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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K


x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended June 30, 2005


OR


o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


For the transition period from
 to


Commission file number 1-8122


GRUBB & ELLIS COMPANY


(Exact name of registrant as specified in its charter)


|                                                                                |  |                                                     
|------------------------------------------------------------------------------- |  | ----------------------------------------------------
|Delaware
    (State or other jurisdiction of
    Incorporation or organization) |  | 94-1424307
    (IRS Employer
    Identification No.)

2215 Sanders Road, Suite 400,


Northbrook IL, 60062


(Address of principal executive offices) (Zip Code)


(847) 753-7500


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act:


|                                     |  |                                                   
|------------------------------------ |  | --------------------------------------------------
|Title of each class
    Common Stock |  | Name of each exchange on which registered
    None

Securities registered pursuant to Section 12(g) of the
Act: None


x o


o


o x


o x






DOCUMENTS INCORPORATED BY REFERENCE












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GRUBB & ELLIS COMPANY


FORM 10-K


TABLE OF CONTENTS


|                                                         |  |                                                                                                     |   |      |    | 
|-------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- | - | ---- | -- | 
|                                                         |  |                                                                                                     |   | Page |   
|                                                         |  |                                                                                                     |   |      |   
|Cover Page                                               |  |                                                                                                     | 1 |     
|Table of Contents                                        |  |                                                                                                     | 2 |     
|Part I.                                                  |  |                                                                                                     |   |      |    | 
|Item 1.                                                  |  | Business                                                                                            |   |      | 3  | 
|Item 2.                                                  |  | Properties                                                                                          |   |      | 7  | 
|Item 3.                                                  |  | Legal Proceedings                                                                                   |   |      | 7  | 
|Item 4.                                                  |  | Submission of Matters to a Vote of Security
    Holders                                             |   |      | 7  | 
|Part II.                                                 |  |                                                                                                     |   |      |    | 
|Item 5.                                                  |  | Market for Registrants Common Equity
    and Related Stockholder Matters                           |   |      | 8  | 
|Item 6.                                                  |  | Selected Financial Data                                                                             |   |      | 10 | 
|Item 7.                                                  |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations           |   |      | 10 | 
|Item 7A.                                                 |  | Quantitative and Qualitative Disclosures
    About Market Risk                                      |   |      | 18 | 
|Item 8.                                                  |  | Financial Statements and Supplementary
    Data                                                     |   |      | 20 | 
|Item 9.                                                  |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure            |   |      | 47 | 
|Item 9A.                                                 |  | Controls and Procedures                                                                             |   |      | 47 | 
|Part III.                                                |  |                                                                                                     |   |      |    | 
|Item 10.                                                 |  | Directors and Executive Officers of the
    Registrant                                              |   |      | 48 | 
|Item 11.                                                 |  | Executive Compensation                                                                              |   |      | 48 | 
|Item 12.                                                 |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholders Matters |   |      | 48 | 
|Item 13.                                                 |  | Certain Relationships and Related
    Transactions                                                  |   |      | 48 | 
|Item 14                                                  |  | Principal Accountant Fees and Services                                                              |   |      | 48 | 
|Part IV.                                                 |  |                                                                                                     |   |      |    | 
|Item 15.                                                 |  | Exhibits, Financial Statement Schedules,
    and Reports on Form 8-K                                |   |      | 49 | 
|Signatures                                               |  |                                                                                                     |   |      | 55 | 
|Exhibit Index                                            |  |                                                                                                     |   |      | 56 | 
|Amendment to Employment Agreement                       
|Subsidiaries                                            
|Consent of Independent Registered Public Accounting Firm
|Powers of Attorney                                      
|Section 302 Certifications                              
|Sections 906 Certification                              



2



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GRUBB & ELLIS COMPANY





PART I








Item 1. Business


General










Current Business Platform and Organization








3



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Transaction Services






Management Services




Knight Frank




Preferred Stock






4



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Credit Facility




Strategic Initiatives






5



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Industry and Competition








Environmental Regulation




6



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Seasonality






Service Marks




Real Estate Markets







Item 2. Properties







Item 3. Legal Proceedings







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




7



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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




|               |  |      |      |  |      |   |      |      |  |   |      |  |  |   |      | 
|-------------- |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ---- |  |  | - | ---- | 
|               |  | 2005 |      |  | 2004 |  
|               |  |      |      |  |      |  
|               |  | High |      |  | Low  |   |      | High |  |   | Low  | 
|               |  |      |      |  |      |   |      |      |  |   |      | 
|First Quarter  |  | $    | 4.26 |  |      | $ | 1.55 |      |  | $ | 1.50 |  |  | $ | 1.01 | 
|Second Quarter |  | $    | 5.20 |  |      | $ | 3.60 |      |  | $ | 1.20 |  |  | $ | 0.80 | 
|Third Quarter  |  | $    | 4.94 |  |      | $ | 4.10 |      |  | $ | 1.20 |  |  | $ | 0.87 | 
|Fourth Quarter |  | $    | 7.00 |  |      | $ | 4.75 |      |  | $ | 2.00 |  |  | $ | 0.90 | 





Sales of Unregistered Securities




1 3


8



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Equity Compensation Plan Information




|                                                           |  |                            |           |  |                      |                         |      |                         |  |  |           | 
|---------------------------------------------------------- |  | -------------------------- | --------- |  | -------------------- | ----------------------- | ---- | ----------------------- |  |  | --------- | 
|                                                           |  |                            |           |  |                      | Number of securities    |     
|                                                           |  |                            |           |  |                      | remaining available for |     
|                                                           |  |                            |           |  |                      | future issuance under   |     
|                                                           |  | Number of securities to be |           |  | Weighted average     |                         |      | equity compensation     | 
|                                                           |  | issued upon exercise of    |           |  | exercise price of    |                         |      | plans (excluding        | 
|                                                           |  | outstanding options,       |           |  | outstanding options, |                         |      | securities reflected in | 
|                                                           |  | warrants and rights        |           |  | warrants and rights  |                         |      | column (a))             | 
|Plan Category                                              |  | (a)                        |           |  | (b)                  |                         |      | (c)                     | 
|                                                           |  |                            |           |  |                      |                         |      |                         | 
|Equity Compensation plans approved by security holders     |  |                            | 853,022   |  |                      | $                       | 4.60 |                         |  |  | 2,273,952 | 
|Equity compensation plans not approved by security holders |  |                            | 592,130   |  |                      | $                       | 9.18 |                         |  |  | 1,336,983 | 
|Total                                                      |  |                            | 1,445,152 |  |                      | $                       | 6.48 |                         |  |  | 3,610,935 | 

Equity Compensation Plans Not Approved by
Stockholders




9



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                              |           |                                   |         |            |      |   |         |            |  |   |         |            |   |      |         |            |   |   |         |            | 
|------------------------------------------------------------- | --------- | --------------------------------- | ------- | ---------- | ---- | - | ------- | ---------- |  | - | ------- | ---------- | - | ---- | ------- | ---------- | - | - | ------- | ---------- | 
|                                                              |           | For the Years Ended June 30,      |        
|                                                              |           |                                   |        
|                                                              |           | 2005                              |         |            | 2004 |   |         | 2003       |  |   | 2002    |            |   | 2001 |        
|                                                              |           |                                   |         |            |      |   |         |            |  |   |         |            |   |      |        
|                                                              |           | (in thousands, except share data) |        
|Total services revenue                                        |           | $                                 | 463,535 |            |      | $ | 440,554 |            |  | $ | 425,946 |            |   | $    | 431,446 |            |   | $ | 516,610 |           
|Net income (loss) to common stockholders                      |           |                                   | 12,378  |            |      |   | 12,576  |            |  |   | (17,902 | )          |   |      | (15,477 | )          |   |   | 1,369   |           
|Benefit (provision) for income taxes                          |           |                                   | 152     |            |      |   | 2,821   |            |  |   | (2,432  | )          |   |      | 1,187   |            |   |   | (5,102  | )         
|(Increase) decrease in deferred tax asset valuation allowance |           |                                   | 5,208   |            |      |   | 7,853   |            |  |   | (7,707  | )          |   |      | (5,214  | )          |   |   |        |           
|Net income (loss)(1)                                          |           |                                   | 13,267  |            |      |   | 14,194  |            |  |   | (16,772 | )          |   |      | (15,477 | )          |   |   | 4,502   |           
|Net income (loss) per common share(1)                         |           |                                   |         |            |      |   |         |            |  |   |         |            |   |      |         |            |   |   |         |           
|                                                              |  Basic   |                                   |         | 0.82       |      |   |         | 0.83       |  |   |         | (1.19      | ) |      |         | (1.09      | ) |   |         | 0.26       | 
|                                                              |  Diluted |                                   |         | 0.81       |      |   |         | 0.83       |  |   |         | (1.19      | ) |      |         | (1.09      | ) |   |         | 0.25       | 
|Weighted average common shares                                |           |                                   |         |            |      |   |         |            |  |   |         |            |   |      |         |            |   |   |         |           
|                                                              |  Basic   |                                   |         | 15,111,898 |      |   |         | 15,097,371 |  |   |         | 15,101,625 |   |      |         | 14,147,618 |   |   |         | 17,051,546 | 
|                                                              |  Diluted |                                   |         | 15,221,982 |      |   |         | 15,101,183 |  |   |         | 15,101,625 |   |      |         | 14,147,618 |   |   |         | 17,975,351 | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Income and per share data reported on the above table reflect
    special charges in the amount of $3.2 million,
    $9.5 million, $1.75 million, and $6.2 million for
    the fiscal years ended June 30, 2004, 2003, 2002 and 2001,
    respectively. Net income for the fiscal year ended June 30,
    2001 includes a loss of $676,000 on the extinguishment of debt
    and a charge of $3.1 million reflecting the cumulative
    effect of a change in an accounting principle. For information
    regarding comparability of this data as it may relate to future
    periods, see discussion in Item 7, Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations and Note 14 of the Notes to Consolidated
    Financial Statements in Item 8 of this Report.

|                                 |  |                                   |            |  |      |   |            |      |  |   |            |   |  |      |            |  |  |   |            | 
|-------------------------------- |  | --------------------------------- | ---------- |  | ---- | - | ---------- | ---- |  | - | ---------- | - |  | ---- | ---------- |  |  | - | ---------- | 
|                                 |  | As of June 30,                    |           
|                                 |  |                                   |           
|                                 |  | 2005                              |            |  | 2004 |   |            | 2003 |  |   | 2002       |   |  | 2001 |           
|                                 |  |                                   |            |  |      |   |            |      |  |   |            |   |  |      |           
|                                 |  | (in thousands, except share data) |           
|Consolidated Balance Sheet Data: |  |                                   |            |  |      |   |            |      |  |   |            |   |  |      |            |  |  |   |            | 
|Total assets                     |  | $                                 | 84,620     |  |      | $ | 73,715     |      |  | $ | 75,102     |   |  | $    | 90,377     |  |  | $ | 92,426     | 
|Working capital                  |  |                                   | 18,094     |  |      |   | 8,622      |      |  |   | (2,723     | ) |  |      | 4,251      |  |  |   | 1,216      | 
|Long-term debt                   |  |                                   | 25,000     |  |      |   | 25,000     |      |  |   |           |   |  |      | 36,660     |  |  |   | 29,000     | 
|Long-term debt  affiliate       |  |                                   |           |  |      |   |           |      |  |   | 31,300     |   |  |      |           |  |  |   |           | 
|Other long-term liabilities      |  |                                   | 6,628      |  |      |   | 7,551      |      |  |   | 10,323     |   |  |      | 10,396     |  |  |   | 9,734      | 
|Stockholders equity             |  |                                   | 24,497     |  |      |   | 14,623     |      |  |   | 255        |   |  |      | 5,866      |  |  |   | 16,316     | 
|Book value per common share      |  |                                   | 1.62       |  |      |   | 0.97       |      |  |   | 0.02       |   |  |      | 0.39       |  |  |   | 1.22       | 
|Common shares outstanding        |  |                                   | 15,114,871 |  |      |   | 15,097,371 |      |  |   | 15,097,371 |   |  |      | 15,028,839 |  |  |   | 13,358,615 | 






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Note Regarding Forward-Looking Statements




10



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Decline in the Volume of
Real Estate Transactions and Prices of Real Estate.


General Economic Slowdown
or Recession in the Real Estate Markets.


The Companys Debt
Level and Ability to Make Principal and Interest Payments.


The Companys
Ability to Attract and Retain Qualified Personnel.


Risks Associated with
Strategic Alliances and Acquisitions.


The Company Faces Intense
Competition.


The Companys
Revenues are Seasonal.


Liabilities Arising from
Environmental Laws and Regulations.


11



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Control by Existing
Stockholders.


Other Factors.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES




Revenue Recognition






Impairment of Goodwill




Deferred Taxes




Insurance and Claim Reserves




12



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RESULTS OF OPERATIONS


Overview




Fiscal Year 2005 Compared to Fiscal Year 2004


Revenue






Costs of Services








13



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Costs and Expenses










Income Taxes




Net Income (Loss)




Stockholders Equity




14



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Fiscal Year 2004 Compared to Fiscal Year 2003


Revenue




Costs of Services








Costs and Expenses










15



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Income Taxes




Net Income (Loss)




Stockholders Equity




LIQUIDITY AND CAPITAL RESOURCES










16



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17



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|            |  |        |        | 
|----------- |  | ------ | ------ | 
|Year Ending |  |       
|June 30     |  | Amount |       
|            |  |        |       
|2006        |  | $      | 15,996 | 
|2007        |  |        | 12,404 | 
|2008        |  |        | 35,278 | 
|2009        |  |        | 7,835  | 
|2010        |  |        | 4,210  | 
|Thereafter  |  |        | 3,072  | 
|            |  |        |       
|            |  | $      | 78,795 | 
|            |  |        |       








|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk Derivatives




18



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Interest rate risk Debt




19



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Item 8. Financial Statements and Supplementary
Data


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















20



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GRUBB & ELLIS COMPANY


CONSOLIDATED BALANCE SHEETS


JUNE 30, 2005 AND 2004


(In thousands, except share data)


|                                     |                                                                                                                                                                     |                                            |   |         |        |  |   |         |        | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ------- | ------ |  | - | ------- | ------ | 
|                                     |                                                                                                                                                                     | 2005                                       |   |         | 2004   | 
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|ASSETS                              
|Current assets:                      |                                                                                                                                                                     |                                            |   |         |        |  |   |        
|                                     | Cash and cash equivalents, including restricted deposits of
    $1,105 and $3,340 at June 30, 2005 and 2004, respectively                                           |                                            | $ | 26,415  |        |  | $ | 14,971  |       
|                                     | Services fees receivable, net                                                                                                                                       |                                            |   | 9,339   |        |  |   | 10,810  |       
|                                     | Other receivables                                                                                                                                                   |                                            |   | 2,509   |        |  |   | 2,968   |       
|                                     | Professional service contracts, net                                                                                                                                 |                                            |   | 2,170   |        |  |   | 1,184   |       
|                                     | Prepaid and other current assets                                                                                                                                    |                                            |   | 2,656   |        |  |   | 2,230   |       
|                                     | Deferred tax assets, net                                                                                                                                            |                                            |   | 3,500   |        |  |   | 3,000   |       
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                     |                                                                                                                                                                     | Total current assets                       |   |         | 46,589 |  |   |         | 35,163 | 
|Noncurrent assets:                   |                                                                                                                                                                     |                                            |   |         |        |  |   |        
|                                     | Equipment, software and leasehold improvements, net                                                                                                                 |                                            |   | 8,189   |        |  |   | 9,865   |       
|                                     | Goodwill, net                                                                                                                                                       |                                            |   | 24,763  |        |  |   | 24,763  |       
|                                     | Other assets                                                                                                                                                        |                                            |   | 5,079   |        |  |   | 3,924   |       
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                     |                                                                                                                                                                     | Total assets                               |   | $       | 84,620 |  |   | $       | 73,715 | 
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                                                                                                                                                     |                                            |   |         |        |  |   |        
|                                     | Accounts payable                                                                                                                                                    |                                            | $ | 4,218   |        |  | $ | 4,756   |       
|                                     | Commissions payable                                                                                                                                                 |                                            |   | 6,282   |        |  |   | 6,433   |       
|                                     | Accrued compensation and employee benefits                                                                                                                          |                                            |   | 11,433  |        |  |   | 9,072   |       
|                                     | Other accrued expenses                                                                                                                                              |                                            |   | 6,562   |        |  |   | 6,280   |       
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                     |                                                                                                                                                                     | Total current liabilities                  |   |         | 28,495 |  |   |         | 26,541 | 
|Long-term liabilities:               |                                                                                                                                                                     |                                            |   |         |        |  |   |        
|                                     | Credit facility debt                                                                                                                                                |                                            |   | 25,000  |        |  |   | 25,000  |       
|                                     | Accrued claims and settlements                                                                                                                                      |                                            |   | 4,972   |        |  |   | 5,523   |       
|                                     | Other liabilities                                                                                                                                                   |                                            |   | 1,656   |        |  |   | 2,028   |       
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                     |                                                                                                                                                                     | Total liabilities                          |   |         | 60,123 |  |   |         | 59,092 | 
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|Stockholders equity:                |                                                                                                                                                                     |                                            |   |         |        |  |   |        
|                                     | Preferred stock, $1,000 stated value: 1,000,000 shares
    authorized; 11,725 shares issued and outstanding at
    June 30, 2005 and 2004                           |                                            |   | 11,725  |        |  |   | 11,725  |       
|                                     | Common stock, $.01 par value: 50,000,000 shares
    authorized; 15,114,871 and 15,097,371 shares issued and
    outstanding at June 30, 2005 and 2004, respectively |                                            |   | 153     |        |  |   | 151     |       
|                                     | Additional paid-in capital                                                                                                                                          |                                            |   | 67,988  |        |  |   | 71,410  |       
|                                     | Accumulated other comprehensive income                                                                                                                              |                                            |   | 27      |        |  |   |        |       
|                                     | Retained deficit                                                                                                                                                    |                                            |   | (55,396 | )      |  |   | (68,663 | )     
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                     |                                                                                                                                                                     | Total stockholders equity                 |   |         | 24,497 |  |   |         | 14,623 | 
|                                     |                                                                                                                                                                     |                                            |   |         |        | 
|                                     |                                                                                                                                                                     | Total liabilities and stockholders equity |   | $       | 84,620 |  |   | $       | 73,715 | 
|                                     |                                                                                                                                                                     |                                            |   |         |        | 



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GRUBB & ELLIS COMPANY


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE YEARS ENDED JUNE 30, 2005, 2004 AND 2003


(In thousands, except share data)


|                                                                 |                                                                        |                                   |          |            |         |  |          |            |         |  |          |            |         |  
|---------------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------- | -------- | ---------- | ------- |  | -------- | ---------- | ------- |  | -------- | ---------- | ------- | -
|                                                                 |                                                                        | 2005                              |          |            | 2004    |  |          | 2003       |        
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|Services revenue:                                                |                                                                        |                                   |          |            |         |  |          |            |         |  |          |           
|                                                                 | Transaction fees                                                       |                                   |          | $267,810   |         |  |          | $249,344   |         |  |          | $240,916   |        
|                                                                 | Management fees, including reimbursed salaries, wages and
    benefits |                                   |          | 195,725    |         |  |          | 191,210    |         |  |          | 185,030    |        
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 |                                                                        | Total services revenue            |          |            | 463,535 |  |          |            | 440,554 |  |          |            | 425,946 |  
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|Costs of services:                                               |                                                                        |                                   |          |            |         |  |          |            |         |  |          |           
|                                                                 | Transaction commissions                                                |                                   |          | 165,615    |         |  |          | 150,233    |         |  |          | 145,287    |        
|                                                                 | Reimbursable salaries, wages and benefits                              |                                   |          | 142,771    |         |  |          | 138,383    |         |  |          | 134,913    |        
|                                                                 | Salaries, wages, benefits and other direct costs                       |                                   |          | 36,672     |         |  |          | 36,381     |         |  |          | 32,073     |        
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 |                                                                        | Total costs of services           |          |            | 345,058 |  |          |            | 324,997 |  |          |            | 312,273 |  
|Costs and expenses:                                              |                                                                        |                                   |          |            |         |  |          |            |         |  |          |           
|                                                                 | Salaries, wages and benefits                                           |                                   |          | 53,562     |         |  |          | 46,639     |         |  |          | 55,288     |        
|                                                                 | Selling, general and administrative                                    |                                   |          | 44,806     |         |  |          | 45,380     |         |  |          | 52,899     |        
|                                                                 | Depreciation and amortization                                          |                                   |          | 5,742      |         |  |          | 6,736      |         |  |          | 7,802      |        
|                                                                 | Severance, office closure and other special charges                    |                                   |          |           |         |  |          | 3,224      |         |  |          | 9,500      |        
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 |                                                                        | Total costs                       |          |            | 449,168 |  |          |            | 426,976 |  |          |            | 437,762 |  
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 |                                                                        | Total operating income (loss)     |          |            | 14,367  |  |          |            | 13,578  |  |          |            | (11,816 | )
|Other income and expenses:                                       |                                                                        |                                   |          |            |         |  |          |            |         |  |          |           
|                                                                 | Interest income                                                        |                                   |          | 406        |         |  |          | 179        |         |  |          | 245        |        
|                                                                 | Interest expense                                                       |                                   |          | (1,658     | )       |  |          | (447       | )       |  |          | (2,271     | )      
|                                                                 | Interest expenseaffiliate                                             |                                   |          |           |         |  |          | (1,937     | )       |  |          | (498       | )      
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 |                                                                        | Income (loss) before income taxes |          |            | 13,115  |  |          |            | 11,373  |  |          |            | (14,340 | )
|Benefit (provision) for income taxes                             |                                                                        |                                   | 152      |            |         |  | 2,821    |            |         |  | (2,432   | )         
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|Net income (loss)                                                |                                                                        |                                   | 13,267   |            |         |  | 14,194   |            |         |  | (16,772  | )         
|Preferred stock dividends accrued                                |                                                                        |                                   | (889     | )          |         |  | (1,618   | )          |         |  | (1,130   | )         
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|Net income (loss) to common stockholders                         |                                                                        |                                   | $ 12,378 |            |         |  | $ 12,576 |            |         |  | $(17,902 | )         
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|Net income (loss) per weighted average common share outstanding: |                                                                        |                                   |          |            |         |  |          |            |         |  |          |           
|                                                                 | Basic-                                                                 |                                   |          | $    0.82  |         |  |          | $    0.83  |         |  |          | $  (1.19   | )      
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 | Diluted-                                                               |                                   |          | $    0.81  |         |  |          | $    0.83  |         |  |          | $  (1.19   | )      
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|Weighted average common shares outstanding:                      |                                                                        |                                   |          |            |         |  |          |            |         |  |          |           
|                                                                 | Basic-                                                                 |                                   |          | 15,111,898 |         |  |          | 15,097,371 |         |  |          | 15,101,625 |        
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        
|                                                                 | Diluted-                                                               |                                   |          | 15,221,982 |         |  |          | 15,101,183 |         |  |          | 15,101,625 |        
|                                                                 |                                                                        |                                   |          |            |         |  |          |            |        



22



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GRUBB & ELLIS COMPANY


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


FOR THE YEARS ENDED JUNE 30, 2005, 2004 AND 2003


(in thousands, except share data)


|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------- |  | --------- | ------ | ------------ | ----------- |  | ---------- | ------ | ----------- | -------- | ------- | - | ------------- | ---- | ------ | -------- | --------- | - | ------------- | ------------- |  | ------------- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                  |  |           |        | Common Stock |             |  |            |        | Accumulated |          |         |   |               |      |        |         
|                                                                  |  |           |        |              |             |  | Additional |        |             | Other    |         |   | Retained      |      |        | Total    |           |   | Total         |              
|                                                                  |  | Preferred |        |              | Outstanding |  |            |        |             | Paid-In- |         |   | Comprehensive |      |        | Earnings |           |   | Comprehensive |               |  | Stockholders |        
|                                                                  |  | Stock     |        |              | Shares      |  |            | Amount |             |          | Capital |   |               | Loss |        |          | (Deficit) |   |               | Income (Loss) |  |               | Equity  |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Balance as of July 1, 2002                                        |  |           |        |              |             |  | 15,028,839 |        |             | $        | 150     |   |               | $    | 72,084 |          |           | $ | (283          | )             |  | $             | (66,085 | ) |  |   |         |   |  | $ | 5,866   |  
|Issuance of 11,725 Series A shares of preferred stock             |  | $         | 11,725 |              |             |  |            |        |             |          |         |   |               |      | (783   | )        |           |   |              |               |  |               |        |   |  |   |         |   |  |   | 10,942  |  
|Stock repurchases                                                 |  |           |        |              |             |  | (125,000   | )      |             |          | (1      | ) |               |      | (162   | )        |           |   |              |               |  |               |        |   |  |   |         |   |  |   | (163    | )
|Employee common stock purchases and net exercise of stock options |  |           |        |              |             |  | 193,532    |        |             |          | 2       |   |               |      | 271    |          |           |   |              |               |  |               |        |   |  |   |         |   |  |   | 273     |  
|Net loss                                                          |  |           |       |              |             |  |           |        |             |          |        |   |               |      |       |          |           |   |              |               |  |               | (16,772 | ) |  | $ | (16,772 | ) |  |   | (16,772 | )
|Change in value of cash flow hedge, net of tax                    |  |           |        |              |             |  |           |        |             |          |        |   |               |      |       |          |           |   | 109           |               |  |               |        |   |  |   | 109     |   |  |   | 109     |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Total comprehensive loss                                          |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |   |  | $ | (16,663 | ) |  |   |         |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Balance as of June 30, 2003                                       |  |           | 11,725 |              |             |  | 15,097,371 |        |             |          | 151     |   |               |      | 71,410 |          |           |   | (174          | )             |  |               | (82,857 | ) |  |   |         |   |  |   | 255     |  
|Net income                                                        |  |           |       |              |             |  |           |        |             |          |        |   |               |      |       |          |           |   |              |               |  |               | 14,194  |   |  | $ | 14,194  |   |  |   | 14,194  |  
|Change in value of cash flow hedge, net of tax                    |  |           |        |              |             |  |           |        |             |          |        |   |               |      |       |          |           |   | 174           |               |  |               |        |   |  |   | 174     |   |  |   | 174     |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Total comprehensive income                                        |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |   |  | $ | 14,368  |   |  |   |         |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Balance as of June 30, 2004                                       |  |           | 11,725 |              |             |  | 15,097,371 |        |             |          | 151     |   |               |      | 71,410 |          |           |   |              |               |  |               | (68,663 | ) |  |   |         |   |  |   | 14,623  |  
|Net exercise of employee stock options                            |  |           |        |              |             |  | 17,500     |        |             |          |        |   |               |      | 50     |          |           |   |              |               |  |               |        |   |  |   |         |   |  |   | 50      |  
|Stock-based compensation expense                                  |  |           |        |              |             |  |           |        |             |          | 2       |   |               |      | 165    |          |           |   |              |               |  |               |        |   |  |   |         |   |  |   | 167     |  
|Payment of dividends on Series A Preferred Stock                  |  |           |        |              |             |  |           |        |             |          |        |   |               |      | (3,637 | )        |           |   |              |               |  |               |        |   |  |   |         |   |  |   | (3,637  | )
|Net income                                                        |  |           |       |              |             |  |           |        |             |          |        |   |               |      |       |          |           |   |              |               |  |               | 13,267  |   |  | $ | 13,267  |   |  |   | 13,267  |  
|Change in value of cash flow hedge, net of tax                    |  |           |        |              |             |  |           |        |             |          |        |   |               |      |       |          |           |   | 27            |               |  |               |        |   |  |   | 27      |   |  |   | 27      |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Total comprehensive income                                        |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |   |  | $ | 13,294  |   |  |   |         |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  
|Balance as of June 30, 2005                                       |  | $         | 11,725 |              |             |  | 15,114,871 |        |             | $        | 153     |   |               | $    | 67,988 |          |           | $ | 27            |               |  | $             | (55,396 | ) |  |   |         |   |  | $ | 24,497  |  
|                                                                  |  |           |        |              |             |  |            |        |             |          |         |   |               |      |        |          |           |   |               |               |  |               |         |  



23



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GRUBB & ELLIS COMPANY


CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE YEARS ENDED JUNE 30, 2005, 2004 AND 2003


(in thousands, except share data)


|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |         |   |         |        |        |  
|---------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | --------------------------------------------------- | ------ | ------ | ------ | - | ------- | ------ | ------- | - | ------- | ------ | ------ | -
|                                                                                                                                   |                                                                            | 2005                                                |        |        | 2004   |   |         | 2003   |        
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|Cash Flows from Operating Activities:                                                                                              |                                                                            |                                                     |        |        |        |   |         |        |         |   |         |       
|Net income (loss)                                                                                                                  |                                                                            | $                                                   | 13,267 |        |        | $ | 14,194  |        |         | $ | (16,772 | )     
|Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:                             |                                                                            |                                                     |        |        |        |   |         |        |         |   |         |       
|                                                                                                                                   | Deferred tax benefit                                                       |                                                     |        | 4,708  |        |   |         |       |         |   |         | (5,197 | )     
|                                                                                                                                   | Increase (decrease) in deferred tax asset valuation allowance              |                                                     |        | (5,208 | )      |   |         | (3,000 | )       |   |         | 7,707  |       
|                                                                                                                                   | Depreciation and amortization                                              |                                                     |        | 5,742  |        |   |         | 6,736  |         |   |         | 7,802  |       
|                                                                                                                                   | Stock-based compensation expense                                           |                                                     |        | 167    |        |   |         |       |         |   |         |       |       
|                                                                                                                                   | Accrued severance, office closure and other special charges                |                                                     |        |       |        |   |         | 3,224  |         |   |         | 9,500  |       
|                                                                                                                                   | Payment of accrued severance                                               |                                                     |        |       |        |   |         | (3,235 | )       |   |         | (3,007 | )     
|                                                                                                                                   | Payment of office closure costs                                            |                                                     |        | (1,273 | )      |   |         | (998   | )       |   |         | (1,157 | )     
|                                                                                                                                   | Provision (recovery) for services fees receivable valuation
    allowances |                                                     |        | (148   | )      |   |         | 25     |         |   |         | 84     |       
|Net receipt of tax refunds                                                                                                         |                                                                            |                                                     | 80     |        |        |   | 398     |        |         |   | 6,473   |       
|Funding of multi-year service contracts                                                                                            |                                                                            |                                                     | (3,274 | )      |        |   | (903    | )      |         |   | (2,361  | )     
|Decrease in services fees receivable                                                                                               |                                                                            |                                                     | 1,714  |        |        |   | 637     |        |         |   | 1,727   |       
|(Increase) decrease in prepaid income taxes                                                                                        |                                                                            |                                                     | (26    | )      |        |   | 21      |        |         |   | (252    | )     
|(Increase) decrease in prepaid and other assets                                                                                    |                                                                            |                                                     | (323   | )      |        |   | (1,830  | )      |         |   | 1,061   |       
|Increase (decrease) in accounts and commissions payable                                                                            |                                                                            |                                                     | (185   | )      |        |   | 3,599   |        |         |   | (3,370  | )     
|Increase (decrease) in accrued compensation and employee benefits                                                                  |                                                                            |                                                     | 2,370  |        |        |   | (2,585  | )      |         |   | (3,770  | )     
|Decrease in accrued claims and settlements                                                                                         |                                                                            |                                                     | (550   | )      |        |   | (1,851  | )      |         |   | (449    | )     
|Increase in other liabilities                                                                                                      |                                                                            |                                                     | 893    |        |        |   | 99      |        |         |   | 736     |       
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|                                                                                                                                   |                                                                            | Net cash provided by (used in) operating activities |        |        | 17,954 |   |         |        | 14,531  |   |         |        | (1,245 | )
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|Cash Flows from Investing Activities:                                                                                              |                                                                            |                                                     |        |        |        |   |         |        |         |   |         |       
|Purchases of equipment, software and leasehold improvements                                                                        |                                                                            |                                                     | (2,618 | )      |        |   | (1,222  | )      |         |   | (2,933  | )     
|Other investing activities                                                                                                         |                                                                            |                                                     | 380    |        |        |   | 125     |        |         |   | (400    | )     
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|                                                                                                                                   |                                                                            | Net cash used in investing activities               |        |        | (2,238 | ) |         |        | (1,097  | ) |         |        | (3,333 | )
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|Cash Flows from Financing Activities:                                                                                              |                                                                            |                                                     |        |        |        |   |         |        |         |   |         |       
|Repayment of credit facility debt                                                                                                  |                                                                            |                                                     |       |        |        |   |        |        |         |   | (4,450  | )     
|Borrowings on credit facility debt                                                                                                 |                                                                            |                                                     |       |        |        |   | 25,000  |        |         |   | 5,000   |       
|Repayment of borrowings from affiliate                                                                                             |                                                                            |                                                     |       |        |        |   | (32,300 | )      |         |   |        |       
|Borrowings on note payableaffiliate                                                                                               |                                                                            |                                                     |       |        |        |   |        |        |         |   | 4,000   |       
|Repayment on note payableaffiliate                                                                                                |                                                                            |                                                     |       |        |        |   | (4,000  | )      |         |   |        |       
|Proceeds from issuance of common stock, net                                                                                        |                                                                            |                                                     | 50     |        |        |   |        |        |         |   | 273     |       
|Repurchase of common stock                                                                                                         |                                                                            |                                                     |       |        |        |   |        |        |         |   | (163    | )     
|Payment of dividends on Series A Preferred Stock                                                                                   |                                                                            |                                                     | (3,637 | )      |        |   |        |        |         |   |        |       
|Issuance costs and deferred financing fees                                                                                         |                                                                            |                                                     | (685   | )      |        |   | (1,101  | )      |         |   | (229    | )     
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|                                                                                                                                   |                                                                            | Net cash provided by (used in) financing activities |        |        | (4,272 | ) |         |        | (12,401 | ) |         |        | 4,431  |  
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|Net increase (decrease) in cash and cash equivalents                                                                               |                                                                            |                                                     | 11,444 |        |        |   | 1,033   |        |         |   | (147    | )     
|Cash and cash equivalents at beginning of the year                                                                                 |                                                                            |                                                     | 14,971 |        |        |   | 13,938  |        |         |   | 14,085  |       
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        
|Cash and cash equivalents at end of the year, including
    restricted deposits of $1,105 and $3,340 in June 30, 2005
    and 2004 |                                                                            | $                                                   | 26,415 |        |        | $ | 14,971  |        |         | $ | 13,938  |       
|                                                                                                                                   |                                                                            |                                                     |        |        |        |   |         |        |        



24



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                           
|-- | ------------------------------------------
|1. | Summary of Significant Accounting Policies

(a) The Company




(b) Principles of Consolidation








(c) Basis of Presentation




(d) Revenue Recognition






25



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|1. | Summary of Significant Accounting
    Policies(Continued)



(e) Costs and Expenses




(f) Accounting for Stock-Based Compensation








(g) Income Taxes




26



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|1. | Summary of Significant Accounting
    Policies(Continued)

(h) Cash and Cash Equivalents






(i) Transaction Service Contracts




(j) Equipment, Software and Leasehold Improvements




(k) Goodwill




Business
Combinations Goodwill and Other
Intangible Assets


27



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|1. | Summary of Significant Accounting
    Policies(Continued)



(l) Accrued Claims and Settlements




(m) Financial Instruments




(n) Fair Value of Derivative Instruments and Hedged
Items




(o) Costs Associated with Exit or Disposal Activities






28



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|1. | Summary of Significant Accounting
    Policies(Continued)





(p) Reclassifications




2. Services Fees Receivable, net




|                                     |                                      |                                                |       |       |       |   |       |        |        | 
|------------------------------------ | ------------------------------------ | ---------------------------------------------- | ----- | ----- | ----- | - | ----- | ------ | ------ | 
|                                     |                                      | 2005                                           |       |       | 2004  |  
|                                     |                                      |                                                |       |       |       |  
|Transaction services fees receivable |                                      | $                                              | 2,587 |       |       | $ | 4,205 |       
|Management services fees receivable  |                                      |                                                | 7,465 |       |       |   | 7,561 |       
|                                     | Allowance for uncollectible accounts |                                                |       | (566  | )     |   |       | (714   | )     
|                                     |                                      |                                                |       |       |       |  
|                                     |                                      | Total                                          |       |       | 9,486 |   |       |        | 11,052 | 
|                                     | Less portion classified as current   |                                                |       | 9,339 |       |   |       | 10,810 |       
|                                     |                                      |                                                |       |       |       |  
|                                     |                                      | Non-current portion (included in other assets) |       | $     | 147   |   |       | $      | 242    | 
|                                     |                                      |                                                |       |       |       |  



|                             |  |      |      |   |      |   |     |      |  |   |     | 
|---------------------------- |  | ---- | ---- | - | ---- | - | --- | ---- |  | - | --- | 
|                             |  | 2005 |      |   | 2004 |   |     | 2003 | 
|                             |  |      |      |   |      |   |     |      | 
|Balance at beginning of year |  | $    | 714  |   |      | $ | 689 |      |  | $ | 605 | 
|Provision for bad debt       |  |      |     |   |      |   | 25  |      |  |   | 84  | 
|Recovery of allowance        |  |      | (148 | ) |      |   |    |      |  |   |    | 
|                             |  |      |      |   |      |   |     |      | 
|Balance at end of year       |  | $    | 566  |   |      | $ | 714 |      |  | $ | 689 | 
|                             |  |      |      |   |      |   |     |      | 

3. Equipment, Software and Leasehold Improvements,
net




|                                                    |       |      |        |        |      |   |        |        | 
|--------------------------------------------------- | ----- | ---- | ------ | ------ | ---- | - | ------ | ------ | 
|                                                    |       | 2005 |        |        | 2004 |  
|                                                    |       |      |        |        |      |  
|Furniture, equipment and software systems           |       | $    | 44,072 |        |      | $ | 42,580 |       
|Leasehold improvements                              |       |      | 6,286  |        |      |   | 5,966  |       
|                                                    |       |      |        |        |      |  
|                                                    | Total |      |        | 50,358 |      |   |        | 48,546 | 
|Less accumulated depreciation and amortization      |       |      | 42,169 |        |      |   | 38,681 |       
|                                                    |       |      |        |        |      |  
|Equipment, software and leasehold improvements, net |       | $    | 8,189  |        |      | $ | 9,865  |       
|                                                    |       |      |        |        |      |  



29



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




3. Equipment, Software and Leasehold Improvements,
net(Continued)






|   |                                 
|-- | --------------------------------
|4. | Earnings (Loss) Per Common Share





|                                   |                                                              |                                    |   |        |      |  |   |        |   |  |   |         |   | 
|---------------------------------- | ------------------------------------------------------------ | ---------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------- | - | 
|                                   |                                                              | For the Fiscal Year Ended June 30, |  
|                                   |                                                              |                                    |  
|                                   |                                                              | 2005                               |   |        | 2004 |  |   | 2003   |  
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|Basic earnings per common share:   |                                                              |                                    |   |        |      |  |   |        |   |  |   |        
|                                   | Net income (loss)                                            |                                    | $ | 13,267 |      |  | $ | 14,194 |   |  | $ | (16,772 | )
|                                   | Preferred stock dividends accrued                            |                                    |   | (889   | )    |  |   | (1,618 | ) |  |   | (1,130  | )
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Net income (loss) to common stockholders                     |                                    | $ | 12,378 |      |  | $ | 12,576 |   |  | $ | (17,902 | )
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Weighted average common shares outstanding                   |                                    |   | 15,112 |      |  |   | 15,097 |   |  |   | 15,102  |  
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Net income (loss) per common share outstanding  basic       |                                    | $ | 0.82   |      |  | $ | 0.83   |   |  | $ | (1.19   | )
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|Diluted earnings per common share: |                                                              |                                    |   |        |      |  |   |        |   |  |   |        
|                                   | Net income (loss)                                            |                                    | $ | 13,267 |      |  | $ | 14,194 |   |  | $ | (16,772 | )
|                                   | Preferred stock dividends accrued                            |                                    |   | (889   | )    |  |   | (1,618 | ) |  |   | (1,130  | )
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Net income (loss) to common stockholders                     |                                    | $ | 12,378 |      |  | $ | 12,576 |   |  | $ | (17,902 | )
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Weighted average common shares outstanding                   |                                    |   | 15,112 |      |  |   | 15,097 |   |  |   | 15,102  |  
|                                   | Effect of dilutive securities:                               |                                    |   |        |      |  |   |        |   |  |   |         |  
|                                   |                                                              | Stock options and warrants         |   |        | 110  |  |   |        | 4 |  |   |         |  | 
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Weighted average common shares outstanding                   |                                    |   | 15,222 |      |  |   | 15,101 |   |  |   | 15,102  |  
|                                   |                                                              |                                    |   |        |      |  |   |        |  
|                                   | Net income (loss) per common share outstanding 
    diluted |                                    | $ | 0.81   |      |  | $ | 0.83   |   |  | $ | (1.19   | )
|                                   |                                                              |                                    |   |        |      |  |   |        |  





|   |                     
|-- | --------------------
|5. | Credit Facility Debt



30



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




5. Credit Facility Debt(Continued)












|            |  |        |        | 
|----------- |  | ------ | ------ | 
|Year Ending |  |       
|June 30     |  | Amount |       
|            |  |        |       
|2006        |  | $      |       | 
|2007        |  |        |       | 
|2008        |  |        | 25,000 | 
|            |  |        |       
|            |  | $      | 25,000 | 
|            |  |        |       

31



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|   |                                
|-- | -------------------------------
|6. | Credit Facility Debt Affiliate







7. Note Payable Affiliate








|   |                                         
|-- | ----------------------------------------
|8. | Issuance and Exchange of Preferred Stock



32



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




8. Issuance and Exchange of Preferred
Stock(Continued)












33



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




8. Issuance and Exchange of Preferred
Stock(Continued)








34



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


9. Income Taxes




|         |                         |      |        |       |      |  |        |        |   |  |       |       |  
|-------- | ----------------------- | ---- | ------ | ----- | ---- |  | ------ | ------ | - |  | ----- | ----- | -
|         |                         | 2005 |        |       | 2004 |  |        | 2003   |  
|         |                         |      |        |       |      |  |        |        |  
|Current  |                         |      |        |       |      |  |        |        |   |  |       |      
|         | Federal                 |      | $      | 4,475 |      |  | $      | 1,371  |   |  | $     | (245  | )
|         | State and local         |      |        | 1,076 |      |  |        | 150    |   |  |       | 167   |  
|         |                         |      |        |       |      |  |        |        |  
|         |                         |      | 5,551  |       |      |  | 1,521  |        |   |  | (78   | )    
|Deferred |                         |      | (5,703 | )     |      |  | (4,342 | )      |   |  | 2,510 |      
|         |                         |      |        |       |      |  |        |        |  
|         | Net provision (benefit) |      | $      | (152  | )    |  | $      | (2,821 | ) |  | $     | 2,432 |  
|         |                         |      |        |       |      |  |        |        |  







|                                                           |                           |      |       |      |      |  |       |       |    |  |       |       |   
|---------------------------------------------------------- | ------------------------- | ---- | ----- | ---- | ---- |  | ----- | ----- | -- |  | ----- | ----- | --
|                                                           |                           | 2005 |       |      | 2004 |  |       | 2003  |   
|                                                           |                           |      |       |      |      |  |       |       |   
|Federal statutory rate                                     |                           |      | 34.0  | %    |      |  | 34.0  | %     |    |  | 35.0  | %    
|State and local income taxes (net of federal tax benefits) |                           |      | 3.2   |      |      |  | 5.3   |       |    |  | 5.2   |      
|Meals and entertainment                                    |                           |      | 2.9   |      |      |  | 2.9   |       |    |  | (2.2  | )    
|Change in valuation allowance                              |                           |      | (3.8  | )    |      |  | (26.4 | )     |    |  | (53.8 | )    
|Utilization of net operating loss carryforwards            |                           |      | (32.7 | )    |      |  | (11.8 | )     |    |  |      |      
|Insurance claim payment                                    |                           |      | 0.5   |      |      |  | (15.6 | )     |    |  |      |      
|Severance and office closure payments                      |                           |      | (4.8  | )    |      |  | (8.6  | )     |    |  |      |      
|Goodwill amortization and other                            |                           |      | (1.6  | )    |      |  | (4.6  | )     |    |  | 2.6   |      
|Executive compensation                                     |                           |      | 1.1   |      |      |  |      |       |    |  | (3.8  | )    
|                                                           |                           |      |       |      |      |  |       |       |   
|                                                           | Effective income tax rate |      |       | (1.2 | )%   |  |       | (24.8 | )% |  |       | (17.0 | )%
|                                                           |                           |      |       |      |      |  |       |       |   



35



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






9. Income Taxes(Continued)






|                         |                                      |                     |        |       |        |  |        |       |        | 
|------------------------ | ------------------------------------ | ------------------- | ------ | ----- | ------ |  | ------ | ----- | ------ | 
|                         |                                      | 2005                |        |       | 2004   | 
|                         |                                      |                     |        |       |        | 
|Deferred tax assets:     |                                      |                     |        |       |        |  |        |      
|                         | Federal NOL and credit carryforwards |                     | $      | 3,586 |        |  | $      | 7,872 |       
|                         | State NOL carryforwards              |                     |        | 2,575 |        |  |        | 2,263 |       
|                         | Insurance reserves                   |                     |        | 2,597 |        |  |        | 2,376 |       
|                         | Compensation and benefits            |                     |        | 561   |        |  |        | 376   |       
|                         | Commission and fee reserves          |                     |        | 510   |        |  |        | 777   |       
|                         | Office closure reserves              |                     |        | 463   |        |  |        | 1,072 |       
|                         | Claims and settlements               |                     |        | 176   |        |  |        | 331   |       
|                         | Other                                |                     |        | 1,042 |        |  |        | 831   |       
|                         |                                      |                     |        |       |        | 
|                         |                                      | Deferred tax assets |        |       | 11,510 |  |        |       | 15,898 | 
|Less valuation allowance |                                      |                     | (4,391 | )     |        |  | (9,599 | )    
|                         |                                      |                     |        |       |        | 
|                         |                                      |                     | 7,119  |       |        |  | 6,299  |      
|Deferred tax liabilities |                                      |                     | (3,619 | )     |        |  | (3,299 | )    
|                         |                                      |                     |        |       |        | 
|                         | Net deferred tax assets              |                     | $      | 3,500 |        |  | $      | 3,000 |       
|                         |                                      |                     |        |       |        | 
|                         |                                      | Current             |        | $     | 3,500  |  |        | $     | 3,000  | 
|                         |                                      |                     |        |       |        | 
|                         |                                      | Long Term           |        | $     |       |  |        | $     |       | 
|                         |                                      |                     |        |       |        | 

36



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


10. Stock Options, Warrants, Stock Purchase and 401(k)
Plans


Stock Option Plans




|                                                       |  |        |           |   |                |  |                 |        |  |  |                |   |  |        |                 |  |                |  |            |   |  |  |                 | 
|------------------------------------------------------ |  | ------ | --------- | - | -------------- |  | --------------- | ------ |  |  | -------------- | - |  | ------ | --------------- |  | -------------- |  | ---------- | - |  |  | --------------- | 
|                                                       |  | 2005   |           |   | 2004           |  |                 | 2003   | 
|                                                       |  |        |           |   |                |  |                 |        | 
|                                                       |  | Shares |           |   | Exercise Price |  |                 | Shares |  |  | Exercise Price |   |  | Shares |                 |  | Exercise Price | 
|                                                       |  |        |           |   |                |  |                 |        |  |  |                |   |  |        |                 |  |                | 
|Stock options outstanding at the beginning of the year |  |        | 1,329,023 |   |                |  | $0.92 to $16.44 |        |  |  | 1,601,091      |   |  |        | $2.00 to $16.44 |  |                |  | 2,816,861  |   |  |  | $1.88 to $16.44 | 
|Granted                                                |  |        | 510,000   |   |                |  | $2.99 to $4.70  |        |  |  | 150,000        |   |  |        | $0.92           |  |                |  | 10,000     |   |  |  | $2.00           | 
|Lapsed or canceled                                     |  |        | (376,371  | ) |                |  | $3.75 to $13.50 |        |  |  | (422,068       | ) |  |        | $2.85 to $13.50 |  |                |  | (1,225,770 | ) |  |  | $1.88 to $13.50 | 
|Exercised                                              |  |        | (17,500   | ) |                |  | $2.85           |        |  |  |               |   |  |        |                |  |                |  |           |   |  |  |                | 
|                                                       |  |        |           |   |                |  |                 |        |  |  |                |   |  |        |                 |  |                | 
|Stock options outstanding at the end of the year       |  |        | 1,445,152 |   |                |  | $0.92 to $16.44 |        |  |  | 1,329,023      |   |  |        | $0.92 to $16.44 |  |                |  | 1,601,091  |   |  |  | $2.00 to $16.44 | 
|                                                       |  |        |           |   |                |  |                 |        |  |  |                |   |  |        |                 |  |                | 
|Exercisable at end of the year                         |  |        | 866,068   |   |                |  |                 |        |  |  | 1,103,356      |   |  |        |                 |  |                |  | 1,129,466  |   |  |  |                 | 
|                                                       |  |        |           |   |                |  |                 |        |  |  |                |   |  |        |                 |  |                | 



|                 |  |        |           |           |      |  |                   |        |  |                   |        |  |  |  |       | 
|---------------- |  | ------ | --------- | --------- | ---- |  | ----------------- | ------ |  | ----------------- | ------ |  |  |  | ----- | 
|                 |  |        |           | Weighted  |      |  | Weighted          |        |  | Weighted          |       
|                 |  |        |           | Average   |      |  | Average           |        |  | Average           |       
|                 |  |        |           | Years     |      |  | Exercise          |        |  | Exercise          |       
|Exercise         |  |        |           | Remaining |      |  | Price-Outstanding |        |  | Price-Exercisable |       
|Price            |  | Shares |           |           | Life |  |                   | Shares |  |                   | Shares | 
|                 |  |        |           |           |      |  |                   |        |  |                   |        | 
|$ 0.92 to $ 4.70 |  |        | 715,500   |           |      |  | 9.20              |        |  |                   | 3.72   |  |  |  | 1.37  | 
|$ 5.44 to $ 8.94 |  |        | 368,552   |           |      |  | 4.04              |        |  |                   | 6.72   |  |  |  | 6.72  | 
|$11.13 to $16.44 |  |        | 361,100   |           |      |  | 2.40              |        |  |                   | 11.69  |  |  |  | 11.69 | 
|                 |  |        |           |           |      |  |                   |        |  |                   |        | 
|                 |  |        | 1,445,152 |           |      |  |                   |        |  |                   |        |  |  |  |       | 
|                 |  |        |           |           |      |  |                   |        |  |                   |        | 



|                |                        |      |      |       |      |  |      |       | 
|--------------- | ---------------------- | ---- | ---- | ----- | ---- |  | ---- | ----- | 
|                |                        | 2005 |      |       | 2004 | 
|                |                        |      |      |       |      | 
|Exercise price: |                        |      |      |       |      |  |      |      
|                | Granted                |      | $    | 4.67  |      |  | $    | 0.92  | 
|                | Lapsed or canceled     |      |      | 8.67  |      |  |      | 5.30  | 
|                | Exercised              |      |      | 2.85  |      |  |      |      | 
|                | Outstanding at June 30 |      |      | 6.48  |      |  |      | 6.98  | 
|Remaining life  |                        |      | 6.19 | years |      |  | 5.28 | years



37



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






10. Stock Options, Warrants, Stock Purchase and 401(k)
Plans(Continued)










Stock Warrants




Employee Stock Purchase Plan






38



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






10. Stock Options, Warrants, Stock Purchase and 401(k)
Plans(Continued)


Pro Forma Information




|                                                                        |  |      |             |   |      |  |             |      |  |  |             |  
|----------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | -
|                                                                        |  | 2005 |             |   | 2004 |  |             | 2003 | 
|                                                                        |  |      |             |   |      |  |             |      | 
|Risk free interest rates                                                |  |      | 3.99        | % |      |  | 3.40        | %    |  |  | 3.83        | %
|Dividend yields                                                         |  |      | 0           | % |      |  | 0           | %    |  |  | 0           | %
|Volatility factors of the expected market price of the common
    stock |  |      | .834        |   |      |  | .795        |      |  |  | .393        |  
|Weighted-average expected lives                                         |  |      | 5.00  years |   |      |  | 6.00  years |      |  |  | 6.00  years |  





39



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GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






10. Stock Options, Warrants, Stock Purchase and 401(k)
Plans(Continued)




|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      |  |   |         |       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---------------------------------- | ------ | ---- | ---- | - | ------ | ---- |  | - | ------- | ----- | -
|                                                                                                                                                        |                       | For the Fiscal Year Ended June 30, |       
|                                                                                                                                                        |                       |                                    |       
|                                                                                                                                                        |                       | 2005                               |        |      | 2004 |   |        | 2003 | 
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 
|Net income (loss) to common stockholders, as reported                                                                                                   |                       | $                                  | 12,378 |      |      | $ | 12,576 |      |  | $ | (17,902 | )    
|Add: Total stock-based employee compensation expense determined
    under the intrinsic value method for all awards, net of related
    tax effects     |                       |                                    |       |      |      |   |       |      |  |   | 228     |      
|Deduct: Total stock-based employee compensation expense
    determined under the fair value based method for all awards, net
    of related tax effects |                       |                                    | (164   | )    |      |   | (172   | )    |  |   | (340    | )    
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 
|Pro forma net income (loss) to common stockholders                                                                                                      |                       | $                                  | 12,214 |      |      | $ | 12,404 |      |  | $ | (18,014 | )    
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 
|Net earnings per weighted average common share outstanding:                                                                                             |                       |                                    |        |      |      |   |        |      |  |   |         |      
|                                                                                                                                                        | Basic  as reported   |                                    | $      | 0.82 |      |   | $      | 0.83 |  |   | $       | (1.19 | )
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 
|                                                                                                                                                        | Basic  pro forma     |                                    | $      | 0.81 |      |   | $      | 0.82 |  |   | $       | (1.19 | )
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 
|                                                                                                                                                        | Diluted  as reported |                                    | $      | 0.81 |      |   | $      | 0.83 |  |   | $       | (1.19 | )
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 
|                                                                                                                                                        | Diluted  pro forma   |                                    | $      | 0.80 |      |   | $      | 0.82 |  |   | $       | (1.19 | )
|                                                                                                                                                        |                       |                                    |        |      |      |   |        |      | 

Stock Repurchase Plan






|    |                           
|--- | --------------------------
|11. | Related Party Transactions



40



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GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




11. Related Party Transactions  (Continued)




|                 |                             |      |        |        |      |  |        |        |  |  |        |        | 
|---------------- | --------------------------- | ---- | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|                 |                             | 2005 |        |        | 2004 |  |        | 2003   | 
|                 |                             |      |        |        |      |  |        |        | 
|Transaction fees |                             |      |        |        |      |  |        |        |  |  |        |       
|                 | Kojaian Companies           |      | $      | 485    |      |  | $      | 330    |  |  | $      | 291    | 
|                 | Archon                      |      |        | 2,346  |      |  |        | 1,819  |  |  |        | 1,663  | 
|                 | Others                      |      |        |       |      |  |        |       |  |  |        | 277    | 
|                 |                             |      |        |        |      |  |        |        | 
|                 |                             |      | 2,831  |        |      |  | 2,149  |        |  |  | 2,231  |       
|                 |                             |      |        |        |      |  |        |        | 
|Management fees  |                             |      |        |        |      |  |        |        |  |  |        |       
|                 | Kojaian Companies           |      |        | 9,232  |      |  |        | 10,468 |  |  |        | 10,274 | 
|                 | Archon                      |      |        | 1,842  |      |  |        | 3,613  |  |  |        | 5,291  | 
|                 |                             |      |        |        |      |  |        |        | 
|                 |                             |      | 11,074 |        |      |  | 14,081 |        |  |  | 15,565 |       
|                 | Less: asset management fees |      |        |        |      |  |        |        |  |  |        |        | 
|                 | Kojaian Companies           |      |        | 2,957  |      |  |        | 3,191  |  |  |        | 3,295  | 
|                 | Archon                      |      |        | 87     |      |  |        | 174    |  |  |        | 239    | 
|                 |                             |      |        |        |      |  |        |        | 
|                 |                             |      | 8,030  |        |      |  | 10,716 |        |  |  | 12,031 |       
|                 |                             |      |        |        |      |  |        |        | 
|                 | Total                       |      | $      | 10,861 |      |  | $      | 12,865 |  |  | $      | 14,262 | 
|                 |                             |      |        |        |      |  |        |        | 









41



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




11. Related Party Transactions  (Continued)






|    |                              
|--- | -----------------------------
|12. | Commitments and Contingencies

Non-cancelable Operating Leases








|                     |            |  |                   |   |        | 
|-------------------- | ---------- |  | ----------------- | - | ------ | 
|Year Ending June 30, |            |  | Lease Obligations |  
|                     |            |  |                   |  
|                     | 2006       |  |                   | $ | 15,996 | 
|                     | 2007       |  |                   |   | 12,404 | 
|                     | 2008       |  |                   |   | 10,278 | 
|                     | 2009       |  |                   |   | 7,835  | 
|                     | 2010       |  |                   |   | 4,210  | 
|                     | Thereafter |  |                   |   | 3,072  | 
|                     |            |  |                   |  
|                     |            |  |                   | $ | 53,795 | 
|                     |            |  |                   |  





Environmental




42



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




12. Commitments and Contingencies(Continued)




Insolvent Insurance Provider






General






|    |                             
|--- | ----------------------------
|13. | Concentration of Credit Risk





43



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




13. Concentration of Credit Risk(Continued)






|    |                                                    
|--- | ---------------------------------------------------
|14. | Severance, Office Closure and Other Special Charges







|    |                                               
|--- | ----------------------------------------------
|15. | Business Acquisitions and Related Indebtedness



16. Segment Information










44



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##### Table of Contents



GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




16. Segment Information(Continued)






|                                |                |                        |   |         |            |  |   |         |   |  |   |         | 
|------------------------------- | -------------- | ---------------------- | - | ------- | ---------- |  | - | ------- | - |  | - | ------- | 
|                                |                | Transaction            |   |         | Management |  |   | Company |  
|                                |                | Services               |   |         | Services   |  |   | Totals  |  
|                                |                |                        |   |         |            |  |   |         |  
|                                |                | (amounts in thousands) |  
|Fiscal year ended June 30, 2005 |                |                        |   |         |            |  |   |         |   |  |   |        
|                                | Total Revenues |                        | $ | 267,810 |            |  | $ | 195,725 |   |  | $ | 463,535 | 
|                                | EBITDA         |                        |   | 19,546  |            |  |   | 563     |   |  |   | 20,109  | 
|                                | Total Assets   |                        |   | 65,606  |            |  |   | 15,317  |   |  |   | 80,923  | 
|                                | Goodwill, net  |                        |   | 18,376  |            |  |   | 6,387   |   |  |   | 24,763  | 
|Fiscal year ended June 30, 2004 |                |                        |   |         |            |  |   |         |   |  |   |        
|                                | Total Revenues |                        | $ | 249,344 |            |  | $ | 191,210 |   |  | $ | 440,554 | 
|                                | EBITDA         |                        |   | 22,105  |            |  |   | 1,433   |   |  |   | 23,538  | 
|                                | Total Assets   |                        |   | 52,672  |            |  |   | 17,792  |   |  |   | 70,464  | 
|                                | Goodwill, net  |                        |   | 18,376  |            |  |   | 6,387   |   |  |   | 24,763  | 
|Fiscal year ended June 30, 2003 |                |                        |   |         |            |  |   |         |   |  |   |        
|                                | Total Revenues |                        | $ | 240,916 |            |  | $ | 185,030 |   |  | $ | 425,946 | 
|                                | EBITDA         |                        |   | 5,700   |            |  |   | (214    | ) |  |   | 5,486   | 

Reconciliation of Segment EBITDA to Statements of Operations
(in thousands):


|                            |                                   |                            |        |        |      |   |        |        |  |   |        |         |  
|--------------------------- | --------------------------------- | -------------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------- | -
|                            |                                   | Fiscal Year Ended June 30, |       
|                            |                                   |                            |       
|                            |                                   | 2005                       |        |        | 2004 |   |        | 2003   | 
|                            |                                   |                            |        |        |      |   |        |        | 
|Total Segment EBITDA        |                                   | $                          | 20,109 |        |      | $ | 23,538 |        |  | $ | 5,486  |        
|Less:                       |                                   |                            |        |        |      |   |        |        |  |   |        |        
|Depreciation & amortization |                                   |                            | (5,742 | )      |      |   | (6,736 | )      |  |   | (7,802 | )      
|Special charges             |                                   |                            |       |        |      |   | (3,224 | )      |  |   | (9,500 | )      
|Net interest expense        |                                   |                            | (1,252 | )      |      |   | (2,205 | )      |  |   | (2,524 | )      
|                            |                                   |                            |        |        |      |   |        |        | 
|                            | Income (loss) before income taxes |                            | $      | 13,115 |      |   | $      | 11,373 |  |   | $      | (14,340 | )
|                            |                                   |                            |        |        |      |   |        |        | 

45



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GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




16. Segment Information(Continued)


Reconciliation of Segment Assets to Balance Sheet (in
thousands):


|                     |              |                |        |        |      |   |        |        | 
|-------------------- | ------------ | -------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                     |              | As of June 30, |       
|                     |              |                |       
|                     |              | 2005           |        |        | 2004 |  
|                     |              |                |        |        |      |  
|Total segment assets |              | $              | 80,923 |        |      | $ | 70,464 |       
|Current tax assets   |              |                | 197    |        |      |   | 251    |       
|Deferred tax assets  |              |                | 3,500  |        |      |   | 3,000  |       
|                     |              |                |        |        |      |  
|                     | Total Assets |                | $      | 84,620 |      |   | $      | 73,715 | 
|                     |              |                |        |        |      |  



|    |                                              
|--- | ---------------------------------------------
|17. | Selected Quarterly Financial Data (unaudited)

|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |        |  |   |              |        | 
|------------------------------------------------ | ------------------------------------------ | ---------------------------------------- | ------------ | ------ | -------------- | - | ------------ | ------------- |  | - | -------------- | ------ |  | - | ------------ | ------ | 
|                                                 |                                            | Fiscal Year Ended June 30, 2005          |             
|                                                 |                                            | (in thousands, except per share amounts) |             
|                                                 |                                            |                                          |             
|                                                 |                                            | First Quarter                            |              |        | Second Quarter |   |              | Third Quarter |  |   | Fourth Quarter |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Operating revenue                                |                                            | $                                        | 103,679      |        |                | $ | 135,580      |               |  | $ | 109,439        |        |  | $ | 114,837      |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Operating income (loss)                          |                                            | $                                        | (1,066       | )      |                | $ | 8,686        |               |  | $ | 1,393          |        |  | $ | 5,354        |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Net (loss) income to common stockholders         |                                            | $                                        | (1,818       | )      |                | $ | 7,852        |               |  | $ | 1,094          |        |  | $ | 5,250        |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Income (loss) per common share:                  |                                            |                                          |              |        |                |   |              |               |  |   |                |        |  |   |              |       
|Basic                                           |                                            | $                                        | (0.12        | )      |                | $ | 0.52         |               |  | $ | 0.07           |        |  | $ | 0.35         |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|                                                 | Weighted average common shares outstanding |                                          |              | 15,103 |                |   |              | 15,115        |  |   |                | 15,115 |  |   |              | 15,115 | 
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Diluted                                         |                                            | $                                        | (0.12        | )      |                | $ | 0.52         |               |  | $ | 0.07           |        |  | $ | 0.34         |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|                                                 | Weighted average common shares outstanding |                                          |              | 15,103 |                |   |              | 15,232        |  |   |                | 15,205 |  |   |              | 15,282 | 
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|EBITDA                                           |                                            | $                                        | 377          |        |                | $ | 10,151       |               |  | $ | 2,787          |        |  | $ | 6,794        |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Common stock market price range
    (high : low) |                                            | $                                        | 4.26 : $1.55 |        |                | $ | 5.20 : $3.60 |               |  | $ | 4.94 : $4.10   |        |  | $ | 7.00 : $4.75 |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       

46



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GRUBB & ELLIS COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




17. Selected Quarterly Financial Data
(unaudited)(Continued)


|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |        |  |   |              |        | 
|------------------------------------------------ | ------------------------------------------ | ---------------------------------------- | ------------ | ------ | -------------- | - | ------------ | ------------- |  | - | -------------- | ------ |  | - | ------------ | ------ | 
|                                                 |                                            | Fiscal Year Ended June 30, 2004          |             
|                                                 |                                            | (in thousands, except per share amounts) |             
|                                                 |                                            |                                          |             
|                                                 |                                            | First Quarter                            |              |        | Second Quarter |   |              | Third Quarter |  |   | Fourth Quarter |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Operating revenue                                |                                            | $                                        | 101,884      |        |                | $ | 123,789      |               |  | $ | 102,402        |        |  | $ | 112,479      |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Operating income (loss)                          |                                            | $                                        | 870          |        |                | $ | 8,576        |               |  | $ | (2,748         | )      |  | $ | 6,880        |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Net (loss) income to common stockholders         |                                            | $                                        | (150         | )      |                | $ | 7,447        |               |  | $ | (3,690         | )      |  | $ | 8,969        |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Income (loss) per common share:                  |                                            |                                          |              |        |                |   |              |               |  |   |                |        |  |   |              |       
|Basic                                           |                                            | $                                        | (0.01        | )      |                | $ | 0.49         |               |  | $ | (0.24          | )      |  | $ | 0.59         |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|                                                 | Weighted average common shares outstanding |                                          |              | 15,097 |                |   |              | 15,097        |  |   |                | 15,097 |  |   |              | 15,097 | 
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Diluted                                         |                                            | $                                        | (0.01        | )      |                | $ | 0.49         |               |  | $ | (0.24          | )      |  | $ | 0.59         |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|                                                 | Weighted average common shares outstanding |                                          |              | 15,097 |                |   |              | 15,098        |  |   |                | 15,097 |  |   |              | 15,105 | 
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|EBITDA                                           |                                            | $                                        | 2,599        |        |                | $ | 10,210       |               |  | $ | (1,199         | )      |  | $ | 8,704        |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       
|Common stock market price range
    (high : low) |                                            | $                                        | 1.50 : $1.01 |        |                | $ | 1.20 : $0.80 |               |  | $ | 1.20 : $0.87   |        |  | $ | 2.00 : $0.90 |       
|                                                 |                                            |                                          |              |        |                |   |              |               |  |   |                |       






Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure







Item 9A. Controls and Procedures




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GRUBB & ELLIS COMPANY


PART III





Item 10. Directors and Executive Officers of the
Registrant







Item 11. Executive Compensation









|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholders Matters






Item 13. Certain Relationships and Related
Transactions







Item 14. Principal Accountant Fees and Services




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GRUBB & ELLIS COMPANY


PART IV





Item 15. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K


(a)




|   |                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------
|1. | The following Report of Independent Registered Public Accounting
    Firm and Consolidated Financial Statements are submitted
    herewith:















|   |                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | All schedules for which provision is made in the applicable
    accounting regulations of the Securities and Exchange Commission
    are not required under the related instructions, are
    inapplicable, or the information is contained in the Notes to
    Consolidated Financial Statements and therefore have been
    omitted.
|  
|3. | Exhibits required to be filed by Item 601 of
    Regulation S-K:                                                                                                                                                                                                                                                                      

(3) Articles of Incorporation and Bylaws


|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 |  | Certificate of Incorporation of the Registrant, as restated
    November 1, 1994, 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 |  | 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).                                                                                                                                                                        
|3.3 |  | 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.                                                                                                                                        
|3.4 |  | 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.
|3.5 |  | Certificate of Designations, Number, Voting Powers, Preferences
    and Rights of Series A Preferred Stock of the Registrant as
    filed with the Secretary of State of the State of Delaware on
    March 8, 2002 incorporated herein by reference to
    Exhibit 4 to the Registrants Current Report on
    Form 8-K filed on March 12, 2002.                                                                                                                                 
|3.6 |  | Certificate of Amendment of Certificate of Designations, Number,
    Voting Powers, Preferences and Rights of Series A Preferred
    Stock of Grubb & Ellis Company, incorporated herein by
    reference to Exhibit 4 to the Registrants Current
    Report on Form 8-K filed on May 14, 2002.                                                                                                                                                                                  
|3.7 |  | 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.                                                                                                                                                                                                                                                                 

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|     |  |                                                                                                                                                                                                                                                                                                                                                                           
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.8  |  | 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.
|3.9  |  | Preferred Stock Exchange Agreement dated as of December 30,
    2004 by and 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.                                                                                                           
|3.10 |  | Certificate of Designations, Number Voting Posers, 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.                          

(4) Instruments Defining the Rights of Security Holders,
including Indentures.


|     |  |                                                                                                                                                                                                                                                                                                                                           
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1  |  | Stock Purchase Agreement dated as of December 11, 1996
    among the Registrant, Mike Kojaian, Kenneth J. Kojaian and C.
    Michael Kojaian, incorporated herein by reference to
    Exhibit 4.3 to the Registrants Current Report on
    Form 8-K filed on December 20, 1996.                                                          
|4.2  |  | Registration Rights Agreement dated as of December 11, 1996
    among the Registrant, Warburg, Pincus Investors, L.P., Joe F.
    Hanauer, Mike Kojaian, Kenneth J. Kojaian and C. Michael
    Kojaian, incorporated herein by reference to Exhibit 4.1 to
    the Registrants Current Report on Form 8-K filed on
    December 20, 1996.
|4.3  |  | Purchase Agreement dated as of January 24, 1997 between the
    Registrant and Warburg, Pincus Investors, L.P., incorporated
    herein by reference to Exhibit 4.1 to the Registrants
    Current Report on Form 8-K filed on February 4, 1997.                                                                                         
|4.4  |  | Stock Purchase Agreement dated as of January 24, 1997
    between the Registrant and Archon Group, L.P., incorporated
    herein by reference to Exhibit 4.2 to the Registrants
    Current Report on Form 8-K filed on February 4, 1997.                                                                                                
|4.5  |  | Registration Rights Agreement dated as of January 24, 1997
    between the Registrant and Archon Group, L.P., incorporated
    herein by reference to Exhibit 4.3 to the Registrants
    Current Report on Form 8-K filed on February 4, 1997.                                                                                           
|4.6  |  | Securities Purchase Agreement dated May 13, 2002 by and
    between Grubb & Ellis Company and Kojaian Ventures,
    LLC, incorporated herein by reference to Exhibit 2 to the
    Registrants Current Report on Form 8-K filed on
    May 14, 2002.                                                                                      
|4.7  |  | Convertible Subordinated Promissory Note and Security Agreement
    in the principal amount of $11,237,500 dated May 13, 2002
    and executed by Grubb & Ellis Company, incorporated
    herein by reference to Exhibit 3 to the Registrants
    Current Report on Form 8-K filed on May 14, 2002.                                      
|4.8  |  | Stock Subscription Warrant No. A-1 dated July 30, 1999
    issued to Aegon USA Realty Advisors, Inc., incorporated herein
    by reference to Exhibit 4.20 to the Registrants
    Annual Report on Form 10-K filed on September 28, 1999.                                                                                                
|4.9  |  | Form of Subordination Agreement, executed by Warburg, Pincus
    Investors, L.P. in favor of Bank of America, N.A., as Agent, and
    the Lenders, which is an Exhibit to the Option Purchase
    Agreement incorporated herein by reference to Exhibit 2 to
    the Registrants Current Report on Form 8-K filed on
    March 12, 2002. 
|4.10 |  | Option Purchase Agreement dated March 7, 2002 by and among
    the Registrant, Warburg, Pincus Investors, L.P. and Bank of
    America, N.A., as Administrative Agent incorporated herein by
    reference to Exhibit 3 to the Registrants Current
    Report on Form 8-K filed on March 12, 2002.                                       

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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.11 |  | Fourth Amendment dated as of May 13, 2002 to the Amended
    and Restated Credit Agreement among the Registrant, the other
    financial institutions from time to time parties thereto, Bank
    of America, N.A., American National Bank and Trust Company of
    Chicago and LaSalle Bank National Association, dated as of
    December 31, 2000, incorporated herein by reference to
    Exhibit 5 to the Registrants Current Report on
    Form 8-K filed on May 14, 2002.
|4.12 |  | Form of Waiver executed by Bank of America, N.A., LaSalle Bank
    National Association and Bank One, N.A., and the Registrant,
    dated December 20, 2002, incorporated herein by reference
    to Exhibit 1 to the Registrants Current Report on
    Form 8-K filed on January 10, 2003.                                                                                                                                                                                     
|4.13 |  | Form of Waiver executed by Bank of America, N.A., LaSalle Bank
    National Association and Bank One, N.A., and the Registrant,
    dated March 26, 2003, incorporated herein by reference to
    Exhibit 6 to the Registrants Current Report on
    Form 8-K filed on March 27, 2003.                                                                                                                                                                                          
|4.14 |  | Form of Waiver executed by Bank of America, N.A., LaSalle Bank
    National Association and Bank One, N.A., and the Registrant,
    dated May 1, 2003, incorporated herein by reference to
    Exhibit 1 to the Registrants Current Report on
    Form 8-K filed on May 2, 2003.                                                                                                                                                                                                
|4.15 |  | Form of Waiver executed by Bank of America, N.A., LaSalle Bank
    National Association and Bank One, N.A., and the Registrant,
    dated May 30, 2003, incorporated herein by reference to
    Exhibit 1 to the Registrants Current Report on
    Form 8-K filed on June 13, 2003.                                                                                                                                                                                             
|4.16 |  | Form of Waiver executed by Kojaian Capital, LLC and the
    Registrant, dated June 6, 2003, incorporated herein by
    reference to Exhibit 2 to the Registrants Current
    Report on Form 8-K filed on June 13, 2003.                                                                                                                                                                                                                                                         
|4.17 |  | Sixth Amendment dated as of June 20, 2003 to the Amended
    and Restated Credit Agreement among the Registrant and Kojaian
    Capital, LLC, dated as of December 31, 2000 incorporated
    herein by reference to Exhibit 1 to the Registrants
    Current Report on Form 8-K filed on June 23, 2003.                                                                                                                                                                         
|4.18 |  | Copy of $5,000,000 Convertible Promissory Note and Security
    Agreement dated March 7, 2002 issued by the Registrant to
    Warburg, Pincus Investors, L.P. incorporated herein by reference
    to Exhibit 5 to the Registrants Current Report on
    Form 8-K filed on March 12, 2002.                                                                                                                                                                                      
|4.19 |  | Form of $6,000,000 Convertible Promissory Note and Security
    Agreement of the Registrant which is an Exhibit to the Option
    Purchase Agreement to be payable to the order of Warburg, Pincus
    Investors, L.P. incorporated herein by reference to
    Exhibit 6 to the Registrants Current Report on
    Form 8-K filed on March 12, 2002 (Commission File
    No. 1-8122).                                                                                            
|4.20 |  | Securities Purchase Agreement dated May 13, 2002 by and
    between Grubb & Ellis Company and Kojaian Ventures,
    LLC, incorporated herein by reference to Exhibit 2 to the
    Registrants Current Report on Form 8-K filed on
    May 14, 2002.                                                                                                                                                                                                                             
|4.21 |  | Copy of Convertible Subordinated Promissory Note and Security
    Agreement in the principal amount of $11,237,500 dated
    May 13, 2002 issued by the Registrant to Kojaian Ventures,
    LLC, incorporated herein by reference to Exhibit 3 to the
    Registrants Current Report on Form 8-K filed on
    May 14, 2002.                                                                                                                                                     
|4.22 |  | Copy of Promissory Note in the principal amount of $4,000,000
    dated May 9, 2003 issued by the Registrant to Kojaian
    Funding, LLC, incorporated herein by reference to
    Exhibit 4.7 to the Registrants Quarterly Report on
    Form 10-Q filed on May 20, 2003.                                                                                                                                                                                                       
|4.23 |  | Copy of Guarantee and Collateral Agreement by the Registrant and
    certain of its Subsidiaries in favor of Kojaian Funding, LLC, as
    Lender, dated as of May 9, 2003, incorporated herein by
    reference to Exhibit 4.8 to the Registrants Quarterly
    Report on Form 10-Q filed on May 20, 2003.                                                                                                                                                                      
|4.24 |  | Copy of Security Agreement by the Registrant in favor of Kojaian
    Funding, LLC, as Lender, dated as of May 9, 2003,
    incorporated herein by reference to Exhibit 4.9 to the
    Registrants Quarterly Report on Form 10-Q filed on
    May 20, 2003.                                                                                                                                                                                                                      

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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.25 |  | Copy of Subordination Agreement executed by Kojaian Funding, LLC
    in favor of Bank of America, as Agent, and the Lenders, dated as
    of May 9, 2003, incorporated herein by reference to
    Exhibit 4.10 to the Registrants Quarterly Report on
    Form 10-Q filed on May 20, 2003.                                                                                                                                                                                                                                                                                                 
|4.26 |  | Copy of Side Letter Agreement executed by the Registrant, dated
    as of May 9, 2003, incorporated herein by reference to
    Exhibit 4.11 to the Registrants Quarterly Report on
    Form 10-Q filed on May 20, 2003.                                                                                                                                                                                                                                                                                                                                                                    
|4.27 |  | Copy of Side Letter Agreement executed by the Registrant, dated
    as of May 9, 2003, incorporated herein by reference to
    Exhibit 4.12 to the Registrants Quarterly Report on
    Form 10-Q filed on May 20, 2003.                                                                                                                                                                                                                                                                                                                                                                    
|4.28 |  | Copy of Credit Agreement, dated as of June 11, 2004,
    entered into by and among the Registrant, certain of its
    subsidiaries, the Lenders (as defined in the Credit
    Agreement), Deutsche Bank Securities, Inc., as sole book-running
    manager and sole lead arranger, and Deutsche Bank Trust Company
    Americas, as initial swing line bank, the initial issuer of
    letters of credit and administrative agent for the lender
    parties, incorporated herein by reference to Exhibit 1 to
    the Registrants Current Report on Form 8-K filed on
    June 21, 2004.
|4.29 |  | Security Agreement, dated as of June 11, 2004, by and among
    the Registrant, certain of its subsidiaries and Deutsche Bank
    Trust Company Americas, as administrative agent, for the
    Secured Parties (as defined in the Security
    Agreement), incorporated herein by reference to Exhibit 2
    to the Registrants Current Report on Form 8-K filed
    on June 21, 2004.                                                                                                                                                                                                   
|4.30 |  | Amended and Restated Credit Agreement, dated as of
    March 31, 2005, entered into by and among Grubb& Ellis
    Company, certain of its subsidiaries, the Lenders
    (as defined therein), Deutsche Bank Securities, Inc., as sole
    book-running manager and sole arranger, Deutsche Bank Trust
    Company Americas, as initial swing line bank, the initial issuer
    of letters of credit and administrative agent for the lender
    parties incorporated herein by reference to Exhibit 1 to
    the Registrants Current Report on Form 8-K filed on
    April 5, 2005.      
|4.31 |  | Amended and Restated Security Agreement, dated as of
    March 31, 2005, by and among Grubb & Ellis
    Company, certain of its subsidiaries and Deutsche Bank Trust
    Company Americas, as administrative agent, for the Secured
    Parties (as defined herein) incorporated herein by
    reference to Exhibit 2 to the Registrants Current
    Report on Form 8-K filed on April 5, 2005.                                                                                                                                                                                          





|     |                   
|---- | ------------------
|(10) | Material Contracts

|      |  |                                                                                                                                                                                                                                                                                                         
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1* |  | Employment Agreement entered into between Brian D. Parker and
    the Registrant dated March 1, 2003, incorporated herein by
    reference to Exhibit 5 to the Registrants Current
    Report on Form 8-K filed on March 27, 2003.                                                                     
|10.2* |  | First Amendment to Employment Agreement entered into between
    Brian D. Parker and the Registrant dated April 1, 2003,
    incorporated herein by reference to Exhibit 10.15 to the
    Registrants Annual Report on Form 10-K filed on
    October 10, 2003.                                        
|10.3* |  | Employment Agreement with First Amendment entered into between
    Richard L. Fulton and the Registrant dated September 1,
    2002 and April 1, 2003, respectively, incorporated herein
    by reference to Exhibit 10.16 to the Registrants
    Annual Report on Form 10-K filed on October 10, 2003.

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|       |  |                                                                                                                                                                                                                                                                                                                                             
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4*  |  | Employment Agreement with First and Second Amendments entered
    into between Robert Osbrink and the Registrant dated
    December 21, 2001, August 16, 2002 and April 1,
    2003, respectively, incorporated herein by reference to
    Exhibit 10.17 to the Registrants Annual Report on
    Form 10-K filed on October 10, 2003.      
|10.5*  |  | 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.                                                               
|10.6*  |  | Form of First Amendment to Employment Agreement entered into
    between Robert Osbrink and the Registrant dated as of
    September 7, 2005.                                                                                                                                                                                               
|10.7*  |  | Compensation Arrangement Letter between Maureen A. Ehrenberg and
    the Registrant dated May 22, 2003, incorporated herein by
    reference to Exhibit 10.18 to the Registrants Annual
    Report on Form 10-K filed on October 10, 2003.                                                                                                 
|10.8*  |  | Employment Agreement, dated as of January 1, 2005, by and
    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.                                                                                                  
|10.9*  |  | Employment Agreement entered into on March 8, 2005, between
    Mark E. Rose and the Registrant, effective March 8, 2005
    incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on Form 8-K filed on
    March 11, 2005.                                                                               
|10.10* |  | Grubb & Ellis 1990 Amended and Restated Stock Option
    Plan, as amended effective as of June 20, 1997,
    incorporated herein by reference to Exhibit 4.6 to the
    Registrants Registration Statement on Form S-8 filed
    on December 19, 1997 (Registration No. 333-42741).                                                        
|10.11* |  | 1993 Stock Option Plan for Outside Directors, incorporated
    herein by reference to Exhibit 4.1 to the Registrants
    registration statement on Form S-8 filed on
    November 12, 1993 (Registration No. 33-71484).                                                                                                                    
|10.12* |  | First Amendment to the 1993 Stock Option Plan for Outside
    Directors, effective November 19, 1998, incorporated herein
    by reference to Exhibit 10.1 to the Registrants
    Quarterly Report on Form 10-Q filed on February 12,
    1999.                                                                                            
|10.13* |  | Grubb & Ellis 1998 Stock Option Plan, effective as of
    January 13, 1998, incorporated herein by reference to
    Exhibit 10.6 to the Registrants Annual Report on
    Form 10-K filed on September 28, 1999.                                                                                                                            
|10.14* |  | First Amendment to the Grubb & Ellis 1998 Stock Option
    Plan, effective as of February 10, 2000, incorporated
    herein by reference to Exhibit 10.7 to the
    Registrants Quarterly Report on Form 10-Q filed on
    May 12, 2000.                                                                                                   
|10.15* |  | Grubb & Ellis Company 2000 Stock Option Plan, effective
    November 16, 2000, incorporated by herein by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q filed on February 14, 2001.                                                                                                                    
|10.16* |  | Description of Grubb & Ellis Company Executive Officer
    Incentive Compensation Plan, incorporated herein by reference to
    Exhibit 10.4 to the Registrants Annual Report on
    Form 10-K filed on September 28, 1999.                                                                                                                
|10.17  |  | Letter Amendment dated May 13, 2002 by and between
    Grubb & Ellis Company and Kojaian Ventures, LLC,
    incorporated herein by reference to Exhibit 1 to the
    Registrants Current Report on Form 8-K filed
    May 14, 2002.                                                                                                        
|10.18  |  | Transition Agreement entered into as of April 1, 2003,
    portions of which were omitted pursuant to a request for
    Confidential Treatment under Rule 24(b) of the Securities
    Act of 1934, as amended, incorporated herein by reference to
    Exhibit 2 to the Registrants Current Report on
    Form 8-K filed on April 16, 2003.



|  |                                                         
|- | --------------------------------------------------------
|* | Management contract or compensatory plan or arrangement.

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##### Table of Contents



(21) Subsidiaries of the Registrant


(23) Consent of Independent Registered Public Accounting
Firm


(24) Powers of Attorney


(31) Section 302 Certifications


(32) Section 906 Certification


(b) Reports filed on Form 8-K




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A Current Report on Form 8-K dated June 6, 2005, was
    filed with the Securities and Exchange Commission on
    June 10, 2005, reporting under Items 1.01 and 3.02
    that the Company had entered into a three year employment
    agreement with Maureen A. Ehrenberg, pursuant to which
    Ms. Ehrenberg will continue to serve as the Companys
    Executive Vice President and as the President of both
    Grubb & Ellis Management Services, Inc. and the
    Companys Global Client Services.
|
| | A Current Report on Form 8-K dated June 21, 2005, was
    filed with the Securities and Exchange Commission on
    June 27, 2005, reporting under Item 1.01 that the
    Compensation Committee of the Company had adopted a long-term
    executive cash incentive plan.                                                                                                                                                                                                                                  
|
| | A Current Report on Form 8-K dated September 12, 2005,
    was filed with the Securities and Exchange Commission on
    September 16, 2005, reporting under Item 5.02 that
    Brian D. Parker had submitted his resignation as the Chief
    Financial Officer of the Company and that the submission of such
    resignation was not the result of any dispute or disagreement
    with the Company.                                                                                                     

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##### Table of Contents






SIGNATURES




Grubb & Ellis Company


(Registrant)


|                                                                                               |  |                   
|---------------------------------------------------------------------------------------------- |  | ------------------
|/s/ Mark E. RoseMark
    E. Rose
    Chief Executive Officer
    (Principal Executive Officer) |  | September 28, 2005



|                                                                                                                    |  |                   
|------------------------------------------------------------------------------------------------------------------- |  | ------------------
|/s/ Mark E. RoseMark
    E. Rose
    Chief Executive Officer and Director
    (Principal Executive Officer)         |  | September 28, 2005
|/s/ Brian D. ParkerBrian
    D. Parker
    Chief Financial Officer
    (Principal Financial and Accounting Officer) |  | September 28, 2005
|*R.
    David Anacker, Director                                                                                     |  | September 28, 2005
|*Anthony
    G. Antone, Director                                                                                    |  | September 28, 2005
|*C.
    Michael Kojaian, Director                                                                                   |  | September 28, 2005
|*Robert
    J. McLaughlin, Director                                                                                 |  | September 28, 2005
|*Rodger
    D. Young, Director                                                                                      |  | September 28, 2005
|                                                                                                                   
|/s/ Mark E. Rose                                                                                                    |  |                   
|                                                                                                                    |  |                   



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##### Table of Contents



GRUBB & ELLIS COMPANY AND SUBSIDIARIES





EXHIBIT INDEX (A)


For the Fiscal Year Ended June 30, 2005


|        |  |                                                                                                                                              
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                              
|        |  |                                                                                                                                              
|(10)    |  | Material Contracts                                                                                                                           
|10.6    |  | Form of First Amendment to Employment Agreement entered into
    between Robert Osbrink and the Registrant dated as of
    September 7, 2005.
|(21)    |  | Subsidiaries of the Registrant                                                                                                               
|(23)    |  | Consent of Independent Registered Public Accounting Firm                                                                                     
|(24)    |  | Powers of Attorney                                                                                                                           
|(31)    |  | Section 302 Certifications                                                                                                                   
|(32)    |  | Section 906 Certification                                                                                                                    



56