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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) NOVEMBER 16, 1998
GRUBB & ELLIS COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 1-8122 94-1424307
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2215 SANDERS ROAD, SUITE 400 NORTHBROOK, IL 60062
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 847.753.7500
NO CHANGE
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
(a) ACQUISITION.
On December 1, 1998, Grubb & Ellis Company (the "Company") completed the
purchase of certain assets of Williams Property Venture d/b/a Smithy
Braedon Oncor International, a Virginia general partnership and Smithy
Braedon Oncor International Management, Inc., a Virginia corporation
(collectively, "Smithy Braedon"), headquartered in Washington, D.C. The
acquisition was made pursuant to an asset purchase agreement entered into
by Smithy Braedon, its owners and the Company. The business of Smithy
Braedon consisted primarily of transactional commercial real estate
brokerage services and property management services. Smithy Braedon had
36 real estate professionals in two offices located in Washington, D.C. and
McLean Virginia, and managed approximately one million square feet of
commercial property.
The assets purchased are comprised mainly of real estate services and
property management contracts, fixtures and equipment, proprietary rights
relating to the business, and other personal property. The purchase price
consists of cash at closing, deferred payments due in January 2000 and an
earnout payment based on revenue levels for the twelve months following the
acquisition date. Due to the contingent nature of the earnout payment, the
Company will not record this portion of the purchase price until it is
earned.
A press release dated December 1, 1998 issued by the Company is filed as an
exhibit to this Report and is incorporated herein by reference.
(b) LEGAL MATTERS.
The Company previously reported in Note 9 of its consolidated financial
statements under the caption "Legal Matters" in its Report on Form 10-K for
the fiscal year ended June 30, 1998 information concerning a law suit
entitled JOHN W. MATTHEWS, ET AL V. KIDDER, PEABODY & CO., ET AL AND HSM
INC., ET AL, filed on January 23, 1995 in the United States District Court
for the Western District of Pennsylvania. On September 26, 1996, the court
granted plaintiffs' motion to file an amended complaint to add additional
plaintiffs with respect to Partnerships I and III and granted plaintiffs'
motion for class certification with respect to Partnerships I, II and III.
Subsequently, the court entered an order granting an interlocutory appeal
by defendants to the September 26, 1996 order on the question of the
applicability of the Private Securities Litigation Reform Act of 1995 (the
"Securities Litigation Reform Act") to this case. The case had been
stayed, including discovery, pending the outcome of the appeal. In
November, 1998 the United States Court of Appeals for the Third Circuit
entered an order holding that the Securities Litigation Reform Act is not
applicable to this case and that plaintiffs may proceed with their RICO
claims against the defendants.
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The Company intends to vigorously defend the MATTHEWS action and believes
it has meritorious defenses to contest the claims asserted by plaintiffs.
Based upon available information, the Company is not able to determine the
financial impact, if any, of such action, but believes that the outcome
will not have a material adverse effect on the Company's financial position
or results of operations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
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<S> <C>
99.1 Press Release of Grubb & Ellis Company dated December 1, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRUBB & ELLIS COMPANY
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(Registrant)
Date: December 23, 1998 By: /s/ Robert J. Walner
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Robert J. Walner
Senior Vice President and
General Counsel
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EXHIBIT INDEX
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Exhibit
Number
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99.1 Press Release of Grubb & Ellis Company dated December 1, 1998.
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EXHIBIT 99-1
GRUBB & ELLIS
PROPERTY SOLUTIONS WORLDWIDE-SM- NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACTS: Ted McDougal
847.753.7582
Monica Sparreo
847.753.7547
GRUBB & ELLIS TO ACQUIRE ASSETS OF SMITHY BRAEDON, CREATING
ONE OF THE LARGEST COMMERCIAL REAL ESTATE FIRMS IN REGION
NORTHBROOK, Ill., Dec. 2, 1998 -- Grubb & Ellis Company (NYSE: GBE) today
announced that it has acquired the assets of Smithy Braedon, one of the top real
estate firms in the Washington, D.C. area, creating one of the largest real
estate services providers in the Mid-Atlantic region. Terms of the transaction
were not disclosed.
"The Washington, D.C. metropolitan area is one of the fastest growing real
estate markets in the nation," said John G. Orrico, Grubb & Ellis' national
president of transaction services. "Today's announcement gives us a strong
position in the Washington, D.C., Northern Virginia and Maryland commercial real
estate markets and aligns two firms that share a commitment to client service
and a combination of strengths that are expected to generate future growth."
In addition, Orrico cited The Retail Group, a division of Smithy Braedon,
as a recognized leader in the retail real estate marketplace, a specialization
that Grubb & Ellis is growing nationally.
"This transaction will help us achieve our overriding goal of providing
clients with the broadest product offerings and market coverage available in the
area," said Smithy Braedon Chairman James L. Eichberg. "In Grubb & Ellis, we
have found an excellent partner. In addition to sharing a common culture, Grubb
& Ellis offers the scope of services and market reach that will allow our
professionals to broaden their skills and better serve clients locally and
nationally."
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With roots dating back to 1930, Smithy Braedon provides a full range of
real estate services to clients throughout the greater Washington, D.C.
marketplace. The firm has offices in Washington, D.C. and McLean, Va., and
manages approximately 1 million square feet of commercial property.
Eichberg will remain with the combined company as an executive vice
president, responsible for working with existing Grubb & Ellis management in
running the firm's local operations. Together, the two firms will have
approximately 70 transaction professionals serving the greater Washington, D.C.
market, including Northern Virginia, Maryland and the District of Columbia.
Grubb & Ellis Company is one of the nation's largest publicly traded
commercial real estate services firms. Through its company-owned offices and
affiliates in approximately 90 markets, the company provides transaction
services, management services, financial services and strategic services to
clients worldwide. For more information, visit the firm's web site, at
www.grubb-ellis.com.
Except for historical information, statements included in this announcement
may constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve a number of
risks, uncertainties and other factors that could cause actual results to differ
materially, as discussed in the company's filings with the Securities and
Exchange Commission.
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