Brokerage Accuses Rival of Smear Tactics : Real estate: Mired in a soft market for commercial property, Grubb & Ellis claims Coldwell Banker has been trying to hijack clients by painting an unflattering picture of Grubb’s financial stability.

It’s tough out there in the commercial real estate trenches, especially now that real estate is slumping.

Times are so tough, in fact, that big commercial brokerage Grubb & Ellis Co. is privately accusing its even larger competitor, Coldwell Banker Commercial Real Estate, of trying to exploit Grubb & Ellis’ financial woes in order to hijack Grubb & Ellis clients.

Instead of taking potshots at Grubb & Ellis, Coldwell Banker ought to get its own finances in order, says a Grubb & Ellis executive in a memo being circulated among the company’s top managers.

Coldwell Banker is said to be the largest commercial real estate broker in the nation and in Orange County. Grubb & Ellis, the county’s second-largest broker, and Coldwell Banker hold a commanding share of the local brokerage business.

But Grubb & Ellis publicly announced last month that the soft market was forcing it to close brokerages in Atlanta, Denver, Detroit and New York and to lay off employees in an effort to save $7 million.

Coldwell Banker, meanwhile, has problems of its own: It is carrying a big debt burden after employees and outside investors paid $300 million to buy the brokerage from Sears, Roebuck & Co. last year. (Sears retained the better-known Coldwell Banker residential brokerage.)

In the three-page Grubb & Ellis memo, Joseph F. Hamilton, executive vice president and chief financial officer, writes: “It has come to my attention that some of our ‘friendly’ competitors at Coldwell Banker have attempted to gain a competitive advantage by criticizing our recent financial performance and current financial position.

“Frankly, I am both outraged and surprised by this criticism originating from Coldwell Banker. Their recent financial performance has been very poor, and their current financial status is highly overleveraged at best.”

The memo, issued late last month, goes on to compare figures for the first six months of the year for publicly traded Grubb & Ellis and for Coldwell Banker, a privately held firm that has been required to report financial data to the Securities and Exchange Commission since the Sears buyout.

According to the memo’s figures, Grubb & Ellis lost $5 million on revenue of $162 million during the first six months of 1990, while Coldwell Banker lost $35 million on revenue of $210 million during the same period.

Grubb & Ellis had long-term debt of $41 million, contrasted with debt of $234 million for Coldwell Banker. Shareholders’ equity--the difference between a corporation’s total assets and liabilities--was $81 million for San Francisco-based Grubb & Ellis, $12 million for Los Angeles-based Coldwell Banker.

“There is absolutely no justification for Grubb & Ellis to lose any business to Coldwell Banker based on a comparison of the financial position of the two companies,” Hamilton writes. “Let’s not let them get away with these efforts!”

The memo urges Grubb & Ellis brokers to show the figures to clients if they bring up the subject.

One manager at an Orange County brokerage that competes with both companies suggested that the flap is something of a tempest in a teapot. He said he doubts the figures make much difference one way or the other to clients.

“Sure, if it comes up, we point out that Grubb hasn’t made much money in umpteen years,” the manager said. “But most clients only care whether you can market their building successfully for them, not whether you make any money doing it.”

Coldwell Banker Chairman James J. Didion responded to the memo Monday by saying Coldwell brokers have better things to do than criticize Grubb & Ellis’ finances.

“I’m unaware of anybody’s efforts here to take shots at Grubb & Ellis,” Didion said. “If anything, I think the opposite is true. But they’re a fine company. It’d surprise me if somebody here was doing that sort of thing.”

At Grubb & Ellis on Monday, Hamilton stood by the accusations in the memo. He respects Coldwell Banker, he said, as “a great firm, but when you have two companies competing against each other, people will use every marketing advantage, every arrow in their quiver.”