Grubb & Ellis Company and NNN Realty Advisors, Inc. have announced that they entered into a definitive merger agreement, to create a real estate services company with a total capitalization of approximately $725 million.
The merger, which has been approved by the Board of Directors of both Grubb & Ellis and NNN Realty Advisors, will create a diversified real estate services business providing a complete range of transaction, management and consulting services, and possessing a strong platform for continued growth. The company will retain the Grubb & Ellis name and will continue to be listed on the NYSE under the ticker symbol "GBE," according to Grubb & Ellis.
Pursuant to the merger agreement, the merger will be effected through the issuance of 0.88 shares of Grubb & Ellis common stock for each share of NNN Realty Advisors common stock outstanding. The transaction is expected to close in the third or fourth quarter of 2007, subject to approval by stockholders of both companies and other customary closing conditions of transactions of this type. Upon closing, Grubb & Ellis is expected to begin paying an annual dividend of $0.41 per share.
Following the merger, Grubb & Ellis stockholders will own approximately 41 percent of the combined company and NNN Realty Advisors stockholders will own approximately 59 percent of the combined company.
"The stock for stock transaction offers significant benefits to stockholders of both companies by combining two industry leaders in their respective segments of the commercial real estate industry," says C. Michael Kojaian, Chairman of Grubb & Ellis Company. "We believe that the combination of the two companies will be accretive in the first full year of operations subsequent to closing and will generate significant cash flow to fuel long term growth."
Scott D. Peters, Chief Executive Officer and President of NNN Realty Advisors will become Chief Executive Officer of the combined entity.
"This is an exciting day for both NNN Realty Advisors and Grubb & Ellis. By leveraging the strengths of these two companies, we will create a dynamic real estate services company. The combined entity will have an attractive mix of diversified earnings with minimal leverage on the balance sheet, well-positioned for growth, both domestically and internationally, consistent with the strategic focus of Grubb & Ellis," says Peters.
The combined company will be headquartered in Santa Ana, CA. Upon closing, the Grubb & Ellis Board will be increased to nine members which will include six nominees from NNN Realty Advisors and three nominees from Grubb & Ellis. Anthony W. Thompson, Founder and Chairman of the Board of NNN Realty Advisors, will join Grubb & Ellis as Chairman of the Board. C. Michael Kojaian, currently Chairman of the Board of Directors of Grubb & Ellis, will remain on the Board of Directors of Grubb & Ellis. Scott D. Peters, President and Chief Executive Officer of NNN Realty Advisors will join the Grubb & Ellis Board of Directors.
Grubb & Ellis' financial advisor with respect to the transaction was JMP Securities LLC and NNN's financial advisor was Lehman Brothers Inc. Grubb & Ellis' legal advisor with respect to the transaction was Zukerman Gore & Brandeis, LLP and NNN Realty Advisors' legal advisor was Alston + Bird LLP.
