Restructured Grubb & Ellis Names Investor as New Chairman
Grubb & Ellis Co., after restructuring its debt and electing a majority of new directors, has selected Orange County investor Joe F. Hanauer as its new chairman.
Hanauer, 55, succeeds San Francisco lawyer Marvin Grove, who resigned last week, along with the rest of the board of one of the nation’s largest real estate brokerage companies. Hanauer is a general partner in Combined Investments L.P., a Laguna Beach company that invests in an array of businesses, including real estate companies and savings banks.
Grubb & Ellis, based in San Francisco, earned as much as $11 million a year in the early 1980s, when the real estate boom was starting. But its fortunes fell amid a glut of commercial real estate and a slide in home buying, leaving the company deeply in debt. The company posted a $9.9-million loss for the first nine months of 1992 on revenue of $163.2 million.
Last year, Hanauer helped create a bailout plan for Grubb & Ellis in which Warburg, Pincus Investors, a New York investment group, provided $13.8 million in cash in exchange for convertible stock and warrants. The restructuring was completed last week, and the group now holds a 37.4% stake in the company.
Grubb & Ellis also restructured its $40-million debt with Prudential Insurance Co. of America of Newark, N.J. Prudential extended $25 million of the debt and exchanged the remaining $15 million for convertible preferred stock and warrants. Prudential now owns 27% of the company.
Hanauer, who will continue at his Laguna Beach business, invested $900,000 in Grubb & Ellis and now holds a 2.8% stake in the company. Before his involvement in the restructuring, his investment in the company was minimal, he said.
On Friday, six new directors were elected to the nine-member board, including Hanauer and executives of Prudential and Warburg, Pincus.
Hanauer said the new board will try to build market share, especially in areas where Grubb & Ellis has been successful. The company has already diversified into property and facilities management, starting a subsidiary last year called Axiom Real Estate Management Inc. The unit is a joint venture with IBM Corp.
“The background I bring to Grubb & Ellis is an understanding of running diverse businesses,” Hanauer said.
For much of the 1980s, Hanauer was in charge of Coldwell Banker’s residential real estate group, a subsidiary of Sears, Roebuck & Co. then based in Newport Beach. He also supervised its relocation management and residential mortgage services. He became chairman and chief executive of the company in 1985 and left in 1988 to start his own ventures.
