Grubb & Ellis Sheds Assets - Analyst Blog

Grubb & Ellis Company (GBE) recently completed the divestment of its investment fund business, Alesco Global Advisors, to Lazard Asset Management LLC. However, the financial terms of the deal were not disclosed.

Grubb & Ellis had acquired a 51% stake in Alesco Global Advisors in 2007. Alesco Global Advisors is a registered investment advisor that focuses on real estate securities and manages three registered mutual funds.

During the second quarter of 2011, the company reported FFO (fund from operations) of ($3.6) million or a loss of 14 cents per share compared with a loss of $1.5 million or 27 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. 

The company is executing plans to maximize returns for its shareholders and enhance its competitive position. The sale of its investment fund business combined with the divestiture of Daymark Realty Advisors has significantly helped the company improve its balance sheet. The company intends to shed all its non-core assets and invest in accretive business opportunities.

Grubb & Ellis is one of the largest commercial real estate services and investment companies in the world. The company offers transaction, management, consulting and investment services, which are supported by highly regarded proprietary market research and extensive local expertise. The company is a leading sponsor of real estate investment programs through its investment management business.

Grubb & Ellis currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, CB Richard Ellis Group, Inc (CBG) holds a Zacks #4 Rank, which translates into a short-term Sell rating.