Grubb & Ellis Company (GBE) filed Amended Annual Report for the period ended 2008-12-31.
Grubb & Ellis Company is a full service commercial real estate company. The Company has a global strategic alliance with Knight Frank, one of the leading property consulting firms in Europe and Asia. The Company, through its offices, affiliates and alliance with Knight Frank, provides a full range of real estate services, including advisory, management and consultative services, to users and investors worldwide. Grubb & Ellis Company has a market cap of $99.1 million; its shares were traded at around $1.52 with and P/S ratio of 0.2.
Highlight of Business Operations:
For the year ended December 31, 2008, the Company had revenues of approximately $611.8 million and loss from continuing operations of approximately $279.5 million.
After considering management’s recommendation and consulting with EY, the Audit Committee has determined that NNN incorrectly recognized fee revenue under Statement of Financial Accounting Standards Statement No. 66, Accounting for Sales of Real Estate, and Statement of Position 92-1, Accounting for Real Estate Syndication Income, in 2005, 2006 and 2007 and the three interim periods in 2008 in connection with certain TIC Programs in which NNN had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties. As a result of the recognition by NNN of the applicable fee revenue in the wrong accounting period, the Company reduced retained earnings as of January 1, 2006 by approximately $8.7 million; increased revenues in 2006 by approximately $518,000; and increased revenues in 2007 by approximately $251,000.
The Company and its subsidiaries are leading sponsors of real estate investment programs that provide individuals and institutions the opportunity to invest in a broad range of real estate investment vehicles, including tax-deferred 1031 TIC exchanges, public non-traded REITs and real estate investment funds. During the year ended, more than $984.3 million in investor equity was raised for these investment programs; the Company has more than $6.8 billion of assets under management related to the various programs that it sponsors. The Company has completed transaction acquisition and disposition volume totaling approximately $11.9 billion on behalf of more than 55,000 program investors since 1998.
On November 4, 2008, the Company further amended (the “Second Letter Amendment”) its Credit Facility as of September 30, 2008. The Second Letter Amendment, among other things, a) reduced the amount available under the Credit Facility from $75,000,000 to $50,000,000 by providing that no advances or letters of credit would be made available to the Company after September 30, 2008 until such time as borrowings are reduced to less than $50,000,000; b) provided that 100% of any net cash proceeds from the sale of certain real estate assets that must be sold by the Company would permanently reduce the Revolving Credit Commitments (as defined in the Credit Facility), provided that the Revolving Credit Commitments shall not be reduced to less than $50,000,000 by reason of the operation of such asset sales; and c) modified the interest rate incurred on borrowings by increasing the applicable margins by 100 basis points and by providing for an interest rate floor for any prime rate related borrowings.
Additionally, the Second Letter Amendment, among other things, reduced the limit on guarantees of primary obligations from $125,000,000 to $50,000,000, modified select financial covenants to reflect the impact of the current economic environment on the Company’s financial performance, amended certain restrictions on payments by deleting any dividend/share repurchase limitations and modified the reporting requirements of the Company with respect to real property owned or held.
As of September 30, 2008, the Company was not in compliance with certain of its financial covenants related to earnings before taxes, interest, depreciation or amortization, or EBITDA. As a result, part of the Second Letter Amendment included a provision to modify selected covenants. The Debt/EBITDA Ratio (as defined in the Credit Facility) for the quarters ending September 30, 2008 and December 31, 2008 were amended from 3.75:1.00 to 5.50:1.00, while the Debt/EBITDA Ratio for the quarters ending March 31, 2009 and thereafter remain at 3.50:1.00. The Interest Coverage Ratio (as defined in the Credit Facility) for the quarters ending September 30, 2008, December 31, 2008 and March 31, 2009 were amended from 3.50:1.00 to 3.25:1.00, while the Interest Coverage Ratio for the quarters ended June 30, 2009 and September 30, 2009 remained unchanged at 3.50:1.00 and for the quarters ended December 31, 2009 and thereafter remained unchanged at 4.00:1.00. The Recourse Debt/Core EBITDA Ratio (as defined in the Credit Facility) for the quarters ending September 30, 2008 and December 31, 2008 were amended from 2.25:1.00 to 4.25:1.00, while the Recourse Debt/Core EBITDA Ratio for the quarters thereafter remained unchanged at 2.25:1.00. The Core EBITDA (as defined in the Credit Facility) to be maintained by the Company at all times was reduced from $60.0 million to $30.0 million and the Minimum Liquidity to be ma
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