Lutnick speaks to Grubb brokers as decision over purchase looms

BGC Partners CEO Howard Lutnick and top executives at Newmark Knight Frank sought to allay fears of Grubb & Ellis brokers during a brief conference call this morning with company employees.

Lutnick spoke with energy about the anticipated merger of Grubb with Newmark and BGC that is slated to happen once a judge from the U.S Bankruptcy Court in Manhattan approves a sale of Grubb assets.

“This is the hottest real estate platform. It is the thing people are talking about. It is the thing our competitors are afraid of,” Lutnick said. “It is not CBRE [Group], it is not JLL [Jones Lang LaSalle], it is not the corporate nonsense. It’s not all that stuff. It’s a great platform.”

Lutnick was joined on the call by Michael Lerhman, global head of real estate for BGC, and Newmark Knight Frank’s Barry Gosin, the CEO, and James Kuhn, the president. They did not take questions from brokers, as Lutnick did on a prior call several months earlier that he said lasted three hours.

Today’s call came a day after a three-and-a-half-hour hearing in U.S. Bankruptcy Court in Manhattan in which Judge Martin Glenn ended without issuing his ruling on whether he would approve BGC’s purchase of Grubb. Lutnick said on the call he expected a ruling in the coming days.

Gosin, speaking as if he were reading from a prepared statement, said, “As the onion gets peeled away, we have realized the full benefit of the partnership with BGC and [financial services firm] Cantor [Fitzgerald].”

Lutnick, speaking more freely and tossing around the word “family” frequently in reference to Grubb, BGC and Newmark, addressed one of the sore points from Grubb agents. Brokers have objected to BGC’s proposed commission payment plan through loans that require brokers who are owed significant money to sign multi-year contracts in order to get paid. Lutnick said brokers would be paid 90 percent of their money in cash and 10 percent in “partner equity.”

In addition, Lerhman said brokers who are not asked to join the new company would be paid their commissions earned before the bankruptcy filing, referred to as “pre-petition commissions,” but did not say exactly how.

Lerhman also stressed that all the Grubb offices were and will remain open.

One Grubb broker, who listened to the call, believed that brokers who are asked to go to BGC but don’t want to go are in a bad position in terms of getting paid. That’s because, he said, BGC has laid out payment plans for brokers BGC asks to join the firm who do so. BGC has also said it will pay brokers who are not invited to join BGC. But he did not know what would happen with commissions due brokers who were asked to join BGC but decided to go elsewhere.

The broker, who asked not to be identified criticizing BGC, called the situation, “indentured servitude.”