Grubb & Ellis Presents Industrial Market Snapshot Third Quarter 2009

CHICAGO, IL-The following summary is designed to provide a brief overview of the Chicago area industrial market during the third quarter of 2009.

 For more information or to speak with one of the company’s local market experts, please contact Erin Mays at 312.698.6735 or via email at erin.mays@grubb-ellis.com.

METRO CHICAGO REGION

· The region’s industrial vacancy stood at 11.8 percent at the end of third quarter of 2009, up from 11.6 percent in the second quarter. The market experienced negative absorption of 773,800 square feet.

· Demand for R&D/Flex space proved to be a bright spot, with the region posting more than 308,000 square feet of positive net absorption. Occupancy in the General Industrial and Warehouse/Distribution sectors contracted by approximately 366,000 square feet and 500,000 square feet, respectively.

Analysis:

The Chicago industrial vacancy rate increased for the ninth straight quarter to the highest rate the Chicagoland area has witnessed in over a decade. Company consolidations, downsizing and businesses focused on mere survival have all contributed to the rise in vacant space and downward pressure on asking rates. For the remainder of the year, the only construction the region is likely to see is build-to-suit projects. Landlords will remain flexible and offer increased incentives, while on the investment side, investors will remain cautious as the 2012 due date for more than $150 billion of CMBS and regular bank loans approaches.

(300 N. Riverside Plaza, middle left photo)

CENTRAL WILL COUNTY

· The Central Will submarket ended the third quarter with a vacancy rate of 25.1 percent, unchanged from the second quarter.

· The submarket posted slight positive absorption of 16,500 square feet, bringing the total positive net absorption to more than 2.6 million square feet year to date.

· The fact that no development is currently under construction in the submarket is a sign that the construction pipeline has tapered off after more than 5.8 million square feet of new speculative construction, most of it logistics space, has been delivered to the submarket since June 2008.

Analysis:

As the region with the most positive absorption year-to-date, the Central Will submarket has been benefiting from the logistics sector; however, an excessive amount of recently completed new construction projects without adequate tenant demand has put downward pressure on rental rates and has sent the vacancy rate to the highest of all Chicago submarkets. Researchers expect rates to stay steady or decrease in the coming quarters, while new construction starts are unlikely.

SOUTH CITY

· Industrial vacancy in the South City submarket rose 40 basis points to 7.7 percent in the third quarter 2009, from the previous quarter in part due to 481,000 square feet of negative absorption.

· Preferred Freezer Services’ 175,000-square-foot build-to-suit is currently the only new development underway.

Analysis:

Effects of the national recession have sent the South City’s vacancy rate to its highest point in over three years; however, the submarket’s great location and access to numerous rail and highway options has prompted significant activity from manufacturers and distributors, particularly food users. As a result, researchers predict that the South City submarket will remain stable.

O’HARE

· Vacancy dropped 20 basis points to 11.7 percent in the O’Hare industrial submarket as the area experienced positive net absorption of 144,000 square feet.

Analysis:

Decreased activity at O’Hare International Airport has led the submarket to suffer more than 1.6 million square feet of negative absorption year-to-date; however, the O’Hare industrial submarket earned a reprieve in the third quarter due to several transactions in the 20,000- to 40,000-square-foot range. Since the O’Hare submarket remains overbuilt and demand is not expected to pick back up until mid-2010, rental rates will continue to decline and landlords will continue to entice tenants with generous incentives.

To access the full Chicago Industrial Metro Trends report and other Grubb & Ellis research publications, visit www.grubb-ellis.com/research.

HFF closes $78.5M loan sale for AEGON USA Realty Advisors

CHICAGO, IL –The Loan Sales group of HFF (Holliday Fenoglio Fowler, L.P.) announced today it consummated the sale of 19 well-performing first mortgage commercial loans on behalf of AEGON USA Realty Advisors.

HFF senior managing director Stuart Salins represented the seller in the transaction.

The 19 loans range in size from approximately $2 million to $7.5 million, with an aggregate face amount of approximately $78.5 million.

Approximately 40% of the loans have a coupon of less than 5.5%. The loans are secured by retail centers, industrial/warehouse and office buildings, a mobile home park and multi-housing properties located in 11 states.

The loans were sold to one institutional investor at pricing that ranged between a modest discount to a slight premium over par.

“The loans are well-underwritten and well-performing and the sale was motivated by a desire of the seller to slightly rebalance its portfolio,” said Salins.

Contacts:

Stuart M. Salins, HFF Senior Managing Director; (312) 528-3678, ssalins@hfflp.com
Kristen M. Murphy, HFF Associate Director, Marketing; (713) 852-3500, krmurphy@hfflp.com

Grubb & Ellis Announces $90 Million Preferred Equity Transaction

SANTA ANA, CA– Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm,  has entered into definitive agreements with qualified institutional buyers and accredited investors to effect the sale of 900,000 shares of a new issuance of a 12 percent cumulative participating perpetual convertible preferred stock for $90 million in gross proceeds.

 The company has also granted the initial purchaser and placement agent a 45-day option to purchase up to an additional 100,000 shares of preferred stock.

The closing of the transaction is expected to occur on or about Nov. 6, 2009, and the company intends to use the offering proceeds to repay in full its credit facility at the agreed reduced principal amount equal to approximately 65 percent of the principal amount outstanding under such facility.

The balance of the offering proceeds will be used for general working capital purposes and transaction costs. As part of the preferred stock offering, the $5 million subordinated loan provided on Oct. 2, 2009 to the company by an affiliate of its largest stockholder will be converted into the preferred stock at the offering price and accrued interest will be paid with respect to the subordinated loan.

“This is a transformational event for Grubb & Ellis. Upon closing, Grubb & Ellis will be one of the stronger capitalized companies in the real estate services industry,” said C. Michael Kojaian, (top right photo) the company’s chairman and largest stockholder. “We are extremely pleased with the demand for the security and the quality of the institutional investors attracted to the company.”

Additional terms and information with respect to the transaction will be included in a Current Report on Form 8-K and a preliminary proxy statement to be filed with the Securities and Exchange Commission by the company and a final proxy statement to be filed with the SEC and mailed to stockholders.

Contact: Janice McDill, Phone: 312.698.6707, Email: janice.mcdill@grubb-ellis.com

CB Richard Ellis Realty Trust and Duke Realty Corp.Joint Venture Buys Orlando Area Office Building

PRINCETON, N.J.,  Oct. 26, 2009 – CB Richard Ellis Realty Trust and Duke Realty Corporation (NYSE: DRE) (Duke Realty) have completed the acquisition of Northpoint III, (aerial photo top left) a 108,499 sf Class A office building in the Orlando area fully leased to Florida Power Corporation through 2021, under the joint venture agreement announced between CB Richard Ellis Realty Trust and Duke Realty in 2008.

Northpoint III is well-located at 3300 Exchange Place in the master-planned Northpoint Office Park in the Lake Mary submarket of Orlando. The property was originally developed in 2001 by Duke Realty.

The four-story building has a state-of-the-art high-tech infrastructure, high-quality interior finishes and a lobby with marble flooring.

Additionally, the site offers a jogging trail around the office park’s lake. Florida Power has occupied Northpoint III since its completion and recently extended its lease for an additional 12 years.

Lake Mary is approximately 16 miles north of downtown Orlando off I-4 with access via Lake Mary Boulevard. Lake Mary has become the premier suburban location for expanding tenants looking for more efficient and cost-effective space. A recent notable feature for the area has been the completion of the Central Florida Greenway, which offers direct highway access from Lake Mary to the Orlando International Airport.

“CB Richard Ellis Realty Trust recently acquired two other well-located Class A office buildings in the Orlando market. Each property offers diversified, credit tenancies on long-term leases in different submarkets, including one other joint venture acquisition with Duke Realty,” said Chuck Hessel, director of investments for CB Richard Ellis Realty Trust “This newest acquisition is an excellent fit with the REIT’s portfolio and other area investments, and we are pleased to continue expanding our portfolio with Duke Realty.”

This joint venture between CB Richard Ellis Realty Trust and Duke Realty Corporation plans to acquire up to $800 million of newly developed build-to-suit projects over a three-year period. The CB Richard Ellis Realty Trust team worked with Jeffrey Torto, Gary Jaye and the acquisitions team from CBRE Investors to acquire this property.

Contact:  Pam Barnett, Corporate Communications Director, CB Richard Ellis Investors, 213.683.4368, pbarnett@cbreinvestors.com