##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from          to   Commission file number 1-8122
 GRUBB & ELLIS
    COMPANY(Exact name of registrant as
    specified in its charter)
  Delaware

94-1424307(State or other jurisdiction of
    incorporation or organization)

(IRS Employer
    Identification No.)   1551
    North Tustin Avenue, Suite 300, Santa Ana, California
    92705
    (Address of principal executive offices) (Zip Code)
  (714) 667-8252
    (Registrants telephone number, including area
    code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
  Indicate
    by check mark if the registrant is a well-known seasoned issuer,
    as defined in Rule 405 of the Securities Act.
    Yes  o
    No  þ  Indicate
    by check mark if the registrant is not required to file reports
    pursuant to Section 13 or Section 15(d) of the Act.
    Yes  o
    No  þ  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Regulation S-T o o
  Rule 12b-2
  Large accelerated filer

o

Accelerated filer

þNon-accelerated filer

o

Smaller reporting company

o(Do not check if a smaller reporting company)   Indicate
    by check mark whether the registrant is a shell company (as
    defined in
    Rule 12b-2
    of the Exchange
    Act).  Yes  o
    No  þ




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##### 





GRUBB &
    ELLIS COMPANYFORM 10-K
  TABLE OF
    CONTENTS
  PagePart IItem 1.


Business

1Item 1A.


Risk Factors

12Item 1B.


Unresolved Staff Comments

31Item 2.


Properties

31Item 3.


Legal Proceedings

31Item 4.


Submission of Matters to a Vote of Security
    Holders

32Part IIItem 5.


Market for Registrants Common Equity and
    Related Stockholder Matters

33Item 6.


Selected Financial Data

36Item 7.


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

38Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk

61Item 8.


Financial Statements and Supplementary Data

63Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure

126Item 9A.


Controls and Procedures

126Item 9B.


Other Information

128Part IIIItem 10.


Directors, Executive Officers and Corporate
    Governance

130Item 11.


Executive Compensation

136Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

160Item 13.


Certain Relationships and Related Transactions
    and Director Independence

163Item 14.


Principal Accountant Fees and Services

168Part IVItem 15.


Exhibits and Financial Statement Schedules

170Schedule II  Valuation and
    Qualifying Accounts

178Schedule III  Real Estate and
    Accumulated Depreciation

179Signatures

181Exhibit IndexExhibit 4.2Exhibit 10.61Exhibit 10.62Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32   i




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
 PART I  Item 1.
    Business.  Form 10-K
  General
  tenant-in-common
      Business
    Segment Reporting
  Disclosures about Segments of an Enterprise and
    Related Information
    Restatement
    of Certain Financial Information and Special
    Investigation




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tenant-in-common
  Accounting for
    Sales of Real Estate 92-1, Accounting for Real Estate Syndication Income
  Consolidation
    of Variable Interest Entities an Interpretation of ARB 51
   2




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Transaction
    Services
          Management
    Services
   3




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best-in-class
    Investment
    Management
           4




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Our
    Opportunity
      Secured
    Credit Facility
     5




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tenant-in-common
        Revised
    Credit Facility
   6




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
    assets sales,
    conversions of Investments (as defined in the Credit Agreement),
    the refund of any taxes or the sale of equity interests by the
    Company or its subsidiaries,
    the issuance of debt securities, or
    any other transaction or event occurring outside the ordinary
    course of business of the Company or its subsidiaries;  provided, however
   7




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Certain
    Real Estate Held for Sale
        Accounting for the
    Impairment or Disposal of Long-Lived Assets,
   8




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Industry
    and Competition
        and/or
   9




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Environmental
    Regulation
  and/or
    and/or
  Seasonality
   10




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Regulation
  Transaction
    and Property Management Services
    Dealer-Manager
    Services
    Service
    Marks
    Real
    Estate Markets
    The
    Merger
       11




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Employees
    Availability
    of this Report
  www.grubb-ellis.com Form 10-K, Form 10-Q, Form 8-K Form 10-K Form 10-K,
  Form 10-K
  Item 1A.
    Risk
    Factors.  Risks
    Related to the Companys Business in General
  We
    currently have restricted borrowing capacity under our senior
    secured credit facility, our senior secured credit facility
    imposes operating restrictions and covenants which the Company
    may be unable to maintain compliance with in future periods, and
    in an event of default, all of our borrowings would become
    immediately due and payable.
    
    incur or guarantee additional indebtedness;
    create liens;
    make investments;
    transfer or sell assets, including the stock of subsidiaries;
    enter into mergers or consolidations;
    enter into transactions with affiliates;
    issue shares of preferred stock;
    enter into sale/leaseback transactions; and
    pay dividends or make distributions on capital stock or redeem
    or repurchase capital stock.   12




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
    assets sales,
    conversions of Investments (as defined in the Credit Agreement),
    the refund of any taxes or the sale of equity interests by the
    Company or its subsidiaries,
    the issuance of debt securities, or
    any other transaction or event occurring outside the ordinary
    course of business of the Company or its subsidiaries;  provided, however
     13




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The
    ongoing downturn in the general economy and the real estate
    market has negatively impacted and could continue to negatively
    impact the Companys business and financial
    results.
    
    a decline in acquisition, disposition and leasing activity;
    a decline in the supply of capital invested in commercial real
    estate;
    a decline in fees collected from investment management programs,
    which are dependent upon demand for investment in commercial
    real estate; and
    a decline in the value of real estate and in rental rates, which
    would cause the Company to realize lower revenue from:  
    property management fees, which in certain cases are calculated
    as a percentage of the revenue of the property under
    management; and
    commissions or fees derived from property valuation, sales and
    leasing, which are typically based on the value, sale price or
    lease revenue commitment, respectively.     14




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Accounting for the Impairment or
    Disposal of Long-Lived Assets,
    The
    ongoing adverse developments in the credit markets and the risk
    of continued market deterioration have adversely affected the
    Companys revenues, expenses and operating results and may
    continue to do so.
     15




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If the
    Company fails to meet its payment or other obligations under its
    senior secured credit facility, then the lenders under such
    credit facility could foreclose on, and acquire control of,
    substantially all of its assets.
    We
    experienced additional, unanticipated costs and may have
    additional risk and further costs as a result of the restatement
    of our financial statements.
    The
    Company may not be able to obtain additional financing when the
    Company needs it or on acceptable terms, and any such financing,
    or the failure to obtain financing, may adversely affect the
    market price of the Companys common stock.
   16




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We
    have received a notice from the New York Stock Exchange
    (NYSE) that we did not meet its continued listing
    requirements. If we are unable to rectify this non-compliance in
    accordance with NYSE rules, our common stock will be delisted
    from trading on the NYSE, which could have a material adverse
    effect on the liquidity and value of our common
    stock.
  trading-day
    The
    Company is in a highly competitive business with numerous
    competitors, some of which may have greater financial and
    operational resources than it does.
    The
    TIC business in general, from which the Company has historically
    generated significant revenues, materially contracted in
    2008.
   17




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As a
    service-oriented company, the Company depends on key personnel,
    and the loss of its current personnel or its failure to hire and
    retain additional personnel could harm its
    business.
  Form 10-K,
  The
    Company plans to expand its business to include international
    operations that could subject it to social, political and
    economic risks of doing business in foreign
    countries.
    
    lack of substantial experience operating in international
    markets;
    lack of recognition of the Grubb & Ellis brand name in
    international markets;
    difficulties and costs of staffing and managing international
    operations;
    currency restrictions, which may prevent the transfer of capital
    and profits to the United States;
    diverse foreign currency fluctuations;
    changes in regulatory requirements;
    potentially adverse tax consequences;
    the responsibility of complying with multiple and potentially
    conflicting laws;
    the impact of regional or country-specific business cycles and
    economic instability;
    the geographic, time zone, language and cultural differences
    among personnel in different areas of the world; 18




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
    political instability; and
    foreign ownership restrictions with respect to operations in
    certain countries.    Failure
    to manage any future growth effectively may have a material
    adverse effect on the Companys financial condition and
    results of operations.
    Risks
    Related to the Companys Transaction Services and
    Management Services Business
  The
    Companys quarterly operating results are likely to
    fluctuate due to the seasonal nature of its business and may
    fail to meet expectations, which may cause the price of its
    securities to decline.
    If the
    properties that the Company manages fail to perform, then its
    business and results of operations could be
    harmed.
   19




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
    the Companys ability to attract and retain creditworthy
    tenants;
    the magnitude of defaults by tenants under their respective
    leases;
    the Companys ability to control operating expenses;
    governmental regulations, local rent control or stabilization
    ordinances which are in, or may be put into, effect;
    various uninsurable risks;
    financial condition of certain clients;
    financial conditions prevailing generally and in the areas in
    which these properties are located;
    the nature and extent of competitive properties; and
    the general real estate market.    If the
    Company fails to comply with laws and regulations applicable to
    real estate brokerage and mortgage transactions and other
    business lines, then it may incur significant financial
    penalties.
    The
    Company may have liabilities in connection with real estate
    brokerage and property and facilities management
    activities.
     20




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Environmental
    regulations may adversely impact the Companys business
    and/or cause the Company to incur costs for cleanup of hazardous
    substances or wastes or other environmental
    liabilities.
  and/or
    and/or
  Risks
    Related to the Companys Investment Management and
    Broker-Dealer Business
  Declines
    in asset value and reductions in distributions in investment
    programs could adversely affect the Company business, as it
    could cause harm to the Companys reputation, cause the
    loss of management contracts and third-party broker-dealer
    selling agreements, limit the Companys ability to sign
    future third-party broker-dealer selling agreements and
    potentially expose the Company to legal liability.
    The
    Company currently provides its Investment Management services
    primarily to its programs. Its revenue depends on the number of
    its programs, on the price of the properties acquired or
    disposed of by these programs, and on the revenue generated by
    the properties under its management.
   21




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The
    Company may be unable to grow its programs, which would cause it
    to fail to satisfy its business strategy.
    The
    inability to access investors for the Companys programs
    through broker-dealers or other intermediaries could have a
    material adverse effect on its business.
    The
    termination of any of the Companys broker-dealer
    relationships, especially given the limited number of key
    broker-dealers, could have a material adverse effect on its
    business.
    Misconduct
    by third-party selling broker-dealers or the Companys
    sales force, could have a material adverse effect on its
    business.
   22




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A
    significant amount of the Companys revenue has
    historically been derived from fees earned through the
    transaction structuring and property management of its TIC
    Programs, which programs rely primarily on Section 1031 of
    the Internal Revenue Code to provide for deferral of capital
    gains taxes to make these programs attractive. A change in this
    tax code section or a complete revocation of this section as it
    relates specifically to TICs could materially impact these
    programs.
    A
    significant amount of the Companys programs are structured
    to provide favorable tax treatment to investors or REITs. If a
    program fails to satisfy the requirements necessary to permit
    this favorable tax treatment, the Company could be subject to
    claims by investors and its reputation for structuring these
    transactions would be negatively affected, which would have an
    adverse effect on its financial condition and results of
    operations.
  i.e.
  Any
    future co-investment activities the Company undertakes could
    subject it to real estate investment risks which could lead to
    the need for substantial capital contributions, which may impact
    its cash flows and financial condition and, if it is unable to
    make them, could damage its reputation and result in adverse
    consequences to its holdings.
   23




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Geographic
    concentration of program properties may expose the
    Companys programs to regional economic downturns that
    could adversely impact their operations and, as a result, the
    fees the Company is able to generate from them, including fees
    on disposition of the properties as the Company may be limited
    in its ability to dispose of properties in a challenging real
    estate market.
    The
    failure of Triple Net Properties, LLC, recently renamed
    Grubb & Ellis Realty Investors, LLC (GERI)
    and Triple Net Properties Realty, Inc. (Realty),
    subsidiaries of the Company acquired in the Merger, to hold
    certain required real estate licenses may subject Realty and the
    Company to penalties, such as fines, restitution payments and
    termination of management agreements, and to the suspension or
    revocation of certain broker licenses.
    If
    third-party managers providing property management services for
    the Companys programs office, medical office and
    healthcare related facilities, retail and multi-family
    properties are negligent in their performance of, or default on,
    their management obligations, the tenants may not renew their
    leases or the Company may become subject to unforeseen
    liabilities. If this occurs, it could have an adverse effect on
    the Companys financial condition and operating
    results.
   24




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The
    Company or its new programs may be required to incur future
    indebtedness to raise sufficient funds to purchase
    properties.
    The
    Company may be required to repay loans the Company guaranteed
    that were used to finance properties acquired by the
    Companys programs.
    (In thousands)

December 31,
    2008Non-recourse/carve-out guarantees of debt of properties under
    management(1)

$
3,414,433Non-recourse/carve-out guarantees of the Companys debt(1)

$
107,000Guarantees of the Companys mezzanine debt

$
Recourse guarantees of debt of properties under management

$
42,426Recourse guarantees of the Companys debt

$
10,000     (1)
    
    A non-recourse/carve-out guaranty imposes personal
    liability on the guarantor in the event the borrower engages in
    certain acts prohibited by the loan documents.  Guarantors Accounting and
    Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others
 25




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The
    revenue streams from the Companys management services may
    be subject to limitation or cancellation.
    Future
    pressures to lower, waive or credit back the Companys fees
    could reduce the Companys revenue and
    profitability.
    Regulatory
    uncertainties related to the Companys broker-dealer
    services could harm the Companys business.
  cease-and-desist
  The
    Company depends upon its programs tenants to pay rent, and
    their inability to pay rent may substantially reduce certain
    fees the Company receives which are based on gross rental
    amounts.
    
    downturns in national or regional economic conditions where the
    Companys programs properties are located, which
    generally will negatively impact the demand and rental rates; 26




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
    changes in local market conditions such as an oversupply of
    properties, including space available by sublease or new
    construction, or a reduction in demand for properties in the
    Companys programs, making it more difficult for the
    Companys programs to lease space at attractive rental
    rates or at all;
    competition from other available properties, which could cause
    the Companys programs to lose current or prospective
    tenants or cause them to reduce rental rates; and
    changes in federal, state or local regulations and controls
    affecting rents, prices of goods, interest rates, fuel and
    energy consumption.      Conflicts
    of interest inherent in transactions between the Companys
    programs and the Company, and among its programs, could create
    liability for the Company that could have a material adverse
    effect on its results of operations and financial
    condition.
    
    the Company experiences conflicts of interests with certain of
    its directors, officers and affiliates from time to time with
    regard to any of its investments, transactions and agreements in
    which it holds a direct or indirect pecuniary interest;
    since the Company receives both management fees and acquisition
    and disposition fees for its programs properties, the
    Company could be in conflict with its programs over whether
    their properties should be sold or held by the program and the
    Company may make decisions or take actions based on factors
    other than in the best interest of investors of a particular
    sponsored investor program;
    a component of the compensation of certain of the Companys
    executives is based on the performance of particular programs,
    which could cause the executives to favor those programs over
    others;
    the Company may face conflicts of interests as to how it
    allocates property acquisition opportunities or prospective
    tenants among competing programs;
    the Company may face conflicts of interests if programs sell
    properties to each other or invest in each other; and
    the Companys executive officers will devote only as much
    of their time to a program as they determine is reasonably
    required, which may be substantially less than full time; during
    times of intense activity in other programs, these officers may
    devote less time and fewer resources to a program than are
    necessary or appropriate to manage the programs business.    The
    offerings conducted to raise capital for the Companys TIC
    Programs are done in reliance on exemptions from the
    registration requirements of the Securities Act. A failure to
    satisfy the requirements for the appropriate exemption could
    void the offering or, if it is already completed, provide the
    investors with rescission rights, either of which would have a
    material adverse effect on the Companys reputation and as
    a result its business and results of operations.
   27




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The
    inability to identify suitable refinance options may negatively
    impact investment program performance and cause harm to the
    Companys reputation, cause the loss of management
    contracts and third-party broker-dealer selling agreements,
    limit the Companys ability to sign future third-party
    broker-dealer selling agreements and potentially expose the
    Company to legal liability.
    An
    increase in interest rates may negatively affect the equity
    value of the Companys programs or cause the Company to
    lose potential investors to alternative investments, causing the
    fees the Company receives for transaction and management
    services to be reduced.
    Increasing
    competition for the acquisition of real estate may impede the
    Companys ability to make future acquisitions which would
    reduce the fees the Company generates from these programs and
    could adversely affect the Companys operating results and
    financial condition.
   28




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Illiquidity
    of real estate investments could significantly impede the
    Companys ability to respond to adverse changes in the
    performance of the Companys programs properties and
    harm the Companys financial condition.
    Uninsured
    and underinsured losses may adversely affect
    operations.
      Risks
    Related to the Company in General
  Delaware
    law and provisions of the Companys amended and restated
    certificate of incorporation and restated bylaws contain
    provisions that could delay, deter or prevent a change of
    control.
    
    a staggered or classified board of directors;
    the authority of the Companys board to issue, without
    stockholder approval, preferred stock with such terms as the
    Companys board may determine;
    the authority of the Companys board to adopt, amend or
    repeal the Companys bylaws; and 29




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
    a prohibition on holders of less than a majority of the
    Companys outstanding shares of capital stock calling a
    special meeting of the Companys stockholders.    As a
    consequence the amendments to the Companys amended and
    restated certificate of incorporation adopted in connection with
    the Merger, the Company has a staggered board, which may
    entrench management and discourage unsolicited stockholder
    proposals that may be deemed to be in the best interests of
    stockholders.
    The
    Company has the ability to issue blank check preferred stock,
    which could adversely affect the voting power and other rights
    of the holders of its common stock.
    The
    Company has registration rights outstanding, which could have a
    negative impact on its share price if exercised.
    Future
    sales of the Companys common stock could adversely affect
    its stock price
   30




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Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.  In the
    matter of Triple Net Properties, LLC.
    General
   31




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Item 4.
    Submission
    of Matters to a Vote of Security Holders.              Election of Directors

For


Withheld


Abstentions


Broker Non-VotesHarold H. Greene


28,486,574



135,814



25,698,805



0Devin I. Murphy


32,839,367



130,723



21,351,103



0D. Fleet Wallace


28,482,376



140,012



25,698,805



0Anthony W. Thompson


19,884,716



1,466,386



32,970,091



0Harold A. Ellis, Jr.


25,624,199



74,605



28,622,389



0Stuart A. Tanz


25,624,414



74,390



28,622,389



0          32




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GRUBB &
    ELLIS COMPANY
 PART II  Item 5.
    Market
    for Registrants Common Equity and Related Stockholder
    Matters.  Market
    and Price Information
    2008


2007High


Low


High


LowFirst Quarter

$
7.50


$
3.80


$
11.90


$
10.23Second Quarter

$
7.50


$
3.61


$
13.25


$
10.69Third Quarter

$
5.00


$
2.70


$
12.15


$
7.00Fourth Quarter

$
2.88


$
0.81


$
9.57


$
4.95       Sales of
    Unregistered Securities
     33




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Equity
    Compensation Plan Information
    Number of securitiesremaining availableWeighted average


forNumber of securities to


exercise price of


future issuance underbe


outstanding


equity compensationissued upon exercise of


options,


plans (excludingoutstanding options,


warrants and


securities reflected inwarrants and rights


rights


column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved by security holders


1,077,175


$
7.76



2,055,375Equity compensation plans not approved by security holders










Total


1,077,175


$
7.76



2,055,375   Grubb &
    Ellis Stock Performance
  This section entitled, Grubb & Ellis Stock
    Performance is not to be deemed to be soliciting
    material or to be filed with the SEC or
    subject to Regulation 14A or 14C or to the liabilities of
    Section 18 of the Exchange Act, except to the extent that
    the Company specifically requests that such information be
    treated as soliciting material or specifically incorporates it
    by reference into any filing under the Securities Act or the
    Exchange Act.
  66-month 6/30/2003 12/31/2008.
 34




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COMPARISON OF 66
    MONTH CUMULATIVE TOTAL RETURN* Among
    Grubb & Ellis Company, The S&P 500 Index
    And A Peer Group
  
  *$100
    invested on 6/30/03 in stock & index-including reinvestment
    of dividends. Fiscal year ended December 31.
  Copyright
    ©

    2009 S&P, a division of The McGraw-Hill Companies Inc. All
    rights reserved.
  6/03


6/04


6/05


6/06


6/07


12/07


12/08Grubb & Ellis Company


100.00



169.36



595.74



787.23



987.23



547.79



110.55S&P 500


100.00



119.11



126.64



137.57



165.90



163.63



103.09Peer Group


100.00



171.44



352.04



629.07



884.74



533.23



142.38   The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.
 35




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Item 6.
    Selected
    Financial Data.    tenant-in-common
    36




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Year Ended December 31,2007


2006


2005


2004(In thousands, except per share
    data)

2008


Restated(1)


Restated(2)


Restated(3)


Restated(3)Consolidated Statement of Operations Data:Total services revenue

$
595,495


$
201,538


$
99,599


$
80,817


$
64,281Total revenue


611,821



217,937



108,543



84,423



66,592Total compensation costs


503,004



104,109



49,449



29,873



19,717Total operating expense


867,275



175,588



97,633



71,035



51,082Operating (loss) income


(255,454
)


42,349



10,910



13,388



15,510(Loss) income from continuing operations


(279,492
)


26,826



20,934



13,438



15,628Net (loss) income


(330,870
)


21,072



19,971



10,047



15,628Basic (loss) earnings per share:

$
(5.21
)

$
0.55


$
1.01


$
0.58


$
0.90Diluted (loss) earnings per share:

$
(5.21
)

$
0.55


$
1.01


$
0.58


$
0.90Basic weighted average shares outstanding


63,515



38,652



19,681



17,200



17,407Diluted weighted average shares outstanding


63,515



38,653



19,694



17,200



17,407Dividends declared per share

$
0.205


$
0.36


$
0.10







Consolidated Statement of Cash Flow Data:Net cash (used in) provided by operating activities

$
(33,629
)

$
33,543


$
17,356


$
23,536


$
17,214Net cash used in investing activities


(76,330
)


(486,909
)


(56,203
)


(35,183
)


(13,046
)Net cash provided by (used in) financing activities


93,616



400,468



140,525



10,251



(7,647
)   December 31,20042008


2007 Restated


2006 Restated


2005 Restated


RestatedConsolidated Balance Sheet Data (at end of period):Total assets

$
520,277


$
988,542


$
347,709


$
126,057


$
42,911Line of credit


63,000



8,000







8,500



3,545Notes payable


215,959



348,931



62,978



54,931



Senior and participating notes


16,277



16,277



10,263



2,300



4,845Redeemable preferred liability














6,077



5,717Stockholders equity


70,171



404,056



217,125



20,081



16,164     (1)
    
    Based on Generally Accepted Accounting Principles (GAAP), the
    operating results for the year ended December 31, 2007
    (restated) includes the results of legacy NNN for the full
    periods presented and the results of the legacy
    Grubb & Ellis business for the period from
    December 8, 2007 through December 31, 2007.(2)
    
    Includes a full year of operating results of GERI, one and
    one-half months of Realty (acquired on November 16,
    2006) and one-half month of GBE Securities (formerly NNN
    Capital Corp.) (acquired on December 14, 2006). GERI was
    treated as the acquirer in connection with these transactions.(3)
    
    Based on GAAP, reflects operating results of GERI. 37




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.    The accompanying Managements Discussion and Analysis of
    Financial Condition and Results of Operations reflects the
    restatement of previously issued financial statements, as
    discussed in Item 8, Note 3 to the consolidated
    financial statements.
  This Annual Report contains statements that are
    forward-looking and as such are not historical facts. Rather,
    these statements constitute projections, forecasts or
    forward-looking statements within the meaning of the Private
    Securities Litigation Reform Act of 1995. You should not place
    undue reliance on these statements. Forward-looking statements
    include information concerning the Companys liquidity and
    possible or assumed future results of operations, including
    descriptions of the Companys business strategies. These
    statements often include words such as believe,
    expect, anticipate, intend,
    plan, estimate seek,
    will, may or similar expressions. These
    statements are based on certain assumptions that the Company has
    made in light of its experience in the industry as well as its
    perceptions of the historical trends, current conditions,
    expected future developments and other factors the Company
    believes are appropriate under these circumstances.
  All such forward-looking statements speak only as of the date
    of this Annual Report. The Company expressly disclaims any
    obligation or undertaking to release publicly any updates or
    revisions to any forward-looking statements contained herein to
    reflect any change in the Companys expectations with
    regard thereto or any change in events, conditions or
    circumstances on which any such statement is based.
  As you read this Annual Report, you should understand that
    these statements are no guarantees of performance or results.
    They involve risks, uncertainties and assumptions. You should
    understand the risks and uncertainties discussed in
    Item 1A  Risk Factors and elsewhere
    in this Annual Report, could affect the Companys actual
    financial results and could cause actual results to differ
    materially from those expressed in the forward-looking
    statements. Some important factors include, but are not limited
    to:
  
    our ability to satisfy financial and other covenants of our
    Credit Facility;
    the continued weakening national economy in general and the
    commercial real estate markets in particular;
    the continued global credit crises and capital markets
    disruption;
    changes in general economic and business conditions, including
    interest rates, the cost and availability of financing of
    capital for investment in real estate, clients willingness
    to make real estate commitments and other factors impacting the
    value of real estate assets;
    our ability to retain major clients and renew related contracts;
    the failure of properties sponsored or managed by us to perform
    as anticipated;
    the effects of the restatement of certain of our financial
    statements;
    our ability to compete in specific geographic markets or
    business segments that are material to us;
    the contraction of the TIC market;
    declining values of real assets and distributions on our
    programs;
    significant variability in our results of operations among
    quarters;
    our ability to retain our senior management and attract and
    retain qualified and experienced employees;
    our ability to comply with the laws and regulations applicable
    to real estate brokerage investment syndication and mortgage
    transactions;
    our exposure to liabilities in connection with real estate
    brokerage, real estate and property management activities; 38




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##### Table of Contents




    changes in the key components of revenue growth for large
    commercial real estate services companies;
    reliance of companies on outsourcing for their commercial real
    estate needs;
    liquidity and availability of additional or continued sources of
    financing for the Companys investment programs;
    trends in use of large, full-service real estate providers;
    diversification of our client base;
    improvements in operating efficiency;
    protection of our brand;
    trends in pricing for commercial real estate services; and
    the effect of implementation of new tax and accounting rules and
    standards.  Overview
    and Background
      Critical
    Accounting Policies
    Revenue
    Recognition
  Transaction
    Services
    Investment
    Management
  92-1 (SOP 92-1), Accounting for Real Estate Syndication Income
 39




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##### Table of Contents



Accounting for Sales of Real Estate SOP 92-1,
      Management
    Services
  on-site
  Basis
    of Presentation and Principles of Consolidation
  Consolidation of Variable
    Interest Entities
   40




---



##### Table of Contents



tenant-in-common
  Purchase
    Price Allocation
  Business Combinations lease-up
      Impairment
    of Long-Lived Assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets
  non-amortizing Goodwill and Other Intangible Assets
 41




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##### Table of Contents



Insurance
    and Claim Reserves
      Recently
    Issued Accounting Pronouncements
  Fair
    Value Measurements No. FAS 157-2, Effective Date of FASB Statement No. 157
 42




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##### Table of Contents



The
    Fair Value Option for Financial Assets and Financial
    Liabilities,
  Business Combinations,
  Noncontrolling Interests in Consolidated Financial
    Statements  An Amendment of ARB No. 51,
  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
 43




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##### Table of Contents



SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1) , Earnings per Share EITF 03-6-1, EITF 03-6-1
  No. 140-4 FAS 140-4). FAS 140-4
  RESULTS
    OF OPERATIONS
  Overview
  tenant-in-common
   44




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Accounting
    for the Impairment or Disposal of Long-Lived Assets,
    Disclosures about Segments of an
    Enterprise and Related Information
 45




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##### Table of Contents



Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
    Year EndedDecember 31,


Change(In thousands)

2008


2007(1)


$


%RestatedRevenueTransaction services

$
240,250


$
35,522


$
204,728



576.3
%Investment management


101,581



149,651



(48,070
)


(32.1
)Management services


253,664



16,365



237,299



1,450.0Rental related


16,326



16,399



(73
)


(0.4
)Total revenue


611,821



217,937



393,884



180.7Operating ExpenseCompensation costs


503,004



104,109



398,895



383.2General and administrative


119,660



44,251



75,409



170.4Depreciation and amortization


10,312



2,621



7,691



293.4Rental related


14,414



16,054



(1,640
)


(10.2
)Interest


5,914



2,168



3,746



172.8Merger related costs


14,732



6,385



8,347



130.7Real estate related impairments


17,954







17,954



Goodwill and intangible asset impairment


181,285







181,285



Total operating expense


867,275



175,588



691,687



393.9Operating (Loss) Income


(255,454
)


42,349



(297,803
)


(703.2
)Other (Expense) IncomeEquity in losses of unconsolidated entities


(13,311
)


2,029



(15,340
)


(756.0
)Interest income


902



2,992



(2,090
)


(69.9
)Other


(6,458
)


(465
)


(5,993
)


(1,288.8
)Total other (expense) income


(18,867
)


4,556



(23,423
)


(514.1
)(Loss) income from continuing operations before minority
    interest and income tax provision


(274,321
)


46,905



(321,226
)


(684.8
)Minority interest in loss (income) of consolidated entities


11,719



(1,961
)


13,680



697.6Loss (income) from continuing operations before income tax
    provision


(262,602
)


44,944



(307,546
)


(684.3
)Income tax provision


(16,890
)


(18,118
)


(1,228
)


(6.8
)Loss (income) from continuing operations


(279,492
)


26,826



(306,318
)


(1,141.9
)Discontinued OperationsLoss from discontinued operations  net of taxes


(51,735
)


(6,006
)


(45,729
)


(761.4
)Gain on disposal of discontinued operations  net of
    taxes


357



252



105



41.7Total loss from discontinued operations


(51,378
)


(5,754
)


(45,624
)


(792.9
)Net (Loss) Income

$
(330,870
)

$
21,072


$
(351,942
)


(1,670.2
)  46




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##### Table of Contents



(1)
    
    Based on GAAP, the operating results for twelve months ended
    December 31, 2007 includes the results of NNN for the full
    periods presented and the results of the legacy
    Grubb & Ellis business for the period from
    December 8, 2007 through December 31, 2007.  Revenue
  Transaction
    Services Revenue
      Investment
    Management Revenue
           47




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##### Table of Contents



Management
    Services Revenue
    Rental
    Revenue
    Operating
    Expense Overview
    Compensation
    costs
    General
    and Administrative
     48




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##### Table of Contents



Depreciation
    and Amortization
    Rental
    Expense
    Interest
    Expense
    Real
    Estate Related Impairments
  Discontinued Operations
  Goodwill
    and Intangible Assets Impairment
   49




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##### Table of Contents



Equity in
    Earnings (Losses) of Unconsolidated Real Estate
    Minority
    Interests
    Discontinued
    Operations
    Income
    Tax
    Net
    (Loss) Income
   50




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##### Table of Contents



Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
    Year EndedDecember 31,


Change(In thousands)

2007(1)


2006(2)


$


%Restated


RestatedRevenueTransaction services

$
35,522


$



$
35,522




%Investment management


149,651



99,599



50,052



50.3Management services


16,365







16,365



Rental related


16,399



8,944



7,455



83.4Total revenue


217,937



108,543



109,394



100.8Operating ExpenseCompensation costs


104,109



49,449



54,660



110.5General and administrative


44,251



30,188



14,063



46.6Depreciation and amortization


2,621



1,808



813



45.0Rental related


16,054



9,423



6,631



70.4Interest


2,168



6,765



(4,597
)


(68.0
)Merger related costs


6,385







6,385



Total operating expense


175,588



97,633



77,955



79.8Operating Income


42,349



10,910



31,439



288.2Other Income (Expense)Equity in earnings (losses) of unconsolidated entities


2,029



1,948



81



4.2Interest income


2,992



713



2,279



319.6Other


(465
)






(465
)


Total other income


4,556



2,661



1,895



71.2Income from continuing operations before minority interest and
    income tax (provision) benefit


46,905



13,571



33,334



245.6Minority interest in income of consolidated entities


(1,961
)


(78
)


(1,883
)


(2,414.1
)Income from continuing operations before income tax (provision)
    benefit


44,944



13,493



31,451



233.1Income tax (provision) benefit


(18,118
)


7,441



(25,559
)


(343.5
)Income from continuing operations


26,826



20,934



5,892



28.1Discontinued OperationsLoss from discontinued operations  net of taxes


(6,006
)


(1,031
)


(4,975
)


(482.5
)Gain on disposal of discontinued operations  net of
    taxes


252



68



184



270.6Total loss from discontinued operations


(5,754
)


(963
)


(4,791
)


(497.5
)Net Income

$
21,072


$
19,971


$
1,101



5.5     (1)
    
    Based on GAAP, the operating results for twelve months ended
    December 31, 2007 includes the results of NNN for the full
    periods presented and the results of the legacy
    Grubb & Ellis business for the period from
    December 8, 2007 through December 31, 2007.(2)
    
    Based on GAAP, the operating results for the twelve months ended
    December 31, 2006 represents legacy NNN business. 51




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##### Table of Contents



Revenue
  Transaction
    Services Revenue
      Investment
    Management Revenue
           52




---



##### Table of Contents



Management
    Services Revenue
    Rental
    Revenue
    Operating
    Expense Overview
    Compensation
    costs
   53




---



##### Table of Contents



General
    and Administrative
    Depreciation
    and Amortization
    Rental
    Expense
    Interest
    Expense
    Discontinued
    Operations
    Income
    Tax
   54




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##### Table of Contents



Net
    Income
    Liquidity
    and Capital Resources
    Current
    Sources of Capital and Liquidity
  Form 10-K,
   55




---



##### Table of Contents



56




---



##### Table of Contents




    assets sales,
    conversions of Investments (as defined in the Credit Agreement),
    the refund of any taxes or the sale of equity interests by the
    Company or its subsidiaries,
    the issuance of debt securities, or
    any other transaction or event occurring outside the ordinary
    course of business of the Company or its subsidiaries; 57




---



##### Table of Contents



provided, however
      Long-Term
    Liquidity Needs
    Factors
    That May Influence Future Sources of Capital and
    Liquidity
   58




---



##### Table of Contents



Cash
    Flow
  Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
       59




---



##### Table of Contents



Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
        Commitments,
    Contingencies and Other Contractual Obligations
  Contractual
    Obligations
      Payments Due by PeriodLess Than








More Than1 Year


1-3 Years


3-5 Years


5 Years(In thousands)

2009


(2010-2011)


(2012-2013)


(After 2013)


TotalPrincipal  secured debt

$
63,000


$



$



$



$
63,000Interest  secured debt


3,570



6,951











10,521Principal  properties held for sale


108,779



180







107,000



215,959Interest  properties held for sale


8,656



13,021



13,012



14,187



48,876Principal  senior notes






16,277











16,277Interest  senior notes


1,424



2,849



843







5,116Operating lease obligations  others


9,793



21,754



21,884



19,880



73,311Operating lease obligations  general


22,085



30,829



22,082



16,903



91,899Capital lease obligations


333



203











536Total

$
217,640


$
92,064


$
57,821


$
157,970


$
525,495  60




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##### Table of Contents



TIC Program Exchange Provisions.
  Off-Balance Sheet Arrangements.
    December 31,(In thousands)

2008


2007Non-recourse/carve-out guarantees of debt of properties under
    management(1)

$
3,414,433


$
3,167,447Non-recourse/carve-out guarantees of the Companys debt(1)

$
107,000


$
221,430Guarantees of the Companys mezzanine debt

$



$
48,790Recourse guarantees of debt of properties under management

$
42,426


$
47,399Recourse guarantees of the Companys debt

$
10,000


$
10,000     (1)
    
    A non-recourse/carve-out guaranty imposes personal
    liability on the guarantor in the event the borrower engages in
    certain acts prohibited by the loan documents.  Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Interest
    Rate Risk
  Derivatives and/or
 61




---



##### Table of Contents



30-day
         62




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Grubb & Ellis CompanyReports of Independent Registered Public
    Accounting Firms


64Consolidated Balance Sheets as of
    December 31, 2008 and 2007 (as restated)


66Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 (as restated) and 2006
    (as restated)


67Consolidated Statements of Stockholders
    Equity (Deficit) for the years ended December 31, 2008,
    2007 (as restated) and 2006 (as restated)


68Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 (as restated) and 2006
    (as restated)


69Notes to Consolidated Financial Statements for
    the years ended December 31, 2008, 2007 and 2006


71  63




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                  64




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              65




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY



CONSOLIDATED
    BALANCE SHEETS

(In
    thousands, except share and per share amounts)  December 31,2008


2007RestatedASSETSCurrent assets:Cash and cash equivalents

$
32,985


$
49,328Restricted cash


36,047



70,023Investment in marketable equity securities


1,510



9,052Current portion of accounts receivable from related
    parties  net


22,630



32,795Current portion of advances to related parties  net


2,982



6,667Notes receivable from related party  net


9,100



7,600Service fees receivable  net


26,987



19,521Current portion of professional service contracts  net


4,326



7,235Real estate deposits and pre-acquisition costs


5,961



11,818Properties held for sale


167,408



332,176Identified intangible assets and other assets held for
    sale  net


37,145



76,985Prepaid expenses and other assets


22,770



12,855Deferred tax assets






7,991Total current assets


369,851



644,046Accounts receivable from related parties  net


11,072



10,360Advances to related parties  net


11,499



3,751Professional service contracts  net


10,320



13,088Investments in unconsolidated entities


8,733



22,191Property, equipment and leasehold improvements  net


14,009



16,728Goodwill






169,317Identified intangible assets  net


91,527



105,473Other assets  net


3,266



3,588Total assets

$
520,277


$
988,542LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable and accrued expenses

$
70,222


$
102,004Due to related parties


2,447



3,329Line of credit


63,000



Current portion of capital lease obligations


333



351Notes payable of properties held for sale


215,959



348,931Liabilities of properties held for sale  net


16,843



25,550Other liabilities


35,762



12,360Deferred tax liabilities


2,080



Total current liabilities


406,646



492,525Long-term liabilities:Line of credit






8,000Senior notes


16,277



16,277Capital lease obligations


203



439Other long-term liabilities


6,077



7,434Deferred tax liabilities


17,298



29,915Total liabilities


446,501



554,590Commitment and contingencies (Note 20)Minority interest


3,605



29,896Stockholders equity:Preferred stock: $0.01 par value; 10,000,000, shares
    authorized as of December 31, 2008 and 2007; no shares
    issued and outstanding as of December 31, 2008 and 2007






Common stock: $0.01 par value; 100,000,000 shares
    authorized; 65,382,601 and 64,824,777 shares issued and
    outstanding as of December 31, 2008 and 2007, respectively


654



648Additional paid-in capital


402,780



393,665(Accumulated deficit) retained earnings


(333,263
)


10,792Other comprehensive loss






(1,049
)Total stockholders equity


70,171



404,056Total liabilities, minority interest and stockholders
    equity

$
520,277


$
988,542    66




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##### Table of Contents



GRUBB &
    ELLIS COMPANY



CONSOLIDATED
    STATEMENTS OF OPERATIONS

(In
    thousands, except per share data)  Year Ended December 31,2008


2007


2006Restated


RestatedREVENUETransaction services

$
240,250


$
35,522


$
Investment management


101,581



149,651



99,599Management services


253,664



16,365



Rental related


16,326



16,399



8,944Total revenue


611,821



217,937



108,543OPERATING EXPENSECompensation costs


503,004



104,109



49,449General and administrative


119,660



44,251



30,188Depreciation and amortization


10,312



2,621



1,808Rental related


14,414



16,054



9,423Interest


5,914



2,168



6,765Merger related costs


14,732



6,385



Real estate related impairments


17,954







Goodwill and intangible asset impairment


181,285







Total operating expense


867,275



175,588



97,633OPERATING (LOSS) INCOME


(255,454
)


42,349



10,910OTHER (EXPENSE) INCOMEEquity in (losses) earnings of unconsolidated entities


(13,311
)


2,029



1,948Interest income


902



2,992



713Other


(6,458
)


(465
)


Total other (expense) income


(18,867
)


4,556



2,661(Loss) income from continuing operations before minority
    interest and income tax (provision) benefit


(274,321
)


46,905



13,571Minority interest in loss (income) of consolidated entities


11,719



(1,961
)


(78
)(Loss) income from continuing operations before income tax
    (provision) benefit


(262,602
)


44,944



13,493Income tax (provision) benefit


(16,890
)


(18,118
)


7,441(Loss) income from continuing operations


(279,492
)


26,826



20,934DISCONTINUED OPERATIONSLoss from discontinued operations  net of taxes


(51,735
)


(6,006
)


(1,031
)Gain on disposal of discontinued operations  net of
    taxes


357



252



68Total loss from discontinued operations


(51,378
)


(5,754
)


(963
)NET (LOSS) INCOME

$
(330,870
)

$
21,072


$
19,971Basic (loss) earnings per share(Loss) income from continuing operations

$
(4.40
)

$
0.69


$
1.06Loss from discontinued operations


(0.81
)


(0.14
)


(0.05
)Net (loss) earnings per share

$
(5.21
)

$
0.55


$
1.01Diluted (loss) earnings per share(Loss) income from continuing operations

$
(4.40
)

$
0.69


$
1.06Loss from discontinued operations


(0.81
)


(0.14
)


(0.05
)Net (loss) earnings per share

$
(5.21
)

$
0.55


$
1.01Basic weighted average shares outstanding


63,515



38,652



19,681Diluted weighted average shares outstanding


63,515



38,653



19,694    67




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##### Table of Contents



GRUBB &
    ELLIS COMPANY



CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY

(In
    thousands)  Accumulated


(AccumulatedAdditional


Other


Deficit)


TotalCommon Stock


Paid-In


Comprehensive


Retained


StockholdersShares


Amount


Capital


Loss


Earnings


EquityBalance as of January 1, 2006 (as previously
    reported)


17,372


$
174


$
3,902


$



$
24,701


$
28,777Prior year adjustment


















(8,696
)


(8,696
)Balance as of January 1, 2006 (as restated)


17,372



174



3,902







16,005



20,081Dividends declared


















(31,883
)


(31,883
)Issuance of common stock to acquire Realty and NNN Capital
    Corp.


5,289



53



60,361











60,414Issuance of common stock


14,080



141



159,859











160,000Offering costs










(13,885
)










(13,885
)Issuance of restricted shares to directors and officers


541



5















5Vesting of share-based compensation










2,448











2,448Change in unrealized (loss) on marketable securities, net of
    taxes














(26
)






(26
)Net income


















19,971



19,971Comprehensive income






















19,945Balance as of December 31, 2006(as restated)


37,282



373



212,685



(26
)


4,093



217,125Dividends declared


















(14,373
)


(14,373
)Vesting of share-based compensation










9,027











9,027Common stock for merger transaction


26,196



262



171,953











172,215Issuance of restricted shares to directors, officers and
    employees


1,450



14















14Cancellation of non-vested restricted shares


(103
)


(1
)














(1
)Change in unrealized loss on marketable securities, net of taxes














(1,023
)






(1,023
)Net income


















21,072



21,072Comprehensive income






















20,049Balance as of December 31, 2007(as restated)


64,825



648



393,665



(1,049
)


10,792



404,056Dividends declared


















(13,395
)


(13,395
)Vesting of share-based compensation










11,248







210



11,458Repurchase of common stock


(532
)


(5
)


(1,835
)










(1,840
)Issuance of restricted shares to directors, officers and
    employees


1,552



15



(15
)










Issuance of stock to directors, officers and employees related
    to equity compensation awards


77



1



378











379Cancellation of non-vested restricted shares


(539
)


(5
)


(75
)










(80
)Change in unrealized loss on marketable securities, net of taxes










(586
)


1,049







463Net loss


















(330,870
)


(330,870
)Comprehensive loss






















(330,407
)Balance as of December 31, 2008


65,383


$
654


$
402,780


$



$
(333,263
)

$
70,171    68




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY



CONSOLIDATED
    STATEMENTS OF CASH FLOWS

(In
    thousands)  Year Ended December 31,2008


2007


2006Restated


RestatedCASH FLOWS FROM OPERATING ACTIVITIESNet (loss) income

$
(330,870
)

$
21,072


$
19,971Adjustments to reconcile net (loss) income to net cash (used in)
    provided by operating activities:Equity in (earnings) losses of unconsolidated entities


13,311



(2,029
)


(1,948
)Depreciation and amortization (including amortization of signing
    bonuses)


28,961



8,652



2,086Loss on disposal of property, equipment and leasehold
    improvements


494



861



Goodwill and intangible asset impairment


181,286







Impairment of real estate


90,351







Stock-based compensation


11,705



9,041



3,865Compensation expense on profit sharing arrangements


1,878



1,999



Amortization/write-off of intangible contractual rights


1,179



3,133



410Amortization of deferred financing costs


1,006



1,713



31Loss (gain) on sale of marketable equity securities


7,215



(184
)


Deferred income taxes


(3,784
)


(7,109
)


(8,147
)Allowance for uncollectible accounts


13,319



806



1,408Minority interest in (losses) income of consolidated entities


(11,719
)


1,961



78Loss on write-off of real estate deposits and pre-acquisition
    costs


2,415







Other operating noncash gains (losses)


2,267



8



(105
)Changes in operating assets and liabilities:Accounts receivable from related parties


6,480



6,018



(1,254
)Prepaid expenses and other assets


(28,945
)


(36,295
)


(919
)Accounts payable and accrued expenses


(19,915
)


15,884



2,367Other liabilities


(263
)


8,012



(487
)Net cash (used in) provided by operating activities


(33,629
)


33,543



17,356CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property and equipment


(4,407
)


(3,331
)


(2,339
)Tenant improvements and capital expendituresPurchases of marketable equity securities


(997
)


(30,732
)


(2,360
)Proceeds from sale of marketable equity securities


2,653



22,870



Advances to related parties


(13,173
)


(39,112
)


(19,268
)Proceeds from repayment of advances to related parties


20,043



117,496



16,713Payments to related parties


(882
)


(2,704
)


(1,064
)Origination of notes receivable from related parties


(15,100
)


(39,300
)


(10,000
)Proceeds from repayment of notes receivable from related parties


13,600



41,700



777Investments in unconsolidated entities


(29,163
)


(9,076
)


(111,772
)Sale of
    tenant-in-common
    interests in unconsolidated entities






20,466



101,128Distributions of capital from unconsolidated entities


914



1,256



20,049Acquisition of businesses  net of cash acquired






339



(7,398
)Acquisition of properties


(122,163
)


(605,126
)


(80,905
)Proceeds from sale of properties






92,945



31,684Real estate deposits and pre-acquisition costs


(59,780
)


(50,202
)


(14,106
)Proceeds from collection of real estate deposits and
    pre-acquisition costs


118,835



49,427



26,722Restricted cash


13,290



(53,825
)


(4,064
)Net cash used in investing activities


(76,330
)


(486,909
)


(56,203
)    69




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued)
 (In
    thousands)
  Year Ended December 31,2008


2007


2006Restated


RestatedCASH FLOWS FROM FINANCING ACTIVITIESAdvances on line of credit


55,000







14,000Repayment of advances on line of credit






(30,000
)


(22,500
)Borrowings on notes payable and capital lease obligations


103,339



547,015



120,711Repayments of notes payable and capital lease obligations


(56,386
)


(143,848
)


(95,930
)Other financing costs






850



(1,867
)Proceeds from issuance of senior notes






6,015



10,263Repayments of participating notes










(2,300
)Redemption of redeemable preferred membership units










(5,506
)Deferred financing costs


(2,412
)


(2,310
)


(1,515
)Net proceeds from issuance of common stock


52







146,000Repurchase of common stock


(1,840
)






Dividends paid to common stockholders


(15,128
)


(16,449
)


(28,070
)Contributions from minority interests


15,084



42,061



7,554Distributions to minority interests


(4,093
)


(2,866
)


(315
)Net cash provided by financing activities


93,616



400,468



140,525NET (DECREASE) INCREASE IN CASH


(16,343
)


(52,898
)


101,678Cash and cash equivalents  Beginning of year


49,328



102,226



548Cash and cash equivalents  End of year

$
32,985


$
49,328


$
102,226SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for:Interest

$
21,089


$
10,148


$
5,784Income taxes

$
2,151


$
22,622


$
179SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIESAccrual for tenant improvements, lease commissions and capital
    expenditures

$
739


$
814


$
Equipment acquired with capital lease obligations

$
52


$
541


$
355Dividends accrued

$



$
1,733


$
3,813Deconsolidation of assets held by variable interest entities

$
301,656


$
372,674


$
28,016Deconsolidation of liabilities held by variable interest entities

$
222,448


$
269,732


$
17,449Assets acquired in acquisition

$



$
462,730


$
26,657Liabilities assumed in acquisition

$



$
259,659


$
19,342    70




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

FOR THE
    YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006  1.
    ORGANIZATION  tenant-in-common
      2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Basis of Presentation and Principles of
    Consolidation Consolidation of Variable Interest
    Entities
  tenant-in-common
  and/or
 71




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Use of Estimates
  Credit Facility
  Reclassifications
  Cash and cash equivalents 
  Restricted Cash 
  Accounts Receivable from Related Parties
  Allowance for Uncollectible Receivables
  Real Estate Deposits and Pre-acquisition
    Costs
 72




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    the costs are directly identifiable with the specific property;
    the costs would be capitalized if the property were already
    acquired; and
    acquisition of the property or an option to acquire the property
    is probable. This condition requires that the Company is
    actively seeking to acquire the property and have the ability to
    finance or obtain financing for the acquisition and that there
    is no indication that the property is not available for sale.  Purchase Price Allocation Business Combinations lease-up
      Identified Intangible Assets
  Properties Held for Investment
 73




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Properties Held for Sale Accounting for the Impairment or
    Disposal of Long-Lived Assets
    Property, Equipment and Leasehold
    Improvements
  Impairment of Long-Lived Assets
  non-amortizing Goodwill and Other Intangible Assets
 74




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Revenue
    Recognition
  Transaction
    Services
    Investment
    Management
  92-1 (SOP 92-1), Accounting for Real Estate Syndication Income Accounting for Sales of
    Real Estate SOP 92-1,
   75




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Management
    Services
  on-site
  Professional Service Contracts
  Fair Value of Financial Instruments Disclosures About Fair Value of
    Financial Instruments
   76




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Measurements Fair Value Measurements
    SFAS No. 157-2,
  Stock-Based Compensation Share Based Payment
  (Loss) earnings per share Earnings Per
    Share
  Concentration of Credit Risk
 77




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accrued Claims and Settlements
  Income Taxes Accounting for Income Taxes
  Accounting for Uncertainty
    in Income Taxes-An Interpretation of Statement of Financial
    Accounting Standard No. 109
    Marketable Securities Accounting for
    Certain Investments in Debt and Equity Securities
    Comprehensive Income (Loss) Reporting Comprehensive Income
 78




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Guarantees Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  Segment Disclosure Disclosures about Segments
    of an Enterprise and Related Information
  Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging
    Activities
  Recently
    Issued Accounting Pronouncements
  Fair Value Measurements No. FAS 157-2, Effective Date of FASB Statement No. 157
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities,
 79




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Business Combinations,
  Noncontrolling Interests in Consolidated Financial
    Statements  An Amendment of ARB No. 51,
  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
 80




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1) , Earnings per Share EITF 03-6-1, EITF 03-6-1
  No. 140-4 Disclosures by Public Entities
    (Enterprises) about Transfers of Financial Assets and Interests
    in Variable Interest Entities FAS 140-4). Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities FAS 140-4
  3.
    RESTATEMENT
    OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS    tenant-in-common
  SOP 92-1
   81




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          December 31, 2007Aspreviously(In thousands)

reported(1)

Adjustments

As RestatedASSETSCurrent assets:Restricted cash

$
69,098


$
925


$
70,023Current portion of accounts receivable from related
    parties  net


32,575



220



32,795Current portion of advances to related parties  net


7,010



(343
)


6,667Deferred tax assets


7,854



137



7,991Total current assets


643,107



939



644,046Investments in unconsolidated entities


11,028



11,163



22,191Total assets


976,440



12,102



988,542LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable and accrued expenses


100,867



1,137



102,004Other liabilities


5,055



7,305



12,360Total current liabilities


484,083



8,442



492,525Long-term liabilities:Deferred tax liabilities


32,837



(2,922
)


29,915Total liabilities


549,070



5,520



554,590Minority interest


18,725



11,171



29,896Stockholders equity:Retained earnings


15,381



(4,589
)


10,792Total stockholders equity


408,645



(4,589
)


404,056Total liabilities, minority interest and stockholders
    equity


976,440



12,102



988,542   82




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (In thousands)

For The Year Ended December 31, 2007

For The Year Ended December 31, 2006As Previously





As PreviouslyReported(1)

Adjustments

As Restated

Reported(1)

Adjustments

As RestatedREVENUEInvestment management

$
149,400


$
251


$
149,651


$
99,081


$
518


$
99,599Total revenue


217,686



251



217,937



108,025



518



108,543OPERATING EXPENSEGeneral and administrative


44,251







44,251



29,845



343



30,188Interest


2,164



4



2,168



5,569



1,196



6,765Total operating expense


175,584



4



175,588



96,094



1,539



97,633OPERATING INCOME (LOSS)


42,102



247



42,349



11,931



(1,021
)


10,910OTHER INCOME (EXPENSE)Equity in earnings (losses) of unconsolidated entities


(339
)


2,368



2,029



491



1,457



1,948Interest income


2,990



2



2,992



713







713Other


(650
)


185



(465
)










Total other income


2,001



2,555



4,556



1,204



1,457



2,661Income from continuing operations before minority interest and
    income tax (provision) benefit


44,103



2,802



46,905



13,135



436



13,571Minority interest in loss (income) of consolidated entities


459



(2,420
)


(1,961
)


(308
)


230



(78
)Income from continuing operations before income tax benefit
    (provision)


44,562



382



44,944



12,827



666



13,493Income tax (provision) benefit


(17,966
)


(152
)


(18,118
)


4,230



3,211



7,441Income from continuing operations


26,596



230



26,826



17,057



3,877



20,934NET INCOME

$
20,842


$
230


$
21,072


$
16,094


$
3,877


$
19,971Basic earnings (loss) per shareIncome from continuing operations

$
0.68


$
0.01


$
0.69


$
0.87


$
0.19


$
1.06Loss from discontinued operations

$
(0.14
)

$



$
(0.14
)

$
(0.05
)

$



$
(0.05
)Net earnings per share

$
0.54


$
0.01


$
0.55


$
0.82


$
0.19


$
1.01Diluted earnings (loss) per shareIncome from continuing operations

$
0.68


$
0.01


$
0.69


$
0.87


$
0.19


$
1.06Loss from discontinued operations

$
(0.14
)

$



$
(0.14
)

$
(0.05
)

$



$
(0.05
)Net earnings per share

$
0.54


$
0.01


$
0.55


$
0.82


$
0.19


$
1.01Basic weighted average shares outstanding


38,652







38,652



19,681







19,681Diluted weighted average shares outstanding


38,653







38,653



19,694







19,694   83




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For The Year Ended December 31, 2007

For The Year Ended December 31, 2006As





AsPreviously



As

Previously



As(In thousands)

Reported

Adjustments

Restated

Reported(1)

Adjustments

RestatedCASH FLOWS FROM OPERATING ACTIVITIESNet income

$
20,842


$
230


$
21,072


$
16,094


$
3,877


$
19,971Adjustments to reconcile net income to net cash provided by
    operating activities:Equity in losses (earnings) of unconsolidated entities


339



(2,368
)


(2,029
)


(491
)


(1,457
)


(1,948
)Depreciation and amortization


9,668



(1,016
)


8,652



2,086







2,086Loss on disposal of property, equipment and leasehold
    improvements






861



861











Stock-based compensation


9,041







9,041



3,865







3,865Compensation expense on profit sharing arrangements






1,999



1,999











Amortization/write-off of intangible contract rights


3,249



(116
)


3,133



410







410Amortization of deferred financing costs


1,713







1,713



31







31Gain on sale of marketable equity securities






(184
)


(184
)










Deferred income taxes


(5,918
)


(1,191
)


(7,109
)


(4,936
)


(3,211
)


(8,147
)Allowance for uncollectible accounts


859



(53
)


806



1,408







1,408Minority interest


(459
)


2,420



1,961



308



(230
)


78Other operating non cash (gains) losses


(119
)


127



8



(448
)


343



(105
)Changes in operating assets and liabilities:Accounts receivable from related parties


(8,907
)


14,925



6,018



(2,636
)


1,382



(1,254
)Prepaid expenses and other assets


366



(36,661
)


(36,295
)


(1,062
)


143



(919
)Accounts payable and accrued expenses


1,110



14,774



15,884



51



2,316



2,367Other liabilities


1,857



6,155



8,012



521



(1,008
)


(487
)Net cash provided by (used in) operating activities


33,641



(98
)


33,543



15,201



2,155



17,356CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment


(2,693
)


(638
)


(3,331
)


(1,984
)


(355
)


(2,339
)Purchases of marketable equity securities


(2,087
)


(28,645
)


(30,732
)


(2,360
)






(2,360
)Proceeds from sale of marketable equity securities






22,870



22,870











Advances to related parties


(5,340
)


(33,772
)


(39,112
)


(19,268
)






(19,268
)Proceeds from repayment of advances to related parties


3,072



114,424



117,496



16,713







16,713Payments to related parties


(3,080
)


376



(2,704
)






(1,064
)


(1,064
)Origination of notes receivable from related parties


(7,600
)


(31,700
)


(39,300
)


(10,000
)






(10,000
)Proceeds from repayment of notes receivable from related parties


10,000



31,700



41,700



777







777Investments in unconsolidated entities


(2,250
)


(6,826
)


(9,076
)


596



(112,368
)


(111,772
)Sale of
    tenant-in-common
    interests in unconsolidated entities






20,466



20,466







101,128



101,128Distributions of capital received from investments in
    unconsolidated entities






1,256



1,256







20,049



20,049Acquisition of properties


(677,392
)


72,266



(605,126
)


(80,905
)






(80,905
)Proceeds from sale of properties


472,553



(379,608
)


92,945



31,684







31,684Real estate deposits and pre-acquisition costs


(11,686
)


(38,516
)


(50,202
)


(15,948
)


1,842



(14,106
)Proceeds from collection of real estate deposits andpre-acquisition costs


12,749



36,678



49,427



33,768



(7,046
)


26,722Restricted cash


(21,909
)


(31,916
)


(53,825
)


(2,787
)


(1,277
)


(4,064
)Net cash (used in) provided by investing activities


(235,324
)


(251,585
)


(486,909
)


(57,112
)


909



(56,203
)CASH FLOWS FROM FINANCING ACTIVITIES:Advances on line of credit


(30,000
)






(30,000
)






14,000



14,000Repayment of advances on line of credit














(8,500
)


(14,000
)


(22,500
)Borrowings on notes payable and capital lease obligations


239,888



307,127



547,015



71,106



49,605



120,711Repayments of notes payable and capital leases obligations


(62,874
)


(80,974
)


(143,848
)


(36,820
)


(59,110
)


(95,930
)Other financing costs


850







850



(1,973
)


106



(1,867
)Contributions from minority interests


13,409



28,652



42,061



904



6,650



7,554Distributions to minority interests






(2,866
)


(2,866
)






(315
)


(315
)Net cash provided by (used in) financing activities


148,529



251,939



400,468



143,589



(3,064
)


140,525NET (DECREASE) INCREASE IN CASH


(53,154
)


256



(52,898
)


101,678







101,678Cash and cash equivalents  End of year

$
49,072


$
256


$
49,328


$
102,226


$



$
102,226SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIESDeconsolidation of assets held by variable interest entities

$



$
372,674


$
372,674


$



$
28,016


$
28,016Deconsolidation of liabilities held by variable interest entities

$



$
269,732


$
269,732


$



$
17,449


$
17,449     (1)
    
    Amounts presented as previously reported have been
    reclassified to conform to current year presentation. See
    discussion of reclassifications in note 2. 84




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    MARKETABLE
    SECURITIES      As of December 31, 2007Gross Unrealized(In thousands)

Historical Cost


Gains


Losses


Market ValueMarketable equity securities

$
4,440


$



$
(1,355
)

$
3,085     Investments
    in Limited Partnerships
    EITF 04-05 Determining Whether a General Partner, or the General
    Partners as a Group Controls a Limited Partnership of Similar
    Entity When the Limited Partners Have Certain Rights,
      As of December 31, 2008


As of December 31, 2007Gross


Fair











FairHistorical


Unrealized


Market


Historical


Gross Unrealized


Market(In thousands)

Cost


Gains


Losses


Value


Cost


Gains


Losses


ValueEquity securities

$
1,933


$
12


$
(435
)

$
1,510


$
7,250


$
134


$
(1,417
)

$
5,967   85




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For The Year Ended


For The Year EndedDecember 31, 2008


December 31, 2007Realized


Unrealized








Realized


UnrealizedInvestment


Gains


Gains





Investment


Gains


Gains(In thousands)

Income


(Losses)


(Losses)


Total


Income


(Losses)


(Losses)


TotalEquity securities

$
307


$
(5,454
)

$
841


$
(4,306
)

$
163


$
(185
)

$
(618
)

$
(640
)Less investment expenses


(283
)










(283
)


(40
)










(40
)$
24


$
(5,454
)

$
841


$
(4,589
)

$
123


$
(185
)

$
(618
)

$
(680
)   5.
    RELATED
    PARTIES    Accounts
    Receivable
    December 31,2008


2007(In thousands)Accrued property management fees

$
23,298


$
19,574Accrued lease commissions


7,720



9,945Other accrued fees


3,372



4,432Other receivables


647



4,147Accrued asset management fees


1,725



1,206Accounts receivable from sponsored REITs


4,768



4,796Accrued real estate acquisition fees


1,834



87Total


43,364



44,187Allowance for uncollectible receivables


(9,662
)


(1,032
)Accounts receivable from related parties  net


33,702



43,155Less portion classified as current


(22,630
)


(32,795
)Non-current portion

$
11,072


$
10,360  86




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Advances
    to Related Parties
    December 31,2008


2007(In thousands)




RestatedAdvances to properties of related parties

$
14,714


$
9,823Advances to related parties


2,937



2,434Total


17,651



12,257Allowance for uncollectible advances


(3,170
)


(1,839
)Advances to related parties  net


14,481



10,418Less portion classified as current


(2,982
)


(6,667
)Non-current portion

$
11,499


$
3,751       Notes
    Receivable From Related Party
       87




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.  SERVICE FEES RECEIVABLE, NET
    December 31,2008


2007(In thousands)Transaction services fees receivable

$
16,185


$
11,289Management services fees receivable


11,848



8,903Allowance for uncollectible accounts


(871
)


(343
)Total


27,162



19,849Less portion classified as current


(26,987
)


(19,521
)Non-current portion (included in other assets)

$
175


$
328   7.
    VARIABLE
    INTEREST ENTITIES         88




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 78-9, Accounting for Investments in Real Estate Ventures (SOP 78-9), No. 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights (EITF 04-5).
    8.
    INVESTMENTS
    IN UNCONSOLIDATED ENTITIES   89




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            9.  PROPERTY, EQUIPMENT AND LEASEHOLD
    IMPROVEMENTS
    December 31,Useful Life

2008


2007(In thousands)Computer equipment

3-5 years

$
31,096


$
32,002Automobiles

5 years


11



11Capital leases

1-5 years


1,566



1,519Furniture and fixtures

7 years


25,083



25,283Leasehold improvements

1-5 years


7,834



7,810Total




65,590



66,625Accumulated depreciation and amortization




(51,581
)


(49,897
)Property and equipment  net



$
14,009


$
16,728    90




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    BUSINESS
    COMBINATIONS AND GOODWILL  Merger
    of Grubb & Ellis Company with NNN
            Current assets

$
189,214Other assets


29,797Identified intangible assets acquired


86,600Goodwill


107,507Total assets


413,118Current liabilities


233,894Other liabilities


7,022Total liabilities


240,916Total purchase price

$
172,202    91




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Acquisition
    of NNN/ROC Apartment Holdings, LLC
    Acquisition
    of Alesco Global Advisors, LLC
    Acquisition
    of Triple Net Properties, Realty, and NNN Capital
    Corp.
      
    TNP Merger Sub, LLC, a Delaware limited liability company and
    wholly-owned subsidiary of NNN, entered into an agreement and
    plan of merger with Triple Net Properties, a Virginia limited
    liability company owned by Anthony W. Thompson (former Chairman
    of the Board), Scott D. Peters (former executive officer and
    director), Louis J. Rogers (former director and former executive
    officer of Triple Net Properties) and a number of other
    employees and third-party investors. In connection with the
    merger agreement, NNN entered into contribution agreements with
    the holders of a majority of the 92




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  common membership interests of Triple Net Properties. Under the
    merger agreement and the contribution agreements, NNN issued
    17,372,438 shares of the Companys common stock (to
    the accredited investor members) and $986,000 in cash (to the
    unaccredited investor members in lieu of 0.5% of the shares of
    the Companys common stock they would otherwise be entitled
    to receive, which was valued at the $11.36 offering price to
    investors in the 144A offering) in exchange for all the common
    member interests. Concurrently with the closing of the 144A
    offering on November 16, 2006, Triple Net Properties became
    a wholly-owned subsidiary of NNN. For accounting purposes,
    Triple Net Properties was considered the acquirer of Realty and
    NNN Capital Corp.  
    NNN entered into a contribution agreement with Mr. Thompson
    and Mr. Rogers pursuant to which they contributed all of
    the outstanding shares of Realty, to the Company in exchange for
    4,124,120 shares of the Companys common stock and,
    with respect to Mr. Thompson, $9.4 million in cash in
    lieu of the shares of NNN he would otherwise be entitled to
    receive, which was valued at the $11.36 offering price to
    investors in the 144A offering. Concurrently with the closing of
    the 144A offering on November 16, 2006, Realty became a
    wholly-owned subsidiary of NNN.
    NNN entered into a contribution agreement with
    Mr. Thompson, Mr. Rogers and Kevin K. Hull pursuant to
    which they contributed all of the outstanding shares of NNN
    Capital Corp. to the Company in exchange for
    1,164,680 shares of the Companys common stock and,
    with respect to Mr. Thompson, $2.7 million in cash in
    lieu of the shares of NNN he would otherwise be entitled to
    receive, which was valued at the $11.36 offering price to
    investors in the 144A offering. NNN Capital Corp. became a
    wholly-owned subsidiary of NNN on December 14, 2006.         93




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands except share and
    per share data)Purchase of shares of Realty for cash





$
9,435Purchase of shares of Realty for stock






46,865Total purchase price






56,300Adjusted beginning equity

$
1,733Adjustment for fair value of intangible contract rights


(20,538
)Adjustment to goodwill to reflect deferred tax liability arising
    from allocation of purchase price to intangible contract rights


8,214Less: fair value of net assets acquired






(10,591
)Goodwill: Excess purchase price over fair value of net assets





$
45,709     Assets:Current assets

$
5,326Intangible contract rights


20,538Total assets


25,864Liabilities:Current liabilities


7,059Long-term deferred tax liability


8,214Total liabilities


15,273Fair value of net assets acquired

$
10,591     Realty fair value

$
56,300Cash payment toward purchase


(9,435
)Value of shares issued

$
46,865Price per share issued

$
10.00Shares issued to Realty owners


4,686,500     (In thousands, except share and
    per share data)Purchase of shares of GBE Securities for cash

$
2,665Purchase of shares of GBE Securities for stock


13,235Total purchase price


15,900Less: fair value of net assets acquired


(1,426
)Goodwill: Excess purchase price over fair value of net assets

$
14,474  94




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Assets:Current assets

$
5,391Property and equipment


104Total assets


5,495Liabilities:Current liabilities


4,069Total liabilities


4,069Fair value of net assets acquired

$
1,426     GBE Securities fair value

$
15,900Cash payment toward purchase


(2,665
)Value of shares issued

$
13,235Price per share issued

$
10.00Shares issued to GBE Securities owners


1,323,500   Supplemental
    information (unaudited)
    UnauditedPro FormaResultsFor The YearEndedDecember 31, 2007(In thousands, except per share
    data)

RestatedRevenue

$
733,095Loss from continuing operations

$
(790
)Net income

$
18,930Basic earnings per share

$
0.30Weighted average shares outstanding for basic earnings per share


63,393Diluted earnings per share

$
0.29Weighted average shares outstanding for diluted earnings per
    share


64,785  95




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
  Transaction


Management


Investment


GoodwillServices


Services


Management


Unassigned


Total(In thousands)Balance as of December 31, 2006

$



$



$
60,183


$



$
60,183Goodwill acquired










1,627







1,627Goodwill acquired  unassigned(1)














107,507



107,507Balance as of December 31, 2007










61,810



107,507



169,317Goodwill assigned


41,098



6,902



59,507



(107,507
)


Goodwill acquired


1,533



98



1,724







3,355Impairment charge off


(42,631
)


(7,000
)


(123,041
)






(172,672
)Balance as of December 31, 2008

$



$



$



$



$
     (1)
    
    The fair values of the assets and liabilities recorded on the
    date of acquisition related to the Merger were preliminary and
    subject to refinement as additional valuation information was
    received. The goodwill recorded in connection with the
    acquisition was assigned to the individual reporting units
    pursuant to FASB Statement No. 142 during the year ended
    December 31, 2008. Approximately $8.8 million of
    goodwill is expected to be deductible for tax purposes.   96




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    PROPERTY
    ACQUISITIONS  2008
    Acquisitions
  Acquisition
    of Properties for TIC Sponsored Programs
    2007
    Acquisitions
  Acquisition
    of Properties for TIC Sponsored Programs
    Acquisition
    of Properties for Investment
      2007(In thousands)Land

$
16,395Building and improvements


79,946In place leases


5,560Above market leases


450Tenant relationships


6,931Net assets acquired

$
109,282Below market leases

$
(233
)Net liabilities assumed

$
(233
)    97




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    IDENTIFIED
    INTANGIBLE ASSETS    December 31,(In thousands)

Useful Life

2008


2007Contract rightsContract rights, established for the legal right to future
    disposition fees of a portfolio of real estate properties under
    contract

Amortize per disposition
    transactions

$
11,924


$
20,538Accumulated amortization  contract rights




(4,700
)


(3,521
)Contract rights, net




7,224



17,017Other identified intangible assetsTrade name

Indefinite


64,100



64,100Affiliate agreement

20 years


10,600



10,600Customer relationships

5 to 7 years


5,436



5,579Internally developed software

4 years


6,200



6,200Customer backlog

1 year


300



300Other contract rights

5 to 7 years


1,418



1,418Non-compete and employment agreements

3 to 4 years


97



59788,151



88,794Accumulated amortization




(3,848
)


(338
)Other identified intangible assets, net




84,303



88,456Total identified intangible assets, net



$
91,527


$
105,473        98




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Inthousands)2009

$
3,2242010


3,2242011


3,1222012


1,5162013


1,157Thereafter


7,960$
20,203   13.
    ACCOUNTS
    PAYABLE AND ACCRUED EXPENSES    December 31,2008


2007(In thousands)




RestatedAccrued liabilities

$
11,502


$
14,990Salaries and related costs


13,643



16,028Accounts payable


14,323



10,961Broker commissions


14,002



26,597Dividends






1,733Severance


2,957



4,965Bonuses


9,741



14,934Property management fees and commissions due to third parties


2,940



4,909Interest


651



1,431Other


463



5,456Total

$
70,222


$
102,004   14.
    CAPITAL
    LEASE OBLIGATIONS    December 31,2008


2007(In thousands)Capital leases obligations

$
536


$
790Total


536



790Less portion classified as current


(333
)


(351
)Non-current portion

$
203


$
439  99




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)2009

$
3712010


1892011


23Less imputed interest


(47
)$
536   15.
    NOTES PAYABLE OF PROPERTIES HELD FOR SALE INCLUDING
    INVESTMENTS IN UNCONSOLIDATED ENTITIES    December 31,2008


2007(In thousands)Mortgage debt payable to various financial institutions, with
    variable interest rates based on London Interbank Offered Rate
    (LIBOR) and include an interest rate cap for LIBOR
    at 6.00% (interest rates ranging from 2.91% to 6.00% per annum
    as of December 31, 2008). The notes require monthly
    interest-only payments and mature in July 2009 and have
    automatic one-year extension options

$
108,677


$
120,500Mortgage debt payable to various financial institutions. Fixed
    interest rates range from 5.95% to 6.32% per annum. The notes
    mature at various dates through February 2017. As of
    December 31, 2008, all notes require monthly interest-only
    payments


107,000



107,000Mezzanine debt payable to various financial institutions, with
    variable interest rates based on LIBOR (ranging from 11.31% to
    12.00% per annum as of December 31, 2007), required monthly
    interest-only payments. These debts were paid in full during the
    first and second quarters of 2008






30,000Mortgage debt payable to various financial institutions. Fixed
    interest rates range from 6.14% to 6.79% per annum. The notes
    were scheduled to mature at various dates through January 2018.
    As of December 31, 2007, all notes required monthly
    interest-only payments (paid in full in 2008)






72,230Mezzanine debt payable to various financial institutions, fixed
    and variable interest rates range from 6.86% to 10.23% per
    annum. The notes were scheduled to mature at various dates
    through December 2008. As of December 31, 2007, all notes
    required monthly interest-only payments (paid in full in 2008)






18,790Unsecured notes payable to third-party investors with fixed
    interest at 6.00% per annum and matures in December 2011.
    Principal and interest payments are due quarterly


282



411Total

$
215,959


$
348,931      100




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (Inthousands)2009

$
108,7792010


1432011


372012


2013


Thereafter


107,000$
215,959   16.
    LINES OF
    CREDIT           101




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           102




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        
    assets sales,
    conversions of Investments (as defined in the Credit Agreement),
    the refund of any taxes or the sale of equity interests by the
    Company or its subsidiaries,
    the issuance of debt securities, or
    any other transaction or event occurring outside the ordinary
    course of business of the Company or its subsidiaries;  provided, however
       103




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    17.
    SENIOR
    NOTES  pari passu
    Date

Maturity

December 31,

Current

CallOwnership

Subsidiary

Issued

Date

2008

2007

Rate

Date(In thousands)100%

Senior Notes Program

08/01/2006

08/01/2011

$
16,277


$
16,277



8.75
%


N/A   18.
    SEGMENT
    DISCLOSURE    Transaction Services
  Investment Management
  Management Services
   104




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Transaction


Investment


ManagementYear Ended December 31, 2008

Services


Management


Services


Total(In thousands)Revenue

$
240,250


$
101,581


$
253,664


$
595,495Compensation costs


220,648



56,591



225,765



503,004General and administrative


45,805



64,978



8,877



119,660Segment operating (loss) income

$
(26,203
)

$
(19,988
)

$
19,022


$
(27,169
)Segment assets

$
100,606


$
90,047


$
50,232


$
240,885   Transaction


Investment


ManagementYear Ended December 31, 2007

Services


Management


Services


Total(In thousands)

Restated


Restated


Restated


RestatedRevenue

$
35,522


$
149,651


$
16,365


$
201,538Compensation costs


27,081



62,454



14,574



104,109General and administrative


3,894



39,535



822



44,251Segment operating income

$
4,547


$
47,662


$
969


$
53,178Segment assets

$
141,348


$
480,155


$
14,469


$
635,972   Transaction


Investment


ManagementYear Ended December 31, 2006

Services


Management


Services


Total(In thousands)

Restated


Restated


Restated


RestatedRevenue

$



$
99,599


$



$
99,599Compensation costs






49,449







49,449General and administrative






30,188







30,188Segment operating income

$



$
19,962


$



$
19,962Segment assets

$



$
273,705


$



$
273,705  105




---



##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006(In thousands)




Restated


RestatedReconciliation to consolidated net (loss) income:Total segment operating (loss) income

$
(27,169
)

$
53,178


$
19,962Non-segment:Rental related revenue


16,326



16,399



8,944Operating expenses


(244,611
)


(27,228
)


(17,996
)Other (expense) income


(18,867
)


4,556



2,661Minority interest in loss (income) of consolidated entities


11,719



(1,961
)


(78
)Income tax (provision) benefit


(16,890
)


(18,118
)


7,441Loss from discontinued operations


(51,378
)


(5,754
)


(963
)Net (loss) income

$
(330,870
)

$
21,072


$
19,971   Reconciliation
    of segment assets to consolidated balance sheets:
  (In thousands)Segment assets

$
240,885


$
635,972


$
273,705Corporate assets


279,392



352,570



74,004Total assets

$
520,277


$
988,542


$
347,709Corporate expenditures

$
4,407


$
3,331


$
2,339Total capital expenditures

$
4,407


$
3,331


$
2,339   19.
    PROPERTIES
    HELD FOR SALE INCLUDING INVESTMENTS IN UNCONSOLIDATED ENTITIES
    AND DISCONTINUED OPERATIONS    December 31,


December 31,2008


2007(In thousands)Cash and cash equivalents

$
922


$
59Restricted cash


33,142



67,047Properties held for sale including investments in unconsolidated
    entities


167,408



332,176Identified intangible assets and other assets


37,145



76,985Other assets






617Total assets

$
238,617


$
476,884Notes payable of properties held for sale including investments
    in unconsolidated entities

$
215,959


$
348,931Liabilities of properties held for sale


16,843



25,550Other liabilities


2,407



12,379Total liabilities

$
235,209


$
386,860  106




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ,
    Accounting for Sales
    of Real Estate 98-8,
     107




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        components-
  Year Ended December 31,2008


2007


2006(In thousands)Rental income

$
40,287


$
22,236


$
1,541Rental expense


(36,892
)


(10,037
)


(862
)Depreciation and amortization






(7,117
)


(199
)Interest expense (including amortization of deferred financing
    costs)


(15,816
)


(15,092
)


(1,572
)Real estate related impairments


(72,397
)






Tax benefit


33,083



4,004



61Loss from discontinued
    operations-net
    of taxes


(51,735
)


(6,006
)


(1,031
)Gain on disposal of discontinued
    operations-net
    of taxes


357



252



68Total loss from discontinued operations

$
(51,378
)

$
(5,754
)

$
(963
)   20.
    COMMITMENTS
    AND CONTINGENCIES  Operating Leases
   108




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Inthousands)2009

$
22,0852010


16,7602011


14,0692012


12,4582013


9,624Thereafter


16,903$
91,899   Operating Leases  Other 10-year
  RentalRelatedExpense(In thousands)2009

$
9,7932010


10,8122011


10,9422012


10,9422013


10,942Thereafter


19,880$
73,311     10-year
 109




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)2009

$
4,4742010


4,4742011


4,4742012


4,4742013


4,474Thereafter


4,518$
26,888       TIC Program Exchange Provision -
  Capital Lease Obligations
  SEC Investigation  In the matter of Triple
    Net Properties, LLC,
  General 
 110




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Guarantees
    December 31,2008


2007(In thousands)Non-recourse/carve-out guarantees of debt of properties under
    management(1)

$
3,414,433


$
3,167,447Non-recourse/carve-out guarantees of the Companys debt(1)

$
107,000


$
221,430Guarantees of the Companys mezzanine debt

$



$
48,790Recourse guarantees of debt of properties under management

$
42,426


$
47,399Recourse guarantees of the Companys debt

$
10,000


$
10,000     (1)
    
    A non-recourse/carve-out guarantee imposes personal
    liability on the guarantor in the event the borrower engages in
    certain acts prohibited by the loan documents.    Environmental Obligations
  Real Estate Licensing Issues
 111




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Alesco Seed Capital
  21.
    EARNINGS
    (LOSS) PER SHARE  Earnings Per Share
     112




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006(In thousands, except per share
    amounts)




Restated


RestatedNumerator:(Loss) income from continuing operations, net of tax

$
(279,492
)

$
26,826


$
20,934Loss from discontinued operations, net of tax


(51,378
)


(5,754
)


(963
)Net (loss) income

$
(330,870
)

$
21,072


$
19,971Denominator:Denominator for basic earnings (loss) per share:Weighted-average number of common shares outstanding


63,515



38,652



19,681
(1)Effect of dilutive securities:Unvested restricted stock



(2)


1
(2)


13
(2)Denominator for diluted earnings (loss) per share:Weighted-average number of common and common equivalentshares outstanding


63,515



38,653



19,694Basic (loss) earnings per share(Loss) income from continuing operations, net of tax

$
(4.40
)

$
0.69


$
1.06Loss from discontinued operations, net of tax


(0.81
)


(0.14
)


(0.05
)Basic (loss) earnings per share

$
(5.21
)

$
0.55


$
1.01Diluted (loss) earnings per share(Loss) income from continuing operations, net of tax

$
(4.40
)

$
0.69


$
1.06Loss from discontinued operations, net of tax


(0.81
)


(0.14
)


(0.05
)Diluted (loss) earnings per share

$
(5.21
)

$
0.55


$
1.01     (1)

    
    Shares of NNNs common stock as December 31, 2007,
    were converted to the Companys common shares outstanding
    by applying December 7, 2007 merger exchange ratio for
    earnings (loss) per share disclosure purposes.(2)

    
    Excluded from the calculation of diluted weighted-average common
    shares were approximately 3.1 million, 2.0 million and
    181,000 shares of options and restricted stock that have an
    anti-dilutive effect when applying the treasury stock method as
    of December 31, 2008, 2007 and 2006, respectively. In
    addition, excluded from the calculation of diluted
    weighted-average common shares as of December 31, 2008 were
    approximately 5.2 million shares that may be awarded to
    employees related to the deferred compensation plan. See
    Note 23  Employee Benefit Plans for additional
    information on the deferred compensation plan.  22.
    OTHER
    RELATED PARTY TRANSACTIONS  Offering Costs and Other Expenses Related to Public
    Non-traded REITs
 113




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Management Fees
  Other Related Party
   114




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            gross-up
  gross-up
   115




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        23.
    EMPLOYEE
    BENEFIT PLANS  Stock
    Incentive Plans
    2006 Omnibus Equity Plan 
    Non-Qualified Stock Options.
   116




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Weighted-AverageRemaining


Weighted-AverageWeighted-Average


Contractual


Grant DateNumber of


Exercise Price


Term


Fair ValueShares


per Share


(In Years)


per ShareOptions outstanding as of January 1, 2006


Options granted


180,400


$
11.36






$
4.16Options exercised


Options forfeited or expired


Options outstanding as of December 31, 2006


180,400


$
11.36



9.87


$
4.16Options granted


610,940


$
11.36






$
3.61Options exercised


Options forfeited or expired


(140,800
)

$
11.36






$
3.78Options converted and vested related to acquired company


1,105,219


$
7.06






$
3.60Options outstanding as of December 31, 2007


1,755,759


$
8.65



6.14


$
3.65Options granted


Options exercised


(76,666
)

$
6.53






$
4.23Options forfeited or expired


(601,918
)

$
10.74






$
2.12Options outstanding as of December 31, 2008


1,077,175


$
7.76



6.79


$
4.51Options vested and exercisable as of December 31, 2008


820,797


$
6.63



6.39


$
4.79Options expected to vest as of December 31, 2008


256,378


$
11.36



8.06


$
3.61Options vested and expected to vest as of December 31, 2008


1,077,175


$
7.76



6.79


$
4.51    117




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2007


2006Exercise price

$
8.59


$
11.36Expected term (in years)


5.0



6.0Risk-free interest rate


3.97
%


4.67
%Expected volatility


81.79
%


43.94
%Expected dividend yield


4.1
%


4.1
%Fair value at date of grant

$
3.45


$
3.66     Restricted Stock.
   118




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageGrant DateNumber of


Fair ValueShares


per ShareNon vested shares outstanding as of January 1, 2006


Shares issued


541,200


$
10.83Shares vested


Shares forfeited


Non vested shares outstanding as of December 31, 2006


541,200


$
10.83Shares issued upon merger


40,000


$
12.49Shares issued


1,409,372


$
10.31Shares vested


(456,133
)

$
10.78Shares forfeited


(102,667
)

$
10.89Non vested shares outstanding as of December 31, 2007


1,431,772


$
10.37Shares issued


1,552,227


$
3.06Shares vested


(455,195
)

$
10.65Shares forfeited


(514,792
)

$
9.79Non vested shares outstanding as of December 31, 2008


2,014,012


$
4.95   Employment Agreements.
  Other stock award.
  Other Equity Awards
 119




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          401k Plan
  Deferred
    Compensation Plan
   120




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      24.
    INCOME
    TAXES    Year Ended December 31,(In thousands)

2008


2007


2006Current:






Restated



RestatedFederal

$
(10,981
)

$
16,991


$
375State


(1,890
)


3,195



331(12,871
)


20,186



706Deferred:Federal


33,175



(1,943
)


(6,766
)State


(3,414
)


(125
)


(1,381
)29,761



(2,068
)


(8,147
)$
16,890


$
18,118


$
(7,441
)      121




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    paragraphs 20-25 true-ups
    Year Ended December 31,2008


2007


2006(In thousands)




Restated


RestatedFederal income taxes at the statutory rate

$
(91,913
)

$
15,736


$
3,769Income of properties not subject to corporate income tax(1)










(4,905
)Tax benefit of change in tax status










(6,086
)State income taxes, net of federal benefit


(3,525
)


2,344



(51
)Credits


(236
)


(250
)


Other


(235
)


(251
)


Non-taxable income










(238
)Non-deductible expenses


63,122



460



70Change in valuation allowance


49,677



79



Provision (benefit) for income taxes

$
16,890


$
18,118


$
(7,441
)     (1)
    
    Represents Grubb & Ellis Realty Investors, LLC income
    for the period January 1, 2006 through November 15,
    2006.   122




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)

December 31, 2008


December 31, 2007RestatedStock compensation

$
953


$
968Accrued expenses


3,446



3,096Severance accrual


1,160



1,986Allowance for bad debts


3,764



1,745Deferred revenue


122



1,750Workers compensation reserves


689



703Net operating losses






2,559Other


870



535Less valuation allowance


(8,363
)


(1,561
)Current deferred tax assets:


2,641



11,781Intangible assets


(2,569
)


(2,532
)Prepaid service contracts


(1,055
)


(1,076
)Other


(1,097
)


(182
)Current deferred tax liabilities:


(4,721
)


(3,790
)Net current deferred tax assets (liabilities)

$
(2,080
)

$
7,991Stock compensation

$
4,720


$
2,616Capitalized cost of member redemption


461



935Property and equipment


3,523



2,568Legal reserve


1,449



2,067Real estate impairments


40,139



Other


5,099



3,653Capital losses


2,528



Net operating losses


9,200



4,125Less valuation allowance


(46,841
)


(1,542
)Noncurrent deferred tax assets


20,278



14,422Intangible assets


(38,470
)


(43,693
)Other


894



(644
)Noncurrent deferred tax liabilities


(37,576
)


(44,337
)Net noncurrent deferred tax liabilities

$
(17,298
)

$
(29,915
)Net deferred tax liabilities:

$
(19,378
)

$
(21,924
)   12-month
 123




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  25.
    SELECTED
    QUARTERLY FINANCIAL DATA (unaudited)  Fiscal Year 2008Quarter EndedAs Reported(1)


As Restated


As Reported(1)


As RestatedMarch 31, 2008


March 31, 2008


June 30, 2008


June 30, 2008(In thousands, except per share
    amounts)Total revenue

$
151,086


$
150,368


$
156,678


$
156,233Operating loss

$
(2,724
)

$
(3,442
)

$
(376
)

$
(821
)Net loss to common stockholders

$
(5,868
)

$
(6,298
)

$
(5,114
)

$
(5,380
)Loss per common share:Basic 

$
(0.09
)

$
(0.10
)

$
(0.08
)

$
(0.08
)Weighted average common shares outstanding


63,521



63,521



63,600



63,600Diluted 

$
(0.09
)

$
(0.10
)

$
(0.08
)

$
(0.08
)Weighted average common shares outstanding


63,521



63,521



63,600



63,600   Fiscal Year 2008Quarter EndedAs Reported(1)


As RestatedSeptember 30, 2008


September 30, 2008


December 31, 2008(In thousands, except per share
    amounts)Total revenue

$
150,110


$
149,192


$
156,028Operating loss

$
(20,489
)

$
(33,121
)

$
(218,070
)Net loss to common stockholders

$
(44,016
)

$
(56,282
)

$
(262,910
)Loss per common share:Basic 

$
(0.69
)

$
(0.88
)

$
(4.15
)Weighted average common shares outstanding


63,601



63,601



63,388Diluted 

$
(0.69
)

$
(0.88
)

$
(4.15
)Weighted average common shares outstanding


63,601



63,601



63,388   124




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal Year 2007Quarter EndedAs Restated


As Reported(1)


As RestatedAs Reported(1) March 31, 2007


March 31, 2007


June 30, 2007


June 30, 2007(In thousands, except per share
    amounts)Total revenue

$
31,616


$
32,641


$
43,258


$
42,197Operating income

$
5,308


$
6,333


$
17,771


$
16,710Net income to common stockholders

$
3,637


$
4,252


$
10,234


$
9,597Income per common share:Basic 

$
0.10


$
0.12


$
0.24


$
0.23Weighted average common shares outstanding


36,910



36,910



41,943



41,943Diluted 

$
0.10


$
0.12


$
0.24


$
0.23Weighted average common shares outstanding


36,949



36,949



42,056



42,056   Fiscal Year 2007Quarter EndedAs Reported(1)


As Restated


As Reported(1)


As RestatedSeptember 30, 2007


September 30, 2007


December 31, 2007


December 31, 2007(In thousands, except per share
    amounts)Total revenue

$
46,158


$
46,763


$
96,522


$
96,336Operating income

$
9,610


$
10,215


$
9,277


$
9,091Net income to common stockholders

$
4,053


$
4,416


$
2,918


$
2,807Income per common share:Basic 

$
0.10


$
0.11


$
0.07


$
0.06Weighted average common shares outstanding


41,943



41,943



43,821



43,821Diluted 

$
0.10


$
0.10


$
0.07


$
0.06Weighted average common shares outstanding


42,127



42,127



43,826



43,826      125




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.  
    Controls and Procedures.
  Restatement
  Form 8-K Form 10-K Form 10-K), Form 10-K. tenant-in-common tenant-in-common
  Evaluation
    of disclosure controls and procedures
    Rule 13a-15(e) 15d-15(e)
  tenant-in-common Form 10-K Form 10-K.
  Material
    Weaknesses in Internal Control Over Financial
    Reporting
   126




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##### Table of Contents




    Several internal controls were not operating effectively and
    therefore failed to identify, adequately disclose and
    appropriately account for the letter agreements and master lease
    arrangements and revenue recognition relating to
    tenant-in-common
    investment programs and master lease arrangements entered into
    by NNN prior to the Merger.
    The Company did not maintain internal controls relating to
    properly evaluating the revenue recognition relating to a number
    of
    tenant-in-common
    investment programs.    Managements
    Report on Internal Control over Financial
    Reporting
      Managements
    Remediation Initiatives
    
    Restructured the Finance and Accounting functions and engaged
    additional resources with the appropriate depth of experience
    for our Finance and Accounting departments
    Updated accounting policies and procedures to ensure that
    accounting personnel have sufficient guidance to remediate
    previously communicated weaknesses and to appropriately account
    for transactions    
    Implementing a required legal and accounting review prior to
    execution of investor agreements
    Enhancing executive and senior management certifications to
    specifically address knowledge of side agreements, related party
    transactions, incidents of fraud, and to acknowledge compliance
    with the Companys Code of Business Conduct and Ethics
    Implementing a management training program that addresses
    acceptable transactions and authorization requirements   127




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##### Table of Contents



Changes
    in Internal Control over Financial Reporting
      Item 9B.
    Other
    Information   128




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  The Board of
    Directors and Shareholders of Grubb & Ellis Company
          tenant-in-common tenancy-in-common
    Ernst &
    Young LLP
   129




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##### Table of Contents



GRUBB &
    ELLIS COMPANY
 PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Information
    about the Directors
    Class A directorsHarold H. Greene
    
    70, has served as a director of the Company since December 2007.
    Mr. Greene also served as a director of NNN from November
    2006 to December 2007. Mr. Greene is a
    40-year
    veteran of the commercial and residential real estate lending
    industry. He most recently served as the Managing Director for
    Bank of Americas California Commercial Real Estate
    Division from 1998 to his retirement in 2001, where he was
    responsible for lending to commercial real estate developers in
    California and managed an investment portfolio of approximately
    $2.6 billion. From 1990 to 1998, Mr. Greene was the
    Executive Vice President of SeaFirst Bank in Seattle, Washington
    and prior to that he served as the Vice Chairman of MetroBank
    from 1989 to 1990 and in various positions, including Senior
    Vice President in charge of the Asset Based Finance Group, with
    Union Bank, where he worked for 27 years. Mr. Greene
    currently serves as a director of Garys and Company
    (mens clothing retailer), as a director and member of the
    audit committee of Paladin Realty Income Properties, Inc., and
    as a director and member of the audit, compensation and
    nominating and corporate governance committees of William Lyon
    Homes.Devin I. Murphy
    
    49, has served as a director of the Company since July 2008. He
    is a Managing Partner of Coventry Real Estate Advisors, LLC, a
    real estate private equity firm which sponsors opportunistic
    institutional investment funds that acquire and develop retail
    and mixed-used properties. Prior to joining Coventry Real Estate
    Advisors, LLC in 2008, Mr. Murphy was the Global Head of
    Real Estate Investment Banking at Deutsche Bank Securities, Inc.
    from 2004 to 2007. From 1993 through 2007, he was with Morgan
    Stanley & Company in a variety of real estate and
    investment banking roles, including Co-Head North American Real
    Estate Investment Banking and Global Head of the firms
    Real Estate Private Capital Markets Group. Mr. Murphy also
    served on the investment committee of the Morgan Stanley Real
    Estate funds for 10 years during which time these funds
    invested over $35 billion.D. Fleet Wallace
    
    41, has served as a director of the Company since December 2007.
    Mr. Wallace also served as a director of NNN from November
    2006 to December 2007. Mr. Wallace is a principal and
    co-founder of McCann Realty Partners, LLC, an apartment
    investment 130




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##### Table of Contents



company focusing on garden apartment properties in the Southeast
    formed in 2004. From April 1998 to August 2001, Mr. Wallace
    served as corporate counsel and assistant secretary of United
    Dominion Realty Trust, Inc., a publicly-traded real estate
    investment trust. From September 1994 to April 1998,
    Mr. Wallace was in the private practice of law with McGuire
    Woods in Richmond, Virginia. Mr. Wallace has also served as
    a Trustee of G REIT Liquidating Trust since January 2008.Class B directorsRobert J. McLaughlin
    
    76, has served as a director of the Company since July 2004.
    Mr. McLaughlin previously served as a director of the
    Company from September 1994 to March 2001. He founded The Sutter
    Group in 1982, a management consulting company that focuses on
    enhancing shareholder value, and currently serves as its
    President. Previously, Mr. McLaughlin served as President
    and Chief Executive Officer of Tru-Circle Corporation, an
    aerospace subcontractor, from November 2003 to April 2004, and
    as Chairman of the Board of Directors from August 2001 to
    February 2003, and as Chairman and Chief Executive Officer from
    October 2001 to April 2002 of Imperial Sugar Company.Gary H. Hunt
    
    60, has served as a director of the Company since December 2007
    and as the Companys Interim Chief Executive Officer since
    July 2008. Mr. Hunt also served as a director of NNN from
    November 2006 to December 2007. Mr. Hunt has served as the
    managing partner of California Strategies, LLC, a privately held
    consulting firm in Irvine, California that works with large
    homebuilders, real estate companies and government entities
    since 2001. Prior to serving with California Strategies,
    Mr. Hunt was the executive vice president and served on the
    board of directors and on the Executive Committee of the Board
    of The Irvine Company, a
    110-year-old
    privately held company that plans, develops and invests in real
    estate primarily in Orange County, California for 25 years.
    He also serves on the board of directors of Glenair Inc. and
    William Lyon Homes. Mr. Hunt has also served as a Trustee
    of G REIT Liquidating Trust since January 2008.Glenn L. Carpenter
    
    66, has served as a director of the Company since December 2007
    and served as Chairman of the Board of the Company from February
    2008 until he voluntarily stepped down as Chairman in January
    2009. Mr. Carpenter also served as a director of NNN from
    November 2006 to December 2007. Since August 2001,
    Mr. Carpenter has served as the Chief Executive Officer,
    President and Chairman of FountainGlen Properties, LP, a
    privately held company in Newport Beach, California, that
    develops, owns and operates apartment communities for active
    seniors. Prior to serving with FountainGlen, from 1994 to 2001,
    Mr. Carpenter was the Chief Executive Officer and founder
    of Pacific Gulf Properties Inc., a publicly traded REIT that
    developed and operated industrial business parks and various
    types of apartment communities. From 1970 to 1994,
    Mr. Carpenter served as Chief Executive Officer and
    President, and other officer positions of Santa Anita Realty
    Enterprises Inc., a publicly traded REIT that owned and managed 131




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##### Table of Contents



industrial office buildings, apartments and shopping centers. He
    has received numerous honors in the real estate field including
    the 2000 Real Estate Man of the Year Award and was voted the
    1999 Orange County Entrepreneur of the Year for real estate.
    Mr. Carpenter sits on the board of councilors of the School
    of Gerontology at the University of Southern California and is a
    council and executive board member of the American Seniors
    Housing Association.Class C directorsC. Michael Kojaian
    
    47, has served as a director of the Company since December 1996.
    He served as the Chairman of the Board of Directors of the
    Company from June 2002 until December 7, 2007 and has
    served as the Chairman of the Board of Directors of the Company
    since January 6, 2009. He has been the President of Kojaian
    Ventures, L.L.C. and also Executive Vice President, a director
    and a shareholder of Kojaian Management Corporation, both of
    which are investment firms headquartered in Bloomfield Hills,
    Michigan, since 2000 and 1985, respectively. He is also a
    director of Arbor Realty Trust, Inc. Mr. Kojaian has also
    served as the Chairman of the Board of Directors of
    Grubb & Ellis Realty Advisors, Inc., an affiliate of
    the Company, from its inception in September 2005 until April
    2008, and as its Chief Executive Officer from December 13,
    2007 until April 2008.Rodger D. Young
    
    62, has served as a director of the Company since April 2003.
    Mr. Young has been a name partner of the law firm of
    Young & Susser, P.C. since its founding in 1991,
    a boutique firm specializing in commercial litigation with
    offices in Southfield, Michigan and New York City. In 2001,
    Mr. Young was named Chairman of the Bush
    Administrations Federal Judge and U.S. Attorney
    Qualification Committee by Governor John Engler and
    Michigans Republican Congressional Delegation.
    Mr. Young is a member of the American College of Trial
    Lawyers and was listed in the 2007 edition of Best Lawyers of
    America. Mr. Young was named by Chambers International
    and by Best Lawyers in America as one of the top commercial
    litigators in the United States.  Communications
    with the Directors
  c/o Corporate c/o Corporate
  Information
    About Executive Officers
    Andrea R. Biller
    
    59, has served as Executive Vice President, General Counsel and
    Secretary of the Company since December 2007. She joined GERI 132




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##### Table of Contents



in March 2003 as General Counsel and served as NNNs
    General Counsel, Executive Vice President and Secretary since
    November 2006 and director since December 2007. Ms. Biller
    also has served as Executive Vice President and Secretary of
    Grubb & Ellis Healthcare REIT, Inc. since April 2006
    and Secretary of Grubb & Ellis Apartment REIT, Inc.
    since April 2009 and from December 2005 to February 2009.
    Ms. Biller also has served as a director of
    Grubb & Ellis Apartment REIT, Inc. since June 2008.
    Ms. Biller served as Executive Vice President of
    G REIT, Inc. from December 2005 to January 2008 and
    Secretary of G REIT, Inc. from June 2004 to January 2008.
    Ms. Biller also served as the Secretary of T REIT, Inc.
    from May 2004 to July 2007. Ms. Biller served as an
    Attorney at the Securities and Exchange Commission, Division of
    Corporate Finance, in Washington D.C. from
    1995-2000,
    including two years as Special Counsel, and as a private
    attorney specializing in corporate and securities law from
    1990-1995
    and
    2000-2002.
    Ms. Biller is licensed to practice law in California,
    Virginia, and Washington, D.C.Jeffrey T. Hanson
    
    38, has served as Chief Investment Officer of the Company since
    January 2008. He has served as Chief Investment Officer of NNN
    since November and joined NNN in July 2006 as the President and
    Chief Executive Officer of Realty. From December 1997 to July
    2006, Mr. Hanson was a Senior Vice President with the Grubb
    and Ellis Institutional Investment Group in Grubb &
    Ellis Newport Beach office. Mr. Hanson served as a
    real estate broker with CB Richard Ellis from 1996 to December
    1997. Mr. Hanson formerly served as a member of the
    Grubb & Ellis Presidents Counsel and
    Institutional Investment Group Board of Advisors.Stanley J. Olander, Jr.
    
    54, has served as an Executive Vice President 
    Multifamily of the Company since December 2007. He has also
    served as Chief Executive Officer and a director of
    Grubb & Ellis Apartment REIT, Inc. and Chief Executive
    Officer of Grubb & Ellis Apartment REIT Advisors, LLC
    since December 2005. Mr. Olander has also served as
    Grubb & Ellis Apartment REIT, Inc.s Chairman of
    the Board since December 2006 and has also served as President
    of Grubb & Ellis Apartment REIT, Inc. and President of
    Grubb & Ellis Apartment REIT Advisors, LLC since April
    2007. Mr. Olander has also been a Managing Member of ROC
    REIT Advisors, LLC since 2006 and a Managing Member of ROC
    Realty Advisors since 2005. Additionally, since July 2007,
    Mr. Olander has also served as Chief Executive Officer,
    President and Chairman of the Board of Grubb & Ellis
    Residential Management, Inc. He served as President and Chief
    Financial Officer and a member of the board of directors of
    Cornerstone Realty Income Trust, Inc. from 1996 until April
    2005. Prior to the sale of Cornerstone Realty Income Trust, Inc.
    in April 2005, the companys shares were listed on the New
    York Stock Exchange, it owned approximately 23,000 apartment
    units in five states and had a total market capitalization of
    approximately 40,000 apartment units.Richard W. Pehlke
    
    55, has served as the Executive Vice President and Chief
    Financial Officer of the Company since February 2007. Prior to
    joining the 133




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##### Table of Contents



Company, Mr. Pehlke served as Executive Vice President and
    Chief Financial Officer and a member of the board of directors
    of Hudson Highland Group, a publicly held global professional
    staffing and recruiting business, from 2003 to December 2005 and
    served as a consultant during 2006. From 2001 to 2003,
    Mr. Pehlke operated his own consulting business
    specializing in financial strategy and leadership development.
    In 2000, he was the Executive Vice President and Chief Financial
    Officer of ONE, Inc. a privately held software implementation
    business. Prior to 2000, Mr. Pehlke held senior financial
    positions in the telecommunications, financial services and food
    and consumer products industries.Jacob Van Berkel
    
    49, has served as Executive Vice President and Chief Operating
    Officer of the Company since February 2008 and President, Real
    Estate Services since May 2008. Mr. Van Berkel oversees
    operations and business integration for Grubb & Ellis,
    having joined NNN Realty Advisors in August 2007 to assist with
    the merger of the two companies. He is responsible for the
    strategic direction of all Grubb & Ellis human
    resources, marketing and communications, research and other
    day-to-day operational activities. He has 25 years of
    experience, including more than four years at CB Richard Ellis
    as senior vice president, human resources as well as in senior
    global human resources, operations and sales positions with
    First Data Corporation, Gateway Inc. and Western Digital.  Section 16(a)
    Beneficial Ownership Reporting Compliance
    1 3
  Code of
    Ethics
   134




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Change to
    Procedures for Recommending Nominees for Director
  Form 8-K
      Corporate
    Governance Guidelines
    Audit
    Committee
   135




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##### Table of Contents



Corporate
    Governance and Nominating Committee
    Certifications
    Item 11.
    Executive
    Compensation.  Compensation
    Discussion and Analysis
     136




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Compensation
    Committee Overview
              Use of
    Consultants
       137




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Role of
    Executives in Establishing Compensation
    Certain
    Compensation Committee Activity
    Compensation
    Philosophy, Goals and Objectives
      
    Compensate management, key employees, independent contractors
    and consultants on a competitive basis in order to attract,
    motivate and retain high quality, high performance individuals
    who will achieve the Companys short-term and long term
    goals;
    Motivate and reward executive officers whose knowledge, skill
    and performance are critical to the Companys success;
    Align the interests of the Companys executive officers and
    stockholders through equity-based long-term incentive awards
    that motivate executive officers to increase stockholder value
    and reward executive officers when stockholder value
    increases; and
    Ensure fairness among the executive management team by
    recognizing contributions each executive officer makes to the
    Companys success.     138




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##### Table of Contents



Compensation
    During Term of Employment
    Base
    Salary
        Annual
    Bonus Incentive Compensation
         139




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,
 140




---



##### Table of Contents



Annual
    Bonus Incentive Compensation
  Bonus Targetas a



BusinessCalendar

% of Base

Company

Unit/Function

Personal GoalsYear

Salary

Performance(5)

Performance(5)

and ObjectivesGary H. Hunt(1)Current Interim Chief
    Executive Officer


2008















Scott D. Peters(2)


2008



200
%


70
%






30
%Former Chief Executive Officer


2007



200
%










2006















Richard W. Pehlke


2008



150
%


70
%






30
%Chief Financial Officer


2007



50
%(3)


90
%






10
%Andrea R. Biller


2008



150
%


70
%






30
%Executive Vice President,


2007



150
%










General Counsel and Corporate Secretary


2006















Jeffrey T. Hanson


2008



150
%


40
%


40
%


20
%Chief Investment Officer


2007



100
%










2006















Jacob Van Berkel(4)


2008



100
%


70
%






30
%Chief Operating Officer and Executive Vice President


2007



100
%










     (1)
    
    Mr. Hunt has served as the Interim Chief Executive Officer
    since July 2008.(2)
    
    Mr. Peters served as the Chief Executive Officer until July
    2008.(3)
    
    Mr. Pehlke had a minimum guaranteed bonus of $125,000 for
    calendar 2007, prorated based on his hire date in February 2007
    (equal to $110,577).(4)
    
    Mr. Van Berkel joined the Company in August 2007.(5)
    
    2008 bonuses calculated based on Company EBITDA and 2007 bonuses
    calculated based on Company EBIT.  Stock-Based
    Compensation and Incentives
       141




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Profit
    Sharing Plan
    Retirement
    Plans
    Personal
    Benefits and Perquisites
    Long Term
    Incentive Plan
           142




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##### Table of Contents



Summary
    Compensation Table
    ChangeinPensionNon-

ValueEquity

AndIncentive

NonqualifiedName and

Year





Stock

Option

Plan

Deferred

All otherPrincipal

Ended

Salary

Bonus

Awards

Awards

Compensation

Compensation

CompensationPosition

December

($)

($)

($)(11)

($)(12)

($)

Earnings

($)(8)(13)(14)

TotalGary H. Hunt(1)


2008


$
300,000
(5)

$



$
59,088


$



$



$



$



$
359,088Interim Chief
    Executive
    OfficerScott D. Peters(2)


2008



401,889







704,841



68,500











528,310



1,703,540Former Chief


2007



587,808



1,825,800



2,610,555



91,250











655,621



5,771,034Executive
    Officer


2006



611,250



1,125,900
(7)


1,834,669



81,345











977,260



4,630,424Richard W. Pehlke(3)


2008



375,000







112,951



















487,951Executive Vice
    President, and
    Chief Financial
    Officer


2007



299,500



200,000



49,770



198,808















748,078Andrea R. Biller


2008



400,000







100,106



42,803











688,565



1,231,474Executive Vice


2007



400,000



451,000



1,286,413



73,000











592,134



2,802,547President, General
    Counsel and Corporate
    Secretary


2006



391,674



501,200
(7)


411,667



65,076











72,834



1,442,451Jeffrey T. Hanson


2008



391,667



250,000
(10)


2,900,777



38,168











556,727



4,137,339Chief


2007



350,000



500,350
(10)


3,410,352



45,625











425,106



4,731,433Investment
    Officer


2006



117,628
(6)


1,212,180
(9)


726,079



40,673











1,083



2,097,643Jacob Van Berkel(4)


2008



380,000







149,203















4,816



534,019Chief Operating
    Officer and
    Executive Vice
    President


2007



115,096



225,000



2,238















30



342,364     (1)
    
    Mr. Hunt has served as the Interim Chief Executive Officer
    since July 2008.(2)
    
    Mr. Peters served as the Chief Executive Officer from
    December 2007 until July 2008.(3)
    
    Mr. Pehlke has served as the Chief Financial Officer since
    February 2007.(4)
    
    Mr. Van Berkel joined the Company in August 2007.(5)
    
    Amounts paid to Mr. Hunt represent a consulting fee as
    Mr. Hunt consults as the Interim Chief Executive Officer
    and is not an employee of the Company.(6)
    
    Mr. Hansons annual salary for fiscal 2006 was
    $250,000. The $117,628 represents amounts paid or to be paid to
    Mr. Hanson from July 29, 2006 (the date
    Mr. Hanson joined GERI) through December 31, 2006.(7)
    
    Bonus amounts include bonuses of $100,000 earned in fiscal 2006
    to each of Mr. Peters and Ms. Biller upon the receipt
    by NNN from G REIT, a public non-traded REIT that NNN
    sponsored, of net 143




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##### Table of Contents



commissions aggregating $5 million or more from the sale of
    G REIT properties pursuant to a plan of liquidation
    approved by G REIT stockholders.(8)
    
    All other compensation also includes: (i) cash
    distributions based on membership interests of $85,303, $159,418
    and $50,000 earned by Mr. Peters and $121,804, $159,418 and
    $50,000 earned by Ms. Biller from Grubb & Ellis
    Apartment Management, LLC for each of the calendar years ended
    December 31, 2008, 2007 and 2006, respectively; and
    (ii) cash distributions based on membership interests of
    $386,700, $413,546 and $0 earned by Mr. Peters and
    $547,519, $413,546 and $0 earned by each of Mr. Hanson and
    Ms. Biller from Grubb & Ellis Healthcare
    Management, LLC for each of the calendar years ended
    December 31, 2008, 2007 and 2006, respectively.(9)
    
    Mr. Hanson was appointed GERIs Managing Director,
    Real Estate on July 29, 2006. His bonus amount included a
    $750,000 sign-on bonus that was paid in September 2006. Amount
    also included a special bonus paid to Mr. Hanson pursuant
    to his employment agreement for being the procuring cause of at
    least $25 million in equity from new sources, which equity
    was received by GERI during the fiscal year, for real estate
    investments sourced by GERI.(10)
    
    Amount includes a special bonus of $250,000. The 2008 special
    bonus has not yet been paid.(11)
    
    The amounts shown are the amounts of compensation cost related
    to the grants of restricted stock, as well as the compensation
    expense associated with the accelerated vesting of the
    restricted stock at the Merger date, as described in Statement
    of Financial Accounting Standards No. 123R Share-Based
    Payment(SFAS No. 123R), utilizing the
    assumptions discussed in Note 23 to the consolidated
    financial statements included in Item 8 of this Annual
    Report.(12)
    
    The amounts shown are the amounts of compensation cost related
    to the grants of stock options, as well as compensation expense
    associated with the accelerated vesting of the stock options at
    the Merger date, as described in SFAS No. 123R,
    utilizing the assumptions discussed in Note 23 to the
    consolidated financial statements included in Item 8 of
    this Annual Report.(13)
    
    The amounts shown include the Companys incremental cost
    for the provision to the named executive officers of certain
    specified perquisites in fiscal 2008, 2007 and 2006, as follows:  Tax Gross


Medical &Living


Travel


Up


DentalExpenses


Expenses


Payment


Premiums


TotalNamed Executive
    Officer

Year


($)


($)


($)


($)


($)Gary H. Hunt


2008


$



$



$



$



$
Scott D. Peters


2008



15,871



15,209







7,161



38,2412007



27,314



29,573







8,340



65,2272006



24,557



31,376



853,668



1,043



910,644Richard W. Pehlke


2008















7,287



7,2872007



















Andrea R. Biller


2008















4,621



4,6212007















1,740



1,7402006















218



218Jeffrey T. Hanson


2008















13,179



13,1792007















8,340



8,3402006















1,043



1,043Jacob Van Berkel


2008



















2007



















  144




---



##### Table of Contents



(14)
    
    The amounts shown also include the following 401(k) matching
    contributions made by the Company, income attributable to life
    insurance coverage and contributions to the profit-sharing plan
    in fiscal 2008, 2007 and 2006, as follows:  Profit-Sharing401(k) Plan

Life

PlanCompany

Insurance

CompanyContributions

Coverage

Contributions

TotalNamed Executive
    Officer

Year

($)

($)

($)

($)Gary H. Hunt


2008


$



$



$



$
Scott D. Peters


2008



4,600



374







4,9742007



3,100



120



14,210



17,4302006







116



16,500



16,616Richard W. Pehlke


2008







1,290







1,2902007















Andrea R. Biller


2008







1,290







1,2902007



3,100



120



14,210



17,4302006



6,000



116



16,500



22,616Jeffrey T. Hanson


2008







270







2702007



3,100



120







3,2202006







40







40Jacob Van Berkel


2008



4,600



450







5,0502007







30







30   Grants of
    Plan-Based Awards
    All Other

All OtherStock

OptionAwards:

Awards:

Exercise or

Grant DateNumber of

Number of

Base Price

FairShares of

Securities

of Option

Value of StockGrant

Stock or

Underlying

Awards

and OptionName

Date

Units

Options(1)

($/Share)

Awards($)(1)Gary H. Hunt













$



$
Scott D. Peters


















Richard W. Pehlke


01/24/08



75,000
(2)






4.41



330,75012/03/08



250,000
(2)






1.26



315,000Andrea R. Biller


















Jeffrey T. Hanson


















Jacob Van Berkel


01/24/08



80,000
(2)






4.41



352,80012/03/08



250,000
(2)






1.26



315,000  145




---



##### Table of Contents



(1)
    
    The grant date fair value of the shares of restricted stock and
    stock options granted were computed in accordance with
    SFAS No. 123R.(2)
    
    Amounts shown with respect to Messrs. Pehlke and Van Berkel
    represent restricted stock awarded pursuant to the
    Companys 2006 Omnibus Equity Plan which will vest in equal
    thirty-three and one third
    (331/3%)
    installments on each of the first, second and third
    anniversaries of their respective grant dates. In February 2009,
    each of Messrs. Pehlke and Van Berkel, on their own
    initiative, voluntarily returned an aggregate of 131,000 and
    130,000 restricted shares, respectively, to the Company for
    re-allocation of such restricted shares, on the same terms and
    conditions, to various employees in their respective business
    units.  Outstanding
    Equity Awards at Fiscal Year-End
    Option Awards


Stock AwardsMarketValueNumber of


Number of








Number of


of SharesSecurities


Securities








Shares or


or UnitsUnderlying


Underlying








Units of


of StockUnexercised


Unexercised


Option


Option


Stock that


ThatOptions


Options


Exercise


Expiration


Have Not


Have NotName

Exercisable


Unexercisable


Price


Date


Vested


Vested(1)Gary H. Hunt


















7,333
(2)

$
83,303















5,997
(3)

$
40,000Scott D. Peters














Richard W. Pehlke


25,000
(4)





$
11.75



02/14/201775,000
(5)

$
330,750250,000
(6)

$
315,000Andrea R. Biller


35,200
(7)





$
11.36



11/16/201617,600
(8)

$
199,936Jeffrey T. Hanson


22,000
(9)





$
11.36



11/16/2016247,720
(10)

$
2,814,09911,733
(11)

$
133,287Jacob Van Berkel


















11,733
(12)

$
59,252















80,000
(5)

$
352,800















250,000
(6)

$
315,000     (1)
    
    The grant date fair value of the shares of restricted stock
    granted on January 24, 2008 or December 3, 2008, as
    applicable, as computed in accordance with
    SFAS No. 123R, is reflected in the Grants of
    Plan-Based Awards table.(2)
    
    Amounts shown represent 11,000 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 12,500 shares of NNN
    restricted stock. The 12,500 shares were awarded to
    Mr. Hunt as a Director pursuant to the NNNs 2006 Long
    Term Incentive Plan and vest in equal 1/3 installments in each
    of the first, second and third anniversaries of the grant date
    (June 27, 2007), subject to continued service with the
    Company.(3)
    
    Amounts shown represent 8,996 shares of the Companys
    common stock that were awarded to Mr. Hunt as a Director
    under the 2006 Omnibus Equity Plan and vest in equal 1/3
    installments in each of the first, 146




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##### Table of Contents



second and third anniversaries of the grant date
    (December 10, 2007), subject to continued service with the
    Company.(4)
    
    Amounts shown represent options granted on February 15,
    2007. These options vest in equal installments of thirty-three
    and one-third percent
    (331/3%)
    on the last business day before each of the first, second and
    third anniversaries of February 14, 2007, subject to the
    terms of the Stock Option Agreement by and between
    Mr. Pehlke and the Company, dated as of February 15,
    2007, and the Companys 2006 Omnibus Equity Plan. The full
    25,000 options vested on the date of the Merger.(5)
    
    Amounts shown represent shares of the Companys common
    stock that were awarded on January 23, 2008 under the 2006
    Omnibus Equity Plan which will vest in equal 1/3 installments in
    each of the first, second and third anniversaries of the grant
    date, subject to continued service with the Company.(6)
    
    Amounts shown represent shares of the Companys common
    stock that were awarded on December 3, 2008 under the 2006
    Omnibus Equity Plan which will vest in equal 1/3 installments in
    each of the first, second and third anniversaries of the grant
    date, subject to continued service with the Company.(7)
    
    Amounts shown represent options received in the Merger in
    exchange for stock options to acquire 40,000 shares of the
    common stock of NNN Realty Advisors, Inc. for $10.00 per share.
    These options vested and became exercisable with respect to
    one-third of the underlying shares of the Companys common
    stock on each of November 16, 2006, November 16, 2007
    and November 16, 2008 and have a maximum term of ten-years.(8)
    
    Amounts shown represent 26,400 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 30,000 shares of NNN
    restricted stock. The 30,000 shares were awarded to
    Ms. Biller pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in equal 1/3 installments in each of the
    first, second and third anniversaries of the grant date
    (June 27, 2007), subject to continued service with the
    Company.(9)
    
    Amounts shown represent options received in the Merger in
    exchange for stock options to acquire 25,000 shares of the
    common stock NNN Realty Advisors, Inc. for $10.00 per share.
    These options vested and became exercisable with respect to
    one-third of the underlying shares of the Companys common
    stock on each of November 16, 2006, November 16, 2007
    and November 16, 2008 and have a maximum term of ten-years.(10)
    
    Amounts shown represent 743,160 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 844,500 of NNN restricted stock
    and which are transferable from Mr. Thompson and
    Mr. Rogers, assuming Mr. Hanson remains employed by
    the Company, in equal 1/3 installments on each of the first,
    second and third anniversaries of the grant date (July 29,
    2006).(11)
    
    Amounts shown represent 17,600 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 20,000 shares of NNN
    restricted stock. The 20,000 shares were awarded to
    Mr. Hanson pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in equal  1/3 installments in each
    of the first, second and third anniversaries of the grant date
    (June 27, 2007), subject to continued service with the
    Company.(12)
    
    Amounts shown represent 17,600 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 20,000 shares of NNN
    restricted stock. The 20,000 shares were awarded to
    Mr. Van Berkel pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in equal 1/3 installments in each of the
    first, second and third anniversaries of the grant date
    (December 4, 2007), subject to continued service with the
    Company. 147




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Options
    Exercises and Stock Vested
    Option Awards


Stock AwardsNumber of Shares





Number of SharesAcquired on


Value Realized on


Acquired on


Value realized onName

Exercise


Exercise ($)


Vesting


Vesting ($)Gary H. Hunt










3,667
(1)

$
14,118
(2)2,999
(3)


3,749
(4)Scott D. Peters














Richard W. Pehlke














Andrea R. Biller










8,800
(5)


33,880
(2)Jeffrey T. Hanson










247,720
(6)


857,111
(7)5,867
(8)


22,588
(2)Jacob Van Berkel










5,867
(9)


7,392
(10)     (1)
    
    Amounts shown represent 11,000 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 12,500 shares of NNN
    restricted stock. The 12,500 shares were awarded to
    Mr. Hunt pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in equal 1/3 installments in each of the
    first, second and third anniversaries of the grant date
    (June 27, 2007), subject to continued service with the
    Company.(2)
    
    On June 26, 2008, the closing price of a share of common
    stock on the NYSE was $3.85.(3)
    
    Amounts shown represent 8,996 shares of the Companys
    common stock that were awarded to Mr. Hunt on
    December 10, 2007 under the 2006 Omnibus Equity Plan and
    vest in equal 1/3 installments in each of the first, second and
    third anniversaries of the grant date, subject to continued
    service with the Company.(4)
    
    On December 9, 2008, the closing price of a share of common
    stock on the NYSE was $1.25.(5)
    
    Amounts shown represent 26,400 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 30,000 shares of NNN
    restricted stock. The 30,000 shares were awarded to
    Ms. Biller pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in equal 1/3 installments in each of the
    first, second and third anniversaries of the grant date
    (June 27, 2007), subject to continued service with the
    Company.(6)
    
    Amounts shown represent 743,160 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 844,500 of NNN restricted stock
    and which are transferable from Mr. Thompson and
    Mr. Rogers, assuming Mr. Hanson remains employed by
    the Company, in equal 1/3 installments on each of the first,
    second and third anniversaries of the grant date (July 29,
    2006).(7)
    
    On July 28, 2008, the closing price of a share of common
    stock on the NYSE was $3.46.(8)
    
    Amounts shown represent 17,600 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 20,000 shares of NNN
    restricted stock. The 20,000 shares were awarded to
    Mr. Hanson pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in equal  1/3 installments in each
    of the first, second and third anniversaries of the grant date
    (June 27, 2007), subject to continued service with the
    Company.(9)
    
    Amounts shown represent 17,600 restricted shares of the
    Companys common stock that were received in connection
    with the Merger in exchange for 20,000 shares of NNN
    restricted stock. The 20,000 shares were awarded to
    Mr. Van Berkel pursuant to the NNNs 2006 Long Term
    Incentive Plan and vest in 148




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##### Table of Contents



equal 1/3 installments in each of the first, second and third
    anniversaries of the grant date (December 4, 2007), subject
    to continued service with the Company.(10)
    
    On December 3, 2008, the closing price of a share of common
    stock on the NYSE was $1.26.  Non-Qualified
    Deferred Compensation
    Contributions.
    Investment
    Elections.
    Vesting.
    Distributions.
          Employment
    Contracts and Compensation Arrangements
  Scott D.
    Peters
  In July 2008, Mr. Peters resigned from the Company. The
    following is a description of the employment agreement under
    which Mr. Peters was employed during calendar year 2008.
 149




---



##### Table of Contents



150




---



##### Table of Contents



Richard
    W. Pehlke
             151




---



##### Table of Contents



Potential
    Payments upon Termination or Change of Control
    Richard W. Pehlke
  InvoluntaryNot for


Involuntary


ResignationExecutive Payments

Voluntary


Early


Normal


Cause


for Cause


for Good


Change inUpon Termination

Termination


Retirement


Retirement


Termination


Termination


Reason


Control


Death


DisabilitySeverance Payments

$



$



$



$
421,875


$



$
421,875


$
1,312,500


$



$
Bonus Incentive Compensation


































Long Term Incentive Plan


































Stock Options (unvested and accelerated)(1)


































Restricted Stock (unvested and accelerated)













$
403,000






$
403,000


$
403,000







Performance Shares (unvested and accelerated)


































Benefit Continuation


































Tax Gross-Up


































Total Value

$



$



$



$
824,875


$



$
824,875


$
1,715,500


$



$
     (1)
    
    Mr. Pehlkes agreement provides for immediate vesting
    of all stock options in the event of involuntary termination not
    for Cause, resignation for Good Reason, or in the event of
    Change of Control; the option exercise price is $11.75 and the
    closing price on the NYSE on December 31, 2008 was $1.24,
    therefore, as of December 31, 2008, Mr. Pehlkes
    options were out of the money.  Andrea R.
    Biller
       152




---



##### Table of Contents



153




---



##### Table of Contents



Potential
    Payments upon Termination or Change in Control
    Andrea R. Biller
  InvoluntaryNot for


Involuntary


ResignationExecutive Payments

Voluntary


Early


Normal


Cause


for Cause


for Good


Change inUpon Termination

Termination


Retirement


Retirement


Termination


Termination


Reason


Control


Death


DisabilitySeverance Payments

$



$



$



$
1,000,000


$



$
1,000,000


$
3,000,000


$



$
Bonus Incentive Compensation


































Long Term Incentive Plan


































Stock Options (unvested and accelerated)


































Restricted Stock (unvested and accelerated)













$
21,824






$
21,824


$
21,824







Performance Shares (unvested and accelerated)


































Benefit Continuation













$
9,242






$
9,242


$
9,242







Tax Gross-Up

























$
428,575







Total Value

$



$



$



$
1,031,066


$



$
1,031,066


$
3,459,641







   Jeffrey
    T. Hanson
         154




---



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155




---



##### Table of Contents



Potential
    Payments upon Termination or Change in Control
    Jeffrey T. Hanson
  InvoluntaryNot for


Involuntary


ResignationExecutive Payments

Voluntary


Early


Normal


Cause


for Cause


for Good


Change inUpon Termination

Termination


Retirement


Retirement


Termination


Termination


Reason


Control


Death


DisabilitySeverance Payments

$



$



$



$
1,375,000


$



$
1,375,000


$
3,625,000


$



$
Bonus Incentive Compensation


































Long Term Incentive Plan


































Stock Options (unvested and accelerated)


































Restricted Stock (unvested and accelerated)













$
321,722






$
321,722


$
321,722







Performance Shares (unvested and accelerated)


































Benefit Continuation













$
26,358






$
26,358


$
26,358







Tax Gross-Up


































Total Value

$



$



$



$
1,723,080


$



$
1,723,080


$
3,973,080


$



$
   Jacob Van
    Berkel
   156




---



##### Table of Contents



Potential
    Payments upon Termination or Change of Control
    Jacob Van Berkel
  InvoluntaryNot for


Involuntary


ResignationExecutive Payments

Voluntary


Early


Normal


Cause


for Cause


for Good


Change inUpon Termination

Termination


Retirement


Retirement


Termination


Termination


Reason


Control


Death


DisabilitySeverance Payments

$



$



$



$



$



$



$
1,200,000


$



$
Bonus Incentive Compensation


































Long Term Incentive Plan


































Stock Options (unvested and accelerated)(1)


































Restricted Stock (unvested and accelerated)

























$
423,749







Performance Shares (unvested and accelerated)


































Benefit Continuation


































Tax Gross-Up


































Total Value

$



$



$



$



$



$



$
1,623,749


$



$
   Compensation
    of Directors
             157




---



##### Table of Contents



Director
    Compensation Table
  Fees Earnedor Paid in

StockDirector

Cash(1)

Awards(2)(3)

TotalGlenn L. Carpenter

$
117,000


$
82,915


$
199,915Harold H. Greene

$
117,500


$
61,751


$
179,251Gary H. Hunt

$
73,250


$
61,751


$
135,001C. Michael Kojaian

$
108,500


$
20,040


$
128,540Robert J. McLaughlin

$
134,000


$
20,040


$
154,040Devin I. Murphy

$
60,110


$
9,666


$
69,776Scott D. Peters(4)

$
0


$
0


$
0Anthony W. Thompson(5)

$
0


$
0


$
0D. Fleet Wallace

$
128,500


$
61,751


$
190,251Rodger D. Young

$
132,000


$
20,040


$
152,040     (1)
    
    Represents annual retainers plus all meeting and committee
    attendance fees earned by non-employee directors in 2008.(2)
    
    The amounts shown are the compensation costs recognized by the
    Company in 2008 in accordance with SFAS No. 123R.
    Mr. Carpenter received a grant of 11,958 shares of
    restricted stock on March 12, 2008, which also vest in
    three equal installments on each of the next three annual
    anniversary dates of the grant. The grant date fair value of the
    11,958 shares of restricted stock was $80,000 based on a
    value of $6.69 per share on the date of the grant.
    Mr. Murphy received a grant of 19,480 shares of
    restricted stock on July 10, 2008, which also vest in three
    equal installments on each of the next three annual anniversary
    dates of the grant. The grant date fair value of the
    19,480 shares of restricted stock was $60,000 based on a
    value of $3.08 per share on the date of the grant. Each of the
    Outside Directors received a grant of 20,000 shares on
    December 10, 2008 which vest in three equal increments on
    each of the next three annual anniversary dates of the grant.
    The grant date fair value of the 20,000 shares of
    restricted stock was $26,000 based on a value of $1.30 per share
    on the date of grant. Those shares represent the Companys
    annual grant to its Outside Directors which, pursuant to the
    Companys 2006 Omnibus Equity Plan, is set at $60,000 worth
    of restricted shares of the Companys common stock based
    upon the closing price of such common stock on the date of the
    grant. However, in light of recent market conditions, the
    Company decided to limit such amount of grant in 2008 to 20,000
    restricted shares of the Companys common stock.(3)
    
    The following table shows the aggregate number of unvested stock
    awards and option awards granted to non-employee directors and
    outstanding as of December 31, 2008:  158




---



##### Table of Contents



Stock AwardsOptions Outstanding


Outstanding atDirector

at Fiscal Year End


Fiscal Year EndGlenn L. Carpenter


0



45,288Harold H. Greene


0



33,330Gary H. Hunt


0



13,330C. Michael Kojaian


0



25,997Robert J. McLaughlin


0
(i)


25,997Devin I. Murphy


0



39,480Scott D. Peters(4)


0



0Anthony W. Thompson(5)


0



0D. Fleet Wallace


0



33,330Rodger D. Young


10,000



25,997   (i)
    Mr. McLaughlin exercised his option to purchase
    10,000 shares of common stock of the Company on
    March 18, 2008, at $2.99 per share.  (4)
    
    Mr. Peters resigned as Chief Executive Officer and
    President of the Company effective July 10, 2008.(5)
    
    Mr. Thompson resigned from the Board of Directors of the
    Company effective February 8, 2008  Stock
    Ownership Policy for Outside Directors
    Compensation
    Committee Interlocks and Insider Participation
    Regulation S-K
  Compensation
    Committee Report
  The forgoing Compensation Committee Report is not to be
    deemed to be soliciting material or to be
    filed with the SEC or subject to Regulation 14A
    or 14C or to the liabilities of Section 18 of the Exchange
    Act, except to the extent that the Company specifically requests
    that such information be treated as soliciting
 159




---



##### Table of Contents



material or specifically incorporates it by reference into
    any filing under the Securities Act of 1933, as amended (the
    Securities Act) or the Exchange Act.
      
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Equity
    Compensation Plan Information
    Stock
    Ownership Table
   160




---



##### Table of Contents



Name and Address

Amount and Nature of

Percent ofof Beneficial Owner(1)

Beneficial Ownership

Class(2)Persons affiliated with Kojaian Holdings LLC(3)


3,616,326



5.5
%Persons affiliated with Kojaian Ventures, L.L.C.(4)


11,700,000



17.9
%Anthony W. Thompson(5)


7,723,043



11.8
%Sharon Thompson(6)


5,209,103



8.0
%Wellington Management Company, LLP(7)


8,863,296



13.6
%Executive Officers and DirectorsGlenn L. Carpenter


78,354
(8)(9)(10)(11)



*Harold H. Greene


48,796
(9)(10)(11)



*Gary H. Hunt


28,796
(9)(10)



*C. Michael Kojaian


15,345,322
(10)(11)(12)


23.5
%Robert J. McLaughlin


157,801
(10)(11)(13)



*Devin I. Murphy


59,481
(11)(14)



*D. Fleet Wallace


48,796
(9)(10)(11)



*Rodger D. Young


71,241
(10)(11)(15)



*Andrea R. Biller


337,810
(16)



*Jeffrey T. Hanson


578,990
(17)



*Richard W. Pehlke


218,166
(18)



*Scott D. Peters


536,083
(19)



*Jacob Van Berkel


217,600
(20)



*All Current Directors and Executive Officers
    as a Group (12 persons)


17,191,153
(21)


26.3
%       (1)
    
    Unless otherwise indicated, the address for each of the
    individuals listed below is
    c/o Grubb &
    Ellis Company, 1551 Tustin Avenue, Suite 300, Santa Ana,
    California 92705.(2)
    
    The percentage of shares of capital stock shown for each person
    in this column and in this footnote assumes that such person,
    and no one else, has exercised any outstanding warrants, options
    or convertible securities held by him or her exercisable on
    May 15, 2009 or within sixty days thereafter.(3)
    
    Kojaian Holdings LLC is affiliated with both C. Michael Kojaian,
    a director of the Company, and Kojaian Ventures, L.L.C. (See
    footnote 12 below). The address for Kojaian Holdings LLC is
    39400 Woodward Avenue, Suite 250, Bloomfield Hills,
    Michigan 48304.(4)
    
    Kojaian Ventures, L.L.C. is affiliated with both C. Michael
    Kojaian, a director of the Company and Kojaian Holdings LLC (see
    footnote 12 below). The address of Kojaian Ventures, L.L.C. is
    39400 Woodward Ave., Suite 250, Bloomfield Hills, Michigan 48304.(5)
    
    Pursuant to a Form 4 filed with the SEC by Anthony Thompson
    on May 18, 2009, Mr. Thompson is deemed to be the
    beneficial owner of 7,723,043 shares of common stock.
    According to such Form 4, of these shares,
    5,209,103 shares are held in a brokerage account by Mr. and
    Mrs. Thompson as joint tenants with right of survivorship
    and, accordingly, Mr. and Mrs. Thompson share voting and
    dispositive power with respect to such shares.
    Mr. Thompsons address is
    c/o Thompson
    Family Office, 1901 Main St., Suite 108, Irvine, California
    92614.(6)
    
    Pursuant to a Form 4 filed by Anthony Thompson on
    May 18, 2009, Sharon Thompson may be deemed to be the
    beneficial owner of 5,209,103 shares of common stock.
    According to such Form 4, these 161




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##### Table of Contents



shares are held in a brokerage account by Mr. and
    Mrs. Thompson as joint tenants with a right of survivorship
    and, accordingly, Mr. and Mrs. Thompson share voting and
    dispositive power with respect to such shares.
    Mrs. Thompsons address is
    c/o Thompson
    Family Office, 1901 Main St., Suite 108, Irvine, California
    92614.(7)
    
    Wellington Management Company, LLP (Wellington), in
    its capacity as investment advisor, may be deemed to
    beneficially own 8,863,296 shares of the Company which are
    held of record by clients of Wellington. Wellingtons
    address is 75 State Street, Boston, Massachusetts 02109.(8)
    
    Beneficially owned shares include 3,986 restricted shares of
    common stock that vested on March 12, 2009. Beneficially
    owned shares include 3,986 restricted shares of common stock
    which vest on March 12, 2010 and 3,986 restricted shares of
    common stock which vest on March 12, 2011, such
    7,972 shares granted pursuant to the Companys 2006
    Omnibus Equity Plan.(9)
    
    Beneficially owned shares include 3,667 restricted shares of
    common stock which vest on June 27, 2009 and 3,666
    restricted shares of common stock which vest on June 27,
    2010.  (10)
    
    Beneficially owned shares include 2,999 restricted shares of
    common stock that vest on the first business day following
    December 10, 2009 and 2,998 restricted shares of common
    stock that vest on the first business day following
    December 10, 2010, such 5,998 shares granted pursuant
    to the Companys 2006 Omnibus Equity Plan.(11)
    
    Beneficially owned shares include 20,000 restricted shares of
    common stock which vest in equal
    331/3
    portions on each of the first, second, and third anniversaries
    of December 10, 2008, such 20,000 shares granted
    pursuant to the Companys 2006 Omnibus Equity Plan.(12)
    
    Beneficially owned shares include shares directly held by
    Kojaian Holdings LLC and Kojaian Ventures, L.L.C. C. Michael
    Kojaian, a director of the Company, is affiliated with Kojaian
    Ventures, L.L.C. and Kojaian Holdings LLC. Pursuant to rules
    established by the SEC, the foregoing parties may be deemed to
    be a group, as defined in Section 13(d) of the
    Exchange Act, and C. Michael Kojaian is deemed to have
    beneficial ownership of the shares directly held by Kojaian
    Ventures, L.L.C. and the shares directly held by Kojaian
    Holdings LLC.(13)
    
    Beneficially owned shares include 92,241 shares of common
    stock held directly by Robert J. McLaughlin and
    65,560 shares of common stock held directly by:
    (i) Katherine McLaughlins IRA (Mr. McLaughlin
    wifes IRA of which Mr. McLaughlin disclaims
    beneficial ownership; (ii) Robert J. and Katherine
    McLaughlin Trust; and (iii) Louise H. McLaughlin Trust.(14)
    
    Beneficially owned shares include 19,480 restricted shares of
    common stock which vest in equal
    331/3
    portions on each first business day following July 10,
    2009, 2010 and 2011 granted pursuant to the Companys 2006
    Omnibus Equity Plan.(15)
    
    Beneficially owned shares include 10,000 shares of common
    stock issuable upon exercise of fully vested outstanding options.(16)
    
    Beneficially owned shares include 35,200 restricted shares of
    common stock issuable upon exercise of fully vested outstanding
    options. Beneficially owned shares include 8,800 restricted
    shares of common stock that vest on June 27, 2009 and
    8,800 shares of restricted stock that vest on June 27,
    2010.(17)
    
    Beneficially owned shares include 22,000 shares of common
    stock issuable upon exercise of fully vested options.
    Beneficially owned shares include 5,866 restricted shares of
    common stock that vest on June 27, 2009 and 5,867
    restricted shares of common stock that vest on June 27,
    2010.(18)
    
    Beneficially owned shares include 16,666 shares of common
    stock issuable upon exercise of fully vested outstanding
    options. Beneficially owned shares include 8,334 shares of
    Company common stock issuable upon exercise of outstanding
    options which do not vest until February 15, 2010.
    Beneficially owned shares include 25,000 restricted shares of
    common stock that vest on the first business day after
    January 24, 2010 and 25,000 restricted shares of common
    stock that vest on the first business day after January 24,
    2011, all of these 50,000 shares are subject to certain
    terms and conditions contained in that certain Restricted Stock
    Agreement between the Company and Mr. Pehlke dated
    January 24, 2008. In addition, beneficially owned shares
    include 119,000 restricted shares of common stock awarded to
    Mr. Pehlke pursuant to the Companys 2006 Omnibus
    Equity Plan which will vest in equal thirty-three 162




---



##### Table of Contents



and one-third percent
    (331/3%)
    installments on each first business day after the first, second
    and third anniversaries of the grant date (December 3,
    2008) and are subject to acceleration under certain
    conditions.(19)
    
    Scott D. Peters resigned his position with the Company in July
    2008. Mr. Peters, upon resignation, forfeited
    308,000 shares of unvested restricted stock. Beneficially
    owned shares include 29,333 shares of common stock issuable
    upon exercise of fully vested outstanding options.(20)
    
    Beneficially owned shares include 120,000 restricted shares of
    common stock awarded to Mr. Van Berkel pursuant to the
    Companys 2006 Omnibus Equity Plan which will vest in equal
    thirty-three and one-third (33 1/3%) installments on each first
    business day after the first, second and third anniversaries of
    the grant date (December 3, 2008) and are subject to
    acceleration under certain conditions. Beneficially owned shares
    also include 26,667 restricted shares of common stock which vest
    on the first business day following January 24, 2010 and
    26,666 restricted shares of common stock which vest on the first
    business day following January 24, 2011. Furthermore
    beneficially owned shares include 5,867 shares of
    restricted common stock which vest on the first business day
    after December 4, 2009 and 5,866 shares of restricted
    common stock which vest on the first business day after
    December 4, 2010.(21)
    
    Beneficially owned shares include the following shares of common
    stock issuable upon exercise of outstanding options which are
    exercisable on May 15, 2009 or within sixty days thereafter
    under the Companys various stock option plans:
    Mr. Young  10,000 shares,
    Ms. Biller  35,200 shares,
    Mr. Hanson  22,000 shares,
    Mr. Pehlke  16,666 shares, and all current
    directors and executive officers as a group 83,866 shares.  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.  Related
    Party Transaction Review Policy
       163




---



##### Table of Contents



Related
    Party Transactions
    Grubb &
    Ellis Realty Advisors, Inc.
  and/or
      Other
    Related Party Transactions
         164




---



##### Table of Contents



and/or
         165




---



##### Table of Contents



gross-up
  gross-up
       166




---



##### Table of Contents



Independence
    of Directors
      No
    Material Relationship
    Employment
  daughters-in-law;
  Other
    Compensation
    Auditor
    Affiliation
   167




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##### Table of Contents



Interlocking
    Directorships
    Business
    Transactions
    Item 14.
    Principal
    Accountant Fees and Services.    2008


2007Audit Fees(1)Audit and quarterly review fees of consolidated financial
    statements

$
2,519,287


$
1,024,450SEC filings, including consents and comment letters


8,300



236,000Total Audit Fees


2,527,587



1,260,450Audit Related Fees(2)Employee benefit plan audits


28,325



25,500Accounting consultations


113,937



318,804Due diligence services on pending merger






161,306Property audits


108,407



SAS No. 70 attestation reports


115,000



85,000Total Audit-Related Fees


365,669



590,610Tax Fees(2)Tax return preparation


250,000



69,500Tax planning


290,487



Total Tax Fees


540,487



69,500Total Fees

$
3,433,743


$
1,920,560     (1)
    
    Includes fees and expenses related to the year-end audit and
    interim reviews, notwithstanding when the fees and expenses were
    billed or when the services were rendered.(2)
    
    Includes fees and expenses for services rendered from January
    through December of the year, notwithstanding when the fees and
    expenses were billed.    Form 10-K.
  168




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2007Audit Fees(1)Audit of consolidated financial statements

$
881,297Timely quarterly reviews


756,970SEC filings, including comfort letters, consents and comment
    letters


Total Audit Fees


1,638,267Audit Related Fees(2)Audits in connection with acquisitions and other accounting
    consultations


373,996Due diligence services on pending merger


19,798Total Audit-Related Fees


393,794Tax Fees(2)Tax return preparation


61,850Total Tax Fees


61,850Total Fees

$
2,093,911     (1)
    
    Includes fees and expenses related to the year-end audit and
    interim reviews, notwithstanding when the fees and expenses were
    billed or when the services were rendered.(2)
    
    Includes fees and expenses for services rendered from January
    through December of the year, notwithstanding when the fees and
    expenses were billed. 169




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##### Table of Contents



PART IV.  Item 15.
    Exhibits
    and Financial Statement Schedules  The
    following documents are filed as part of this report:
  (a)
    The following Reports of Independent Registered Public
    Accounting Firm and Consolidated Financial Statements are
    submitted herewith:              (b)
    Consolidated Financial Statements Schedules      (c)
    Exhibits required to be filed by Item 601 of
    Regulation S-K:  (2) Plan
    of Acquisition, Reorganization, Arrangement, Liquidation or
    Succession
  2.1
    Agreement and Plan of Merger, dated as of May 22, 2007,
    among NNN Realty Advisors, Inc., B/C Corporate Holdings, Inc.
    and the Registrant, incorporated herein by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K
    filed on May 23, 2007.2.2
    Merger Agreement, dated as of January 22, 2009, by and
    among the Registrant, GERA Danbury LLC, GERA Property
    Acquisition, LLC, Matrix Connecticut, LLC and Matrix Danbury,
    LLC, incorporated herein by reference to Exhibit 2.1 to the
    Registrants Current Report on
    Form 8-K
    filed on January 29, 2009.2.3
    First Amendment to Merger Agreement, dated as of
    January 22, 2009, by and among the Registrant, GERA Danbury
    LLC, GERA Property Acquisition, LLC, Matrix Connecticut, LLC and
    Matrix Danbury, LLC, incorporated herein by reference to
    Exhibit 2.2 to the Registrants Current Report on
    Form 8-K
    filed on January 29, 2009.2.4
    Second Amendment to Merger Agreement, dated as of May 19,
    2009, by and among the Registrant, GERA Danbury LLC, GERA
    Property Acquisition, LLC, Matrix Connecticut, LLC and Matrix
    Danbury, LLC, incorporated herein by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K
    filed on May 26, 2009.  (3) Articles
    of Incorporation and Bylaws
  3.1
    Restated Certificate of Incorporation of the Registrant,
    incorporated herein by reference to Exhibit 3.2 to the
    Registrants Annual Report on
    Form 10-K
    filed on March 31, 1995.3.2
    Certificate of Retirement with Respect to 130,233 Shares of
    Junior Convertible Preferred Stock of Grubb & Ellis
    Company, filed with the Delaware Secretary of State on
    January 22, 1997, incorporated herein by reference to
    Exhibit 3.3 to the Registrants Quarterly Report on
    Form 10-Q
    filed on February 13, 1997. 170




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##### Table of Contents



3.3
    Certificate of Retirement with Respect to 8,894 Shares of
    Series A Senior Convertible Preferred Stock,
    128,266 Shares of Series B Senior Convertible Preferred
    Stock, and 19,767 Shares of Junior Convertible Preferred
    Stock of Grubb & Ellis Company, filed with the
    Delaware Secretary State on January 22, 1997, incorporated
    herein by reference to Exhibit 3.4 to the Registrants
    Quarterly Report on
    Form 10-Q
    filed on February 13, 1997.3.4
    Amendment to the Restated Certificate of Incorporation of the
    Registrant as filed with the Delaware Secretary of State on
    December 9, 1997, incorporated herein by reference to
    Exhibit 4.4 to the Registrants Statement on
    Form S-8
    filed on December 19, 1997 (File
    No. 333-42741).3.5
    Amended and Restated Certificate of Designations, Number, Voting
    Powers, Preferences and Rights of Series A Preferred Stock
    of Grubb & Ellis Company, as filed with the Secretary
    of State of Delaware on September 13, 2002, incorporated
    herein by reference to Exhibit 3.8 to the Registrants
    Annual Report on
    Form 10-K
    filed on October 15, 2002.3.6
    Certificate of Designations, Number, Voting Powers, Preferences
    and Rights of
    Series A-1
    Preferred Stock of Grubb & Ellis Company, as filed
    with the Secretary of State of Delaware on January 4, 2005,
    incorporated herein by reference to Exhibit 2 to the
    Registrants Current Report on
    Form 8-K
    filed on January 6, 2005.3.7
    Preferred Stock Exchange Agreement, dated as of
    December 30, 2004, between the Registrant and Kojaian
    Ventures, LLC, incorporated herein by reference to
    Exhibit 1 to the Registrants Current Report on
    Form 8-K
    filed on January 6, 2005.3.8
    Certificate of Designations, Number, Voting Powers, Preferences
    and Rights of
    Series A-1
    Preferred Stock of Grubb & Ellis Company, as filed
    with the Secretary of State of Delaware on January 4, 2005,
    incorporated herein by reference to Exhibit 2 to the
    Registrants Current Report on
    Form 8-K
    filed on January 6, 2005.3.9
    Certificate of Amendment to the Amended and Restated Certificate
    of Incorporation of Grubb & Ellis Company as filed
    with the Delaware Secretary of State on December 7, 2007,
    incorporated herein by reference to Exhibit 3.1 to the
    Registrants Current Report on
    Form 8-K
    filed on December 13, 2007.3.10
    Bylaws of the Registrant, as amended and restated effective
    May 31, 2000, incorporated herein by reference to
    Exhibit 3.5 to the Registrants Annual Report on
    Form 10-K
    filed on September 28, 2000.3.11
    Amendment to the Amended and Restated By-laws of the Registrant,
    effective as of December 7, 2007, incorporated herein by
    reference to Exhibit 3.2 to Registrants Current
    Report on
    Form 8-K
    filed on December 13, 2007.3.12
    Amendment to the Amended and Restated By-laws of the Registrant,
    effective as of January 25, 2008, incorporated herein by
    reference to Exhibit 3.1 to Registrants Current
    Report on
    Form 8-K
    filed on January 31, 2008.3.13
    Amendment to the Amended and Restated By-laws of the Registrant,
    effective as of October 26, 2008, incorporated herein by
    reference to Exhibit 3.1 to Registrants Current
    Report on
    Form 8-K
    filed on October 29, 2008.3.14
    Amendment to the Amended and Restated By-laws of the Registrant,
    effective as of February 5, 2009, incorporated herein by
    reference to Exhibit 3.1 to Registrants Current
    Report on
    Form 8-K
    filed on February 9, 2009. 171




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##### Table of Contents



(4) Instruments
    Defining the Rights of Security Holders, including
    Indentures.
  4.1
    Registration Rights Agreement, dated as of April 28, 2006,
    between the Registrant, Kojaian Ventures, LLC and Kojaian
    Holdings, LLC, incorporated herein by reference to
    Exhibit 99.2 to the Registrants Current Report on
    Form 8-K
    filed on April 28, 2006.4.2
    Warrant Agreement, dated as of May 18, 2009, by and between
    the Registrant, Deutsche Bank Trust Company Americas, Fifth
    Third Bank, JPMorgan Chase, N.A. and KeyBank, National
    Association.    (10) Material
    Contracts
  10.1*
    Employment Agreement entered into on November 9, 2004,
    between Robert H. Osbrink and the Registrant, effective
    January 1, 2004, incorporated herein by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    filed on November 15, 2004.10.2*
    Employment Agreement entered into on March 8, 2005, between
    Mark E. Rose and the Registrant, incorporated herein by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed on March 11, 2005.10.3*
    Employment Agreement, dated as of January 1, 2005, between
    Maureen A. Ehrenberg and the Registrant, incorporated herein by
    reference to Exhibit 1 to the Registrants Current
    Report on Form
    8-K filed on
    June 10, 2005.10.4*
    First Amendment to Employment Agreement entered into between
    Robert Osbrink and the Registrant, dated as of September 7,
    2005, incorporated herein by reference to Exhibit 10.6 to
    the Registrants Report on
    Form 10-K
    filed on September 28, 2005.10.5*
    Form of Restricted Stock Agreement between the Registrant and
    each of the Registrants Outside Directors, dated as of
    September 22, 2005, incorporated herein by reference to
    Exhibit 10.15 to Amendment No. 1 to the Registrants
    Registration Statement on
    Form S-1
    filed on June 19, 2006 (File
    No. 333-133659).10.6*
    Employment Agreement entered into on April 1, 2006, between
    Frances P. Lewis and the Registrant, incorporated herein by
    reference to Exhibit 10.17 to the Registrants Current
    Report on
    Form 10-K
    filed on September 28, 2006.10.7*
    Grubb & Ellis Company 2006 Omnibus Equity Plan
    effective as of November 9, 2006, incorporated herein by
    reference to Appendix A to the Registrants Proxy
    Statement for the 2006 Annual Meeting of Stockholders filed on
    October 10, 2006.  10.8
    Purchase and Sale Agreement between Abrams Office Center Ltd and
    GERA Property Acquisition LLC, a wholly-owned subsidiary of the
    Registrant, dated as of October 24, 2006, incorporated
    herein by reference to Exhibit 99.1 to the
    Registrants Current Report on Form
    8-K filed on
    October 30, 2006.  10.9*
    Second Amendment to Employment Agreement entered into between
    Robert H. Osbrink and the Registrant, dated as of
    November 15, 2006, incorporated herein by reference to
    Exhibit 1 to the Registrants Current Report on
    Form 8-K
    filed on November 21, 2006.10.10
    Letter Agreement between Abrams Office Centre and GERA Property
    Acquisition LLC, a wholly owned subsidiary of the Registrant,
    dated December 8, 2006, incorporated herein 172




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##### Table of Contents



by reference to Exhibit 99.1 to the Registrants
    Current Report on
    Form 8-K
    filed on December 14, 2006.  10.11
    Second Amendment to the Purchase and Sale Agreement between
    Abrams Office Centre, Ltd. and GERA Property Acquisition LLC, a
    wholly owned subsidiary of the Registrant, dated
    December 15, 2006, incorporated herein by reference to
    Exhibit 99.1 to the Registrants Current Report on
    Form 8-K
    filed on December 21, 2006.10.12
    Letter Agreement between Abrams Office Centre, Ltd. and GERA
    Property Acquisition LLC, a wholly owned subsidiary of the
    Registrant, dated December 29, 2006, incorporated herein by
    reference to Exhibit 99.1 to the Registrants Current
    Report on
    Form 8-K
    filed on January 5, 2007.10.13
    Letter Agreement between Abrams Office Centre, Ltd. and GERA
    Property Acquisition LLC, a wholly owned subsidiary of the
    Registrant, dated December 29, 2006, incorporated herein by
    reference to Exhibit 99.2 to the Registrants Current
    Report on
    Form 8-K
    filed on January 5, 2007.10.14
    Letter Agreement between Abrams Office Centre, Ltd. and GERA
    Property Acquisition LLC, a wholly owned subsidiary of the
    Registrant, dated January 4, 2007, incorporated herein by
    reference to Exhibit 99.3 to the Registrants Current
    Report on
    Form 8-K
    filed on January 5, 2007.10.15
    Letter Agreement between Abrams Office Centre, Ltd. and GERA
    Property Acquisition LLC, a wholly owned subsidiary of the
    Registrant, dated January 19, 2007, incorporated herein by
    reference to Exhibit 99.1 to the Registrants Current
    Report on
    Form 8-K
    filed on January 25, 2007.10.16
    Purchase and Sale Agreement between F/B 6400 Shafer Ct.
    (Rosemont), LLC and GERA Property Acquisition LLC, a wholly
    owned subsidiary of the Registrant, dated as of February 9,
    2007, incorporated herein by reference to Exhibit 99.1 to
    the Registrants Current Report on
    Form 8-K
    filed on February 9, 2007.10.17*
    Employment Agreement between Richard W. Pehlke and the
    Registrant, dated as of February 9, 2007, incorporated
    herein by reference to Exhibit 99.1 to the
    Registrants Current Report on
    Form 8-K
    filed on February 15, 2007.10.18*
    Amendment No. 1 Employment Agreement between Richard W.
    Pehlke and the Registrant, dated as of December 23, 2008,
    incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on Form
    8-K filed on
    December 23, 2008.10.19
    Purchase and Sale Agreement between Danbury Buildings Co., L.P.,
    Danbury Buildings, Inc. and GERA Property Acquisition LLC, a
    wholly owned subsidiary of the Registrant, dated
    February 20, 2007, incorporated herein by reference to
    Exhibit 99.2 to the Registrants Current Report on
    Form 8-K
    filed on February 22, 2007.10.20
    Letter Agreement between Danbury Buildings Co., L.P., Danbury
    Buildings, Inc. and GERA Property Acquisition LLC, a wholly
    owned subsidiary of the Registrant, dated March 16, 2007,
    incorporated herein by reference to Exhibit 99.1 to the
    Registrants Current Report on
    Form 8-K
    filed on March 21, 2007.10.21
    Amendment to Purchase and Sale Agreement between Danbury
    Buildings, Inc. and Danbury Buildings Co., L.P. and GERA
    Property Acquisition LLC, a wholly owned subsidiary of the
    Registrant, dated February 20, 2007, incorporated herein by
    reference to Exhibit 99.1 to the Registrants Current
    Report on
    Form 8-K
    filed on May 3, 2007.10.22
    Letter Amendment to Purchase and Sale Agreement between Danbury
    Buildings, Inc. and Danbury Buildings Co., L.P. and GERA
    Property Acquisition LLC, a wholly owned 173




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##### Table of Contents



subsidiary of the Registrant, dated as of April 30, 2007,
    incorporated herein by reference to Exhibit 99.2 to the
    Registrants Current Report on Form
    8-K filed on
    May 3, 2007.  10.23
    Form of Voting Agreement between Registrant and certain
    stockholders or NNN Realty Advisors, Inc., incorporated herein
    by reference to Exhibit 10.1 to the Registrants
    Current Report on Form
    8-K filed on
    May 23, 2007.10.24
    Form of Voting Agreement between NNN Realty Advisors, Inc. and
    certain stockholders of the Registrant, incorporated herein by
    reference to Exhibit 10.2 to the Registrants Current
    Report on Form
    8-K filed on
    May 23, 2007.10.25
    Form of Escrow Agreement between NNN Realty Advisors, Inc.,
    Wilmington Trust Company and the Registrant, incorporated
    herein by reference to Exhibit 10.3 to the
    Registrants Current Report on Form
    8-K filed on
    May 23, 2007.10.26
    Deed of Trust, Security Agreement, Assignment of Rents and
    Fixture Filing by and among GERA Abrams Centre LLC, Rebecca S.
    Conrad, as Trustee for the benefit of Wachovia Bank, National
    Association, dated as of June 15, 2007 incorporated herein
    by reference to Exhibit 10.1 to the Registrants
    Current Report on Form
    8-K filed on
    June 19, 2007.10.27
    Commercial Offer to purchase by and between Aurora Health Care,
    Inc. and Triple Net Properties, LLC, dated November 21,
    2007, incorporated herein by reference to Exhibit 10.1 to
    the Registrants Current Report on
    Form 8-K
    filed on December 28, 2007.10.28
    First Amendment to Offer to Purchase by and between Aurora
    Medical Group, Inc. and Triple Net Properties, LLC, dated
    November 29, 2007, incorporated herein by reference to
    Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    filed on December 28, 2007.10.29
    Form of Lease among NNN Eastern Wisconsin Medical Portfolio, LLC
    and Aurora Medical Group, Inc., dated as of December 21,
    2007, incorporated herein by reference to Exhibit 10.3 to
    the Registrants Current Report on
    Form 8-K
    filed on December 28, 2007.10.30
    Form of Subordination, Non-Disturbance and Attornment Agreement,
    between Aurora Medical Group, Inc. and PNC Bank, National
    Association dated as of December 21, 2007, incorporated
    herein by reference to Exhibit 10.4 to the
    Registrants Current Report on Form
    8-K filed on
    December 28, 2007.10.31
    Form of Estoppel Certificate from Aurora Medical Group, Inc. to
    PNC Bank, National Association, dated as of December 21,
    2007 incorporated herein by reference to Exhibit 10.5 to
    the Registrants Current Report on
    Form 8-K
    filed on December 28, 2007.10.32
    Form of Guaranty executed by Aurora Health Care, Inc. in favor
    of NNN Eastern Wisconsin Medical Portfolio, LLC dated
    December 21, 2007, incorporated herein by reference to
    Exhibit 10.6 to the Registrants Current Report on
    Form 8-K
    filed on December 28, 2007.10.33
    Promissory Note for $32,300,000 senior loan of NNN Eastern
    Wisconsin Medical Portfolio, LLC to the order of PNC Bank,
    National Association, dated December 21, 2007, incorporated
    herein by reference to Exhibit 10.7 to the
    Registrants Current Report on Form
    8-K filed on
    December 28, 2007.10.34
    Promissory Note for $3,400,000 mezzanine loan by NNN Eastern
    Wisconsin Medical Portfolio, LLC to the order of PNC Bank,
    National Association, dated December 21, 2007, incorporated
    herein by reference to Exhibit 10.8 to the
    Registrants Current Report on Form
    8-K filed on
    December 28, 2007.10.35
    Mortgage, Security Agreement, Assignment of Leases and Rents and
    Fixture Filing by NNN Eastern Wisconsin Medical Portfolio, LLC
    in favor of PNC Bank, National 174




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##### Table of Contents



Association, dated December 21, 2007, incorporated herein
    by reference to Exhibit 10.9 to the Registrants
    Current Report on
    Form 8-K
    filed on December 28, 2007.  10.36
    Agreement for Purchase and Sale of Real Property and Escrow
    Instructions, dated as of October 31, 2008, by and between
    GERA Danbury LLC and Matrix Connecticut, LLC, incorporated
    herein by reference to Exhibit 99.1 to the
    Registrants Current Report on Form
    8-K filed on
    November 5, 2008.10.37*
    Employment Agreement between NNN Realty Advisors, Inc. and Scott
    D. Peters incorporated herein by reference to Exhibit 10.26
    to the Registrants Annual Report on
    Form 10-K
    filed on March 17, 2008.10.38*
    Employment Agreement between NNN Realty Advisors, Inc. and
    Andrea R. Biller incorporated herein by reference to
    Exhibit 10.27 to the Registrants Annual Report on
    Form 10-K
    filed on March 17, 2008.10.39*
    Employment Agreement between NNN Realty Advisors, Inc. and
    Francene LaPoint incorporated herein by reference to
    Exhibit 10.28 to the Registrants Annual Report on
    Form 10-K
    filed on March 17, 2008.10.40
    Employment Agreement between NNN Realty Advisors, Inc. and
    Jeffrey T. Hanson incorporated herein by reference to
    Exhibit 10.29 to the Registrants Annual Report on
    Form 10-K
    filed on March 17, 2008.10.41
    Indemnification Agreement dated as of October 23, 2006
    between Anthony W. Thompson and NNN Realty Advisors, Inc.,
    incorporated herein by reference to Exhibit 10.30 to the
    Registrants Annual Report on
    Form 10-K
    filed on March 17, 2008.10.42
    Indemnification and Escrow Agreement by and among Escrow Agent,
    NNN Realty Advisors, Inc., Anthony W. Thompson, Louis J. Rogers
    and Jeffrey T. Hanson, together with Certificate as to
    Authorized Signatures incorporated herein by reference to
    Exhibit 10.31 to the Registrants Annual Report on
    Form 10-K
    filed on March 17, 2008.10.43*
    Form of Indemnification Agreement executed by Andrea R. Biller,
    Glenn L. Carpenter, Howard H. Greene, Jeffrey T. Hanson, Gary H.
    Hunt, C. Michael Kojaian, Francene LaPoint, Robert J.
    McLaughlin, Devin I. Murphy, Robert H. Osbrink, Richard W.
    Pehlke, Scott D. Peters, Dylan Taylor, Jacob Van Berkel, D.
    Fleet Wallace and Rodger D. Young. incorporated herein by
    reference to Exhibit 10.41 to the Registrants Annual
    Report on
    Form 10-K
    filed on March 17, 2008.10.44*
    Change of Control Agreement dated December 23, 2008 by and
    between Dylan Taylor and the Registrant, incorporated herein by
    reference to Exhibit 10.2 to the Registrants Current
    Report on
    Form 8-K
    filed on December 24, 2008.10.45*
    Change of Control Agreement dated December 23, 2008 by and
    between Jacob Van Berkel and the Company, incorporated herein by
    reference to Exhibit 10.3 to the Registrants Current
    Report on
    Form 8-K
    filed on December 24, 2008.10.46
    First Amendment to Agreement for Purchase and Sale of Real
    Property and Escrow Instructions, dated as of January 8,
    2009, by and between GERA Danbury LLC and Matrix Connecticut,
    LLC, incorporated herein by reference to Exhibit 99.1 to
    the Registrants Current Report on
    Form 8-K
    filed on January 14, 2009.10.47
    Second Amendment to Agreement for Purchase and Sale of Real
    Property and Escrow Instructions, dated as of January 12,
    2009, by and between GERA Danbury LLC and Matrix Connecticut,
    LLC, incorporated herein by reference to Exhibit 99.2 to
    the Registrants Current Report on
    Form 8-K
    filed on January 14, 2009. 175




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##### Table of Contents



10.48
    Third Amendment to Agreement for Purchase and Sale of Real
    Property and Escrow Instructions, dated as of January 14,
    2009, by and between GERA Danbury LLC and Matrix Connecticut,
    LLC, incorporated herein by reference to Exhibit 99.1 to
    the Registrants Current Report on
    Form 8-K
    filed on January 21, 2009.10.49
    Fourth Amendment to Agreement for Purchase and Sale of Real
    Property and Escrow Instructions, dated as of January 16,
    2009, by and between GERA Danbury LLC and Matrix Connecticut,
    LLC, incorporated herein by reference to Exhibit 99.2 to
    the Registrants Current Report on
    Form 8-K
    filed on January 21, 2009.10.50
    Fifth Amendment to Agreement for Purchase and Sale of Real
    Property and Escrow Instructions, dated as of January 20,
    2009, by and between GERA Danbury LLC and Matrix Connecticut,
    LLC, incorporated herein by reference to Exhibit 99.3 to
    the Registrants Current Report on
    Form 8-K
    filed on January 21, 2009.10.51
    Sixth Amendment to Agreement for Purchase and Sale of Real
    Property and Escrow Instructions, dated as of January 21,
    2009, by and between GERA Danbury LLC and Matrix Connecticut,
    LLC, incorporated herein by reference to Exhibit 99.2 to
    the Registrants Current Report on
    Form 8-K
    filed on January 27, 2009.10.52
    Escrow Agreement, dated as of January 22, 2009, by and
    among Grubb & Ellis Company, Matrix Connecticut, LLC
    and First American Title Insurance Company, incorporated
    herein by reference to Exhibit 99.1 to the Registrants
    Current Report on
    Form 8-K/A
    filed on January 29, 2009.10.53
    Mortgage, Security Agreement, Assignment of Rents and Fixture
    Filing between GERA 6400 Shafer LLC to Wachovia Bank, National
    Association dated as of June 15, 2007, incorporated herein
    by reference to Exhibit 10.2 to the Registrants
    Current Report on Form
    8-K filed on
    June 19, 2007.10.54
    Open-end Mortgage, Security Agreement, Assignment of Rents and
    Fixture Filing between GERA Danbury LLC to Wachovia Bank,
    National Association dated as of June 15, 2007,
    incorporated herein by reference to Exhibit 10.3 to the
    Registrants Current Report on Form
    8-K filed on
    June 19, 2007.10.55
    Letter Agreement by and among Wachovia Bank, National
    Association, GERA Abrams Centre LLC and GERA 6400 Shafer LLC,
    dated September 28, 2007, incorporated herein by reference
    to Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on October 4, 2007.10.56
    Letter Agreement by and between Wachovia Bank, National
    Association and GERA Danbury, LLC, dated September 28,
    2007, incorporated herein by reference to Exhibit 10.2 to
    the Registrants Current Report on
    Form 8-K
    filed on October 4, 2007.10.57
    Second Amended and Restated Credit Agreement, dated as of
    December 7, 2007, among the Registrant, certain of its
    subsidiaries (the Guarantors), the
    Lender (as defined therein), Deutsche Bank
    Securities, Inc., as syndication agent, sole book-running
    manager and sole lead arranger, and Deutsche Bank
    Trust Company Americas, as initial issuing bank, swing line
    bank and administrative agent, incorporated herein by reference
    to Exhibit 10.1 to Registrants Current Report on
    Form 8-K
    filed on December 13, 2007.10.58
    Second Amended and Restated Security Agreement, dated as of
    December 7, 2007, among the Registrant, certain of its
    subsidiaries and Deutsche Bank Trust Company Americas, as
    administrative agent, for the Secured Parties (as
    defined therein), incorporated herein by reference to
    Exhibit 10.2 to Registrants Current Report on Form
    8-K filed on
    December 13, 2007. 176




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##### Table of Contents



10.59
    First Letter Amendment, dated as of August 4, 2008, by and
    among the Registrant, the guarantors named therein, Deutsche
    Bank Trust Company Americas, as administrative agent, the
    financial institutions identified therein as lender parties,
    Deutsche Bank Trust Company Americas, as syndication agent,
    and Deutsche Bank Securities Inc., as sole book running manager
    and sole lead arranger, incorporated herein by reference to
    Exhibit 99.1 to Registrants Current Report on
    Form 8-K
    filed on August 6, 2008.10.60
    Second Letter Amendment to the Registrants senior secured
    revolving credit facility executed on November 4, 2008, and
    dated as of September 30, 2008, incorporated herein by
    reference to Exhibit 10.2 to the Registrants Quarterly
    Report on
    Form 10-Q
    filed on November 10, 2008.10.61
    Third Amended and Restated Credit Agreement, dated as of
    May 18, 2009, among the Registrant, certain of its
    subsidiaries (the Guarantors), the
    Lender (as defined therein), Deutsche Bank
    Securities, Inc., as syndication agent, sole book-running
    manager and sole lead arranger, and Deutsche Bank
    Trust Company Americas, as initial issuing bank, swing line
    bank and administrative agent.10.62
    Third Amended and Restated Security Agreement, dated as of
    May 18, 2009, among the Registrant, certain of its
    subsidiaries and Deutsche Bank Trust Company Americas, as
    administrative agent, for the Secured Parties (as
    defined therein).  (14) Code
    of Ethics
  14.1
    Amendment to Code of Business Conduct and Ethics of the
    Registrant, incorporated herein by reference to
    Exhibit 14.1 to the Registrants Current Report on
    Form 8-K
    filed on January 31, 2008.  (16) Change
    in Certifying Accountants
  16.1
    Letter from Deloitte & Touche LLP to the Securities
    and Exchange Commission, dated December 14, 2007,
    incorporated herein by reference to Exhibit 16.1 to the
    Registrants Current Report on Form
    8-K filed on
    December 14, 2007.  (21) Subsidiaries
    of the Registrant
  (23)  Consent
    of Independent Registered Public Accounting Firm
  23.1
    Consent of Ernst & Young LLP23.2
    Consent of Deloitte & Touche LLP  (31.1) Section 302
    Certifications
  (32) Section 906
    Certification
  (99)
    Additional
    Exhibits  99.1
    Letter of termination from Grubb &Ellis Realty
    Advisors, Inc. to the Registrant dated as of February 28,
    2008, incorporated herein by reference to Exhibit 99.1 to
    the Registrants Current Report on
    Form 8-K
    filed on February 29, 2008.  
    Filed herewith.*
    Management contract or compensatory plan arrangement. 177




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##### Table of Contents



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS



GRUBB &
    ELLIS COMPANY



December 31,
    2008  Balance at

ChargedBeginning

to



Balance atof

Costs and



End(In thousands)

Period

Expenses

Deductions(1)

of PeriodAllowance for accounts receivableYear Ended December 31, 2008

$
1,376


$
12,446


$
(3,289
)

$
10,533Year Ended December 31, 2007

$
723


$
709


$
(56
)

$
1,376Year Ended December 31, 2006

$
153


$
886


$
(316
)

$
723Allowance for advances and notes receivableYear Ended December 31, 2008

$
1,839


$
1,331


$



$
3,170Year Ended December 31, 2007

$
1,400


$
451


$
(12
)

$
1,839Year Ended December 31, 2006

$
562


$
811


$
27


$
1,400     (1)
    
    Uncollectible accounts written off, net of recoveries 178




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##### Table of Contents



Schedule III 
    REAL ESTATE AND ACCUMULATED DEPRECIATION



GRUBB &
    ELLIS COMPANY MaximumLife onWhichDepreciationCosts








in LatestInitial Costs to Company


Capitalized








Income


Gross Amount at Which Carried at December 31, 2008Buildings and


Subsequent to


Date


Date


Statement





Buildings and





Accumulated(In thousands)

Encumbrance


Land


Improvements


Acquisition


Constructed


Acquired


is Computed


Land


Improvements


Total


DepreciationProperties Held for SaleRocky Mountain Exchange (Office)

$
411


$
1,202


$
2,559


$
505



1984



6/8/2005



N/A


$
396


$
1,089


$
1,485



366Denver, CO 
    200 Galleria


84,000



7,440



64,591



571



1984



1/31/2007



N/A



5,527



50,276



55,803



4,550Atlanta, GA 
    The Avallon Complex


53,000



7,748



54,771



628



1986-2001



7/10/2007



N/A



4,765



34,650



39,415



1,968Austin, TX 
    Danbury Corporate Center


78,000



3,689



58,666



9,427



1981



12/7/2007



N/A



1,008



57,370



58,378



2,634Danbury, CT 
    Abrams Centre


20,540



3,012



14,650



1,268



1983



12/7/2007



N/A



2,025



11,968



13,993



1,234Dallas, TX 
    6400 Shafer


21,961



3,222



16,313



777



1979



12/7/2007



N/A



1,105



8,621



9,726



640Rosemont, IL$
257,912


$
26,313


$
211,550


$
13,176














$
14,826


$
163,974


$
178,800


$
11,392   (a)
    The changes in real estate for the year ended December 31,
    2008 are as follows:  (In thousands)Balance at December 31, 2007

$
335,957Acquisitions


144,162Additions


12,813Real estate related impairments


(71,488
)Disposals and deconsolidations


(242,644
)Balance at December 31, 2008

$
178,800   (b)
    The changes in accumulated depreciation for the year ended
    December 31, 2007 are as follows:  (In thousands)Balance at December 31, 2007

$
3,781Additions


7,760Disposals and deconsolidations


(149
)Balance at December 31, 2008

$
11,392   (b)
    The changes in real estate for the year ended December 31,
    2007 are as follows:  (In thousands)Balance at December 31, 2006

$
44,325Acquisitions


671,985Additions


266Disposals and deconsolidations


(380,619
)Balance at December 31, 2007

$
335,957  179




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##### Table of Contents



(b)
    The changes in accumulated depreciation for the year ended
    December 31, 2007 are as follows:  (In thousands)Balance at December 31, 2006

$
230Additions


3,845Disposals and deconsolidations


(294
)Balance at December 31, 2007

$
3,781  180




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##### Table of Contents



SIGNATURES    Grubb & Ellis Company
    (Registrant)/s/  Gary
    H.
    Hunt

May 27, 2009Gary H. Hunt
    Interim Chief Executive Officer and Director
    (Principal Executive Officer)     Signature

Title

Date/s/  Gary
    H. HuntGary
    H. Hunt

Interim Chief Executive Officer and Director
    (Principal Executive Officer)

May 27, 2009/s/  Richard
    W. PehlkeRichard
    W. Pehlke

Chief Financial Officer
    (Principal Financial and Accounting Officer)

May 27, 2009/s/  Glenn
    L. CarpenterGlenn
    L. Carpenter

Director

May 27, 2009/s/  Harold
    H. GreeneHarold
    H. Greene

Director

May 27, 2009/s/  C.
    Michael KojaianC.
    Michael Kojaian

Director

May 27, 2009/s/  Robert
    J. McLaughlinRobert
    J. McLaughlin

Director

May 27, 2009/s/  Devin
    I. MurphyDevin
    I. Murphy

Director

May 27, 2009/s/  D.
    Fleet WallaceD.
    Fleet Wallace

Director

May 27, 2009/s/  Rodger
    D. YoungRodger
    D. Young

Director

May 27, 2009  181