##### Table of Contents



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

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

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from toCommission File Number:
    000-52612   Grubb & Ellis
    Apartment REIT, Inc.
    Maryland(State or other jurisdiction of
    incorporation or organization)

20-3975609(I.R.S. Employer
    Identification No.)1551 N. Tustin Avenue, Suite 300
    Santa Ana, California(Address of principal executive offices)

92705(Zip Code)   (714) 667-8252
   N/A
     þ o
  non-accelerated Rule 12b-2
  Large accelerated filer

o

Accelerated filer

oNon-accelerated filer

þ (Do
    not check if a smaller reporting company)

Smaller reporting company

o   Rule 12b-2
 o þ




---



##### 



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


Financial Statements


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


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


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


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


5Notes to Condensed Consolidated Financial
    Statements (Unaudited)


6Item 2.


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


26Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


42Item 4.


Controls and Procedures


43Item 4T.


Controls and Procedures


43PART II  OTHER INFORMATIONItem 1.


Legal Proceedings


44Item 1A.


Risk Factors


44Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


45Item 3.


Defaults Upon Senior Securities


46Item 4.


Submission of Matters to a Vote of Security
    Holders


46Item 5.


Other Information


46Item 6.


Exhibits


46Signatures


47EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   1




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##### Table of Contents



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


December 31,2008


2007ASSETSReal estate investments:Operating properties, net

$
302,643,000


$
220,390,000Cash and cash equivalents


3,633,000



1,694,000Accounts and other receivables


534,000



438,000Restricted cash


2,841,000



3,286,000Identified intangible assets, net


902,000



1,171,000Other assets, net


1,937,000



1,835,000Total assets

$
312,490,000


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

$
193,844,000


$
139,318,000Unsecured note payables to affiliate


3,700,000



7,600,000Lines of credit


16,000,000



10,000,000Accounts payable and accrued liabilities


4,990,000



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


1,273,000



776,000Security deposits and prepaid rent


1,097,000



675,000Total liabilities


220,904,000



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






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






Common stock, $0.01 par value; 300,000,000 shares
    authorized; 12,472,863 and 8,528,844 shares issued and
    outstanding as of June 30, 2008 and December 31, 2007,
    respectively


125,000



85,000Additional paid-in capital


110,841,000



75,737,000Accumulated deficit


(19,380,000
)


(9,766,000
)Total stockholders equity


91,586,000



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

$
312,490,000


$
228,814,000    2




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
 CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS
    For the Three and Six Months Ended June 30, 2008 and
    2007
    (Unaudited)  Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007Revenues:Rental income

$
6,494,000


$
1,812,000


$
12,165,000


$
3,522,000Other property revenues


773,000



191,000



1,407,000



317,000Total revenues


7,267,000



2,003,000



13,572,000



3,839,000Expenses:Rental expenses


3,797,000



946,000



6,977,000



1,759,000General and administrative


1,148,000



601,000



2,241,000



999,000Depreciation and amortization


2,525,000



915,000



5,119,000



1,756,000Total expenses


7,470,000



2,462,000



14,337,000



4,514,000Loss before other income (expense)


(203,000
)


(459,000
)


(765,000
)


(675,000
)Other income (expense):Interest expense (including amortization of deferred financing
    costs and debt discount):Interest expense related to mezzanine line of credit and note
    payables to affiliate


(2,000
)


(4,000
)


(46,000
)


(137,000
)Interest expense related to mortgage loan payables and lines of
    credit


(2,860,000
)


(646,000
)


(5,185,000
)


(1,269,000
)Interest and dividend income


5,000



51,000



16,000



55,000Net loss

$
(3,060,000
)

$
(1,058,000
)

$
(5,980,000
)

$
(2,026,000
)Net loss per share  basic and diluted

$
(0.27
)

$
(0.24
)

$
(0.58
)

$
(0.61
)Weighted average number of shares outstanding 
    basic and diluted


11,368,448



4,374,486



10,364,248



3,336,287Distributions declared per common share

$
0.18


$
0.18


$
0.35


$
0.34    3




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
 CONDENSED
    CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
    For the Six Months Ended June 30, 2008
    (Unaudited)  Common Stock











TotalNumber of





Additional


Preferred


Accumulated


StockholdersShares


Amount


Paid-In Capital


Stock


Deficit


EquityBALANCE  December 31, 2007


8,528,844


$
85,000


$
75,737,000


$



$
(9,766,000
)

$
66,056,000Issuance of common stock


3,786,397



38,000



37,802,000











37,840,000Issuance of vested and nonvested common stock


3,000







6,000











6,000Offering costs










(4,175,000
)










(4,175,000
)Amortization of nonvested common stock compensation










6,000











6,000Issuance of common stock under theDRIP


164,745



2,000



1,563,000











1,565,000Repurchase of common stock


(10,123
)






(98,000
)










(98,000
)Distributions


















(3,634,000
)


(3,634,000
)Net loss


















(5,980,000
)


(5,980,000
)BALANCE  June 30, 2008


12,472,863


$
125,000


$
110,841,000


$



$
(19,380,000
)

$
91,586,000    4




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Six Months Ended June 30, 2008 and 2007
    (Unaudited)
  Six Months Ended June 30,2008


2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(5,980,000
)

$
(2,026,000
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization (including deferred financing
    costs and debt discount)


5,667,000



1,848,000Loss on capital replacement costs


18,000



Stock based compensation, net of forfeitures


12,000



9,000Bad debt expense


272,000



78,000Changes in operating assets and liabilities:Accounts and other receivables


(335,000
)


68,000Other assets, net


181,000



170,000Accounts payable and accrued liabilities


832,000



1,030,000Accounts payable due to affiliates, net


458,000



(1,077,000
)Prepaid rent


64,000



(142,000
)Net cash provided by (used in) operating activities


1,189,000



(42,000
)CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of real estate operating properties


(87,804,000
)


(22,377,000
)Capital expenditures


(454,000
)


(35,000
)Restricted cash


445,000



(736,000
)Net cash used in investing activities


(87,813,000
)


(23,148,000
)CASH FLOWS FROM FINANCING ACTIVITIESBorrowings on mortgage loan payables


54,651,000



20,000,000Borrowings on unsecured note payables to affiliate


3,700,000



3,300,000Borrowings (repayments) under the lines of credit, net


6,000,000



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


(193,000
)


Payments on unsecured note payables to affiliate


(7,600,000
)


(10,000,000
)Deferred financing costs


(690,000
)


(212,000
)Proceeds from issuance of common stock


38,718,000



35,691,000Repurchase of common stock


(98,000
)


Security deposits


50,000



8,000Payment of offering costs


(4,135,000
)


(3,694,000
)Distributions


(1,840,000
)


(581,000
)Net cash provided by financing activities


88,563,000



22,927,000NET CHANGE IN CASH AND CASH EQUIVALENTS


1,939,000



(263,000
)CASH AND CASH EQUIVALENTS  Beginning of period


1,694,000



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

$
3,633,000


$
1,191,000SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for:Interest

$
4,470,000


$
1,353,000Income taxes

$
3,000


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

$
3,000


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

$
2,000


$
12,000Other assets

$
77,000


$
Accrued expenses

$
166,000


$
368,000Security deposits and prepaid rent

$
308,000


$
215,000Mortgage loan payable, net

$



$
9,646,000Financing Activities:Issuance of common stock under the DRIP

$
1,565,000


$
329,000Distributions declared but not paid

$
710,000


$
293,000Accrued offering costs

$
463,000


$
450,000Accrued deferred financing costs

$



$
15,000(Payable) receivable for issuance of common stock

$
(555,000
)

$
120,000    5




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Reclassifications
    Segment
    Disclosure
  Disclosures about Segments of an Enterprise and
    Related Information
  Recently
    Issued Accounting Pronouncements
  Fair Value Measurements, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13, SFAS 157-1. SFAS 157-1 Accounting for Leases SFAS No. 157-2, Effective Date of FASB Statement No. 157, SFAS 157-2. SFAS 157-2 SFAS 157-1 SFAS 157-1 SFAS 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities,
  Business Combinations, Noncontrolling Interests in
    Consolidated Financial Statements  An Amendment of
    ARB No. 51,
 8




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##### Table of Contents



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




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##### Table of Contents



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


December 31, 2007Land

$
38,011,000


$
24,670,000Land improvements


18,985,000



12,592,000Building and improvements


243,438,000



179,226,000Furniture, fixtures and equipment


9,487,000



7,454,000309,921,000



223,942,000Less: accumulated depreciation


(7,278,000
)


(3,552,000
)$
302,643,000


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




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Kedron
    Village  Peachtree City, Georgia
    4.
    Identified
    Intangible Assets    June 30, 2008


December 31, 2007In place leases, net of accumulated amortization of $359,000 and
    $450,000 as of June 30, 2008 and December 31, 2007,
    respectively, (with a weighted average remaining life of
    5 months as of June 30, 2008 and December 31,
    2007)

$
655,000


$
785,000Tenant relationships, net of accumulated amortization of
    $132,000 and $499,000 as of June 30, 2008 and
    December 31, 2007, respectively, (with a weighted average
    remaining life of 5 months as of June 30, 2008 and
    December 31, 2007)


247,000



386,000$
902,000


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


December 31, 2007Deferred financing costs, net of accumulated amortization of
    $209,000 and $262,000 as of June 30, 2008 and
    December 31, 2007, respectively

$
1,663,000


$
1,457,000Prepaid expenses and deposits


274,000



378,000$
1,937,000


$
1,835,000    11




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  6.  Mortgage
    Loan Payables, Net and Unsecured Note Payables to
    Affiliate
  Mortgage
    Loan Payables
      Interest


MaturityProperty

Rate


Date


June 30, 2008


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


5.34
%


01/11/17


$
19,218,000


$
19,218,000Walker Ranch Apartment Homes


5.36
%


05/11/17



20,000,000



20,000,000Residences at Braemar


5.72
%


06/01/15



9,589,000



9,662,000Park at Northgate


5.94
%


08/01/17



10,295,000



10,295,000Baypoint Resort


5.94
%


08/01/17



21,612,000



21,612,000Towne Crossing Apartments


5.04
%


11/01/14



15,169,000



15,289,000Villas of El Dorado


5.68
%


12/01/16



13,600,000



13,600,000The Heights at Olde Towne


5.79
%


01/01/18



10,475,000



10,475,000The Myrtles at Olde Towne


5.79
%


01/01/18



20,100,000



20,100,000Arboleda Apartments


5.36
%


04/01/15



17,651,000



157,709,000



140,251,000Variable Rate Debt:Creekside Crossing


4.60
%*


07/01/15



17,000,000



Kedron Village


4.62
%*


07/01/15



20,000,000



37,000,000



Total fixed and variable debt










194,709,000



140,251,000Less: discount










(865,000
)


(933,000
)Mortgage loan payables









$
193,844,000


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




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##### Table of Contents



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

Amount2008

$
198,0002009

$
415,0002010

$
594,0002011

$
714,0002012

$
752,000Thereafter

$
192,036,000   Unsecured
    Note Payables to Affiliate
          7.
    Lines of
    Credit and Mezzanine Line of Credit  Line
    of Credit and Mezzanine Line of Credit
   13




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
          Wachovia
    Loan
         14




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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

Fee

June 30, 2008


December 31, 2007Grubb & Ellis Realty Investors

Operating Expenses

$
72,000


$
50,000Grubb & Ellis Realty Investors

Offering Costs


318,000



270,000Grubb & Ellis Realty Investors

Due Diligence


1,000



Grubb & Ellis Realty Investors

On-site Payroll






10,000Grubb & Ellis Securities

Selling Commissions and Marketing
    Support Fees


144,000



153,000Residential Management

Property Management Fees


27,000



9,000Realty

Asset and Property Management Fees


709,000



284,000NNN Realty Advisors

Interest Expense


2,000



$
1,273,000


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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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


Average GrantCommon Stock


Date Fair ValueBalance  December 31, 2007


4,200


$
10.00Granted


3,000



10.00Vested


(1,200
)


10.00Forfeited






Balance  June 30, 2008


6,000


$
10.00Expected to vest  June 30, 2008


6,000


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




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##### Table of Contents



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




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##### Table of Contents



Grubb &
    Ellis Apartment REIT, Inc.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Share
    Repurchases
      Proposed
    Acquisitions
       25




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



Recently
    Issued Accounting Pronouncements
  Fair Value Measurements, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13, SFAS 157-1. SFAS 157-1 Accounting for Leases SFAS No. 157-2, Effective Date of FASB Statement No. 157, SFAS 157-2. SFAS 157-2 SFAS 157-1 SFAS 157-1 SFAS 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities,
  Business Combinations, Noncontrolling Interests in
    Consolidated Financial Statements  An Amendment of
    ARB No. 51,
  Disclosures about Derivative Instruments and Hedging
    Activities
 28




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##### Table of Contents



SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, SFAS 142-3. SFAS 142-3 Goodwill and Other Intangible Assets, SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  No. 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities, EITF 03-6-1. EITF 03-6-1 Earnings per Share. EITF 03-6-1 EITF 03-6-1 EITF 03-6-1. EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
  Acquisitions
    in 2008
  Arboleda
    Apartments  Cedar Park, Texas
   29




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##### Table of Contents



Creekside
    Crossing  Lithonia, Georgia
    Kedron
    Village  Peachtree City, Georgia
    Factors
    Which May Influence Results of Operations
  Rental
    Income
    Offering
    Proceeds
    Sarbanes-Oxley
    Act
     30




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##### Table of Contents



Results
    of Operations
  Comparison
    of the Three and Six Months Ended June 30, 2008 and
    2007
    Form 10-K
    Revenues
        Rental
    Expenses
      General
    and Administrative
   31




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##### Table of Contents



Article 3-14 Regulation S-X
  Article 3-14 Regulation S-X Article 3-14 Regulation S-X
  Depreciation
    and Amortization
      Interest
    Expense
   32




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##### Table of Contents



Interest
    and Dividend Income
      Net
    Loss
    Liquidity
    and Capital Resources
         33




---



##### Table of Contents



Other
    Liquidity Needs
        Cash
    Flows
   34




---



##### Table of Contents



Distributions
             35




---



##### Table of Contents



Capital
    Resources
  Financing
      Mortgage
    Loan Payables
   36




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##### Table of Contents



Interest

Maturity


June 30,


December 31,Property

Rate

Date


2008


2007Fixed Rate Debt:Hidden Lake Apartment Homes

5.34%


01/11/17


$
19,218,000


$
19,218,000Walker Ranch Apartment Homes

5.36%


05/11/17



20,000,000



20,000,000Residences at Braemar

5.72%


06/01/15



9,589,000



9,662,000Park at Northgate

5.94%


08/01/17



10,295,000



10,295,000Baypoint Resort

5.94%


08/01/17



21,612,000



21,612,000Towne Crossing Apartments

5.04%


11/01/14



15,169,000



15,289,000Villas of El Dorado

5.68%


12/01/16



13,600,000



13,600,000The Heights at Olde Towne

5.79%


01/01/18



10,475,000



10,475,000The Myrtles at Olde Towne

5.79%


01/01/18



20,100,000



20,100,000Arboleda Apartments

5.36%


04/01/15



17,651,000



157,709,000



140,251,000Variable Rate Debt:Creekside Crossing

4.60%*


07/01/15



17,000,000



Kedron Village

4.62%*


07/01/15



20,000,000



37,000,000



Total fixed and variable debt








194,709,000



140,251,000Less: discount








(865,000
)


(933,000
)Mortgage loan payables







$
193,844,000


$
139,318,000     *
    
    Represents the interest rate in effect as of June 30, 2008.        Unsecured
    Note Payables to Affiliate
   37




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##### Table of Contents



Lines of
    Credit and Mezzanine Line of Credit
  Line of
    Credit and Mezzanine Line of Credit
          Wachovia Loan
     38




---



##### Table of Contents



REIT
    Requirements
    Commitments
    and Contingencies
  Organizational,
    Offering and Related Expenses
    Repairs
    and Maintenance Expenses
     39




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##### Table of Contents



Debt
    Service Requirements
          Contractual
    Obligations
    Payments Due by PeriodLess than








More than1 Year


1-3 Years


4-5 Years


5 Years(2008)


(2009-2010)


(2011-2012)


(After 2012)


TotalPrincipal payments  fixed rate debt

$
9,898,000


$
1,009,000


$
1,466,000


$
155,036,000


$
167,409,000Interest payments  fixed rate debt


4,875,000



17,560,000



17,407,000



33,680,000



73,522,000Principal payments  variable rate debt


10,000,000











37,000,000



47,000,000Interest payments  variable rate debt (based on rates
    in effect as of June 30, 2008)


1,138,000



3,459,000



3,464,000



4,464,000



12,525,000Repairs and maintenance


154,000















154,000Total

$
26,065,000


$
22,028,000


$
22,337,000


$
230,180,000


$
300,610,000   Off-Balance
    Sheet Arrangements
    Inflation
    Funds
    from Operations
     40




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##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007Net loss

$
(3,060,000
)

$
(1,058,000
)

$
(5,980,000
)

$
(2,026,000
)Add:Depreciation and amortization  consolidated properties


2,525,000



915,000



5,119,000



1,756,000FFO

$
(535,000
)

$
(143,000
)

$
(861,000
)

$
(270,000
)FFO per share  basic and diluted

$
(0.05
)

$
(0.03
)

$
(0.08
)

$
(0.08
)Weighted average common shares outstanding basic and diluted


11,368,448



4,374,486



10,364,248



3,336,287     Subsequent
    Events
  Status
    of our Offering
    Advisory
    Agreement
    Share
    Repurchases
   41




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##### Table of Contents



Proposed
    Acquisition
       Item 3. Quantitative
    and Qualitative Disclosures About Market Risk.  Form 10-K,
    Expected Maturity Date2008


2009


2010


2011


2012


Thereafter


Total


Fair ValueFixed rate debt  principal payments

$
9,898,000


$
415,000


$
594,000


$
714,000


$
752,000


$
155,036,000


$
167,409,000


$
162,642,000Weighted average interest rate on maturing debt


12.87
%


5.30
%


5.32
%


5.32
%


5.32
%


5.58
%


6.01
%


Variable rate debt  principal payments

$
10,000,000


$



$



$



$



$
37,000,000


$
47,000,000


$
47,000,000Weighted average interest rate on maturing debt (based on rates
    in effect as of June 30, 2008)


7.97
%



%



%



%



%


4.61
%


5.33
%


    42




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##### Table of Contents



Item 4. Controls
    and Procedures.    Item 4T. Controls
    and Procedures.
  Evaluation of disclosure controls and
    procedures.
  Rules 13a-15(e) 15d-15(e)
  Changes in internal control over financial
    reporting.
 43




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##### Table of Contents



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




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##### Table of Contents



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


Maximum ApproximateTotal Number of Shares


Dollar ValuePurchased As Part of


of Shares that May(a)


(b)


Publicly


Yet Be PurchasedTotal Number of


Average Price


Announced


Under thePeriod

Shares Purchased


Paid per Share


Plan or Program


Plans or ProgramsApril 1, 2008 to April 30, 2008


4,923


$
9.41



4,923



(1
)May 1, 2008 to May 31, 2008





$







$
June 1, 2008 to June 30, 2008





$







$
     (1)
    
    Subject to funds being available, we will limit the number of
    shares repurchased during any calendar year to 5.0% of the
    weighted average number of our shares outstanding during the
    prior calendar year. 45




---



##### Table of Contents



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

For

WithheldStanley J. Olander, Jr.

5,283,391

96,948Glenn W. Bunting, Jr.

5,286,668

93,671Robert A. Gary, IV

5,293,087

87,252W. Brand Inlow

5,285,027

95,312Andrea R. Biller

5,295,716

84,623   Ratification of

For

Against

AbstainDeloitte & Touche LLP

5,197,649

40,223

142,467  Item 5. Other
    Information.   Item 6. Exhibits.   46




---



##### Table of Contents



SIGNATURES    Grubb & Ellis Apartment REIT, Inc.(Registrant)August 8, 2008Date

By: /s/  Stanley
    J. Olander, Jr.Stanley
    J. Olander, Jr.Chief Executive Officer and President
    (principal executive officer)August 8, 2008Date

By: /s/  Shannon
    K S JohnsonShannon
    K S JohnsonChief Financial Officer
    (principal financial officer)  47




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##### Table of Contents



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

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

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

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

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

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

Purchase and Sale Agreement by and between Atlanta Creekside
    Gardens Associates, LLC and Grubb & Ellis Realty
    Investors, LLC, dated June 12, 2008 (included as
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.2

First Amendment to Purchase and Sale Agreement by and between
    Atlanta Creekside Gardens Associates, LLC and Grubb &
    Ellis Realty Investors, LLC, dated June 18, 2008 (included
    as Exhibit 10.2 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.3

Purchase and Sale Agreement by and between AMLI at Peachtree
    City-Phase I, LLC, AMLI at Peachtree City-Phase II, LLC and
    Grubb and Ellis Realty Investors, LLC, dated June 23, 2008
    (included as Exhibit 10.4 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.4

Purchase and Sale Agreement Assignment by and between
    Grubb & Ellis Realty Investors, LLC and G&E
    Apartment REIT Creekside Crossing, LLC, dated June 26, 2008
    (included as Exhibit 10.3 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.5

Multifamily Note by G&E Apartment REIT Creekside Crossing,
    LLC to the order of Capmark Bank for Freddie Mac, dated
    June 26, 2008 (included as Exhibit 10.6 to our Current
    Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.6

Multifamily Deed of Trust, Assignment of Rents and Security
    Agreement by G&E Apartment REIT Creekside Crossing, LLC and
    Capmark Bank, dated June 26, 2008 (included as
    Exhibit 10.7 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.7

Guaranty by G&E Apartment REIT, Inc. for the benefit of
    Capmark Bank, dated June 26, 2008 (included as
    Exhibit 10.8 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.8

Multifamily Note by G&E Apartment REIT Kedron Village, LLC
    to the order of Capmark Bank for Freddie Mac, dated
    June 26, 2008 (included as Exhibit 10.9 to our Current
    Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.9

Multifamily Deed of Trust, Assignment of Rents and Security
    Agreement by G&E Apartment REIT Kedron Village, LLC and
    Capmark Bank, dated June 26, 2008 (included as
    Exhibit 10.10 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference) 48




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##### Table of Contents



10
.10

Guaranty by G&E Apartment REIT, Inc. for the benefit of
    Capmark Bank, dated June 26, 2008 (included as
    Exhibit 10.11 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.11

Third Amendment to and Waiver of Loan Agreement between
    Grubb & Ellis Apartment REIT, Inc. and Wachovia Bank,
    National Association, dated June 26, 2008 (included as
    Exhibit 10.12 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.12

Third Amended and Restated Pledge Agreement by and between
    Wachovia Bank, National Association and Grubb and Ellis
    Apartment REIT Holdings, L.P., dated June 26, 2008
    (included as Exhibit 10.13 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.13

Assignment and Assumption of Real Estate Purchase Agreement by
    and between Grubb & Ellis Realty Investors, LLC and
    G&E Apartment REIT Kedron Village, LLC, dated June 27,
    2008 (included as Exhibit 10.5 to our Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)10
.14

Unsecured Promissory Note by Grubb & Ellis Apartment
    REIT Holdings, LP in favor of NNN Realty Advisors, Inc., dated
    June 27, 2008 (included as Exhibit 10.14 to our
    Current Report on
    Form 8-K
    filed July 2, 2008 and incorporated herein by reference)31
.1*

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

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

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

Certification of Chief Financial Officer, pursuant to
    18 U.S.C. Section 1350, as created by Section 906
    of the Sarbanes-Oxley Act of 2002     *
    
    Filed herewith. 49