SANTA ANA, CA, (Feb. 11, 2010) – Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today announced unaudited preliminary results for the fourth quarter of 2009 and updated expectations for fiscal year 2010. For the fourth quarter of 2009, the company expects to report revenue of approximately $147 million and adjusted EBITDA of approximately $1.0 million. The company’s previous guidance had anticipated revenue of $149 million to $161 million and adjusted EBITDA of $6 million to $10 million. (1)
“Although we are beginning to see early signs of a recovery and an improvement in market sentiment and business confidence, these trends did not translate into the higher transaction volume we historically have experienced in the fourth quarter,” said Richard W. Pehlke, (top right photo) executive vice president and chief financial officer of Grubb & Ellis.
Overall revenue and adjusted EBITDA were positively impacted by better than anticipated results in the Management Services and Investment Management segments. Those results were offset by lower than expected revenue in Transaction Services due to reduced transaction activity, higher direct costs and the deferral of transactions that the company anticipated closing late in the quarter, which resulted in the fourth quarter 2009 shortfall.
Given the company’s current market expectations and following a detailed review of its three main business segments, the company has reset its outlook for 2010. The company now anticipates 2010 total revenue of $550 million to $575 million and adjusted EBITDA of $10 million to $15 million.
The company expects to return to profitability in 2010 as its recruiting efforts mature and cost containment efforts are fully realized. The company is targeting further reductions in operating expenses of 12 to 14 percent on an annualized basis.
The company stated that it continues to expect a 25 to 30 percent increase in 2010 investment sales activity over 2009 levels, and a 10 to 15 percent increase in leasing activity over the prior year. The company’s original guidance was based on stronger financial performance for 2009.
“Our recent recapitalization, which generated gross proceeds of $96 million and net proceeds of $40 million after repayment of debt and expenses, considerably strengthened our financial position and the company today is essentially debt-free.
"When combined with our key strategic hires, broad market presence and strong client relationships, Grubb & Ellis is well positioned to capitalize on the opportunities that will present themselves as the market recovers.”
D’Arcy added, “During the year we will continue to invest in our business to drive revenue, expand our service offerings and improve our overall service quality.
"At the same time, we will realign our cost structure to more closely match resources to the drivers of our revenue in order to make our company lean, profitable and cost competitive. We look forward to discussing these initiatives and the company’s growth opportunities in greater detail on our fourth quarter earnings call.”
(1) Revenue excludes approximately $4.0 million of revenue from wholly owned properties held for investment.
Adjusted EBITDA is a non-GAAP financial measure which excludes the impact of non-cash items such as charges related to sponsored programs, real estate-related impairment and stock-based compensation.
The company will release its fourth quarter earnings before the market opens on Thursday, Feb. 18, 2010. Management will host a conference call at 10:30 a.m. Eastern Time to review the results. A live webcast will be accessible through the Investor Relations section of the company's Web site at http://www.grubb-ellis.com/.
The direct dial-in number for the conference call is 1.800.706.7749 for domestic callers and 1.617.614.3474 for international callers.
The conference call ID number is 81705538. An audio replay will be available beginning at 1:30 p.m. ET on Thursday, Feb. 18 until 7 p.m. ET on Thursday, Feb. 25 and can be accessed by dialing 1.888.286.8010 for domestic callers and 1.617.801.6888 for international callers and entering conference call ID 41102092.
In addition, the conference call audio will be archived on the company's Web site following the call.
Contacts: Janice McDill, Phone: 312.698.6707, Email: janice.mcdill@grubb-ellis.com
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