##### 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
    June 30, 2007oro

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934   
  0-50261
  G REIT, Inc.
   Maryland

52-2362509(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)1551 N. Tustin
    Avenue,
    Suite 200 Santa Ana, California(Address of principal
    executive offices)

92705(Zip code)   (714) 667-8252
   N/A
     þ o
  Rule 12b-2
 o o þ
  Rule 12b-2
 o þ




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##### 



G REIT,
    INC.
    (A Maryland Corporation)
    TABLE OF CONTENTS
  PART
    I  FINANCIAL INFORMATIONItem 1.


Financial
    Statements


2Condensed
    Consolidated Statements of Net Assets (Liquidation Basis) as of
    June 30, 2007 (Unaudited) and December 31, 2006
    (Unaudited)


2Condensed
    Consolidated Statements of Changes in Net Assets (Liquidation
    Basis) for the Three and Six Months Ended June 30, 2007
    (Unaudited) and 2006 (Unaudited)


3Notes to Condensed
    Consolidated Financial Statements (Unaudited)


4Item 2.


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


19Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


31Item 4.


Controls and
    Procedures


32Item 4T.


Controls and
    Procedures


32PART
    II  OTHER INFORMATIONItem 1.


Legal
    Proceedings


33Item 1A.


Risk
    Factors


33Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


33Item 3.


Defaults Upon
    Senior Securities


34Item 4.


Submission of
    Matters to a Vote of Security Holders


34Item 5.


Other
    Information


34Item 6.


Exhibits


34SIGNATURESEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   1




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements.  G REIT,
    INC.
  CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS
 (Liquidation
    Basis)
    June 30, 2007 (Unaudited) and December 31, 2006
    (Unaudited)
  June 30,


December 31,2007


2006ASSETSReal estate investments:Real estate held for sale

$
173,685,000


$
417,384,000Investments in unconsolidated real
    estate


16,134,000



15,889,000189,819,000



433,273,000Cash and cash equivalents


31,990,000



76,812,000Restricted cash


2,415,000



8,555,000Accounts receivable, net


3,553,000



5,025,000Accounts receivable from related
    parties


378,000



199,000Asset for estimated receipts in
    excess of estimated costs during liquidation


962,000



3,041,000Total assets


229,117,000



526,905,000LIABILITIESMortgages payable secured by
    properties held for sale


69,132,000



225,836,000Accounts payable and accrued
    liabilities


5,322,000



8,526,000Accounts payable due to related
    parties


1,033,000



1,175,000Security deposits and prepaid rent


1,911,000



2,629,000Total liabilities


77,398,000



238,166,000Commitments and contingencies
    (Note 12)Net assets in liquidation

$
151,719,000


$
288,739,000    2




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G REIT,
    INC.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS(Liquidation Basis)
    For the Three and Six Months Ended June 30, 2007
    (Unaudited) and 2006 (Unaudited)
  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Net assets in liquidation,
    beginning of period

$
284,843,000


$
454,184,000


$
288,739,000


$
453,459,000Changes in net assets in
    liquidation:Changes to asset (liability) for
    estimated receipts (costs) in excess of estimated costs
    (receipts) during liquidation:Operating income


(3,597,000
)


(6,003,000
)


(6,675,000
)


(11,702,000
)Distributions received from
    unconsolidated properties


(182,000
)


(347,000
)


(419,000
)


(694,000
)Payments of liquidation costs and
    other amounts


984,000



4,824,000



2,961,000



7,139,000Distributions to stockholders


-



-



-



8,235,000Change in estimated receipts
    (costs) in excess of estimated costs (receipts) during
    liquidation


1,871,000



1,212,000



2,054,000



(3,671,000
)Change to asset (liability) for
    estimated receipts (costs) in excess of estimated costs
    (receipts) during liquidation


(924,000
)


(314,000
)


(2,079,000
)


(693,000
)Change in fair value of assets and
    liabilities:Change in fair value of marketable
    securities


-



(31,000
)


-



(82,000
)Change in fair value of real estate
    investments


142,000



26,390,000



1,086,000



32,048,000Change in assets and liabilities
    due to activity in asset (liability) for estimated receipts
    (costs) in excess of estimated costs (receipts) during
    liquidation


2,795,000



1,525,000



4,133,000



(2,978,000
)Net increase in fair value


2,937,000



27,884,000



5,219,000



28,988,000Liquidating distributions to
    stockholders


(135,137,000
)


(8,236,000
)


(140,160,000
)


(8,236,000
)Change in net assets in
    liquidation


(133,124,000
)


19,334,000



(137,020,000
)


20,059,000Net assets in liquidation, end
    of period

$
151,719,000


$
473,518,000


$
151,719,000


$
473,518,000    3




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G REIT,
    INC.



NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  The use of the words we, us or
    our refers to G REIT, Inc. and its
    subsidiaries, including G REIT, L.P., or our Operating
    Partnership, except where the context otherwise requires.
  1.
    Organization
    and Description of Business              2.
    Plan of
    Liquidation   4




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
        3.
    Summary
    of Significant Accounting Policies    Interim
    Financial Data
  Form 10-K,
  Principles
    of Consolidation
   5




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
  Consolidation of Variable Interest Entities, an
    Interpretation of Accounting Research
    Bulletin No. 51
  Liquidation
    Basis of Accounting
  tenant-in-common,
    Segments
    Recently
    Issued Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes
  Fair Value
    Measurement
 6




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
    The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  4.
    Asset for
    Estimated Receipts in Excess of Estimated Costs During
    Liquidation      December 31,


Cash Payments


Change in


June 30,2006


and (Receipts)


Estimates


2007Assets:Estimated net inflows from
    consolidated and unconsolidated operating activities

$
12,424,000


$
(7,094,000
)

$
1,133,000


$
6,463,000Liabilities:Liquidation costs


(5,291,000
)


915,000



305,000



(4,071,000
)Capital expenditures


(4,092,000
)


2,046,000



616,000



(1,430,000
)(9,383,000
)


2,961,000



921,000



(5,501,000
)Total asset for estimated receipts
    in excess of estimated costs during liquidation

$
3,041,000


$
(4,133,000
)

$
2,054,000


$
962,000   5.
    Net
    Assets in Liquidation   7




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
       8




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
        6.
    Real
    Estate Investments      Dispositions
    in 2007
    Two
    Corporate Plaza  Houston, Texas
    One
    World Trade Center  Long Beach,
    California
   9




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
    One
    Financial Plaza  St. Louis,
    Missouri
    824
    Market Street  Wilmington, Delaware
  tenant-in-common,
  North
    Belt Corporate Center  Houston, Texas
    Properties
    Under Contract
      Dispositions
    in 2006
   10




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
  7.
    Restricted
    Cash    8.
    Mortgage
    Loans Payable        Derivative Instruments and Hedging Activities.
  9.
    Minority
    Interests       11




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
    10.
    Stockholders
    Equity  Common
    Stock
    Dividend
    Reinvestment Program
    Share
    Repurchase Plan
    Stock
    Option Plans
  Independent
    Director Stock Option Plan
    Officer
    and Employee Stock Option Plan
    2004
    Incentive Award Plan
   12




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
        Share-Based Payment
  11.
    Related
    Party Transactions  Advisory
    Agreement
  Advisory
    Fees
      Real
    Estate Acquisition Fee
   13




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
  Real
    Estate Disposition Fee
    Lease
    Commissions
    Property
    Management Fees
    Incentive
    Distributions
    Retention
    Bonuses and Milestone Payments
     14




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
    Real
    Estate Commissions
    Related
    Party Accounts Receivable/Payable
    12.
    Commitments
    and Contingencies  SEC
    Investigation
  In the matter of Triple Net Properties, LLC.
  and/or Accounting for Contingencies.
  Litigation
   15




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
    Environmental
    Matters
    Unconsolidated
    Debt
        Other
   16




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
  13.
    Concentration
    of Credit Risk      Percentage of2007 Annual


2007 Annual




Square Footage


LeaseTenant

Base Rent(1)


Base Rent


Property

(Approximately)


Expiration DateFederal Deposit Insurance Corp.
    (FDIC)(2)

$
5,019,000



21.1
%

Pacific Place


321,000



11/30/2007General Services Administration
    (IRS)(3)

$
2,490,000



10.5
%

North Pointe


92,000



8/17/2007Corporate Center     (1)
    
    Annualized rental income is based on contractual base rent set
    forth in leases in effect as of June 30, 2007.(2)
    
    We have been notified that the FDIC does not intend to renew
    their lease upon expiration of their current lease term on
    November 30, 2007.(3)
    
    On June 11, 2007, we entered into a supplemental lease
    agreement extending the lease term for an additional
    24 months effective August 18, 2007, with an option to
    terminate after 12 months with 90 days notice.    14.
    Subsequent
    Events  Real
    Estate Investments
  Dispositions
    in 2007
  Opus Plaza at Ken Caryl  Littleton,
    Colorado
   17




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G REIT,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited) - Continued
  Madrona Buildings  Torrance, California
    Properties
    Under Contract
      Mortgage
    Loans Payable
  90-day
 18




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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 G REIT, Inc. and its
    subsidiaries, including G REIT, L.P., our Operating
    Partnership.
  Form 10-Q.
  Forward-Looking
    Statements
    Overview
    and Background
     19




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Business
    Strategy and Plan of Liquidation
       20




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Critical
    Accounting Policies
  Form 10-K,
  Interim
    Financial Data
  Form 10-K,
  Dispositions
    in 2007
    Two
    Corporate Plaza  Houston, Texas
    One
    World Trade Center  Long Beach,
    California
   21




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One
    Financial Plaza  St. Louis,
    Missouri
    824
    Market Street  Wilmington, Delaware
  tenant-in-common,
  North
    Belt Corporate Center  Houston, Texas
    Properties
    Under Contract
      Dispositions
    in 2006
   22




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Factors
    Which May Influence Results of Operations
  Rental
    Income
    Scheduled
    Lease Expirations
    Sarbanes-Oxley
    Act
  and/or
  Changes
    in Net Assets in Liquidation
  Three
    and Six Months Ended June 30, 2007 and 2006
     23




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24




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Liquidity
    and Capital Resources
    Current
    Sources of Capital and Liquidity
  and/or
    Factors
    Which May Influence Future Sources of Capital and
    Liquidity
  SEC
    Investigation
  In the matter of Triple Net Properties, LLC.
  and/or Accounting for Contingencies.
 25




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Debt
    Financing
      Weighted-AverageTotal Debt


Interest RateJune 30,


December 31,


June 30,


December 31,2007


2006


2007


2006(Liquidation Basis)Mortgage debt

$
69,132,000


$
225,836,000



6.34
%


5.65
%Fixed rate and variable rateFixed rate

$
44,670,000


$
196,321,000



5.41
%


5.32
%Variable rate

$
24,462,000


$
29,515,000



8.03
%


7.86
%       Other
    Liquidity Needs
     26




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27




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Capital
    Resources
  General
      and/or
    Financing
      Unconsolidated
    Debt
     28




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##### Table of Contents



Debt
    Service Requirements
    Contractual
    Obligations
    Payments Due by PeriodLess Than








More Than1 Year


1-3 Years


3-5 Years


5 Years(2007)


(2008-2009)


(2010-2011)


(After 2011)


TotalPrincipal payments 
    variable rate debt

$
18,894,000


$
5,568,000


$
-


$
-


$
24,462,000Principal payments 
    fixed rate debt


211,000



1,138,000



6,041,000



37,280,000



44,670,000Interest payments 
    variable rate debt (based
      on rate in effect as of June 30, 2007)


891,000



430,000



-



-



1,321,000Interest payments  fixed
    rate debt


1,380,000



4,816,000



4,192,000



6,808,000



17,196,000Ground lease obligations(1)


-



-



-



-



-Tenant improvement and lease 
      commission obligations


828,000



-



-



-



828,000Total

$
22,204,000


$
11,952,000


$
10,233,000


$
44,088,000


$
88,477,000   ­
    ­
  (1)
    
    The Sutter Square Galleria property
    is subject to a ground lease expiring in 2040 with one ten-year
    option period thereafter. Future minimum rents to be paid under
    this non-cancelable operating lease are computed at 12.5% of
    gross rents, as defined in the ground lease agreement. 29




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Off-Balance
    Sheet Arrangements
    Inflation
    Subsequent
    Events
  Real
    Estate Investments
  Dispositions
    in 2007
  Opus Plaza at Ken Caryl  Littleton,
    Colorado
    Madrona Buildings  Torrance, California
    Properties
    Under Contract
     30




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Mortgage
    Loans Payable
  90-day
  Recently
    Issued Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes
  Fair Value
    Measurement
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.   31




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Expected Maturity Date2007


2008


2009


2010


2011


Thereafter


TotalFixed rate debt

$
211,000


$
513,000


$
625,000


$
659,000


$
5,382,000


$
37,280,000


$
44,670,000Average interest 
    rate on maturing debt


5.47
%


5.44
%


5.41
%


5.41
%


5.24
%


5.44
%


5.41%Variable rate debt

$
18,894,000


$
115,000


$
5,453,000


$



$



$



$
24,462,000Average interest 
    rate on maturing debt (based on rate in effect as of
    June 30, 2007)


8.22
%


7.39
%


7.39
%














8.03%     Item 4.
    Controls
    and Procedures.   Item 4T. Controls
    and Procedures.  Evaluation of disclosure controls and
    procedures.
  Form 10-Q Rules 13a-14(a) 15d-14(a) Form 10-Q
  Rules 13a-15(e) 15d-15(e)
  Changes in internal control over financial
    reporting.
 32




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PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings.  SEC
    Investigation
  In the matter of Triple Net Properties, LLC.
  and/or Accounting for
    Contingencies.
  Litigation
    Item 1A.
    Risk
    Factors.  Form 10-K,
  Some or all of our properties may incur vacancies, which
    may result in reduced revenue and liquidation value, a reduction
    in cash available for liquidating distributions and a diminished
    return on your investment.
    Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.   33




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Item 3.
    Defaults
    Upon Senior Securities.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    For


WithheldElection of DirectorsGary H. Hunt


23,483,208



359,483W. Brand Inlow


23,491,407



351,284Edward A. Johnson


23,494,172



348,519D. Fleet Wallace


23,480,106



362,585Gary T. Wescombe


23,489,202



353,489   For


Against


AbstainRatification ofDeloitte & Touche LLP


23,140,758



201,446



500,487   Item 5.
    Other
    Information.    Item 6.
    Exhibits.   34




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SIGNATURES    G REIT, INC.(Registrant)August 14, 2007

By:

/s/  SCOTT
    D. PETERSDate



Scott D. PetersChief Executive Officer and
    President
    (principal executive officer)August 14, 2007

By:

/s/  COURTNEY
    A. BROWERDate



Courtney A. BrowerChief Accounting Officer 
    (principal accounting
    officer)  35




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

Exhibit2
.1

G REIT, Inc. Plan of
    Liquidation and Dissolution, as approved by stockholders on
    February 27, 2006 and as currently in effect (included as
    Exhibit A to our Definitive Proxy Statement filed on
    January 13, 2006 and incorporated herein by reference)3
.1

Articles of Incorporation of
    G REIT, Inc. (as approved by stockholders on June 29,
    2004 and as currently in effect (included as Appendix B to
    our Definitive Proxy Statement filed on May 27, 2004 and
    incorporated herein by reference)3
.2

Bylaws of G REIT, Inc. (as
    approved by stockholders on June 29, 2004 and as currently
    in effect (included as Appendix C to our Definitive Proxy
    Statement filed on May 27, 2004 and incorporated herein by
    reference)10
.1

Form of Agreement of Limited
    Partnership of G REIT, L.P. (included as Exhibit 10.1
    to our Registration Statement on
    Form S-11
    filed on January 9, 2002 (File
    No. 333-76498)
    and incorporated herein by reference)10
.2

Advisory Agreement between
    G REIT, Inc. and Triple Net Properties, LLC (included as
    Exhibit 10.6 to our Registration Statement on
    Form S-11
    filed on January 9, 2002 (File
    No. 333-76498)
    and incorporated herein by reference)10
.3

First Amendment to Advisory
    Agreement between G REIT, Inc. and Triple Net Properties,
    LLC (included as Exhibit 10.8 to Post Effective Amendment
    No. 1 to our Registration Statement on
    Form S-11
    filed on December 18, 2002 (File
    No. 333-76498)
    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 Accounting
    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 Accounting
    Officer, pursuant to 18 U.S.C. Section 1350, as
    created by Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    Filed herewith. 36