##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  FORM 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    fromto   000-52612
  Grubb & Ellis Apartment
    REIT, Inc.
 (Exact name of registrant as
    specified in its charter)
  Maryland

20-3975609(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1551 N. Tustin Avenue, Suite 300
    Santa Ana, California(Address of principal executive offices)

92705(Zip Code)   (714) 667-8252
 (Registrants telephone
    number, including area code)
  N/A
 (Former name, former address and
    former fiscal year, if changed since last report)
   Yes
    þ
    No
    o
  Rule 12b-2
  Large accelerated filer

o



Accelerated filer

oNon-accelerated filer

þ

(Do not check if a smaller reporting company)

Smaller reporting company

o   Rule 12b-2
 Yes
    o
    No
    þ




---



##### 





Grubb &
    Ellis Apartment REIT, Inc.
    (A Maryland Corporation)
    TABLE OF CONTENTS
   
 PART I  FINANCIAL
    INFORMATIONItem 1.


Financial Statements


2Condensed Consolidated Balance Sheets as of
    September 30, 2008 (Unaudited) and December 31, 2007
    (Unaudited)


2Condensed Consolidated Statements of Operations
    for the Three and Nine Months Ended September 30, 2008 and
    2007 (Unaudited)


3Condensed Consolidated Statement of
    Stockholders Equity for the Nine Months Ended
    September 30, 2008 (Unaudited)


4Condensed Consolidated Statements of Cash Flows
    for the Nine Months Ended September 30, 2008 and 2007
    (Unaudited)


5Notes to Condensed Consolidated Financial
    Statements (Unaudited)


6Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


42Item 4.


Controls and Procedures


43Item 4T.


Controls and Procedures


43PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


44Item 1A.


Risk Factors


44Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


46Item 3.


Defaults Upon Senior Securities


47Item 4.


Submission of Matters to a Vote of Security
    Holders


47Item 5.


Other Information


47Item 6.


Exhibits


47Signatures


48EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements.  Grubb &
    Ellis Apartment REIT, Inc.CONDENSED CONSOLIDATED BALANCE SHEETSAs of September 30, 2008 and December 31, 2007
    (Unaudited)
  September 30, 2008


December 31, 2007ASSETSReal estate investments:Operating properties, net

$
337,493,000


$
220,390,000Cash and cash equivalents


3,512,000



1,694,000Accounts and other receivables


340,000



438,000Restricted cash


4,709,000



3,286,000Identified intangible assets, net


817,000



1,171,000Other assets, net


2,823,000



1,835,000Total assets

$
349,694,000


$
228,814,000LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS
    EQUITYLiabilities:Mortgage loan payables, net

$
217,780,000


$
139,318,000Unsecured note payables to affiliate


9,100,000



7,600,000Lines of credit


10,000,000



10,000,000Accounts payable and accrued liabilities


6,457,000



4,388,000Accounts payable due to affiliates, net


2,138,000



776,000Security deposits and prepaid rent


1,147,000



675,000Total liabilities


246,622,000



162,757,000Commitments and contingencies (Note 8)Minority interest of limited partner in operating partnership






1,000Stockholders equity:Preferred stock, $0.01 par value; 50,000,000 shares
    authorized; none issued and outstanding






Common stock, $0.01 par value; 300,000,000 shares
    authorized; 14,377,662 and 8,528,844 shares issued and
    outstanding as of September 30, 2008 and December 31,
    2007, respectively


144,000



85,000Additional paid-in capital


127,849,000



75,737,000Accumulated deficit


(24,921,000
)


(9,766,000
)Total stockholders equity


103,072,000



66,056,000Total liabilities, minority interest and stockholders
    equity

$
349,694,000


$
228,814,000    2




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFor the Three and Nine Months Ended September 30, 2008
    and 2007
    (Unaudited)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Revenues:Rental income

$
8,021,000


$
3,484,000


$
20,186,000


$
7,006,000Other property revenues


864,000



368,000



2,271,000



685,000Total revenues


8,885,000



3,852,000



22,457,000



7,691,000Expenses:Rental expenses


4,507,000



1,888,000



11,484,000



3,647,000General and administrative


1,212,000



573,000



3,453,000



1,572,000Depreciation and amortization


3,164,000



1,574,000



8,283,000



3,330,000Total expenses


8,883,000



4,035,000



23,220,000



8,549,000Income (loss) before other income (expense)


2,000



(183,000
)


(763,000
)


(858,000
)Other income (expense):Interest expense (including amortization of deferred financing
    costs and debt discount):Interest expense related to unsecured note payables to affiliate


(58,000
)


(31,000
)


(104,000
)


(168,000
)Interest expense related to mortgage loan payables and lines of
    credit


(3,118,000
)


(1,210,000
)


(8,303,000
)


(2,479,000
)Interest and dividend income


4,000



4,000



20,000



59,000Loss before minority interest


(3,170,000
)


(1,420,000
)


(9,150,000
)


(3,446,000
)Minority interest


1,000







1,000



Net loss

$
(3,169,000
)

$
(1,420,000
)

$
(9,149,000
)

$
(3,446,000
)Net loss per share  basic and diluted

$
(0.23
)

$
(0.24
)

$
(0.80
)

$
(0.82
)Weighted average number of shares outstanding 
    basic and diluted


13,499,942



5,990,009



11,417,294



4,212,080    3




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.CONDENSED CONSOLIDATED STATEMENT OF
    STOCKHOLDERS EQUITYFor the Nine Months Ended September 30, 2008
    (Unaudited)
  Common Stock











TotalNumber of





Additional


Preferred


Accumulated


StockholdersShares


Amount


Paid-In Capital


Stock


Deficit


EquityBALANCE - December 31, 2007


8,528,844


$
85,000


$
75,737,000


$



$
(9,766,000
)

$
66,056,000Issuance of common stock


5,590,777



56,000



55,787,000











55,843,000Issuance of vested and nonvested common stock


3,000







6,000











6,000Offering costs










(6,112,000
)










(6,112,000
)Amortization of nonvested common stock compensation










10,000











10,000Issuance of common stock under the DRIP


274,629



3,000



2,606,000











2,609,000Repurchase of common stock


(19,588
)






(185,000
)










(185,000
)Distributions


















(6,006,000
)


(6,006,000
)Net loss


















(9,149,000
)


(9,149,000
)BALANCE - September 30, 2008


14,377,662


$
144,000


$
127,849,000


$



$
(24,921,000
)

$
103,072,000    4




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Nine Months Ended September 30, 2008 and
    2007
    (Unaudited)
  Nine Months EndedSeptember 30,2008


2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(9,149,000
)

$
(3,446,000
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization (including deferred financing
    costs and debt discount)


9,021,000



3,492,000Loss on property insurance settlements


26,000



Stock based compensation, net of forfeitures


17,000



12,000Bad debt expense


382,000



161,000Minority interest income


(1,000
)


Changes in operating assets and liabilities:Accounts and other receivables


(475,000
)


(177,000
)Other assets, net


265,000



15,000Accounts payable and accrued liabilities


2,366,000



1,880,000Accounts payable due to affiliates, net


580,000



248,000Prepaid rent


(93,000
)


(134,000
)Net cash provided by operating activities


2,939,000



2,051,000CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of real estate operating properties


(124,779,000
)


(63,915,000
)Capital expenditures


(896,000
)


(124,000
)Proceeds from property insurance settlements


360,000



Restricted cash


(1,423,000
)


(2,523,000
)Net cash used in investing activities


(126,738,000
)


(66,562,000
)CASH FLOWS FROM FINANCING ACTIVITIESBorrowings on mortgage loan payables


78,651,000



51,907,000Borrowings on unsecured note payables to affiliate


9,100,000



21,900,000Repayments under the lines of credit, net






(21,585,000
)Payments on mortgage loan payables


(291,000
)


(42,000
)Payments on unsecured note payables to affiliate


(7,600,000
)


(29,700,000
)Deferred financing costs


(950,000
)


(625,000
)Proceeds from issuance of common stock


56,030,000



49,065,000Repurchase of common stock


(185,000
)


Security deposits


44,000



12,000Payment of offering costs


(6,131,000
)


(4,961,000
)Distributions


(3,051,000
)


(1,161,000
)Net cash provided by financing activities


125,617,000



64,810,000NET CHANGE IN CASH AND CASH EQUIVALENTS


1,818,000



299,000CASH AND CASH EQUIVALENTS - Beginning of period


1,694,000



1,454,000CASH AND CASH EQUIVALENTS - End of period

$
3,512,000


$
1,753,000SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for:Interest

$
7,346,000


$
2,352,000Income taxes

$
11,000


$
2,000SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:Investing Activities:Accrued capital expenditures

$
46,000


$
Accrued acquisition related expenses

$
802,000


$
The following represents the increase in certain assets and
    liabilities in connection with our acquisitions of
    operating properties:Accounts and other receivables

$
2,000


$
Other assets

$
141,000


$
44,000Accrued expenses

$
493,000


$
1,037,000Security deposits and prepaid rent

$
521,000


$
394,000Mortgage loan payables, net

$



$
24,109,000Financing Activities:Issuance of common stock under the DRIP

$
2,609,000


$
726,000Distributions declared but not paid

$
826,000


$
375,000Accrued offering costs

$
404,000


$
605,000Payable for issuance of common stock

$



$
36,000Receivable for issuance of common stock

$
136,000


$
    5




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 For
    the Three and Nine Months Ended September 30, 2008 and
    2007
  The use of the words we, us or
    our refers to Grubb & Ellis Apartment
    REIT, Inc. and its subsidiaries, including Grubb &
    Ellis Apartment REIT Holdings, L.P., except where the context
    otherwise requires.
  1.
    Organization
    and Description of Business           6




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  2.
    Summary
    of Significant Accounting Policies    Basis
    of Presentation
  Consolidation of Variable Interest
    Entities, an Interpretation of Accounting Research
    Bulletin No. 51,
  Interim
    Financial Data
  Form 10-K,
  Reclassifications
    Segment
    Disclosure
  Disclosures about Segments of an Enterprise and
    Related Information
 7




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Recently
    Issued Accounting Pronouncements
  Fair Value Measurements, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13, SFAS 157-1. SFAS 157-1 Accounting for Leases SFAS No. 157-2, Effective Date of FASB Statement No. 157, SFAS 157-2. SFAS 157-2 SFAS No. 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active SFAS 157-3. SFAS 157-3 SFAS 157-1 SFAS 157-1 SFAS 157-3 SFAS 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities,
  Business Combinations, Noncontrolling Interests in
    Consolidated Financial Statements  An Amendment of
    ARB No. 51,
 8




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Disclosures about Derivative Instruments and Hedging
    Activities
  SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, SFAS 142-3. SFAS 142-3 Goodwill and Other Intangible Assets, SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  No. 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities, EITF 03-6-1. EITF 03-6-1 Earnings per Share. EITF 03-6-1 EITF 03-6-1
 9




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  EITF 03-6-1. EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
  3.
    Real
    Estate Investments    September 30, 2008


December 31, 2007Land

$
41,926,000


$
24,670,000Land improvements


22,066,000



12,592,000Building and improvements


272,571,000



179,226,000Furniture, fixtures and equipment


10,732,000



7,454,000347,295,000



223,942,000Less: accumulated depreciation


(9,802,000
)


(3,552,000
)$
337,493,000


$
220,390,000     Acquisitions
    in 2008
  Arboleda
    Apartments  Cedar Park, Texas
    Creekside
    Crossing  Lithonia, Georgia
    Kedron
    Village  Peachtree City, Georgia
   10




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Canyon
    Ridge Apartments  Hermitage, Tennessee
    4.
    Identified
    Intangible Assets    September 30, 2008


December 31, 2007In place leases, net of accumulated amortization of $284,000 and
    $450,000 as of September 30, 2008 and December 31,
    2007, respectively, (with a weighted average remaining life of
    5 months as of September 30, 2008 and
    December 31, 2007)

$
594,000


$
785,000Tenant relationships, net of accumulated amortization of
    $106,000 and $499,000 as of September 30, 2008 and
    December 31, 2007, respectively, (with a weighted average
    remaining life of 5 months as of September 30, 2008
    and December 31, 2007)


223,000



386,000$
817,000


$
1,171,000     5.
    Other
    Assets    September 30, 2008


December 31, 2007Deferred financing costs, net of accumulated amortization of
    $365,000 and $262,000 as of September 30, 2008 and
    December 31, 2007, respectively

$
1,767,000


$
1,457,000Prepaid expenses and deposits


1,056,000



378,000$
2,823,000


$
1,835,000     6.
    Mortgage
    Loan Payables, Net and Unsecured Note Payables to
    Affiliate  Mortgage
    Loan Payables
   11




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Interest





MaturityProperty

Rate





Date


September 30, 2008


December 31, 2007Fixed Rate Debt:Hidden Lake Apartment Homes


5.34
%






01/11/17


$
19,218,000


$
19,218,000Walker Ranch Apartment Homes


5.36
%






05/11/17



20,000,000



20,000,000Residences at Braemar


5.72
%






06/01/15



9,551,000



9,662,000Park at Northgate


5.94
%






08/01/17



10,295,000



10,295,000Baypoint Resort


5.94
%






08/01/17



21,612,000



21,612,000Towne Crossing Apartments


5.04
%






11/01/14



15,109,000



15,289,000Villas of El Dorado


5.68
%






12/01/16



13,600,000



13,600,000The Heights at Olde Towne


5.79
%






01/01/18



10,475,000



10,475,000The Myrtles at Olde Towne


5.79
%






01/01/18



20,100,000



20,100,000Arboleda Apartments


5.36
%






04/01/15



17,651,000



157,611,000



140,251,000Variable Rate Debt:Creekside Crossing


5.02
%*






07/01/15



17,000,000



Kedron Village


5.04
%*






07/01/15



20,000,000



Canyon Ridge Apartments


5.07
%*






10/01/15



24,000,000



61,000,000



Total fixed and variable debt














218,611,000



140,251,000Less: discount














(831,000
)


(933,000
)Mortgage loan payables













$
217,780,000


$
139,318,000     *
    
    Represents the interest rate in effect as of September 30,
    2008.     12




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
          Year

Amount2008

$
101,0002009

$
415,0002010

$
594,0002011

$
714,0002012

$
752,000Thereafter

$
216,035,000   Unsecured
    Note Payables to Affiliate
       13




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      7.
    Lines of
    Credit and Mezzanine Line of Credit  Line
    of Credit and Mezzanine Line of Credit
          Wachovia
    Loan
     14




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      8.
    Commitments
    and Contingencies  Litigation
    Environmental
    Matters
    Other
    Organizational and Offering Expenses
    Repairs
    Expense and Capital Replacements
     15




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Other
    9.
    Related
    Party Transactions  Fees
    and Expenses Paid to Affiliates
  and/or
  Offering
    Stage
  Selling
    Commissions
    Marketing
    Support Fees and Due Diligence Expense Reimbursements
   16




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Other
    Organizational and Offering Expenses
    Acquisition
    and Development Stage
  Acquisition
    Fee
    Reimbursement
    of Acquisition Expenses
    Operational
    Stage
  Asset
    Management Fee
   17




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Property
    Management Fee
    On-site
    Personnel Payroll
  on-site on-site
  Operating
    Expenses
      Compensation
    for Additional Services
       18




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Liquidity
    Stage
  Disposition
    Fees
    Incentive
    Distribution upon Sales
    Incentive
    Distribution upon Listing
    Fees
    Payable upon Internalization of the Advisor
   19




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Accounts
    Payable Due to Affiliates, Net
    Entity

Fee

September 30, 2008


December 31, 2007Grubb & Ellis Realty Investors

Operating Expenses

$
36,000


$
50,000Grubb & Ellis Realty Investors

Offering Costs


270,000



270,000Grubb & Ellis Realty Investors

Due Diligence


1,000



Grubb & Ellis Realty Investors

On-site Personnel Payroll


18,000



10,000Grubb & Ellis Realty Investors

Acquisition Related Expenses


802,000



Grubb & Ellis Securities

Selling Commissions and Marketing Support Fees


133,000



153,000Residential Management

Property Management Fees


76,000



9,000Realty

Asset and Property Management Fees


802,000



284,000$
2,138,000


$
776,000   Unsecured
    Note Payables to Affiliate
    Former
    Director and Presidents Financial Arrangement with Legal
    Counsel
     20




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    10.
    Minority
    Interest    11.
    Stockholders
    Equity  Common
    Stock
      Preferred
    Stock
    Distribution
    Reinvestment Plan
   21




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Share
    Repurchase Plan
        2006
    Incentive Award Plan
       22




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    WeightedRestricted Common


Average GrantStock


Date Fair ValueBalance  December 31, 2007


4,200


$
10.00Granted


3,000



10.00Vested


(1,800
)


10.00Forfeited






Balance  September 30, 2008


5,400


$
10.00Expected to vest  September 30, 2008


5,400


$
10.00   12.
    Special
    Limited Partner Interest    13.
    Business
    Combinations      Business
    Combinations
 23




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
        14.
    Concentration
    of Credit Risk      15.
    Per Share
    Data  Earnings Per Share
    16.
    Subsequent
    Events  Status
    of our Offering
   24




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Share
    Repurchases
    Termination
    of Proposed Acquisition
    Extension
    of Wachovia Loan Maturity Date
    Extension
    of Unsecured Note Payable to Affiliate
   25




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The use of the words we, us or
    our refers to Grubb & Ellis Apartment
    REIT, Inc. and its subsidiaries, including Grubb &
    Ellis Apartment REIT Holdings, L.P., except where the context
    otherwise requires.
  Form 10-Q.
  Forward-Looking
    Statements
    Overview
    and Background
     26




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##### Table of Contents



Critical
    Accounting Policies
  Form 10-K,
  Interim
    Financial Data
  Form 10-K,
 27




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##### Table of Contents



Recently
    Issued Accounting Pronouncements
  Fair Value Measurements, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13, FSP SFAS 157-1. SFAS 157-1 Accounting for Leases SFAS No. 157-2, Effective Date of FASB Statement No. 157, SFAS 157-2. SFAS 157-2 SFAS No. 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active SFAS 157-3. SFAS 157-3 SFAS 157-1 SFAS 157-1 SFAS 157-3 SFAS 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities,
  Business Combinations, Noncontrolling Interests in
    Consolidated Financial Statements  An Amendment of
    ARB No. 51,
 28




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
    Activities
  SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, SFAS 142-3. SFAS 142-3 Goodwill and Other Intangible Assets, SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  No. 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities, EITF 03-6-1. EITF 03-6-1 Earnings per Share. EITF 03-6-1 EITF 03-6-1 EITF 03-6-1. EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
 29




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##### Table of Contents



Acquisitions
    in 2008
  Arboleda
    Apartments Cedar Park, Texas
    Creekside
    Crossing Lithonia, Georgia
    Kedron
    Village Peachtree City, Georgia
    Canyon
    Ridge Apartments  Hermitage, Tennessee
    Factors
    Which May Influence Results of Operations
  Form 10-K
  Rental
    Income
   30




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##### Table of Contents



Offering
    Proceeds
    Sarbanes-Oxley
    Act
      Results
    of Operations
  Comparison
    of the Three and Nine Months Ended September 30, 2008 and
    2007
      Revenues
       31




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##### Table of Contents



Rental
    Expenses
      General
    and Administrative
  Article 3-14 Regulation S-X
  Article 3-14 Regulation S-X Article 3-14 Regulation S-X
  Depreciation
    and Amortization
   32




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Interest
    Expense
      Interest
    and Dividend Income
      Net
    Loss
   33




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##### Table of Contents



Liquidity
    and Capital Resources
            Other
    Liquidity Needs
     34




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##### Table of Contents



Cash
    Flows
        Distributions
       35




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##### Table of Contents



on-site
      Capital
    Resources
  Financing
      Mortgage
    Loan Payables
   36




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##### Table of Contents



Interest





MaturityProperty

Rate





Date


September 30, 2008


December 31, 2007Fixed Rate Debt:Hidden Lake Apartment Homes


5.34
%






01/11/17


$
19,218,000


$
19,218,000Walker Ranch Apartment Homes


5.36
%






05/11/17



20,000,000



20,000,000Residences at Braemar


5.72
%






06/01/15



9,551,000



9,662,000Park at Northgate


5.94
%






08/01/17



10,295,000



10,295,000Baypoint Resort


5.94
%






08/01/17



21,612,000



21,612,000Towne Crossing Apartments


5.04
%






11/01/14



15,109,000



15,289,000Villas of El Dorado


5.68
%






12/01/16



13,600,000



13,600,000The Heights at Olde Towne


5.79
%






01/01/18



10,475,000



10,475,000The Myrtles at Olde Towne


5.79
%






01/01/18



20,100,000



20,100,000Arboleda Apartments


5.36
%






04/01/15



17,651,000



157,611,000



140,251,000Variable Rate Debt:Creekside Crossing


5.02
%*






07/01/15



17,000,000



Kedron Village


5.04
%*






07/01/15



20,000,000



Canyon Ridge Apartments


5.07
%*






10/01/15



24,000,000



61,000,000



Total fixed and variable debt














218,611,000



140,251,000Less: discount














(831,000
)


(933,000
)Mortgage loan payables













$
217,780,000


$
139,318,000     *
    
    Represents the interest rate in effect as of September 30,
    2008.         37




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##### Table of Contents



Unsecured
    Note Payables to Affiliate
            Lines of
    Credit and Mezzanine Line of Credit
  Line of
    Credit and Mezzanine Line of Credit
         38




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##### Table of Contents



Wachovia Loan
        REIT
    Requirements
    Commitments
    and Contingencies
  Other
    Organizational and Offering Expenses
   39




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##### Table of Contents



Repairs
    and Capital Replacements
      Debt
    Service Requirements
          Contractual
    Obligations
    Payments Due by PeriodLess than








More than1 Year


1-3 Years


4-5 Years


5 Years(2008)


(2009-2010)


(2011-2012)


(After 2012)


TotalPrincipal payments - fixed rate debt

$
101,000


$
10,109,000


$
1,466,000


$
155,035,000


$
166,711,000Interest payments - fixed rate debt


2,324,000



17,679,000



17,408,000



33,680,000



71,091,000Principal payments - variable rate debt






10,000,000







61,000,000



71,000,000Interest payments - variable rate debt
    (based on rates in effect as of
    September 30, 2008)


986,000



6,902,000



6,244,000



8,357,000



22,489,000Repairs expense and capital replacements


178,000















178,000Total

$
3,589,000


$
44,690,000


$
25,118,000


$
258,072,000


$
331,469,000   Off-Balance
    Sheet Arrangements
    Inflation
   40




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##### Table of Contents



Funds
    from Operations
            Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Net loss

$
(3,169,000
)

$
(1,420,000
)

$
(9,149,000
)

$
(3,446,000
)Add:Depreciation and amortization  consolidated properties


3,164,000



1,574,000



8,283,000



3,330,000FFO

$
(5,000
)

$
154,000


$
(866,000
)

$
(116,000
)FFO per share  basic and diluted

$



$
0.03


$
(0.08
)

$
(0.03
)Weighted average common shares outstanding
     basic and diluted


13,499,942



5,990,009



11,417,294



4,212,080    41




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##### Table of Contents



Subsequent
    Events
  Status
    of our Offering
    Share
    Repurchases
    Termination
    of Proposed Acquisition
    Extension
    of Wachovia Loan Maturity Date
    Extension
    of Unsecured Note Payable to Affiliate
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Form 10-K,
    Expected Maturity Date2008


2009


2010


2011


2012


Thereafter


Total


Fair ValueFixed rate debt -
    principal payments

$
101,000


$
9,515,000


$
594,000


$
714,000


$
752,000


$
155,035,000


$
166,711,000



*Weighted average interest
    rate on maturing debt


5.30%



4.99%



5.32%



5.32%



5.32%



5.58%



5.54%



Variable rate debt -
    principal payments

$



$
10,000,000


$



$



$



$
61,000,000


$
71,000,000


$
71,000,000Weighted average interest
    rate on maturing debt
    (based on rates in effect
    as of September 30, 2008)


%



7.97%



%



%



%



5.04%



5.45%



  42




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##### Table of Contents



*
    
    The estimated fair value of our fixed rate mortgage loan
    payables was $151,418,000 as of September 30, 2008. The
    estimated fair value of the $9,100,000 unsecured note payables
    to an affiliate as of September 30, 2008 is not
    determinable due to the related party nature of the note.          Item 4.
    Controls
    and Procedures.    Item 4T.
    Controls
    and Procedures.  Evaluation of disclosure controls and
    procedures.
  Rules 13a-15(e) 15d-15(e)
  Changes in internal control over financial
    reporting.
 43




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##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors.  Form 10-K,
    The
    recent downturn in the credit markets may increase the cost of
    borrowing and may make financing difficult to obtain, each of
    which may have a material adverse effect on our results of
    operations and business.
      Our
    results of operations, our ability to pay distributions to our
    stockholders and our ability to dispose of our investments are
    subject to general economic and regulatory factors we cannot
    control or predict.
    
    poor economic times may result in defaults by tenants of our
    properties.  We may also be required to provide rent concessions
    or reduced rental rates to maintain or increase occupancy levels;
    job transfers and layoffs may cause vacancies to increase and a
    lack of future population and job growth may make it difficult
    to maintain or increase occupancy levels;
    increases in supply of competing properties or decreases in
    demand for our properties may impact our ability to maintain or
    increase occupancy levels;
    changes in interest rates and availability of debt financing
    could render the sale of properties difficult or unattractive;
    periods of high interest rates may reduce cash flow from
    leveraged properties; and 44




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##### Table of Contents




    increased insurance premiums, real estate taxes, utilities or
    other expenses may reduce funds available for distribution.
    Also, any such increased expenses may make it difficult to
    increase rents to tenants on turnover, which may limit our
    ability to increase our returns.  We may
    not have sufficient cash available from operations to pay
    distributions, and, therefore, distributions may be paid with
    offering proceeds or borrowed funds.
    on-site
      If one
    of our insurance carriers does not remain solvent, we may not be
    able to fully recover on our claims.
    The
    failure of any bank in which we deposit our funds could reduce
    the amount of cash we have available to pay distributions and
    make additional investments.
   45




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##### Table of Contents



Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.  Use of
    Public Offering Proceeds
  Form S-11 No. 333-130945)
        Purchase
    of Equity Securities by the Issuer and Affiliated
    Purchasers
      (d)(c)


Maximum ApproximateTotal Number of Shares


Dollar ValuePurchased As Part of


of Shares that May(a)


(b)


Publicly


Yet Be PurchasedTotal Number of


Average Price


Announced


Under thePeriod

Shares Purchased


Paid per Share


Plan or Program


Plans or ProgramsJuly 1, 2008 to July 31, 2008


9,465


$
9.21



9,465



(1
)August 1, 2008 to August 31, 2008





$







$
September 1, 2008 to September 30, 2008





$







$
     (1)
    
    Subject to funds being available, we will limit the number of
    shares repurchased during any calendar year to 5.0% of the
    weighted average number of our shares outstanding during the
    prior calendar year. 46




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##### Table of Contents



Item 3.
    Defaults
    Upon Senior Securities.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Item 5.
    Other
    Information.    Item 6.
    Exhibits.   47




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##### Table of Contents



SIGNATURES    Grubb & Ellis Apartment REIT,
    Inc.(Registrant)November 12, 2008

By: /s/  Stanley
    J.Olander, Jr.Date

Stanley J. Olander, Jr.Chief Executive Officer and President
    (principal executive officer)November 12, 2008

By: /s/  Shannon
    K S JohnsonDate

Shannon K S JohnsonChief Financial Officer
    (principal financial officer)  48




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##### Table of Contents



EXHIBIT INDEX
     Regulation S-K,
  Form 10-Q Regulation S-K).
  3
.1

Articles of Amendment and Restatement of NNN Apartment REIT,
    Inc. dated July 18, 2006 (included as Exhibit 3.1 to our Form
    10-Q filed November 9, 2006 and incorporated herein by reference)3
.2

Amended and Restated Bylaws of NNN Apartment REIT, Inc. dated
    July 19, 2006 (included as Exhibit 3.2 to our Form 10-Q filed
    November 9, 2006 and incorporated herein by reference)3
.3

Agreement of Limited Partnership of NNN Apartment REIT Holdings,
    L.P. dated July 19, 2006 (included as Exhibit 3.3 to our Form
    10-Q filed November 9, 2006 and incorporated herein by reference)3
.4

Amendment to Amended and Restated Bylaws of NNN Apartment REIT,
    Inc. dated December 6, 2006 (included as Exhibit 3.6 to
    Post-Effective Amendment No. 1 to the registrants
    Registration Statement on Form S-11 (File No. 333-130945) filed
    January 31, 2007 and incorporated herein by reference)3
.5

Articles of Amendment to the Articles of Amendment and
    Restatement of Grubb & Ellis Apartment REIT, Inc. dated
    December 7, 2007 (included as Exhibit 3.1 to our Current Report
    on Form 8-K filed on December 10, 2007 and incorporated herein
    by reference)10
.1

First Amended and Restated Advisory Agreement by and between
    Grubb & Ellis Apartment REIT, Inc. and Grubb & Ellis
    Apartment REIT Advisor, LLC, dated July 18, 2008 (included as
    Exhibit 10.1 to our Current Report on Form 8-K filed July 21,
    2008 and incorporated herein by reference)10
.2

Real Estate Purchase and Sale Agreement by and between
    Apartments at Canyon Ridge, LLC and Grubb & Ellis Realty
    Investors, LLC, dated July 10, 2008 (included as Exhibit 10.1 to
    our Current Report on Form 8-K filed September 19, 2008 and
    incorporated herein by reference)10
.3

First Amendment to Real Estate Purchase and Sale Agreement by
    and between Apartments at Canyon Ridge, LLC and Grubb &
    Ellis Realty Investors, LLC, dated August 15, 2008 (included as
    Exhibit 10.2 to our Current Report on Form 8-K filed September
    19, 2008 and incorporated herein by reference)10
.4

Assignment and Assumption of Real Estate Purchase and Sale
    Agreement by and between Grubb & Ellis Realty
    Investors, LLC and G&E Apartment REIT Canyon Ridge, LLC,
    dated September 15, 2008 (included as Exhibit 10.3 to our
    Current Report on Form 8-K filed September 19, 2008 and
    incorporated herein by reference)10
.5

Multifamily Note by G&E Apartment REIT Canyon Ridge, LLC to
    the order of Capmark Bank, dated September 15, 2008 (included as
    Exhibit 10.4 to our Current Report on Form 8-K filed September
    19, 2008 and incorporated herein by reference)10
.6

Multifamily Deed of Trust, Assignment of Rents and Security
    Agreement by G&E Apartment REIT Canyon Ridge, LLC for the
    benefit of Capmark Bank, dated September 15, 2008 (included as
    Exhibit 10.5 to our Current Report on Form 8-K filed September
    19, 2008 and incorporated herein by reference)10
.7

Guaranty by G&E Apartment REIT, Inc. for the benefit of
    Capmark Bank, dated September 15, 2008 (included as Exhibit 10.6
    to our Current Report on Form 8-K filed September 19, 2008 and
    incorporated herein by reference) 49




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##### Table of Contents



10
.8

Fourth Amendment to and Waiver of Loan Agreement between Grubb
    & Ellis Apartment REIT, Inc. and Wachovia Bank, National
    Association, dated September 15, 2008 (included as Exhibit 10.7
    to our Current Report on Form 8-K filed September 19, 2008 and
    incorporated herein by reference)10
.9

Fourth Amended and Restated Pledge Agreement by and between
    Wachovia Bank, National Association and Grubb and Ellis
    Apartment REIT Holdings, L.P., dated September 15, 2008
    (included as Exhibit 10.8 to our Current Report on Form 8-K
    filed September 19, 2008 and incorporated herein by reference)10
.10

Unsecured Promissory Note by Grubb & Ellis Apartment REIT
    Holdings, LP in favor of NNN Realty Advisors, Inc., dated
    September 15, 2008 (included as Exhibit 10.9 to our Current
    Report on Form 8-K filed September 19, 2008 and incorporated
    herein by reference)10
.11

Assignment and Assumption of Real Estate Purchase and Sale
    Agreement by and between Grubb & Ellis Realty
    Investors, LLC and G&E Apartment REIT Canyon Ridge, LLC,
    dated September 15, 2008 (included as Exhibit 10.3 to our
    Current Report on Form 8-K/A filed September 25, 2008 and
    incorporated herein by reference)31
.1*

Certification of Chief Executive Officer, pursuant to Section
    302 of the Sarbanes-Oxley Act of 200231
.2*

Certification of Chief Financial Officer, pursuant to Section
    302 of the Sarbanes-Oxley Act of 200232
.1*

Certification of Chief Executive Officer, pursuant to
    18 U.S.C. Section 1350, as created by Section 906 of the
    Sarbanes-Oxley Act of 200232
.2*

Certification of Chief Financial Officer, pursuant to
    18 U.S.C. Section 1350, as created by Section 906 of the
    Sarbanes-Oxley Act of 2002     *
    
    Filed herewith. 50