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Monday, May 23, 2022

Colony Financial Makes Loan to Grubb & Ellis

Colony Financial Inc. late Tuesday said that it had participated in $57 million worth of transactions, including an $18 million loan to struggling Santa Ana real estate brokerage Grubb & Ellis Co.

The Santa Monica commercial mortgage real estate investment trust, in partnership with another entity affiliated with parent Colony Capital LLC, originated the secured senior term loan.

Colony Financial has a 50-percent interest in the loan, which includes warrants equal to about 9.6 percent of Grubb & Ellis’ outstanding shares.

Grubb & Ellis, which lost nearly $67 million last year, announced last month that it had hired an adviser to explore strategic alternatives that could include a potential sale or merger. The New York Stock Exchange on Friday informed the company, which saw its market cap fall to $42 million, that its stock was out of compliance with NYSE requirements. It has six months to reach and maintain a minimum $1-per-share average closing price for 30 straight days. The stock closed at 64 cents on Tuesday.

In a second transaction more typical of Colony Financial’s investment strategy, the REIT said it acquired an existing $60 million first mortgage loan, secured by certain condominium interests in two Manhattan “landmark” buildings. Colony Financial said it acquired the loans at a discount and with the same partner in the Grubb & Ellis deal.

Colony Financial shares earlier closed up 8 cents, or less than a percent, to $18.43 on the New York Stock Exchange.

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