Santa Monica-based private equity firm Colony Capital provided Grubb & Ellis an $18 million bridge loan, and received an exclusive sixty-day negotiating and evaluation period to determine whether it will make a larger "strategic investment" in Grubb. If Colony makes a larger investment, Grubb then has twenty-five days to shop the deal around to try and get a better deal.
Here are two articles regarding the Colony loan, one from GlobeSt and the second from the Orange County Register's real estate blog. Colony has been involved in multiple transactions over the past several years. From the GlobeSt article:
The financing deal with Grubb & Ellis is the latest in a series of investments for Colony Capital, which has been involved in some of the largest FDIC deals to date and has been active on a number of other fronts. In 2009, for example, Colony launched a publicly traded REIT, Colony Financial, that focuses primarily on acquiring, originating and managing performing, sub-performing and non-performing commercial mortgage loans.
More recently, Colony led a consortium of investors in acquiring two FDIC loan portfolios with an unpaid balance of $817 million that include 1,505 residential and commercial acquisition, development and construction loans. In Los Angeles recently, funds managed by Colony Capital and R.W. Selby & Co. acquired a portfolio of seven student housing properties adjacent to the University of Southern California comprising 223 units and 836 beds from Westar Associates for $98 million.
In early 2010, investment vehicles managed by Colony paid $90.5 million for a 40% interest in an LLC created by the FDIC to hold assets of 22 failed-bank receiverships and became the managing equity owner of the LLC. Colony was one of 21 bidders who vied for the 40% ownership interest in the LLC, which owned a portfolio of approximately 1,200 distressed commercial real estate loans with an unpaid principal balance of $1.02 billion, of which 70% were delinquent.
Grubb did not waste much time finding a potential suitor, announcing only last week that it had hired an advisor.