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Grubb & Ellis Trades On Expertise & Network, Acquiring 22% Stake In New Spin-Off Company

A large real estate services firm, Chicago-based Grubb & Ellis, has completed an initial public offering (IPO) on the American Stock Exchange for a blank-check company.

The newly-formed Grubb & Ellis Realty Advisors´┐Ż controversial structure is so named because investors buy shares before the company identifies what it will acquire. (Blank-check firms consist of an empty shell company and a management team whose purpose is to raise capital to purchase an operating business.)

Grubb & Ellis plans to use its existing corporate network of 5,000 people in 38 states to help identify undervalued properties in secondary markets that G&E Realty Advisors could purchase, improve and resell. The company would also receive management and leasing fees, as well as disposition fees when the properties are sold.

The IPO raised $143 million. Grubb & Ellis made a modest capital contribution of $2.5 million and then traded on its expertise and network to obtain an initial 22% ownership in the newly-traded company. Their ownership position, valued at $30 million, reinforces the fact that an entity (whether an individual or other structure) can successfully trade on its various assets to build wealth. In this case, those assets were expertise coupled with an effective business network.