FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
--------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission File Number: 1-8122
------------
GRUBB & ELLIS COMPANY
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-1424307
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2215 Sanders Road, Suite 400,
Northbrook, IL 60062
-----------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(847) 753-7500
-----------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
19,991,216
-----------------------------------------------------------------
(Number of shares outstanding of the registrant's
common stock at November 1, 1999)
PART I
FINANCIAL INFORMATION
2
Item 1. Financial Statements
GRUBB & ELLIS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
(unaudited)
For the Three Months
Ended September 30,
------------------------------
1999 1998
----------- -----------
Revenue:
Transaction services fees $ 80,332 $ 64,213
Management services fees 14,869 11,956
----------- -----------
Total revenue 95,201 76,169
----------- -----------
Costs and expenses:
Transaction services commissions 48,176 37,272
Salaries, wages and benefits 23,789 20,307
Selling, general and administrative 15,907 13,656
Depreciation and amortization 1,819 1,273
----------- -----------
Total costs and expenses 89,691 72,508
----------- -----------
Total operating income 5,510 3,661
Other income and expenses:
Interest and other income 251 212
Interest expense (192) (157)
----------- -----------
Income before income taxes 5,569 3,716
Provision for income taxes (2,228) (1,406)
----------- -----------
Net income $ 3,341 $ 2,310
=========== ===========
Net income per common share:
Basic - $ .17 $ .12
=========== ===========
Diluted - $ .16 $ .11
=========== ===========
Weighted average common shares outstanding:
Basic - 19,851,208 19,722,124
=========== ===========
Diluted - 21,071,963 21,879,551
=========== ===========
See notes to condensed consolidated financial statements.
3
GRUBB & ELLIS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
Assets
September 30, June 30,
1999 1999
------------- --------
Current assets:
Cash and cash equivalents $ 8,869 $ 5,500
Services fees receivable, net 7,571 9,019
Other receivables 2,527 2,291
Prepaids and other current assets 5,583 5,020
Deferred tax assets, net 1,102 2,940
-------- --------
Total current assets 25,652 24,770
Noncurrent assets:
Equipment and leasehold improvements, net 20,290 18,554
Goodwill, net 30,591 28,564
Deferred tax assets 3,450 3,450
Other assets 3,755 4,455
-------- --------
Total assets $ 83,738 $ 79,793
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,844 $ 3,122
Credit facility indebtedness 3,000 7,500
Acquisition indebtedness 1,252 2,332
Accrued compensation and employee benefits 11,274 9,511
Deferred commissions payable 3,657 -
Other accrued expenses 3,468 2,605
-------- --------
Total current liabilities 25,495 25,070
Long-term liabilities:
Acquisition indebtedness - 553
Accrued claims and settlements 8,866 8,837
Other liabilities 848 851
-------- --------
Total liabilities 35,209 35,311
-------- --------
Stockholders' equity:
Common stock, $.01 par value: 50,000,000 shares authorized; issued and
outstanding 19,766,142 shares (net of 176,000 treasury shares) at
September 30, 1999 and 19,885,084 shares at June 30, 1999 198 199
Additional paid-in-capital 113,257 112,550
Retained earnings (deficit) (64,926) (68,267)
-------- --------
Total stockholders' equity 48,529 44,482
-------- --------
Total liabilities and stockholders' equity $ 83,738 $ 79,793
======== ========
See notes to condensed consolidated financial statements.
4
GRUBB & ELLIS COMPANY
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
For the three months ended
September 30,
--------------------------
1999 1998
-------- --------
Cash Flows from Operating Activities
Net income $ 3,341 $ 2,310
Net adjustments to reconcile net income to net cash
provided by operating activities 10,980 4,532
-------- --------
Net cash provided by operating activities 14,321 6,842
-------- --------
Cash Flows from Investing Activities:
Purchases of equipment, software and leasehold
improvements (3,044) (1,008)
Cash paid for business acquisitions, net of cash acquired (829) (9,195)
-------- --------
Net cash used in investing activities (3,873) (10,203)
-------- --------
Cash Flows from Financing Activities:
Repayment of acquisition debt (1,633)
Repayment of credit facility debt (4,500)
Other financing uses (946)
--------
(7,079)
--------
Net increase (decrease) in cash and cash equivalents 3,369 (3,361)
Cash and cash equivalents at beginning of period 5,500 14,251
-------- --------
Cash and cash equivalents at end of period $ 8,869 $ 10,890
======== ========
----------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash payments during the period for:
Interest $ 293 $ 110
Income taxes 542 582
See notes to condensed consolidated financial statements.
5
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. Interim Period Reporting
The accompanying unaudited condensed consolidated financial statements include
the accounts of Grubb & Ellis Company and its wholly owned subsidiaries and
controlled partnerships (collectively, the "Company").
The accompanying unaudited condensed consolidated financial statements are
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and, therefore, should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended June 30, 1999.
The financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
(including disclosure of contingent assets and liabilities) at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
In the opinion of management, all adjustments necessary for a fair statement of
the financial position and results of operations for the interim periods
presented have been included in these financial statements and are of a normal
and recurring nature. Certain amounts in prior periods have been reclassified
to conform to the current presentation.
Operating results for the three months ended September 30, 1999 are not
necessarily indicative of the results that may be achieved in future periods.
2. Income Taxes
The provision for income taxes for the three months ended September 30, 1999 and
1998 is as follows (in thousands):
For the three months ended
September 30,
--------------------------
1999 1998
------ ------
Current $ 390 $ 256
Deferred 1,838 1,150
------ ------
$2,228 $1,406
====== ======
6
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
3. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share from continuing operations (in thousands, except per share data):
Three months ended
September 30,
-------------------
1999 1998
------- -------
Net income $ 3,341 $ 2,310
======= =======
Basic earnings per share:
Weighted average common shares
outstanding 19,851 19,722
======= =======
Earnings per share - basic $ 0.17 $ 0.12
======= =======
Diluted earnings per share:
Weighted average common shares
Outstanding 19,851 19,722
Effect of dilutive securities:
Stock options and warrants 1,221 2,158
------- -------
Weighted average dilutive common
Shares outstanding 21,072 21,880
======= =======
Earnings per share - diluted $ 0.16 $ 0.11
======= =======
4. Business Acquisitions
On July 30, 1999, the Company acquired substantially all of the assets of
Landauer Associates, Inc. a real estate valuation and consulting firm.
Consideration given the seller at closing included cash, common stock
warrants and the assumption of certain liabilities. The Company recorded the
acquisition under the purchase method of accounting, and all operations
subsequent to the acquisition date are reflected in the Company's financial
statements.
Pro Forma Information:
The Company also completed three other acquisitions during fiscal year 1999
(Williams Property Venture d/b/a Smithy Braedon Oncor International and
Smithy Braedon Oncor International Management, Inc., Commercial Florida
Realty Partners, Inc. and Island Realty Service Group, Inc.) whose results of
operations, due to the timing of the acquisitions, are not included in the
Company's financial statements for the three months ended September 30, 1998.
The following unaudited pro forma financial information reflects the
operations of the Company for the three months ended September 30, 1998,
assuming the above four acquisitions had occurred on July 1, 1998 (in
thousands, except per share data):
7
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
4. Business Acquisitions (Continued)
Three months ended
September 30,
1998
------------------
Total revenue $85,011
Income before taxes 4,062
Net income 2,524
Earnings per share:
Basic 0.13
Diluted 0.12
The Company's results of operations for the three months ended September 30,
1999, which includes operations of Landauer Associates, Inc. subsequent to the
date of acquisition, do not materially differ from pro forma results that would
have been obtained for that period.
Pro forma information does not purport to be indicative of the results that
would have been obtained had these events occurred at the beginning of the
period presented, and is not intended to be a projection of future results.
5. Segment Information
The Company has two reportable segments - Transaction Services and Management
Services, and evaluates segment performance and allocates resources based on
earnings before interest expense, taxes, depreciation and amortization
("EBITDA"). (Amounts in $000's)
Transaction Management Company
Services Services Totals
Three months ended September 30, 1999
Total revenue $80,332 $14,869 $95,201
EBITDA 6,901 679 7,580
Total assets as of September 30, 1999 61,609 22,129 83,738
Three months ended September 30, 1998
Total revenue $64,213 $11,956 $76,169
EBITDA 5,111 35 5,146
Total assets as of June 30, 1999 59,998 19,795 79,793
Reconciliation of Segment EBITDA to Income Statement:
Three months ended September 30,
--------------------------------
1999 1998
------- -------
Total segment EBITDA $7,580 $5,146
Less:
Depreciation & amortization 1,819 1,273
Interest expense 192 157
------ ------
Income before income taxes $5,569 $3,716
====== ======
8
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
6. Commitments and Contingencies
The Company previously disclosed in its Annual Report on Form 10-K for the year
ended June 30, 1999, information concerning a lawsuit filed on January 23, 1995
in the United States District Court for the Western District of Pennsylvania,
entitled John W. Matthews, et al. v. Kidder, Peabody & Co., et al. and HSM Inc.,
et al. During the fiscal quarter ended September 30, 1999, there were no
material developments in this matter.
The Company is involved in various other claims and lawsuits arising out of the
conduct of its business, as well as in connection with its participation in
various joint ventures and partnerships, many of which may not be covered by the
Company's insurance policies. In the opinion of management, the eventual
outcome of such claims and lawsuits is not expected to have a material adverse
effect on the Company's financial position or results of operations.
7. Subsequent Event
On October 15, 1999 the Company entered into a new credit agreement ("Credit
Agreement") arranged by Bank of America, N.A. ("BofA"), and simultaneously
repaid and terminated its prior credit facility. The Credit Agreement consists
of a $40 million reducing revolver credit facility to be used for acquisitions
and stock repurchases (of which $15 million is uncommitted), along with a $10
million revolving credit facility for working capital purposes. Interest on
outstanding borrowings is due quarterly in arrears and is based upon BofA's
prime rate and/or the LIBOR rate plus, in either case, an additional margin
based upon a particular financial ratio of the Company, and will vary depending
upon which interest rate options the Company chooses to be applied to specific
borrowings. Both credit facilities mature on October 15, 2004, however, the
total available commitment on the reducing revolver will be reduced by 20%, 35%
and 45% during the third, fourth and fifth year of the facility, respectively.
Borrowings from the new Credit Agreement were used to repay loans of $3 million
which were outstanding as of September 30, 1999, along with related financing
costs of the facility, which are being amortized over the term of the Credit
Agreement.
Performance of the Company's obligations under the Credit Agreement is
collateralized by substantially all of the Company's assets. The Credit
Agreement also contains certain restrictive covenants, including, among other
things, the prohibition of the payment of dividends, restrictions on the
issuance of certain types of preferred stock, and the maintenance of certain
financial ratios.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements which may involve known and
unknown risks, uncertainties and other factors that may cause the Company's
actual results and performance in future periods to be materially different
from any future results or performance suggested by these statements. Such
factors, which could adversely affect the Company's ability to obtain these
results include, among other things, (i) the volume of transactions and
prices for real estate in the real estate markets generally, (ii) a general
or regional economic downturn which could create a recession in the real
estate markets, (iii) the Company's debt level and its ability to make
interest and principal payments, (iv) an increase in expenses related to
new initiatives, investments in personnel and technology, and service
improvements, (v) the success of new initiatives and investments, (vi) the
impact of Year 2000 technology issues, (vii) the ability of the Company to
integrate acquired companies and assets, and (viii) other factors described
in the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1999.
RESULTS OF OPERATIONS
Revenue
The Company's revenue is derived principally from transaction services fees
related to commercial real estate, which include commissions from leasing,
acquisition and disposition transactions as well as fees from appraisal,
consulting and asset management assignments. Management services fees
comprise the remainder of the Company's revenues, and include fees related
to both property and facilities management, business services, construction
management and agency leasing.
Revenue in any given quarter during the three fiscal year period ended June
30, 1999, as a percentage of total annual revenue, ranged from a high of
31.4% to a low of 19.1%, with revenue earned in the first quarters of each
of the last three fiscal years ranging from 22.0% to 24.2%. The Company
has typically experienced its lowest quarterly revenue in the quarter
ending March 31 of each year with higher and more consistent revenue in the
quarters ended June 30 and September 30, and its highest quarterly revenue
in the quarter ending December 31, due to increased activity caused by the
desire of clients to complete transactions by calendar year-end.
Total revenue for the three months ended September 30, 1999 was $95.2
million, an increase of 25.0% over revenue of $76.2 million for the same
period last year, reflecting stronger real estate markets than the prior
year period, increased business activity across the Company's service lines
and the impact of the Company's recent acquisitions. This improvement
related to a $16.1 million increase in transaction services commissions and
a $2.9 million increase in management services fees over the same period in
1998.
10
Costs and Expenses
Transaction services commission expense is the Company's major expense and
is a direct function of gross transaction revenue levels, which include
transaction service commissions and other fees. Professionals participate
in transaction services fees at rates which increase upon achievement of
certain levels of production. As a percentage of gross transaction
revenue, related commission expense increased for the quarter ended
September 30, 1999 as compared to the same periods in 1998 due to higher
participation percentages related to increased production levels.
Total costs and expenses, other than transaction services commissions,
increased by $6.3 million, or 17.8%, for the first three months of fiscal
year 2000 compared to the same period in fiscal year 1999. These increases
were due to increased operating, depreciation and amortization expenses
attributable to the ten acquisitions made by the Company in these fiscal
years, as well as higher variable operating costs associated with increases
in its management services business.
Net Income
Net income for the three months ended September 30, 1999 was $3.3 million,
or $.16 per common share on a diluted basis, as compared to net income of
$2.3 million, or $.11 per common share for the same period in fiscal year
1999. The increase was due primarily to increased revenues which, coupled
with the benefit of stabilized fixed expenses, increased the Company's
operating margin.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operations of $14.3 million, of which $3.8
million was used in investing activities, primarily for business
acquisitions and purchases of equipment and leasehold improvements, and
$7.1 million was used in financing activities, primarily to repay
acquisition and credit facility debt. Working capital also increased by
$457,000 during the three months ended September 30, 1999.
The Company has historically experienced the highest use of operating cash in
the quarter ended March 31, primarily related to the payment of incentive
and deferred commission payable balances which attain peak levels as a
result of the high volume of transaction services activity during the
quarter ended December 31. Deferred commissions balances of approximately
$3,657,000 were outstanding as of September 30, 1999.
On October 15, 1999 the Company entered into a new credit agreement
("Credit Agreement") arranged by Bank of America, N.A. ("BofA"), and
simultaneously repaid and terminated its prior credit facility. The Credit
Agreement consists of a $40 million reducing revolver credit facility to be
used for acquisitions and stock repurchases (of which $15 million is
uncommitted), along with a $10 million revolving credit facility for
working capital purposes. Borrowings from the new Credit Agreement were
used to repay loans of $3 million which were outstanding as of September
30, 1999, along with related financing costs of the facility, which are
being amortized over the term of the Credit Agreement. See Note 7 of Notes
to Condensed Consolidated Financial Statements for additional information.
11
In August 1999 the Company announced a program through which it may
purchase up to $3 million of its common stock on the open market from time
to time as market conditions warrant. As of September 30, 1999 the Company
had repurchased 176,000 shares at a total cost of approximately $978,000.
The Company believes that its short-term and long-term operating cash
requirements, including its technology initiative commitments, will be met
by operating cash flow. In addition, the Company has a $50 million credit
facility available for additional capital needs.
To the extent that the Company's cash requirements are not met by operating
cash flow or borrowings under its credit facility, or in the event of
adverse economic conditions or other unfavorable events, the Company may
find it necessary to reduce expenditure levels or undertake other actions
as may be appropriate under the circumstances.
The Company continues to explore additional strategic acquisition
opportunities that have the potential to broaden its geographic reach,
increase its market share to a significant portion and/or expand the depth
and breadth of its current lines of business. The sources of consideration
for such acquisitions could be cash, the Company's current credit facility,
new debt, and/or the issuance of stock. Although it is the Company's
intent to actively pursue this strategy, no assurances can be made that any
new acquisitions will occur.
Year 2000 Issues
During fiscal years 1997 through 1999, the Company significantly increased
its investment in various technology initiatives. The Company embarked
upon these initiatives to enhance the productivity of its staff and
business processes, and to provide a stable platform to support the
Company's recent and future growth. Through its three year technology
plan, the Company has sought to mitigate material risks associated with the
year 2000. This technology improvement plan has replaced most of the
Company's information systems and equipment platforms, including intranet,
human resources, general ledger, accounts payable and transaction services
management and research, and consequently has brought these systems into
compliance with year 2000 requirements. The Company has also completed
upgrades to various servers and desktop computers. As a part of this three
year plan, the Company implemented a new transaction services revenue
system in November 1999.
The Company has made capital expenditures totaling $9.7 million through
October 31, 1999 related to these systems, and currently expects to invest
an additional $120,000 over the next two months to complete its technology
plan, the majority of which relates to implementation for the revenue
system. The Company has been testing its systems (including tests of the
financial systems and service interruption tests) and has found no
significant problems. Management of the Company believes it has an
effective program in place relating to its internal information systems to
resolve the year 2000 issue in a timely manner, although no assurances can
be given in this regard.
The Company has assessed its exposure to year 2000 issues other than those
related to internal information systems, including issues related to third
party vendors, and developed a plan (including contingencies to
12
address these risks). The Company evaluated its telecommunication systems and,
based on this investigation, spent $2.0 million (and expects to spend another
$225,000) to upgrade or replace non-compliant telephone, voice mail, facsimile
and other telecommunications equipment. As of October 31, 1999, all replacements
and upgrades were complete, except for those at two remaining offices which are
scheduled to be completed by November 30, 1999. The Company will face business
interruption risk if telecommunications are suspended as a result of a year 2000
issue.
In addition to its own systems, the Company's year 2000 plan has included
evaluation of building systems in properties managed by Grubb & Ellis
Management Services, Inc. ("GEMS") (as well as the Company's facilities),
and various property accounting systems for GEMS clients. GEMS is working
with its clients (property owners) to gather information on the year 2000
readiness of building systems such as security, elevator and HVAC. As of
September 30, 1999, 94% of the buildings GEMS manages had completed
testing, and 81% of the remediation projects were complete. GEMS is also
assisting its clients in preparing contingency plans, which will be issued
to property owners in November 1999. For client accounting, GEMS has
received and installed accounting software upgrades from all software
vendors, and the Company believes that these systems are year 2000
compliant.
Since the Company cannot anticipate all possible outcomes of the year 2000
problem, nor predict the readiness of entities with which it transacts
business, there can be no assurance these events will not have a material
adverse effect on the Company's business, financial condition, results of
operations or cash flows.
13
PART II
OTHER INFORMATION
(Items 3, 4 and 5 are not applicable
for the quarter ended September 30, 1999)
14
Item 1. Legal Proceedings.
-----------------
The information called for by Item 1 is incorporated by reference from Note
6 to Notes to Condensed Consolidated Financial Statements.
Item 2. Changes in Securities
---------------------
(b) Effective October 15, 1999, the Company entered into a secured
credit agreement with Bank of America, N.A. as Administrative Agent and a
lender, and certain other lenders (the "Credit Agreement"), providing for a
credit facility of up to $50 million. The term of the Credit Agreement
extends until October 2004. As security for the facility, the lenders have
a security interest in the majority of the assets of the Company and its
primary subsidiaries. In addition, the material subsidiaries of the Company
have guaranteed repayment of any amounts borrowed under the facility.
Pursuant to the provisions of the Credit Agreement, the Company is
prohibited from the payment of dividends or other repurchases, redemption
or distributions with respect to its capital stock, other than dividends,
redemptions or other distributions payable in common stock with the same
economic and voting rights as the currently outstanding common stock; and
the Company may repurchase shares for cash in the amount of $10 million
less the amount spent on the repurchase of shares since June 30, 1999 and
less the amounts spent on certain other restricted investments. There are
also restrictions on indebtedness, liens, guarantees, loans, investments,
acquisitions, and dispositions of assets. The financial covenants
applicable during the term of the Credit Agreement include maintaining a
ratio of debt to EBITDA of no more than 2.25 to 1.00 as of the last day of
each fiscal quarter beginning December 31, 1999 for the period of the four
fiscal quarters ending on that date; and a ratio of EBITDA to the sum of
interest expense, income taxes, debt service, capital expenditures and
earnout payments of at least 1.00 to 1.00 at all times.
(c) On July 30, 1999, the Company issued to AEGON USA Realty Advisors,
Inc. ("AEGON") a warrant to purchase an aggregate of 600,000 shares of
common stock of the Company at an exercise price of $6.25 per share, as
partial consideration for the purchase of certain assets of Landauer
Associates, Inc., a subsidiary of AEGON ("Landauer"), and certain
affiliates of Landauer. The transaction was consummated in reliance on
Section 4(2) of the Securities Act of 1933, as amended, in that it did not
involve a public offering or sale of the Company's securities, and was not
underwritten.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
-------------
(3) Articles of Incorporation and Bylaws
3.1 Certificate of Incorporation of the Registrant, as restated effective
November 1, 1994, incorporated herein by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K filed on March 31, 1995 (Commission
File No. 1-8122).
15
3.2 Certificate of Retirement with Respect to 130,233 Shares of Junior
Convertible Preferred Stock of Grubb & Ellis Company, filed with the
Delaware Secretary of State on January 22, 1997, incorporated herein by
reference to Exhibit 3.3 to the Registrant's Quarterly Report on Form 10-Q
filed on February 13, 1997 (Commission File No. 1-8122).
3.3 Certificate of Retirement with Respect to 8,894 Shares of Series A Senior
Convertible Preferred Stock, 128,266 Shares of Series B Senior Convertible
Preferred Stock, and 19,767 Shares of Junior Convertible Preferred Stock of
Grubb & Ellis Company, filed with the Delaware Secretary of State on
January 22, 1997, incorporated herein by reference to Exhibit 3.4 to the
Registrant's Quarterly Report on Form 10-Q filed on February 13, 1997
(Commission File No. 1-8122).
3.4 Grubb & Ellis Company Bylaws, as amended and restated effective June 1,
1994, incorporated herein by reference to Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q filed on November 13, 1996 (Commission File
No. 1-8122).
(4) Instruments Defining the Rights of Security Holders, including Indentures
4.1 Credit Agreement among the Registrant, certain subsidiaries of the
Registrant, Bank of America, N.A., American National Bank and Trust of
Chicago and LaSalle Bank National Association, dated as of October 15,
1999.
4.2 Revolving Credit Loan Note executed by the Registrant in favor of Bank of
America, N.A. in the amount of $3,714,285.71 dated as of October 15, 1999.
4.3 Revolving Credit Loan Note executed by the Registrant in favor of American
National Bank and Trust of Chicago in the amount of $3,428,571.43 dated as
of October 15, 1999.
4.4 Revolving Credit Loan Note executed by the Registrant in favor of LaSalle
Bank National Association in the amount of $2,857,142.86 dated as of
October 15, 1999.
4.5 Reducing Revolving Credit Loan Note executed by the Registrant in favor of
Bank of America, N.A. in the amount of $9,285,714.29 dated as of October
15, 1999.
4.6 Reducing Revolving Credit Loan Note executed by the Registrant in favor of
American National Bank and Trust of Chicago in the amount of $8,571,428.57
dated as of October 15, 1999.
4.7 Reducing Revolving Credit Loan Note executed by the Registrant in favor of
LaSalle Bank National Association in the amount of $7,142,857.14 dated as
of October 15, 1999.
4.8 Swingline Loan Note executed by the Registrant in favor of Bank of America,
N.A. in the amount of $2,000,000 dated as of October 15, 1999.
16
4.9 Stock Subscription Warrant No. A-1 dated July 30, 1999, issued to Aegon USA
Realty Advisors, Inc., incorporated herein by reference to Exhibit 4.20 to
the Registrant's Annual Report on Form 10-K filed on September 28, 1999
(Commission File No. 1-8122).
On an individual basis, instruments other the Exhibits listed above under
Exhibit 4 defining the rights of holders of long-term debt of the Registrant and
its consolidated subsidiaries and partnerships do not exceed ten percent of
total consolidated assets and are, therefore, omitted; however, the Company will
furnish supplementally to the Commission any such omitted instrument upon
request.
(10) Material Contracts
10.1 Pledge Agreement between the Registrant and Bank of America, N.A., as
Administrative Agent, dated as of October 15, 1999.
10.2 Pledge Agreement between Grubb & Ellis Management Services, Inc. and Bank
of America, N.A., as Administrative Agent, dated as of October 15, 1999.
10.3 Pledge Agreement between HSM Inc. and Bank of America, N.A., as
Administrative Agent, dated as of October 15, 1999.
10.4 Guarantee and Collateral Agreement by the Registrant and certain of its
Subsidiaries in favor of Bank of America, N.A., as Administrative Agent,
dated as of October 15, 1999.
10.5 Collateral Trademark Security Agreement by the Registrant in favor of Bank
of America, N.A., as Administrative Agent, dated as of October 15, 1999.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
None.
17
SIGNATURE
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 thereunto duly authorized.
GRUBB & ELLIS COMPANY
---------------------
(Registrant)
Date: November 12, 1999 /s/ Brian D. Parker
-----------------------------------
Brian D. Parker
Executive Vice President
and Chief Financial Officer
18
Grubb & Ellis Company and Subsidiaries
EXHIBIT INDEX
for the quarter ended September 30, 1999
----------------------------------------
Exhibit
- -------
(4) Instruments Defining the Rights of Security Holders, including Indentures
4.1 Credit Agreement among the Registrant, certain subsidiaries of the
Registrant, Bank of America, N.A., American National Bank and Trust of
Chicago and LaSalle Bank National Association, dated as of October 15,
1999.
4.2 Revolving Credit Loan Note executed by the Registrant in favor of Bank of
America, N.A. in the amount of $3,714,285.71 dated as of October 15, 1999.
4.3 Revolving Credit Loan Note executed by the Registrant in favor of American
National Bank and Trust of Chicago in the amount of $3,428,571.43 dated as
of October 15, 1999.
4.4 Revolving Credit Loan Note executed by the Registrant in favor of LaSalle
Bank National Association in the amount of $2,857,142.86 dated as of
October 15, 1999.
4.5 Reducing Revolving Credit Loan Note executed by the Registrant in favor of
Bank of America, N.A. in the amount of $9,285,714.29 dated as of October
15, 1999.
4.6 Reducing Revolving Credit Loan Note executed by the Registrant in favor of
American National Bank and Trust of Chicago in the amount of $8,571,428.57
dated as of October 15, 1999.
4.7 Reducing Revolving Credit Loan Note executed by the Registrant in favor of
LaSalle Bank National Association in the amount of $7,142,857.14 dated as
of October 15, 1999.
4.8 Swingline Loan Note executed by the Registrant in favor of Bank of America,
N.A. in the amount of $2,000,000 dated as of October 15, 1999.
(10) Material Contracts
10.1 Pledge Agreement between the Registrant and Bank of America, N.A., as
Administrative Agent, dated as of October 15, 1999.
10.2 Pledge Agreement between Grubb & Ellis Management Services, Inc. and Bank
of America, N.A., as Administrative Agent, dated as of October 15, 1999.
10.3 Pledge Agreement between HSM Inc. and Bank of America, N.A., as
Administrative Agent, dated as of October 15, 1999.
19
10.4 Guarantee and Collateral Agreement by the Registrant and certain of its
Subsidiaries in favor of Bank of America, N.A., as Administrative Agent,
dated as of October 15, 1999.
10.5 Collateral Trademark Security Agreement by the Registrant in favor of Bank
of America, N.A., as Administrative Agent, dated as of October 15, 1999.
(27) Financial Data Schedule
20