Ellis was hurt by its merger with real estate investment management company NNN Realty Advisors Inc in December 2007, which in retrospect “couldn’t have come at a worse time.”
He said losses piled up during the financial crisis, and that the Santa Ana, California-based company was further hurt by the sluggish real-estate market. Rispoli said Grubb & Ellis does not have enough cash to make it through the end of March.
An expedited sale through the bankruptcy process “is the only remaining way to allow Grubb & Ellis to preserve its business as a going concern, protect jobs, and maximize the value of the debtors’ estates,” Rispoli wrote.
Grubb & Ellis had $150 million of assets and $167 million of liabilities as of December 31, according to its petition filed Monday in U.S. Bankruptcy Court in Manhattan. Sixteen affiliates also sought protection from creditors.
The company said BGC will provide financing to keep it operating without disruption. BGC separated from Cantor Fitzgerald in 2004.
The case is In re: Grubb & Ellis Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10685.
Reporting by Jonathan Stempel in New York; Additional reporting by Sakthi Prasad in Bangalore; Editing by Kim Coghill, Dave Zimmerman