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, 2001
                                       OR
          [ ] 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                                             94-1424307
 ------------------------------                              -------------------
(State or other jurisdiction of                                (IRS Employer
 Incorporation or organization)                              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         Name of each exchange on which registered
     -------------------         -----------------------------------------
         Common Stock                   New York Stock Exchange

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes _X_   No _____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's  knowledge,  in its definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of voting common stock held by  non-affiliates of the
registrant as of August 20, 2001 was approximately $14,544,021.

The number of shares  outstanding of the registrant's  common stock as of August
20, 2001 was 13,516,380 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's  definitive proxy statement to be filed pursuant to
Regulation 14A no later than 120 days after the end of the fiscal year (June 30,
2001) are incorporated by reference into Part III of this Report.

                              GRUBB & ELLIS COMPANY
                                    FORM 10-K

                                       1
<PAGE>


                                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 the Registrant's Common Equity

                        and Related Stockholder Matters                       8

    Item 6.       Selected Financial Data                                     9

    Item 7.       Management's Discussion and Analysis of Financial          10
                        Condition and Results of Operations

    Item 7A.      Quantitative and Qualitative Disclosures About Market

                      Risk                                                   20

    Item 8.       Financial Statements and Supplementary Data                21

    Item 9.       Changes in and Disagreements with Accountants

                      on Accounting and Financial Disclosure                 50

Part III.

    Item 10.      Directors and Executive Officers of the Registrant         51

    Item 11.      Executive Compensation                                     51

    Item 12.      Security Ownership of Certain Beneficial

                      Owners and Management                                  51

    Item 13.      Certain Relationships and Related Transactions             51

Part IV.

    Item 14.      Exhibits, Financial Statement Schedules,
                        and Reports on Form 8-K                              52

SIGNATURES                                                                   58

EXHIBIT INDEX                                                                59

                                       2
<PAGE>


                              GRUBB & ELLIS COMPANY

                                     PART I
                           ---------------------------


ITEM 1.  BUSINESS

GENERAL

Grubb  & Ellis  Company,  a  Delaware  corporation  organized  in  1980,  is the
successor by merger to a real estate  brokerage  company  first  established  in
California in 1958. Grubb & Ellis Company and its wholly owned subsidiaries (the
"Company") is a full service  commercial real estate company.  The Company has a
global  strategic  alliance  with  Knight  Frank,  one of the  leading  property
consulting  firms  in  Europe  and  Asia.  The  Company,  through  its  offices,
affiliates and alliance with Knight Frank,  provides a full range of real estate
services, including advisory, management and consultative services, to users and
investors  worldwide.  With the  collective  resources of nearly 8,300 people in
over 200 offices in 29 countries,  the Company's  professionals arrange the sale
or lease of such business properties as industrial, retail and office buildings,
as well as the  acquisition  and  disposition of  multi-family  and  hospitality
properties and commercial land.

Major  multiple-market  clients  have a single  point  of  contact  through  the
Company's national accounts program for coordination of all services.  Delivered
in  a  seamless  manner  across  a  national  platform,  comprehensive  services
inclusive of  feasibility  studies,  market  forecasts  and  research,  are made
available to large national entities. The Company is one of the nation's largest
publicly traded commercial real estate firms, based on total revenue.

Property  and  facilities  management  services  are  provided  by Grubb & Ellis
Management  Services,  Inc. ("GEMS"),  a wholly owned subsidiary of the Company.
Leveraging the management  portfolio and the trend for  outsourcing,  additional
revenues  are  earned  in  the  provision  of  business   services  and  project
management.  Positioned as a reputable  national service delivery  organization,
agency  leasing  business  activity   generates   revenues  as  well.  GEMS  had
approximately  142 million square feet of property  under  management as of June
30, 2001.

Our global executive office is located at 55 E. 59th Street,  New York, New York
10022-1122 (telephone 212-759-9700).  Our principal operations center is located
at  2215  Sanders  Road,  Suite  400,  Northbrook,   Illinois  60062  (telephone
847-753-7500).

STRATEGIC INITIATIVES

In fiscal 2001, the Company  continued to build a national  platform and develop
the  expertise  to provide a  comprehensive  range of real estate  advisory  and
consulting services. The Company's research capabilities support its transaction
professionals to achieve sustained capabilities in executing transactions in the
national  marketplace.  The Company  plans to leverage its  expertise and market
presence in advisory and management  services to become a full-service  business
advisory firm that corporations  entrust to advise them on strategic real estate
issues.

Under the direction of its new  management  team,  the Company's  strategy is to
establish a strategic  planning and consulting  business practice unit that will
be integrated with the Company's transaction


                                       3
<PAGE>


and property management businesses. Through the integration of these businesses,
the Company  plans to promote  efficiencies  and  maximize  the  potential  from
business  development  opportunities.  The  Company  believes  that these  three
business lines complement each other and will help insulate the Company from the
cyclical nature of the real estate market,  and potentially  move the Company to
generate more consistent, higher profit margins.

Grubb & Ellis' focus will be to provide  services that go beyond  facilitating a
real estate  transaction.  The Company's  expansion  will be modeled  around the
growth and integration of its three core lines of business: (1) transaction, (2)
property  management  and (3)  consulting.  The plan to  integrate  real  estate
knowledge with specific industry expertise has been initiated through the hiring
of  industry  specialists.   These  specialists  will  support  the  transaction
professionals  in addressing  challenges and issues faced by clients in specific
industry  sectors.   Real  estate  knowledge  will  be  integrated  with  strong
transaction  capability  to service  clients in a  broader,  more  comprehensive
delivery system.

Rather than merely executing a transaction, the Company's goal will be to advise
a  client  on how real  estate  fits  into  their  overall  strategic  plan.  By
positioning  Grubb & Ellis as a business  advisor to the "C" suite,  the Company
plans to create the platform to deliver the strategic planning and advisory real
estate  services  that the Company  believes  will be the catalyst for increased
success in the delivery of transactions.  The Company's  ability to execute this
strategic plan will depend on the establishment of the consulting  business unit
and the integration of that unit with the Company's other lines of business, and
there can be no assurance  that the Company  will  succeed in this  effort.  The
Company will strive to move towards an account-centric  model of building client
relationships  and  recurring  revenue  streams  from  the  integrated  business
platform.

The Knight Frank  strategic  alliance will be the centerpiece for the deployment
of the Company's global business strategy. With market presence in Europe, India
and the Pacific Rim, the Company  believes that Knight Frank is positioned to be
an effective  alliance  partner that  complements  Grubb & Ellis'  strengths and
provides the mechanism to deliver real estate services to global enterprises. As
the trend towards globalization among large entities continues to gain momentum,
the Company intends to focus on global business development and capabilities.

Grubb & Ellis  believes that  strategic  acquisitions  are likely to provide the
foundation for its entry into the real estate consulting business. The Company's
strategy is for organic growth and consulting  business  expansion to occur from
the platform established from the initial acquisitions. The Company's ability to
assimilate acquired consulting practices within its existing infrastructure, and
its  effectiveness in transitioning the acquired business units, are critical to
its success in realizing its goals of a fully integrated  business model.  There
can be no  assurance  that  the  Company  will  be  able to  complete  any  such
acquisitions  or, if  completed,  that the Company  will be able to  effectively
integrate the acquired  businesses  into its  transaction  services and property
management businesses.

The  Company's  goal in the  national  and global  marketplace  is to become the
premier  provider of comprehensive  real estate  services.  In doing so, Grubb &
Ellis  believes  it will be more  resilient  to the  economic  swings  that have
traditionally  impacted earnings and made the company a cyclical investment.  In
establishing  higher margin consulting  revenues as a more prominent part of the
overall revenue mix, profit margins will potentially be higher overall.

Grubb & Ellis plans to continue  to leverage  the talent  within the Company and
the collective local market knowledge.  The Company plans on capitalizing on its
nationally  recognized  real estate  research which will assist its  transaction
professionals   to   differentiate   themselves   in   the   marketplace.   Upon

                                       4
<PAGE>


implementation  of  the  Company's   strategic  plan,  its  extensive   research
capabilities  will  support its three  operating  units.  The  Company  plans to
leverage the services  offered by each unit,  stressing  synergy and integration
and building account-centric relationships.

The Company has broadened its national affiliate program, through alliances with
40 real estate  services  firms,  which has enabled it to enter markets where it
previously  did not have a formal  presence and to better meet the  multi-market
needs of national clients.  The Company has also invested in technology  systems
designed to provide a scalable  platform for growth and to  efficiently  deliver
and share data with  clients.  Among them is what the  Company  believes to be a
state-of-the-art,  company-wide  information  sharing and research network which
enables its  professional  staff  across all  offices to work more  efficiently,
access the latest market intelligence, and more fully address clients' needs.

The Company  completed a  self-tender  offer in February  2001 and purchased 7.0
million  shares of its  outstanding  common stock at a price of $7.00 per share.
See Item 7 of this Report for additional information.

ORGANIZATION

The Company is currently organized in the following business segments,  in order
to  provide  the  real  estate  related  services  described  below.  Additional
information  on  these  business  segments  can be  found in Note 15 of Notes to
Consolidated Financial Statements under Item 8 of this Report.

ADVISORY SERVICES

Historically,  advisory  services  have  represented  a  large  portion  of  the
Company's  operations,  and in fiscal year 2001 represented 85% of the Company's
total revenue.  A significant  portion of the advisory  services provided by the
Company are transaction  related services,  in which the Company  represents the
interests  of tenants,  owners,  buyers or sellers in leasing,  acquisition  and
disposition transactions. These transactions involve various types of commercial
real estate, including office, industrial, retail, hospitality and land.

The Company  also  delivers,  to a lesser  extent,  certain  consulting  related
services to its advisory services clients, including site selection, feasibility
studies,  exit  strategies,  market  forecasts,  appraisals and demographics and
research services.

MANAGEMENT SERVICES

GEMS provides  comprehensive  property  management,  agency  leasing and related
services for properties owned primarily by institutional  investors,  along with
facilities  management  services for corporate  users.  Related services include
construction  management,  business services and engineering services. In fiscal
year 2001,  these services  represented the remaining 15% of the Company's total
revenue.

COMPETITION

The Company competes in a variety of service  disciplines  within the commercial
real estate  industry.  Each of these business areas is highly  competitive on a
national as well as local level.  The Company  faces  competition  not only from
other real estate  service  providers,  but also from  accounting  and


                                       5
<PAGE>


appraisal firms and self-managed real estate investment trusts. Although many of
the Company's  competitors  are local or regional  firms that are  substantially
smaller than the Company,  some of these firms are substantially larger than the
Company on a local or regional basis. In general, there can be no assurance that
the Company will be able to continue to compete effectively, to maintain current
fee levels or margins,  or maintain or  increase  its market  share.  Due to the
Company's  relative  strength and longevity in the markets in which it presently
operates,  and its ability to offer clients a range of real estate services on a
local, regional,  national and international basis, the Company believes that it
can  operate  successfully  in the future in this highly  competitive  industry,
although there can be no assurances in this regard.

ENVIRONMENTAL REGULATION

Federal,  state and local laws and regulations  impose  environmental  controls,
disclosure  rules and zoning  restrictions  which have impacted the  management,
development,  use, and/or sale of real estate. Such laws and regulations tend to
discourage  sales and leasing  activities  and mortgage  lending with respect to
some properties, and may therefore adversely affect the Company and the industry
in  general.  Failure  of  the  Company  to  disclose  environmental  issues  in
connection  with a real estate  transaction may subject the Company to liability
to a buyer or lessee of property. Applicable laws and contractual obligations to
property  owners  could also  subject the Company to  environmental  liabilities
through the provision of management services. Environmental laws and regulations
impose  liability on current or previous real  property  owners or operators for
the cost of  investigating,  cleaning  up or  removing  contamination  caused by
hazardous or toxic substances at the property. The Company may be held liable as
an operator for such costs in its role as an on-site property manager. Liability
can be imposed  even if the  original  actions were legal and the Company had no
knowledge of, or was not responsible for, the presence of the hazardous or toxic
substances.  Further,  the Company may also be held  responsible  for the entire
payment of the liability if it is subject to joint and several liability and the
other  responsible  parties  are unable to pay.  The  Company may also be liable
under  common law to third  parties  for  damages and  injuries  resulting  from
environmental  contamination  emanating from the site, including the presence of
asbestos containing materials.  Insurance for such matters may not be available.
Additionally,  new or  modified  environmental  regulations  could  develop in a
manner  which could  adversely  affect the  Company's  advisory  and  management
services.  The  Company's  financial  results and  competitive  position for the
fiscal  year 2001  have not been  materially  impacted  by its  compliance  with
environmental laws or regulations, and no material capital expenditures relating
to such compliance are planned.  See Note 9 of Notes to  Consolidated  Financial
Statements in Item 8 of this Report.

SEASONALITY

A  substantial  component  of the  Company's  revenues,  as well as the  related
commission  expense,  is  transactional  in nature and as a result is subject to
seasonal  fluctuations.  However, the Company's non-variable operating expenses,
which are treated as expenses  when  incurred  during the year,  are  relatively
constant in total  dollars on a  quarterly  basis.  The  Company  has  typically
experienced its lowest quarterly  revenue in the quarter ending March 31 of each
year with higher and more consistent  revenue in the quarters ending June 30 and
September  30. The quarter  ending  December 31 has  historically  provided  the
highest  quarterly  level of revenue  due to  increased  activity  caused by the
desire of clients to complete transactions by calendar year-end.  Revenue in any
given  quarter  during  the years  ended  June 30,  2001,  2000 and  1999,  as a
percentage  of total  annual  revenue,  ranged  from a high of 34.3% to a low of
19.1%.

                                       6
<PAGE>


SERVICE MARKS

The Company has registered trade names and service marks for the "Grubb & Ellis"
name and  logo.  The  right to use the  "Grubb & Ellis"  name is  considered  an
important asset of the Company,  and the Company  actively  defends and enforces
such trade names and service marks.

REAL ESTATE MARKETS

The  Company's  business  is highly  dependent  on the  commercial  real  estate
markets,  which in turn are  impacted by such  factors as the  general  economy,
interest  rates and demand for real estate in local  markets.  Changes in one or
more of these factors could either favorably or unfavorably impact the volume of
transactions  and  prices or lease  terms  for real  estate.  Consequently,  the
Company's revenue from advisory services and property management fees, operating
results,  cash flow and financial condition could also be impacted by changes in
these factors.

ITEM 2.   PROPERTIES

The  Company  leases  all of its  office  space.  The terms of the  leases  vary
depending  on the size and  location of the  office.  As of June 30,  2001,  the
Company leased approximately 782,000 square feet of office space in 85 locations
under  leases,  which expire at various dates  through  September 30, 2010.  For
those leases which are not  renewable,  the Company  believes  there is adequate
alternative office space available at acceptable rental rates to meet its needs,
although there can be no assurances in this regard. For further information, see
Note 9 of  Notes  to  Consolidated  Financial  Statements  under  Item 8 of this
Report.

ITEM 3.   LEGAL PROCEEDINGS

The  information  called  for by  Item 3 is  included  in  Note  9 of  Notes  to
Consolidated Financial Statements under Item 8 of this Report.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of fiscal year 2001.

                                       7
<PAGE>

                              GRUBB & ELLIS COMPANY

                                     PART II
                           ---------------------------


ITEM 5.   MARKET FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
          MATTERS

The  principal  market  for the  Company's  common  stock is the New York  Stock
Exchange ("NYSE").  The following table sets forth the high and low sales prices
of the  Company's  common stock on the NYSE for each quarter of the fiscal years
ended June 30, 2001 and 2000.

                                 2001                          2000
                      --------------------------    ----------------------------
                         HIGH            LOW           HIGH            LOW
                         ----            ---           ----            ---
First Quarter            $6.50          $5.50          $5.94          $4.63
Second Quarter           $6.38          $4.13          $6.00          $4.56
Third Quarter            $6.30          $4.80          $6.00          $4.56
Fourth Quarter           $6.07          $4.50          $6.88          $5.25


As of August 20, 2001, there were 995 registered holders of the Company's common
stock and 13,516,380  shares of common stock  outstanding,  of which  10,511,417
were held by persons  who may be  considered  "affiliates"  of the  Company,  as
defined in  Federal  securities  regulations.  Sales of  substantial  amounts of
common stock,  including shares issued upon the exercise of warrants or options,
or the perception that such sales might occur, could adversely affect prevailing
market prices for the common stock.

No cash dividends were declared on the Company's  common stock during the fiscal
years  ended June 30, 2001 or 2000.  The Company has agreed,  under the terms of
its revolving credit facility, not to pay cash dividends on its common stock for
the duration of the facility,  without obtaining an appropriate  waiver from the
lenders.  In February  2001,  the Company  purchased  7.0 million  shares of its
common stock at $7.00 per share in cash,  pursuant to a self-tender  offer.  See
"Liquidity and Capital Resources" under Item 7 of this Report.

                                       8
<PAGE>


ITEM 6.   SELECTED FINANCIAL DATA

Five-Year Comparison of Selected Financial and Other Data for the Company:

<TABLE>
<CAPTION>
                                                                             FOR THE YEARS ENDED JUNE 30,
                                                   -------------------------------------------------------------------------------
                                                       2001             2000             1999             1998             1997
                                                   -----------      -----------      -----------      -----------      -----------
                                                                           (in thousands, except share data)

<S>                                                <C>              <C>              <C>              <C>              <C>
Total revenue                                      $   411,815      $   413,535      $   314,101      $   282,834      $   228,630
Net income                                               1,369           16,290            8,079           21,506           19,010
Dividends in arrears applicable to preferred
  stockholders                                              --               --               --               --           (1,431)
Provision for income taxes                              (5,372)          (9,598)          (5,301)            (447)            (372)
Reduction in deferred tax asset
  valuation allowance                                       --               --            1,325            6,504            3,220
Income before extraordinary item and
  cumulative effect (1)                                  4,908           16,290            8,079           21,506           13,629
Income before extraordinary item and
    cumulative effect per common share (1)
  - Basic                                                  .28              .82             0.41             1.10              .85
  - Diluted                                                .27              .77             0.37              .98              .70
Weighted average common shares
  - Basic                                           17,051,546       19,779,220       19,785,715       19,607,352       14,429,971
  - Diluted                                         17,975,351       21,037,311       21,587,898       22,043,920       19,567,635

OTHER DATA:

EBITDA (2)                                         $    27,919      $    38,972      $    19,506      $    18,026      $    16,789
EBITDA as a percent of  total revenue                      6.8%             9.4%             6.2%             6.4%             7.3%
</TABLE>

(1)

     Income  and per share  data  reported  on the  above  table  reflect  other
non-recurring  expenses in the amount of $6.2  million,  $2.65  million and $2.4
million for the fiscal years ended June 30, 2001,  2000 and 1997,  respectively.
Net  income for the  fiscal  years  ended  June 30,  2001 and 1997  includes  an
extraordinary  loss  of  $406,000  and  $5.4  million  in  extraordinary   gain,
respectively,  both net of taxes, on the  extinguishment of debt. Net income for
the fiscal  year ended June 30,  2001,  also  includes 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 Notes 5, 12 and 13 of the
Notes to Consolidated Financial Statements under Item 8 of this Report.

(2)

     The Company  defines  EBITDA as earnings  before  interest,  income  taxes,
depreciation and amortization,  adjusted to exclude other  non-recurring  income
and expense and extraordinary  items, which may not be comparable to measures of
the same title  reported by other  companies.  Management  believes  EBITDA is a
relevant  measurement  of cash flow  before  interest  and  taxes.  This form of
measurement assists in evaluating the Company's ability to service its debt, and
facilitates  comparisons  of the  Company's  results  of  operations  with other
companies having different capital structures.

<TABLE>
<CAPTION>
                                                                          AS OF JUNE 30,
                                          -----------------------------------------------------------------------------
                                              2001            2000             1999             1998            1997
                                          -----------     -----------     ------------      -----------     -----------
                                                                (in thousands, except share data)
<S>                                        <C>             <C>              <C>              <C>             <C>
CONSOLIDATED BALANCE SHEET DATA:
Total assets                                  $92,426        $115,942          $98,451          $76,847         $45,986
Working capital                                 1,216          11,883             (300)          15,822          16,985
Long-term debt                                 29,000              --              553              459              --
Other long-term liabilities                     9,734          10,422           11,189           11,122          13,828
Stockholders' equity                           16,316          61,620           44,482           35,414          12,923
Book value per common share                      1.22            3.11             2.24             1.80             .66
Common shares outstanding                  13,358,615      19,810,894       19,885,084       19,721,056      19,509,952
</TABLE>

                                       9
<PAGE>


ITEM 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

                    NOTE REGARDING FORWARD-LOOKING STATEMENTS

This  Annual  Report  contains  statements  that are not  historical  facts  and
constitute  projections,  forecasts  or  forward-looking  statements  within the
meaning of the Private Securities  Litigation Reform Act of 1995. The statements
are not  guarantees  of  performance.  They  involve  known and  unknown  risks,
uncertainties, assumptions and other factors which may cause the actual results,
performance or achievements  of the Company to be materially  different from any
future  results,  performance  or  achievements  expressed  or  implied by these
statements. You can identify such statements by the fact that they do not relate
strictly to  historical or current  facts.  These  statements  use words such as
"believe," "expect," "should," "plan," "intend",  "estimate" and "anticipate" or
similar  expressions.  When we  discuss  our  strategy  or plans,  we are making
projections,   forecasts  or  forward-looking  statements.  Actual  results  and
stockholders'  value  will be  affected  by a  variety  of  risks  and  factors,
including,  without  limitation,  international,  national  and  local  economic
conditions and real estate risks and financing  risks and acts of terror or war.
Many of the risks and factors that will  determine  these results and values are
beyond  the  Company's  ability  to control or  predict.  These  statements  are
necessarily based upon various  assumptions  involving  judgment with respect to
the future.

All such  forward-looking  statements  speak only as of the date of this  Annual
Report. The Company expressly disclaims any obligation or undertaking to release
publicly any updates of revisions to any  forward-looking  statements  contained
herein to reflect any change in the Company's  expectations  with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.

Factors  which could  adversely  affect the  Company's  ability to obtain  these
results and value include, among other things:

o    DECLINE  IN THE  VOLUME  OF REAL  ESTATE  TRANSACTIONS  AND  PRICES OF REAL
ESTATE.  The Company's  revenue is largely based on commissions from real estate
transactions.  As a result, a decline in the volume of real estate available for
lease or sale, or in real estate prices, could have a material adverse effect on
the Company's revenues.

o    GENERAL ECONOMIC SLOWDOWN OR RECESSION IN THE REAL ESTATE MARKETS.  Periods
of economic slowdown or recession, rising interest rates or declining demand for
real estate,  both on a general or regional basis, will adversely affect certain
segments of the Company's  business.  Such economic conditions could result in a
general decline in rents and sales prices,  a decline in the level of investment
in real  estate,  a  decline  in the  value of real  estate  investments  and an
increase in defaults by tenants under their respective  leases,  all of which in
turn would adversely  affect revenues from advisory  services fees and brokerage
commissions which are derived from property sales, aggregate rental payments and
property management fees.

o    THE  COMPANY'S  DEBT  LEVEL AND  ABILITY  TO MAKE  PRINCIPAL  AND  INTEREST
PAYMENTS.  As a result of the Company's strategic  initiatives,  the Company may
incur substantial amounts of debt. In connection with the self-tender offer, the
Company incurred approximately $40.0 million of bank debt. Any material downturn
in the Company's  revenue or increase in its costs and expenses could render the
Company unable to meet its debt obligations.

                                       10
<PAGE>


o    IMPLEMENTATION OF STRATEGIC  INITIATIVES,  EXPENSES OR CAPITAL EXPENDITURES
RELATED TO  INITIATIVES.  As discussed  in Part I, Item 1 of this Annual  Report
under "Strategic Initiatives," the Company has undertaken, and plans to continue
to undertake, a number of strategic initiatives, some of which involve expansion
into a new  consulting  business  unit,  integration  of the Company's  business
units,  investments  in technology  systems,  service  improvements,  people and
acquisitions.  There  can be no  assurance  that  the  Company  will  be able to
successfully develop and expand a consulting business, whether by acquisition or
organic  growth,  or that the Company will be able to effectively  integrate its
three business units. Even if the Company  successfully  develops and integrates
the new  business  unit,  there can be no  assurance  that it will result in the
Company's  revenues  and value being less  cyclical or in the  Company's  profit
margins being more consistent and higher. The investments related to some or all
of these new initiatives may result in significant  expenditures by the Company.
The  Company's  results  of  operations  could be  adversely  affected  if these
strategic initiatives are unsuccessful.

o    RISKS ASSOCIATED WITH ACQUISITIONS.  As discussed in Part I, Item I of this
Annual Report under "Strategic  Initiatives," the Company has completed a number
of acquisitions and established a strategic  alliance.  Also, in connection with
the Company's  strategic  initiatives,  it may  undertake one or more  strategic
acquisitions.  There  can  be no  assurance  that  significant  difficulties  in
integrating  operations  acquired from other companies and in  coordinating  and
integrating  systems in a strategic alliance will not be encountered,  including
difficulties  arising from the diversion of  management's  attention  from other
business concerns,  the difficulty  associated with assimilating groups of broad
and  geographically  dispersed  personnel and  operations  and the difficulty in
maintaining  uniform standards and policies.  There can be no assurance that the
integration will ultimately be successful, that the Company's management will be
able to  effectively  manage any acquired  business or that any  acquisition  or
strategic alliance will benefit the Company overall.

o    LIABILITIES ARISING FROM ENVIRONMENTAL LAWS AND REGULATIONS. Part I, Item I
of this Annual Report under "Environmental Regulation" discusses potential risks
related to environmental laws and regulations.

o    THE COMPANY FACES INTENSE COMPETITION. Part I, Item I of this Annual Report
under "Competition" discusses potential risks related to competition.

o    THE COMPANY'S  REVENUES ARE SEASONAL.  Part I, Item I of this Annual Report
under "Seasonality"  discusses potential risks related to the seasonal nature of
the Company's business.

o    THE COMPANY'S ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL. The growth
of the Company's  business is largely  dependent upon its ability to attract and
retain  qualified  personnel  in all areas of its  business.  If the  Company is
unable to attract and retain such qualified personnel, it may be forced to limit
its growth, and its business and operating results could suffer.

o    CONTROL BY  EXISTING  STOCKHOLDERS.  A single  investor  beneficially  owns
approximately 48% of the outstanding  common stock of the Company.  As a result,
this investor can significantly influence the Company's affairs and policies and
the approval or disapproval of most matters submitted to a vote of the Company's
stockholders, including the election of directors.

o    OTHER FACTORS. Other factors described elsewhere in this Annual Report.

                                       11
<PAGE>


                              RESULTS OF OPERATIONS

OVERVIEW

The  Company  reported  net income of $1.4  million  for the year ended June 30,
2001,  reflecting  a  significant  decrease  in  operating  income due to larger
advisory service commissions expense, a reduction in management services revenue
and non-recurring  expenses.  The current downturn in the general economy during
the last half of the Company's  fiscal year has impacted the  Company's  revenue
stream and has eroded much of the  operating  profits  realized in the first six
months of the fiscal year.

ACCOUNTING CHANGE

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial  Statements.  SAB
101 summarizes the SEC staff's views  regarding the recognition and reporting of
revenues in  financial  statements.  The  adoption of SAB 101 is  reflected as a
cumulative effect of a change in accounting  principle as of July 1, 2000. Under
SAB 101, the Company's leasing  commissions that are payable upon certain events
such as tenant occupancy or commencement of rent will now be recognized upon the
occurrence of such events. In addition, consulting fees will be recognized under
SAB 101  generally  upon the  delivery  of agreed  upon  services to the client.
Historically,  the Company had recognized leasing  commissions at the earlier of
receipt of full payment or receipt of partial payment when lease and commissions
agreements  had been  executed and no  significant  contingencies  existed.  The
Company  had  recognized  consulting  fees as  employee  time was  incurred on a
project.  While this  accounting  change  affects the timing of  recognition  of
leasing revenues (and corresponding  services commission expense) and consulting
revenues, it does not impact the Company's cash flow from operations.  Financial
results for the year ended June 30, 2001 have been adjusted retroactively to the
beginning of the year in compliance  with the  requirements  of this  accounting
change.  The impact of this accounting  change on the fiscal year is provided in
the following table:

                                                                 Income Before
                                       Advisory                   Cumulative
(In thousands)                       Services Fees   EBITDA (1)     Effect
--------------                       -------------   ---------   -------------

Operating Results - Previous Basis
  of Accounting                        $ 349,005      $ 26,865      $ 3,870
                                       ---------      --------      -------
Effect of SAB 101:

Quarter ended September 30, 2000           1,662           856          514

Quarter ended December 31, 2000            1,194           982          589

Quarter ended March 31, 2001                (515)         (885)        (531)

Quarter ended June 30, 2001                  241           101           60
                                       ---------      --------      -------

     Year ended June 30, 2001              2,582         1,054          632
                                       ---------      --------      -------


Operating Results - Before
  Cumulative Effect                      351,587        27,919        4,502

Cumulative Effect - July 1, 2000              --            --       (3,133)
                                       ---------      --------      -------

Operating Results - After
  Cumulative Effect                    $ 351,587      $ 27,919      $ 1,369
                                       =========      ========      =======

(1)  The Company  defines  EBITDA as earnings  before  interest,  income  taxes,
     depreciation  and  amortization,  adjusted to exclude  other  non-recurring
     income and expense and extraordinary  items, which may not be comparable to
     measures of the same title reported by other companies. Management believes
     EBITDA is a relevant  measurement  of cash flow before  interest and taxes.
     This form of  measurement  assists in evaluating  the Company's  ability to
     service its debt, and facilitates  comparisons of the Company's  results of
     operations with other companies having different capital structures.

                                       12
<PAGE>


                        RESULTS OF OPERATIONS (CONTINUED)

ACCOUNTING CHANGE (CONTINUED)

The  cumulative  effect of the  accounting  change on prior years  resulted in a
reduction  to income for fiscal  year 2001 of $3.1  million  (net of  applicable
taxes of $2.1  million),  or $.17 per diluted  share.  The effect of retroactive
application of the accounting change to July 1, 2000 increased advisory services
fees by $2.6 million,  EBITDA by $1.1 million and income  before the  cumulative
effect of the  accounting  change by $632,000,  or $.04 per diluted  share,  for
fiscal year 2001.

On a pro forma basis,  giving effect to the change  retroactive to July 1, 1999,
the Company would have reported advisory services fees of $346.5 million, EBITDA
of $37.7 million,  and net income of $15.5 million for fiscal year 2000.  Actual
results reported for fiscal year 2000 included  advisory services fees of $348.2
million, EBITDA of $38.9 million and net income of $16.3 million.

FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000

REVENUE

The Company's revenue is derived principally from advisory services fees related
to commercial real estate,  which include commissions from leasing,  acquisition
and disposition assignments as well as fees from valuation, consulting and asset
management  assignments.  Management services fees comprise the remainder of the
Company's  revenues,  and  include  fees  related  to  property  management  and
facilities management outsourcing, business services and agency leasing.

Total revenue for fiscal year 2001 was $411.8  million,  a decrease of 0.4% from
$413.5 million for fiscal year 2000.  Advisory services fees remained relatively
flat,  as  increased  activity in the first half of the fiscal year from certain
technology markets, multi-market relationships and larger assignments was offset
in the second half of the fiscal year by the weakening  general  economy and its
impact on the real  estate  industry  through  negative  absorption  and  higher
vacancy  rates.  The  impact of SAB 101 on these  revenues  for  fiscal  2001 as
compared to fiscal 2000 was  insignificant.  Management  services  fees of $60.2
million in fiscal 2001 decreased by approximately $5.1 million, or 7.9% compared
to the prior  year.  New  business  revenue  gains  were  offset by the  Company
resigning a marginally profitable account which had generated approximately $3.0
million  in annual  revenue,  as well as fees  recognized  in  fiscal  year 2000
resulting  from  an  unusually  large  one-time   business   services   printing
assignment.

COSTS AND EXPENSES

Advisory services  commission  expense is the Company's largest expense and is a
direct function of advisory  services gross  transaction  revenue levels,  which
include advisory service commissions and other fees.  Professionals  participate
in advisory  services fees at rates which  increase upon  achievement of certain
levels of  production.  As a percentage of gross advisory  services  transaction
revenue,  related  commission  expense  increased to 61.6% from 59.8% for fiscal
year 2001 as compared to fiscal year 2000.  Unusually  high  average  commission
expense  had been  incurred  during the first six months of fiscal  year 2001 in
flourishing technology markets such as Silicon Valley, San

                                       13
<PAGE>


                        RESULTS OF OPERATIONS (CONTINUED)

COSTS AND EXPENSES (CONTINUED)

Francisco,  Denver,  Washington  D.C. and New York.  This  resulted  from strong
incremental  revenue  growth  in  these  markets  and  the  commensurately  high
production per  professional,  rather than changes to the existing  compensation
structure  of  the  Company's  advisory  professionals.  Commensurate  with  the
subsequent  downturn in advisory services  commission  revenues described above,
the commission  expenses incurred during the last six months of fiscal year 2001
also  declined.  The  Company  expects  commissions  as a percent  of revenue to
decrease over time as its transaction  professionals have greater  opportunities
to increase their earnings  potential  through the Company's  expanded  business
lines.

Salaries,   wages  and  benefits  expenses  along  with  selling,   general  and
administrative expenses, were relatively flat in fiscal year 2001 as compared to
2000,  increasing by approximately  $710,000,  or 0.4%, as the Company tightened
its discretionary expenditures in response to the slowing general economy.

Depreciation  and  amortization  expense for fiscal year 2001 increased to $11.6
million from $10.5 million in fiscal year 2000 as the Company  placed in service
numerous technology infrastructure  improvements during the first half of fiscal
year 2000. The Company also holds multi-year  service contracts with certain key
advisory  professionals  for which cash payments  were made to the  professional
upon  signing,  the  costs of which are  being  amortized  over the lives of the
respective  contracts,  which are  generally  two to three  years.  Amortization
expense  relating to these  contracts of $2.9 million was  recognized  in fiscal
year 2001, compared to $2.2 million in the prior year.

During fiscal year 2001, the Company  recognized  other  non-recurring  expenses
totaling $6.2 million,  relating primarily to the impairment of goodwill related
to the April  1998  acquisition  of White  Commercial  Real  Estate,  as well as
compensation  expense related to stock options  exercised in connection with the
Company's  recently  completed  self-tender  offer,  a writedown in the carrying
basis of an investment in an internet  venture,  and executive  severance  costs
related to recent  senior  management  changes.  See Notes 11 and 12 of Notes to
Condensed  Consolidated  Financial  Statements  in  Item 8 of  this  Report  for
additional  information.  Other non-recurring expenses totaling $2.7 million for
fiscal year 2000 were  recognized  in  connection  with the  resignation  of the
Company's former chairman and chief executive officer.

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards No. 141,  BUSINESS  COMBINATIONS,  and No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be amortized but
will be subject to annual  impairment  tests in accordance  with the Statements.
Other intangible assets will continue to be amortized over their useful lives.

The  Company  will  apply the new rules on  accounting  for  goodwill  and other
intangible  assets  beginning in the first fiscal quarter of fiscal 2003,  which
for the Company would be the quarter ending  September 30, 2002.  Application of
the  nonamortization  provisions  of the  Statement  is expected to result in an
increase in net income of approximately $1.6 million per year.

                                       14
<PAGE>


                        RESULTS OF OPERATIONS (CONTINUED)

COSTS AND EXPENSES (CONTINUED)

During  fiscal  2003,  the  Company  will  perform  the  first  of the  required
impairment  tests of goodwill as of July 1, 2002 and has not yet determined what
the effect of these tests will be on the earnings and financial  position of the
Company.

Interest and other income  increased during fiscal year 2001 as compared to 2000
as a result of higher  available  invested cash from improved  operations in the
first half of the fiscal  year being  invested  prior to funding  the  Company's
self-tender offer and related costs during the latter half of the fiscal year.

Interest  expense  incurred in fiscal year 2000 and through the first six months
of  fiscal  2001 was due  primarily  to seller  financing  related  to  business
acquisitions  made in calendar year 1998, as well as credit facility  borrowings
in the last half of fiscal year 1999.  Interest  expense  incurred in the second
half of  fiscal  year 2001 was due to the term loan  borrowings  related  to the
Company's self-tender offer.

Effective  December  31,  2000,  the Company  amended and  restated its existing
credit  agreement.  Unamortized  costs related to the prior  agreement  totaling
$406,000 (net of applicable  taxes of  approximately  $270,000) were written off
and were recorded as an extraordinary  loss from  extinguishment  of debt during
the quarter ended December 31, 2000.

As disclosed in "Accounting  Change"  above,  the SEC issued SAB 101 relating to
the recognition of revenue for publicly owned companies.  The application of SAB
101 resulted in the  recognition  of a cumulative  effect charge of $3.1 million
(net of applicable taxes effect of $2.1 million) on July 1, 2000.

INCOME TAXES

As of June 30, 2001, the Company had gross deferred tax assets of $11.4 million,
with $2.5  million of the  deferred tax assets  relating to net  operating  loss
carry  forwards  which will be available to offset future taxable income through
2008.  Management  believes  that the Company will  generate  sufficient  future
taxable  income to realize the majority of these net  deferred  tax assets.  The
Company has recorded a valuation allowance for $4.5 million against the deferred
tax  assets as of June 30,  2001 and will  continue  to do so until such time as
management  believes that the Company will realize such tax  benefits.  Although
uncertainties  exist as to these events, the Company will continue to review its
operations  periodically  to assess whether and when all deferred tax assets may
be realized.  See Note 6 of Notes to Consolidated Financial Statements in Item 8
of this Report for additional information.

                                       15
<PAGE>


                        RESULTS OF OPERATIONS (CONTINUED)

NET INCOME

Net income for fiscal year 2001 was $1.4 million,  or $.08 per common share on a
diluted basis,  as compared to net income of $16.3  million,  or $.77 per common
share for fiscal year 2000.  The Company  generated  basic earnings per share of
$.08 and $.82 in fiscal  years  2001 and  2000,  respectively.  Included  in net
income were deferred tax benefits of $1.4 million for fiscal year 2000.

STOCKHOLDERS' EQUITY

During fiscal year 2001,  stockholders'  equity decreased $45.3 million to $16.3
million from $61.6  million at June 30, 2000.  In addition to net income of $1.4
million for fiscal year 2001, the Company received $1.0 million from the sale of
common stock under its stock option plans and employee  stock  purchase plan and
paid $48.8  million to  shareholders  in  connection  with a  self-tender  offer
completed in January 2001. See Liquidity and Capital Resources below and Notes 7
and 11 of Notes to  Consolidated  Financial  Statements in Item 8 of this Report
for  additional  information.  The  book  value  per  common  share  issued  and
outstanding decreased to $1.22 at June 30, 2001 from $3.11 at June 30, 2000.

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

REVENUE

Total revenue for fiscal year 2000 was $413.5 million, an increase of 31.7% from
$314.1  million for fiscal year 1999,  reflecting  stronger real estate  markets
overall and increased business activity across the Company's service lines. This
improvement  related  primarily  to an $88.1  million,  or  33.9%,  increase  in
advisory  services fees as a result of growth in strategic and select  corporate
account activity, along with the effect of acquisitions completed in fiscal year
1999.  Management  services fees of $65.4 million increased by $11.3 million, or
21.0%,  in fiscal  2000  compared to the prior  year,  as a result of  increased
activity in business services and property management and facilities  management
outsourcing assignments.

COSTS AND EXPENSES

As  a  percentage  of  advisory  services  gross  transaction  revenue,  related
commission  expense  increased  by 200  basis  points  for  fiscal  year 2000 as
compared  to fiscal year 1999.  This  increase  was due to higher  participation
rates in effect  at some of the  companies  acquired  over the past two years as
well as  larger  percentages  of the  fiscal  year  2000  revenue  generated  by
professionals in the higher commission brackets.

Total costs and expenses, other than advisory services commissions, depreciation
and amortization and other non-recurring  expenses,  increased by $22.1 million,
or 15.3%,  for fiscal year 2000 compared to fiscal year 1999.  The rise in these
operating  costs is  attributable  partially to the  incremental  operating  and
integration costs associated with the acquisition of Landauer Associates,

                                       16
<PAGE>


                        RESULTS OF OPERATIONS (CONTINUED)

COSTS AND EXPENSES (CONTINUED)

Inc.  in the first  quarter  of fiscal  2000,  along with  additional  costs and
expenses related to fiscal 1999 acquisitions and infrastructure and personnel to
support the overall revenue growth of the Company.

Depreciation  and  amortization  expense for fiscal year 2000 increased to $10.5
million from $7.3  million in fiscal year 1999 as the Company  placed in service
numerous technology infrastructure improvements during the latter part of fiscal
year 1999 and  through  the first  half of fiscal  year  2000.  Amortization  of
goodwill related to the Company's various business  acquisitions during 1998 and
1999 also  contributed  to this  increase.  The Company  also signed  multi-year
service contracts with certain advisory  professionals  over the last two fiscal
years,  the costs of which are being  amortized over the lives of the respective
contracts, which are generally two to three years. Amortization expense relating
to these contracts of $2.2 million was recognized in fiscal year 2000,  compared
to $1.2 million in the prior year.

Other  non-recurring  expenses  totaling  $2.7 million for fiscal year 2000 were
recognized in connection with the  resignation of the Company's  former chairman
and chief executive officer.

Interest  expense  incurred in fiscal  years 2000 and 1999 was due  primarily to
seller financing related to business acquisitions made in calendar year 1998, as
well as credit facility borrowings in the last half of fiscal year 1999.

INCOME TAXES

As of June 30, 2000, the Company had gross deferred tax assets of $10.0 million,
with $2.8  million of the  deferred tax assets  relating to net  operating  loss
carry  forwards.  The Company  recorded a valuation  allowance  for $4.4 million
against the deferred tax assets as of June 30, 2000.

NET INCOME

Net income for fiscal year 2000 was $16.3 million, or $.77 per common share on a
diluted  basis,  as compared to net income of $8.1  million,  or $.37 per common
share for fiscal year 1999.  The Company  generated  basic earnings per share of
$.82 and $.41 in fiscal  years  2000 and  1999,  respectively.  Included  in net
income were  deferred  tax  benefits of $1.4 million and $1.3 million for fiscal
years 2000 and 1999, respectively.

STOCKHOLDERS' EQUITY

During fiscal year 2000,  stockholders'  equity increased $17.1 million to $61.6
million from $44.5  million at June 30, 1999. In addition to net income of $16.3
million for fiscal year 2000, the Company received $1.2 million from the sale of
common stock under its stock option plans and employee  stock purchase plan. The
Company also issued a warrant to Aegon USA Realty  Advisors,  Inc.,  to purchase
600,000  shares of its  common  stock,  which was  valued at $1.6  million,  and
repurchased  359,900 shares of its common stock for approximately  $2.0 million.
In addition,  the Company agreed to pay $1.6 million to its former  chairman and
chief executive officer in return for

                                       17
<PAGE>


                        RESULTS OF OPERATIONS (CONTINUED)

STOCKHOLDERS' EQUITY (CONTINUED)

the  cancellation  of options to purchase  465,000 shares of common stock of the
Company.  The book value per common  share issued and  outstanding  increased to
$3.11 at June 30, 2000 from $2.24 at June 30, 1999.

                         LIQUIDITY AND CAPITAL RESOURCES

The  Company  had  an  overall   reduction  in  cash  of  $10.6  million  mostly
attributable to the net impact on cash reserves from the self-tender  offer. The
Company  generated cash flow from  operations of $8.0 million during fiscal year
2001,  which was used to fund its purchase of equipment,  software and leasehold
improvements of $6.2 million,  and make deferred payments of $568,000 to sellers
involved in the Company's recent  acquisitions.  With respect to the self-tender
offer  completed  in February  2001,  the  Company  disbursed  $48.8  million to
stockholders and related costs, offset by $37 million in related net borrowings.

See Note 15 of  Notes to  Consolidated  Financial  Statements  in Item 8 of this
Report for information concerning earnings before interest,  taxes, depreciation
and amortization.

The Company has  historically  experienced  the highest use of operating cash in
the  quarter  ending  March 31,  primarily  related  to the  payment  of certain
employee benefits and incentives and deferred  commission payable balances which
attain peak levels during the quarter ending December 31.  Deferred  commissions
balances of approximately $25.7 million,  related to revenues earned in calendar
year 2000, were paid in the quarter ended March 31, 2001.

On December 15, 2000,  the Company  commenced a self-tender  offer  ("Offer") to
purchase up to 7.0 million shares of its outstanding  common stock at a price of
$7 per share in cash. On January 25, 2001 the Company  announced the  expiration
of the Offer period,  and  subsequently  disbursed net proceeds of approximately
$48.8 million to the shareholders and  optionholders and to fund direct expenses
of the Offer.  The Offer and  payment of related  expenses  was funded with $8.8
million of the  Company's  cash  reserves and a $40 million  term loan  borrowed
under an amended and restated credit agreement ("Credit  Agreement") arranged by
Bank of America,  N.A.  ("BofA"),  which revised certain terms and provisions of
its prior credit facility.

The Credit  Agreement also provides a $15 million  revolving credit facility for
working capital purposes.  The term loan facility ($40 million at inception) was
funded on January 24,  2001,  and  amortizes on a quarterly  basis,  totaling $8
million each year,  until  December 31, 2005 when both  facilities  mature.  The
revolving credit facility remains fully available as of the date of this report.
Certain  other  mandatory  prepayment  provisions  related to the receipt by the
Company of certain  debt,  equity  and/or sales  proceeds  also exist within the
Credit Agreement.

Direct expenses related to the Offer totaling  approximately $795,000 were fully
paid and charged to  stockholders'  equity during fiscal year 2001, as incurred.
Direct expenses were paid related to the Credit Agreement totaling approximately
$559,000,  which  have been  recorded  as  deferred  financing  fees and will be
amortized over the term of the agreement.

                                       18
<PAGE>


                   LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

The Credit  Agreement  also  required  the Company to enter into  interest  rate
protection agreements, within 90 days of the date of the agreement,  effectively
fixing the interest rates on not less than 50% of the aggregate principal amount
of the term loan scheduled to be outstanding for a period of not less than three
years.  The Company  entered into two such  agreements,  each of which  contains
nearly identical terms.  These interest rate swap agreements require the Company
to pay a fixed annual interest rate of 5.18% on a notional  amount  representing
one-half of the outstanding term loan principal, or $18.5 million as of June 30,
2001. The Company has determined that these  agreements are to be  characterized
as  effective  under the  definitions  included  within  Statement  of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities".  This characterization requires the Company to recognize changes in
the fair value of the instruments within its stockholders' equity for the period
being presented.  The fair value of the instruments at June 30, 2001 reflects an
obligation,  and a corresponding charge has been recorded in Other Comprehensive
Loss in the Company's stockholders' equity.

See Notes 5 and 11 of Notes to Consolidated Financial Statements under Item 8 of
this Report for additional  information  pertaining to the Credit  Agreement and
Offer.

In August 1999 the Company  announced a program through which it may purchase up
to $3 million of its common stock on the open market from time to time as market
conditions  warrant.  As of June 30, 2001 the Company  had  repurchased  359,900
shares at a total cost of approximately $2.0 million. No shares were repurchased
under this program during fiscal year 2001.

The Company entered into an employment agreement with Barry M. Barovick as Chief
Executive  Officer and President  effective May 15, 2001. Terms of the agreement
call for,  among other things,  a signing bonus and loan payments of up to $1.75
million to be paid within the first ninety days of the agreement.  See Note 8 of
Notes to Consolidated Financial Statements in Item 8 of this Report.

The  Company   believes  that  its  short-term  and  long-term   operating  cash
requirements  will be met by operating  cash flow.  In addition,  the  Company's
credit  facility is available  for  additional  capital  needs.  In the event of
adverse economic  conditions or other unfavorable events, and to the extent that
the Company's cash requirements are not met by operating cash flow or borrowings
under  its  credit  facility,  the  Company  may  find it  necessary  to  reduce
expenditure  levels or undertake  other actions as may be appropriate  under the
circumstances.

The Company continues to explore additional strategic acquisition  opportunities
that have the  potential to expand the depth and breadth of its current lines of
business and increase its market share.  The sources of  consideration  for such
acquisitions  could be cash, the Company's  current credit  facility,  net debt,
and/or the issuance of stock,  or a combination of the above.  No assurances can
be  made  that  any  additional  acquisitions  will  be  made.  Warburg,  Pincus
Investors, L.P., a principal stockholder, may provide the Company with financing
in connection with potential acquisitions.

                                       19
<PAGE>


                   LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's bank debt obligations are floating rate obligations whose interest
rate and related  monthly  interested  payments vary with the movement in LIBOR.
See Note 5 of Notes to the  Consolidated  Financial  Statements  under Item 8 of
this  Report.  In order to  mitigate  this risk,  terms of the credit  agreement
required the Company to enter into interest rate swap  agreements to effectively
convert fifty percent of its floating rate term debt  obligations  to fixed rate
debt obligations  through March 2004.  Interest rate swaps generally involve the
exchange of fixed and floating rate interest payments on an underlying  notional
amount.  As of June 30, 2001 the Company  had $18.5  million in notional  amount
interest rate swaps  outstanding in which the Company pays a fixed rate of 5.18%
and  receives  a three  month  LIBOR  based  rate from the  counterparties.  The
notional  amount of the interest rate swap agreements is scheduled to decline as
follows:

                   Notional Amount                Date
                   ---------------          --------------
                     $14,500,000             June 30, 2002
                      10,500,000             June 30, 2003
                       8,000,000            March 31, 2004

When  interest  rates rise the interest  rate swap  agreements  increase in fair
value to the  Company  and when  interest  rates  fall the  interest  rate  swap
agreements decline in value to the Company.  As of June 30, 2001, interest rates
had  fallen and the  interest  rate swap  agreement  was in an  unrealized  loss
position to the Company of approximately $68,000, net of taxes.

To highlight the  sensitivity of the interest rate swap agreements to changes in
interest  rates,  the  following  summary  shows the  effects of a  hypothetical
instantaneous  change of 100 basis points (BPS) in interest rates as of June 30,
2001 (in thousands):

            Notional Amount                               $ 18,500
            Fair Value to the Company                          (68)
            Fair Value to the Company Reflecting
                Change in Interest Rates
                -100 BPS                                      (250)
                +100 BPS                                       115

The  Company  does  not  utilize  financial  instruments  for  trading  or other
speculative purposes, nor does it utilize leveraged financial instruments.

                                       20
<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Grubb & Ellis Company

We have audited the  accompanying  consolidated  balance sheets of Grubb & Ellis
Company as of June 30, 2001 and 2000, and the related consolidated statements of
income,  stockholders' equity, and cash flows for each of the three years in the
period ended June 30, 2001. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Grubb &
Ellis  Company at June 30, 2001 and 2000,  and the  consolidated  results of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 2001, in conformity with accounting  principles  generally  accepted in
the United States.

As discussed in Note 13 to the consolidated financial statements, in fiscal 2001
the Company changed its method of accounting for revenue recognition for leasing
commissions and consulting fees.

ERNST & YOUNG LLP

Chicago, Illinois
August 28, 2001

                                       21
<PAGE>


                              GRUBB & ELLIS COMPANY
                           CONSOLIDATED BALANCE SHEETS

                             JUNE 30, 2001 AND 2000

                        (IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS

                                                           2001          2000
                                                         --------     ---------

Current assets:
  Cash and cash equivalents                              $  7,248     $  17,862
  Service fees receivable, net                             17,897        28,896
  Other receivables                                         3,610         3,416
  Advisor service contracts, net                            3,263         2,364
  Prepaids and other current assets                         5,278         2,113
  Deferred tax assets, net                                  1,296         1,132
                                                         --------     ---------
      Total current assets                                 38,592        55,783

Noncurrent assets:
  Equipment, software and leasehold
    improvements, net                                      19,669        20,501
  Goodwill, net                                            26,328        29,559
  Deferred tax assets, net                                  3,535         3,133
  Other assets                                              4,302         6,966
                                                         --------     ---------

      Total assets                                       $ 92,426     $ 115,942
                                                         ========     =========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                       $  3,330     $   2,708
  Commissions payable                                       7,952        18,682
  Acquisition indebtedness                                     --           519
  Credit facility debt                                      8,000            --
  Accrued compensation and employee benefits               13,416        14,316
  Other accrued expenses                                    4,678         7,675
                                                         --------     ---------
    Total current liabilities                              37,376        43,900

Long-term liabilities:
  Credit facility debt                                     29,000            --
  Accrued claims and settlements                            8,695         8,741
  Other liabilities                                         1,039         1,681
                                                         --------     ---------
    Total liabilities                                      76,110        54,322
                                                         --------     ---------


Stockholders' equity:
  Common stock, $.01 par value: 50,000,000 shares
      authorized; 13,358,615 and 19,810,894
      shares issued and outstanding at
      June 30, 2001 and  2000, respectively                   134           198
    Additional paid-in-capital                             66,858       113,399
    Accumulated other comprehensive loss                      (68)           --
    Retained deficit                                      (50,608)      (51,977)
                                                         --------     ---------
      Total stockholders' equity                           16,316        61,620
                                                         --------     ---------

      Total liabilities and stockholders' equity         $ 92,426     $ 115,942
                                                         ========     =========



                 The accompanying notes are an integral part of
                     the consolidated financial statements.

                                       22
<PAGE>


                              GRUBB & ELLIS COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME

                FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                               2001            2000            1999
                                                           -----------     -----------     -----------
<S>                                                        <C>             <C>             <C>
Revenue:
    Advisory services fees                                 $   351,587     $   348,165     $   260,071

    Management services fees                                    60,228          65,370          54,030
                                                           -----------     -----------     -----------
      Total revenue                                            411,815         413,535         314,101
                                                           -----------     -----------     -----------
Costs and expenses:
   Services commissions                                        216,646         208,260         150,343
   Salaries, wages and benefits                                 98,847          98,383          83,531
   Selling, general and administrative                          68,550          68,304          61,064
   Depreciation and amortization                                11,635          10,521           7,328
   Impairment and other non-recurring expenses                   6,222           2,650              --
                                                           -----------     -----------     -----------
      Total costs and expenses                                 401,900         388,118         302,266
                                                           -----------     -----------     -----------
        Total operating income                                   9,915          25,417          11,835
Other income and expenses:
   Interest and other income                                     1,787             884             922
   Interest expense                                             (1,422)           (413)           (702)
                                                           -----------     -----------     -----------
      Income before income taxes, extraordinary item
         and  cumulative effect                                 10,280          25,888          12,055

Provision for income taxes                                      (5,372)         (9,598)         (3,976)
                                                           -----------     -----------     -----------
Income before extraordinary item and cumulative effect           4,908          16,290           8,079
Extraordinary loss on extinguishment of debt, net of tax          (406)             --              --
                                                           -----------     -----------     -----------
Income before cumulative effect of accounting change             4,502          16,290           8,079
Cumulative effect of accounting change, net of tax              (3,133)             --              --
                                                           -----------     -----------     -----------
   Net income                                              $     1,369     $    16,290     $     8,079
                                                           ===========     ===========     ===========
Net income per common share:
   Basic-
   - before extraordinary item and cumulative effect       $      0.28     $      0.82     $      0.41
   - from extraordinary loss                                     (0.02)             --              --
   - from cumulative effect of accounting change                 (0.18)             --              --
                                                           -----------     -----------     -----------
                                                           $      0.08     $      0.82     $      0.41
                                                           ===========     ===========     ===========

   Diluted-
   -before extraordinary item and cumulative effect        $      0.27     $      0.77     $      0.37
   -from extraordinary loss                                      (0.02)             --              --
   -from cumulative effect of accounting change                  (0.17)             --              --
                                                           -----------     -----------     -----------
                                                           $      0.08     $      0.77     $      0.37
                                                           ===========     ===========     ===========
Weighted average common shares outstanding:
   Basic-                                                   17,051,546      19,779,220      19,785,715
                                                           ===========     ===========     ===========

   Diluted-                                                 17,975,351      21,037,311      21,587,898
                                                           ===========     ===========     ===========
</TABLE>


                 The accompanying notes are an integral part of
                     the consolidated financial statements.

                                       23
<PAGE>


                              GRUBB & ELLIS COMPANY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                        Common Stock
                                  ------------------------                  Accumulated
                                                              Additional       Other        Retained       Total          Total
                                  Outstanding                  Paid-In-    Comprehensive    Earnings    Comprehensive  Stockholders'
                                     Shares         Amount     Capital          Loss        (Deficit)      Income         Equity
                                  ------------      ------    ----------   -------------    --------    -------------  ------------
<S>                <C>              <C>             <C>        <C>            <C>           <C>           <C>            <C>
Balance as of July 1, 1998          19,721,056      $ 198      $ 111,562      $     --      $(76,346)                    $ 35,414


Employee common stock
  purchases and net
  exercise of stock
  options                              164,028          1            988            --            --                          989
Net income                                  --         --             --            --         8,079                        8,079
                                    ----------      -----      ---------      --------      --------                     --------
Balance as of June 30, 1999         19,885,084        199        112,550            --       (68,267)                      44,482

Stock warrants issued                       --         --          1,620                          --                        1,620

Stock repurchases                     (359,900)        (4)        (1,979)                         --                       (1,983)

Employee common stock
  purchases and net
  exercise of stock
  options                              285,710          3          1,208                          --                        1,211

Net income                                  --         --             --                      16,290                       16,290
                                  ------------      -----      ---------      --------      --------                     --------
Balance as of June 30, 2000         19,810,894        198        113,399            --       (51,977)                      61,620

Self-tender offer repurchases       (7,000,073)       (70)       (48,740)           --            --                      (48,810)

Employee common stock
  purchases and net
  exercise of stock options            547,794          6          2,199            --            --                        2,205
Net income                                  --         --             --            --         1,369      $  1,369          1,369

Change in value of cash
  flow hedge, net of tax                    --         --             --           (68)           --           (68)           (68)
                                                                                                          --------
Total comprehensive income                                                                                $  1,301
                                  ------------      -----      ---------      --------      --------      ========       --------

Balance as of June 30, 2001         13,358,615      $ 134      $  66,858      $    (68)     $(50,608)                    $ 16,316
                                  ============      =====      =========      ========      ========                     ========
</TABLE>


                 The accompanying notes are an integral part of
                     the consolidated financial statements.

                                       24
<PAGE>


                              GRUBB & ELLIS COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                        2001          2000          1999
                                                                      --------      --------      --------
<S>                                                                   <C>           <C>           <C>
Cash Flows from Operating Activities:

Net income                                                            $  1,369      $ 16,290      $  8,079
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Deferred tax provision (benefit)                                       (566)        2,125         3,334
   Depreciation and amortization                                        11,635        10,521         7,328
   Extraordinary loss, net of tax                                          406            --            --
   Cumulative effect of accounting change, net of tax                    3,133            --            --
   Impairment of goodwill and other investments                          3,000            --            --
   (Recovery) provision for services fees
       receivable valuation allowances                                    (195)         (336)          547
    Stock option compensation expense                                    1,219            --            --
Funding of multi-year service contracts                                 (3,637)       (2,773)           --
Increase in services fees receivable                                    (3,962)       (2,384)       (5,373)
(Increase) decrease in prepaid and other assets                           (623)        1,268        (6,537)
Increase in accounts and commissions payable                                92         1,111         4,109
Increase (decrease) in compensation and employee benefits payable         (900)        4,805         2,563
Decrease in accrued claims and settlements                                 (46)          (95)         (204)
Increase  (decrease) in other liabilities                               (2,916)        4,402        (1,051)
                                                                      --------      --------      --------
     Net cash provided by operating activities                           8,009        34,934        12,795
                                                                      --------      --------      --------

Cash Flows from Investing Activities:

Purchases of equipment, software and leasehold improvements             (6,153)       (8,008)       (9,669)
Cash paid for business acquisitions, net of cash acquired                 (568)       (1,112)      (17,102)
Other investing activities                                                  --        (1,900)           --
                                                                      --------      --------      --------
    Cash used in investing activities                                   (6,721)      (11,020)      (26,771)
                                                                      --------      --------      --------

Cash Flows from Financing Activities:

Repayment of credit facility debt                                       (3,000)       (7,500)           --
Borrowings on credit facility                                           40,000            --         7,500
Repayment of acquisition indebtedness                                     (519)       (2,366)       (3,264)
Proceeds from issuance of common stock, net                                986         1,211           989
Cash paid to fund self-tender offer                                    (48,810)           --            --
Repurchase of common stock                                                  --        (1,983)           --
Deferred financing fees                                                   (559)         (914)           --
                                                                      --------      --------      --------
   Net cash (used in) provided by financing activities                 (11,902)      (11,552)        5,225
                                                                      --------      --------      --------

Net increase  (decrease) in cash and cash equivalents                  (10,614)       12,362        (8,751)
Cash and cash equivalents at beginning of the year                      17,862         5,500        14,251
                                                                      --------      --------      --------

Cash and cash equivalents at end of the year                          $  7,248      $ 17,862      $  5,500
                                                                      ========      ========      ========
</TABLE>

                 The accompanying notes are an integral part of
                     the consolidated financial statements.

                                       25
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A)  THE COMPANY

Grubb & Ellis Company (the  "Company") is a full service  commercial real estate
company  that  provides  services  to real estate  owners/investors  and tenants
including advisory services  involving  leasing,  acquisitions and dispositions,
and property  and  facilities  management  services.  Additionally,  the Company
provides  consulting  and strategic  services  with respect to  commercial  real
estate.

(B)  PRINCIPLES OF CONSOLIDATION

The  consolidated  financial  statements  include the  accounts of Grubb & Ellis
Company,  and its wholly owned subsidiaries,  including Grubb & Ellis Management
Services,  Inc.  ("GEMS"),  which provides  property and  facilities  management
services. All significant intercompany accounts have been eliminated.

(C)  BASIS OF PRESENTATION

The  financial  statements  have been  prepared in  conformity  with  accounting
principles  generally  accepted in the United States which require management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  (including  disclosure of contingent assets and liabilities) at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

(D)  REVENUE RECOGNITION

Real  estate  sales  commissions  are  recognized  at the  earlier of receipt of
payment,  close of escrow or transfer of title between buyer and seller. Receipt
of  payment  occurs  at the  point at  which  all  Company  services  have  been
performed,  and title to real  property  has  passed  from  seller to buyer,  if
applicable.  Real estate leasing  commissions  are recognized  upon execution of
appropriate  lease and  commission  agreements  and  receipt  of full or partial
payment,  and, when payable upon certain events such as tenant occupancy or rent
commencement, upon occurrence of such events. All other commissions and fees are
recognized at the time the related  services have been performed by the Company,
unless future contingencies exist.

Effective July 1, 2000,  the Company  changed its method of accounting to comply
with the Securities and Exchange  Commission's ("SEC") Staff Accounting Bulletin
No. 101, "Revenue Recognition in Financial Statements," which summarized the SEC
staff's views  regarding the  recognition and reporting of revenues in financial
statements. See Note 13 for additional information.

                                       26
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(E)  COSTS AND EXPENSES

Real estate advisory and other commission  expenses are recognized  concurrently
with the related  revenue.  All other costs and  expenses  are  recognized  when
incurred.

GEMS incurs certain salaries, wages and benefits in connection with the property
and  corporate  facilities  management  services it  provides  which are in part
reimbursed at cost by the owners of such properties.  The following is a summary
of the GEMS  total  gross and  reimbursable  salaries,  wages and  benefits  (in
thousands) for the years ended June 30, 2001,  2000 and 1999. The net expense is
included in  salaries,  wages and  benefits on the  Consolidated  Statements  of
Income.

                                               2001         2000         1999
                                            ---------    ---------    ---------

Gross salaries, wages and benefits          $ 140,667    $ 132,556    $ 125,126

Less: reimbursements from property owners    (104,648)     (94,621)     (94,753)
                                            ---------    ---------    ---------

Net salaries, wages and benefits            $  36,019    $  37,935    $  30,373
                                            =========    =========    =========

(F)  ACCOUNTING FOR STOCK-BASED COMPENSATION

Statements  of  Financial   Accounting   Standards  No.  123,   "Accounting  for
Stock-Based  Compensation  ("Statement  123") allows companies to either account
for stock-based  compensation under the provisions of Statement 123 or under the
provisions of Accounting Principles Board Opinion No. 25 ("APB 25"). The Company
elected to continue  accounting for  stock-based  compensation  to its employees
under the provisions of APB 25.  Accordingly,  because the exercise price of the
Company's  employee stock options equals or exceeds the fair market value of the
underlying stock on the date of grant, no compensation  expense is recognized by
the  Company.  If the  exercise  price of an award is less than the fair  market
value of the underlying stock at the date of grant,  the Company  recognizes the
difference as  compensation  expense over the vesting  period of the award.  The
Company,  however,  is required to provide pro forma  disclosure  as if the fair
value  measurement  provisions of Statement 123 had been adopted.  See Note 7 of
Notes to Consolidated Financial Statements for additional information.

(G)  INCOME TAXES

Deferred  income taxes are recorded based on enacted  statutory rates to reflect
the tax consequences in future years of the differences between the tax bases of
assets and  liabilities  and their  financial  reporting  amounts.  Deferred tax
assets,  such as net operating loss carry  forwards,  which will generate future
tax benefits are  recognized  to the extent that  realization  of such  benefits
through  future taxable  earnings or  alternative  tax strategies is more likely
than not.

                                       27
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(H)  CASH AND CASH EQUIVALENTS

Cash  and  cash  equivalents  consist  of  demand  deposits  and  highly  liquid
short-term  debt  instruments  with  maturities of three months or less from the
date of purchase and are stated at cost.

Cash payments for interest were approximately $1,383,000,  $537,000 and $511,000
for each of the fiscal years ended June 30, 2001,  2000 and 1999,  respectively.
Cash  payments for income  taxes for the fiscal years ended June 30, 2001,  2000
and 1999 were approximately $10,303,000, $4,372,000 and $474,000, respectively.

(I)  ADVISOR SERVICE CONTRACTS

The Company  holds  multi-year  service  contracts  with  certain  key  advisory
professionals  for  which  cash  payments  were made to the  professionals  upon
signing, the costs of which are being amortized over the lives of the respective
contracts, which are generally two to three years. Amortization expense relating
to these  contracts of $2.9 million and $2.2  million was  recognized  in fiscal
years 2001 and 2000, respectively.

(J)  EQUIPMENT, SOFTWARE AND LEASEHOLD IMPROVEMENTS

Equipment,   software  and   leasehold   improvements   are  recorded  at  cost.
Depreciation of equipment is computed using the straight-line  method over their
estimated useful lives ranging from three to seven years. Software costs consist
of costs to purchase  and develop  software.  All software  costs are  amortized
using a  straight-line  method over their estimated  useful lives,  ranging from
three to seven years.  Development costs are amortized once the related software
is  placed  in  service.   Leasehold   improvements   are  amortized  using  the
straight-line  method  over  their  useful  lives not to exceed the terms of the
respective leases. Maintenance and repairs are charged to expense as incurred.

(K)  GOODWILL

Goodwill,  representing  the  excess of the cost over the fair  value of the net
tangible assets of acquired businesses,  is stated at cost and is amortized on a
straight line basis over estimated  future periods to be benefited,  which range
from  15  to  25  years.  Accumulated  amortization  amounted  to  approximately
$4,704,000 and $3,375,000 at June 30, 2001 and 2000, respectively.

The net  carrying  value of  goodwill is  reviewed  by  management  if facts and
circumstances,   such  as   significant   declines  in  revenues  or  number  of
professionals,  suggest  that an  impairment  may  exist.  If an  impairment  is
identified  as a  result  of such  reviews,  the  Company  would  measure  it by
comparing  undiscounted  cash flows of a  specific  acquired  business  with the
carrying value of goodwill

                                       28
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

associated  therewith.  If the future estimated  undiscounted cash flows are not
sufficient to recover the carrying value of such  goodwill,  such asset would be
adjusted to its fair value through a charge to operations. An impairment loss of
$2,150,000 was  recognized in fiscal 2001 (See Note 12 of Notes to  Consolidated
Financial  Statements for  additional  information).  No impairment  losses were
identified in fiscal 2000 or 1999.

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards No. 141,  BUSINESS  COMBINATIONS,  and No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be amortized but
will be subject to annual  impairment  tests in accordance  with the Statements.
Other intangible assets will continue to be amortized over their useful lives.

The  Company  will  apply the new rules on  accounting  for  goodwill  and other
intangible  assets  beginning in the first fiscal quarter of fiscal 2003,  which
for the Company would be the quarter ending  September 30, 2002.  Application of
the  nonamortization  provisions  of the  Statement  is expected to result in an
increase in net income of  approximately  $1.6 million per year.  During  fiscal
2003,  the Company will perform the first of the  required  impairment  tests of
goodwill as of July 1, 2002 and has not yet determined  what the effect of these
tests will be on the earnings and financial position of the Company.

(L)  ACCRUED CLAIMS AND SETTLEMENTS

The Company has maintained  partially  self-insured and deductible  programs for
errors and  omissions,  general  liability,  workers'  compensation  and certain
employee  health care costs.  Reserves for such programs are included in accrued
claims and  settlements  and  compensation  and employee  benefits  payable,  as
appropriate.  Reserves are based on the  aggregate of the liability for reported
claims and an actuarially-based estimate of incurred but not reported claims.

(M)  FAIR VALUE OF FINANCIAL INSTRUMENTS

Statements of Financial  Accounting  Standards No. 107,  "Disclosures about Fair
Value of Financial  Instruments",  requires disclosure of fair value information
about  financial  instruments,  whether or not  recognized  in the  Consolidated
Balance Sheets. Considerable judgment is required in interpreting market data to
develop estimates of fair value. Accordingly, the estimates presented herein are
not  necessarily  indicative  of the amounts that the Company could realize in a
current  market  exchange.  The  use  of  different  market  assumptions  and/or
estimation  methodologies may have a material effect on the estimated fair value
amounts.  The carrying  amounts of the Company's  financial  instruments,  which
include cash and cash  equivalents,  receivables and obligations  under accounts
payable and debt instruments,  approximate  their fair values,  based on similar
instruments with similar risks.

                                       29
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(N)  FAIR VALUE OF DERIVATIVE INSTRUMENTS AND HEDGED ITEMS

The  Financial   Accounting   Standards  Board  issued  Statement  of  Financial
Accounting  ("SFAS") No. 138 "Accounting for Derivative  Instruments and Hedging
Activities"  which amends SFAS No. 133,  "Accounting for Derivative  Instruments
and Hedging Activities." SFAS No. 133, as amended,  requires companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
value.  The Company  became subject to the  requirements  of SFAS No. 133 during
March 2001, as a result of entering into two interest rate swaps in  conjunction
with a new  credit  agreement.  See Note 5 of Notes  to  Consolidated  Financial
Statements  for  additional  information.  SFAS No. 133 may increase or decrease
reported net income and stockholders' equity prospectively,  depending on future
levels of interest rates, the computed  "effectiveness"  of the derivatives,  as
that term is defined by SFAS No. 133,  and other  variables  affecting  the fair
values of derivative  instruments  and hedged items,  but will have no effect on
cash flows.

(O)  RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.  Commissions  payable and other liabilities of approximately $12.7
million,  respectively,  at June 30,  2000,  were offset  against  service  fees
receivables  and other assets in previous  financial  statements,  and have been
reclassified  to  commissions  payable  and other  liabilities  for  comparative
purposes.

2.   SERVICES FEES RECEIVABLE, NET

Service fees receivable at June 30, 2001 and 2000 consisted of the following (in
thousands):

                                                           2001          2000
                                                         --------      --------

Advisory services fees receivable                        $  9,969      $ 23,971
Management services fees receivable                         8,886         8,432
  Allowance for uncollectible accounts                       (834)       (2,326)
                                                         --------      --------
      Total                                                18,021        30,077
  Less portion classified as current                       17,897        28,896
                                                         --------      --------
    Non-current portion (included in other assets)       $    124      $  1,181
                                                         ========      ========

The  following is a summary of the changes in the  allowance  for  uncollectible
service fees  receivable for the fiscal years ended June 30, 2001, 2000 and 1999
(in thousands):

                                                    2001        2000       1999
                                                  -------     -------     ------

Balance at beginning of year                      $ 2,326     $ 2,662     $2,115
Reduction from change in accounting principle      (1,297)         --         --
Provision for bad debt                                 --          --        547
Recovery of allowance                                (195)       (336)        --
                                                  -------     -------     ------

Balance at end of year                            $   834     $ 2,326     $2,662
                                                  =======     =======     ======

                                       30
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.   EQUIPMENT, SOFTWARE AND LEASEHOLD IMPROVEMENTS, NET

Equipment,  software  and  leasehold  improvements  at June  30,  2001  and 2000
consisted of the following (in thousands):

                                                               2001        2000
                                                             -------     -------

Furniture, equipment and software systems                    $40,954     $37,028
Leasehold improvements                                         5,060       4,577
                                                             -------     -------
    Total                                                     46,014      41,605
Less accumulated depreciation and amortization                26,345      21,104
                                                             -------     -------
Equipment, software and leasehold improvements, net          $19,669     $20,501
                                                             =======     =======

          The Company wrote off  approximately  $1.7 million and $4.0 million of
     furniture  and  equipment  during the fiscal  years ended June 30, 2001 and
     2000,  respectively.   Approximately  $1.3  million  and  $3.7  million  of
     accumulated  depreciation  and  amortization  expense had been  recorded on
     these assets prior to their  disposition in the fiscal years ended June 30,
     2001 and 2000, respectively.

4.   EARNINGS PER COMMON SHARE

Statement  of  Financial  Accounting  Standards  No. 128,  "Earnings  per Share"
("Statement 128") requires disclosure of basic earnings per share which excludes
any  dilutive  effects of options,  warrants,  and  convertible  securities  and
diluted earnings per share.

The following table sets forth the computation of basic and diluted earnings per
common share from continuing  operations (in thousands,  except per share data):

                                                             For the
                                                    fiscal year ended June 30,
                                                   2001        2000        1999
                                                 -------     -------     -------
Basic earnings per common share:
  Income before extraordinary item
    and cumulative effect                        $ 4,908     $16,290     $ 8,079
                                                 =======     =======     =======
  Weighted average common shares
    outstanding                                   17,052      19,779      19,786
                                                 =======     =======     =======
   Earnings per common share - basic             $  0.28     $  0.82     $  0.41
                                                 =======     =======     =======

                                                             For the
                                                    fiscal year ended June 30,
                                                   2001        2000        1999
                                                 -------     -------     -------
Diluted earnings per common share:
  Income before extraordinary item
    and cumulative effect                        $ 4,908     $16,290     $ 8,079
                                                 =======     =======     =======
  Weighted average common shares outstanding      17,052      19,779      19,786
  Effect of dilutive securities:
    Stock options and warrants                       923       1,258       1,802
                                                 -------     -------     -------

  Weighted average common shares outstanding      17,975      21,037      21,588
                                                 =======     =======     =======

  Earnings per common share - diluted            $  0.27     $  0.77     $  0.37
                                                 =======     =======     =======

                                       31
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.   EARNINGS PER COMMON SHARE (CONTINUED)

Options  outstanding  to purchase  shares of common  stock,  the effect of which
would be  anti-dilutive,  were 1,661,697,  1,177,800,  and 1,124,850 at June 30,
2001, 2000 and 1999,  respectively,  and were not included in the computation of
diluted  earnings per share because the option  exercise  price was greater than
the average market price of the common shares for the year.

5.   CREDIT FACILITY DEBT

Effective  December 31, 2000,  the Company  entered into an amended and restated
credit  agreement  ("Credit  Agreement")  arranged  by  Bank  of  America,  N.A.
("BofA"),  which  revised  certain  terms and  provisions  of its  prior  credit
facility.  The Credit  Agreement  provides for a $40 million term loan which was
used to  fund a  portion  of the  self-tender  offer  completed  by the  Company
effective  January 24, 2001, along with a $15 million  revolving credit facility
for working capital  purposes.  The term loan facility was funded on January 24,
2001, with the revolving  credit  facility  remaining fully available as of June
30, 2001.

Interest on  outstanding  borrowings  is based upon  BofA's  prime rate and/or a
LIBOR  based  rate plus,  in either  case,  an  additional  margin  based upon a
particular financial leverage ratio of the Company, and will vary depending upon
which  interest  rate  options  the  Company  chooses to be applied to  specific
borrowings.  The  average  interest  rate  incurred by the Company on the Credit
Agreement  obligations during fiscal year 2001 was 7.35%. The term loan facility
amortizes on a quarterly  basis,  totaling $8 million each year,  until December
31,  2005  when both  facilities  mature.  Certain  other  mandatory  prepayment
provisions  related to the  operating  cash flows of the Company and receipts of
certain debt, equity and/or sales proceeds also exist within the agreement.

Direct expenses related to the Credit Agreement amendment totaling approximately
$559,000  have been  recorded as deferred  financing  fees and will be amortized
over the term of the agreement. Unamortized fees related to the prior agreement,
totaling  approximately  $406,000  (net of  applicable  taxes  of  approximately
$270,000) were written off concurrently with the effective date of the amendment
and have been recorded as an  extraordinary  loss in accordance  with accounting
principles generally accepted in the United States.

The variable interest rate structure of the Credit Agreement exposes the Company
to risks associated with changes in the interest rate markets. Consequently, the
Credit  Agreement  required  the  Company  to  enter  interest  rate  protection
agreements, within 90 days of the date of the agreement,  effectively fixing the
interest  rates on not less than 50% of the  aggregate  principal  amount of the
term loan scheduled to be outstanding for a period of not less than three years.
The Company subsequently  established risk management policies and procedures to
manage the cost of borrowing obligations, which include the use of interest rate
swap  derivatives  to fix the interest  rate on debt with floating rate indices.
Further, the Company prohibits the use of derivative  instruments for trading or
speculative  purposes. In March 2001, the Company entered into two interest rate
swap agreements

                                       32
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.   CREDIT FACILITY DEBT (CONTINUED)

for a three year term, with banks that are parties to the Credit  Agreement.  As
of June 30,  2001,  the swap  agreements  had a total  notional  amount of $18.5
million,  with a fixed annual  interest rate to be paid by the Company of 5.18%,
and a variable  rate to be received  by the  Company  equal to three month LIBOR
based borrowing  rates.  The Company has determined that these agreements are to
be characterized as effective under the definitions included within Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging Activities".

On June 30, 2001, the derivative  instruments  were reported at their fair value
of approximately  $68,000,  net of applicable taxes, in other liabilities in the
condensed  Consolidated  Balance Sheet.  The offsetting  amount is reported as a
deferred loss in Accumulated Other  Comprehensive  Loss. The Company's  interest
rate swaps are treated as cash flow hedges,  which  address the risk  associated
with future variable cash flows of debt transactions.  Over time, the unrealized
gains  and  losses  held  in  Accumulated  Other   Comprehensive  Loss  will  be
reclassified  into  earnings  in the same  periods in which the hedged  interest
payments affect earnings.

Repayment of the Credit Agreement is  collateralized by substantially all of the
Company's  assets  and  the  Credit  Agreement   contains  certain   restrictive
covenants,  including,  among other things:  restrictions on  indebtedness,  the
payment  of  dividends,   the   redemption  or  repurchase  of  capital   stock,
acquisitions,  investments and loans;  and the maintenance of certain  financial
ratios and minimum cash flow levels.

In August 2001,  the Company  entered into an amendment to the Credit  Agreement
which  amended  financial  covenants  related  to minimum  cash flow  levels and
acceptable  fixed cost ratios.  The amendment also increased the interest margin
by 0.25% over the rate effective in fiscal 2001.

6.   INCOME TAXES

The Company  maintains a fiscal  year  ending  June 30 for  financial  reporting
purposes and a calendar  year for income tax reporting  purposes.  The provision
for income taxes for the fiscal years ended June 30, 2001, 2000 and 1999,  which
includes the income tax impact attributed to the  extraordinary  item ($270,000)
and the cumulative  effect adjustment  ($2,089,000),  consisted of the following
(in thousands):

                                            2001            2000           1999
                                          -------          ------         ------
Current

  Federal                                 $ 3,095          $6,230         $  227
  State and  local                            484           1,243            415
                                          -------          ------         ------
                                            3,579           7,473            642
  Deferred                                   (566)          2,125          3,334
                                          -------          ------         ------
  Net provision                           $ 3,013          $9,598         $3,976
                                          =======          ======         ======

                                       33
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   INCOME TAXES (CONTINUED)

At June 30, 2001, federal income tax operating loss carryforwards ("NOL's") were
available  to the Company in the amount of  approximately  $6.3  million,  which
expire in 2008.  Utilization of the net operating loss  carryforwards is limited
to  approximately  $960,000  per year,  pursuant to Section 382 of the  Internal
Revenue Code ("Code")  relating to a prior ownership  change.  At June 30, 2001,
the Company also had a book capital loss  carryforward  of $850,000 which can be
used to offset future book capital gains.

As a result of a change in  estimate  in the fiscal  year  ended  June 30,  2000
additional  NOL's  of   approximately   $2.0  million,   previously   considered
unavailable  to the Company  under Code  Section  382 (and not given  accounting
recognition)  were  identified.  Approximately  $1.0 million of these NOL's were
utilized in fiscal year 2000,  with the remaining  carryforwards  reflected as a
component of the NOL's at June 30, 2001, discussed above.

The  Company's  effective  tax rate on its income  before taxes differs from the
statutory federal income tax rate as follows for the fiscal years ended June 30:

                                                2001        2000         1999
                                               ------      ------       ------

Federal statutory rate                           35.0%       35.0%        35.0%
State and local income taxes
  (net of federal tax benefits)                   3.9         5.2          1.9
Alternative minimum tax                            --          --          1.9
Meals and entertainment                           3.2         1.3          3.4
Increase (decrease) in valuation allowance         --          --        (11.0)
Goodwill impairment                               8.1          --           --
Goodwill amortization and other                   2.1        (2.1)         1.8
NOL carryforwards                                  --        (2.3)          --
                                               ------      ------       ------

  Effective income tax rate                      52.3%       37.1%        33.0%
                                               ======      ======       ======

During fiscal year 1999,  the Company  reduced the  valuation  allowance by $1.3
million to  recognize  deferred  tax assets  expected  to be  realized in future
years.  Management  believes  that the Company will generate  sufficient  future
taxable income to realize the net deferred tax assets.

                                       34
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   INCOME TAXES (CONTINUED)

Deferred  income  tax  liabilities  or  assets  are  determined   based  on  the
differences  between  the  financial  statement  and tax  basis  of  assets  and
liabilities. The components of the Company's deferred tax assets and liabilities
are as follows as of June 30, 2001 and 2000 (in thousands):

                                                            2001           2000
                                                        --------       --------
Deferred tax assets:
    NOL and credit carry forwards                       $  2,464       $  2,838
    Insurance reserves                                     2,677          2,451
    Commission and fee reserves                              641          1,196
    Claims and settlements                                 1,534          1,431
    Accounting change, deferred for tax basis              1,014             --
    Deferred compensation plan                             1,298            821
    Other                                                  1,746          1,301
                                                        --------       --------
        Deferred tax assets                               11,374         10,038
Less valuation allowance                                  (4,530)        (4,366)
                                                        --------       --------
                                                           6,844          5,672
Deferred tax liabilities                                  (2,013)        (1,407)
                                                        --------       --------
    Net deferred tax asset                              $  4,831       $  4,265
                                                        ========       ========
        Current                                         $  1,296       $  1,132
                                                        ========       ========
        Long Term                                       $  3,535       $  3,133
                                                        ========       ========

7.   STOCK OPTIONS, WARRANTS, STOCK PURCHASE AND 401(K) PLANS

STOCK OPTION PLANS

Changes in stock  options  were as follows  for the fiscal  years ended June 30,
2001, 2000, and 1999:

<TABLE>
<CAPTION>
                                                2001                              2000                             1999
                                   -----------------------------     -----------------------------     -----------------------------
                                    Shares       Exercise Price        Shares      Exercise Price       Shares       Exercise Price
                                   ---------     ---------------     ---------     ---------------     ---------     ---------------
<S>                                <C>           <C>                 <C>           <C>                 <C>           <C>
Stock  options
  outstanding at the
  beginning of the year            2,714,330     $1.88 to $16.44     2,530,280     $1.88 to $20.00     2,383,280     $1.88 to $27.50
Granted                              620,000      $4.80 to $6.44       845,500      $4.75 to $5.81       357,500      $6.25 to $8.94
Lapsed or canceled                  (310,895)    $1.88 to $13.50      (648,050)    $1.88 to $20.00      (182,100)    $2.38 to $27.50
Exercised                           (468,920)     $1.88 to $6.50       (13,400)     $1.88 to $2.38       (28,400)     $1.88 to $6.50
                                   ---------                         ---------                         ---------
Stock options outstanding
  at the end of the year           2,554,515     $1.88 to $16.44     2,714,330     $1.88 to $16.44     2,530,280     $1.88 to $20.00
                                   =========                         =========                         =========

Exercisable at end of
  the year                         1,095,007                         1,127,182                         1,045,102
                                   =========                         =========                         =========
</TABLE>

                                       35
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   STOCK OPTIONS, WARRANTS, STOCK PURCHASE AND 401(K) PLANS (CONTINUED)

Additional  information  segregated  by relative  ranges of exercise  prices for
stock options outstanding as of June 30, 2001 is as follows:

                                 Weighted        Weighted          Weighted
                                 Average         Average            Average
                                  Years          Exercise          Exercise
    Exercise                    Remaining   Price-Outstanding  Price-Exercisable
     Price            Shares      Life            Shares            Shares
-----------------   ---------   ---------   -----------------  -----------------

 $1.88 to $4.25       293,118     2.59           $3.60              $3.48
 $4.80 to $5.81     1,165,744     8.80           $5.30              $5.79
 $5.94 to $8.94       346,165     6.35           $8.08              $8.07
$10.00 to $16.44      749,488     5.92           $11.97            $11.96
                    ---------
                    2,554,515
                    =========

Weighted average  information per share with respect to stock options for fiscal
years ended June 30, 2001 and 2000 is as follows:

                                                   2001               2000
                                                 --------           --------
Exercise price:
  Granted                                        $   4.88           $   5.63
  Lapsed or cancelled                                6.21               4.27
  Exercised                                          3.56               1.98
  Outstanding at June 30                             7.45               7.21
Remaining life                                   6.88 years         6.71 years

The Company's 1990 Amended and Restated Stock Option Plan, as amended,  provides
for grants of options to  purchase  the  Company's  common  stock for a total of
2,000,000  shares.  At June 30,  2001,  2000 and  1999,  the  number  of  shares
available  for the grant of options  under the plan were  595,014,  543,524  and
226,124,  respectively.  Stock  options under this plan may be granted at prices
from 50% up to 100% of the market  price per share at the dates of grant,  their
terms and vesting schedules of which are determined by the Board of Directors.

The  Company's  1993 Stock  Option Plan for Outside  Directors  provides  for an
automatic  grant of an option to purchase  10,000 shares of common stock to each
newly  elected  independent  member of the Board of  Directors  and an automatic
grant of an option to purchase 8,000 shares at the successive  four year service
anniversaries  of each such director.  The exercise prices are set at the market
price at the date of grant. The options expire five years from the date of grant
and vest over three years from such date.  The plan was amended in November 1998
to increase the number of issuable shares authorized for the plan from 50,000 to
300,000  and to  provide  for the  anniversary  options.  The  number  of shares
available for grant was 254,000 at June 30, 2001 and 246,000 at each of June 30,
2000 and 1999.

The Company's  1998 Stock Option Plan provides for grants of options to purchase
the Company's  common stock. The plan authorizes the issuance of up to 2,000,000
shares, and had 786,105, 567,100, and 1,081,950 shares available for grant as of
June 30, 2001, 2000 and 1999, respectively. Stock options under this plan may be
granted at prices and with such other terms and vesting

                                       36
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   STOCK OPTIONS, WARRANTS, STOCK PURCHASE AND 401(K) PLANS (CONTINUED)

schedules as determined by the Compensation Committee of the Board of Directors,
or, with  respect to options  granted to corporate  officers,  the full Board of
Directors.

The  Company's  2000 Stock Option Plan,  which was approved by the  stockholders
effective  November  16,  2000,  provides  for grants of options to purchase the
Company's  common  stock.  The plan  authorizes  the issuance of up to 1,500,000
shares,  and had 900,000 shares  available for grant as of June 30, 2001.  Stock
options  under this plan may be granted at prices and with such other  terms and
vesting  schedules as determined by the  Compensation  Committee of the Board of
Directors,  or, with respect to options  granted to  corporate  officers who are
subject to Section 16 of the  Securities  Exchange Act of 1934, as amended,  the
full Board of Directors.

STOCK WARRANTS

As of June 30, 2001, the Company had the following stock warrants outstanding:

                  Number of Shares
                 Subject to Warrants            Exercise Price
                 -------------------            --------------

                       475,000                     $2.37500
                       235,045                      3.40355
                       887,358                      3.50000
                       88,496                       3.60449
                       600,000                      6.25000

In July 1999,  the Company  issued a warrant to purchase  600,000  shares of the
Company's common stock to Aegon USA Realty Advisors, Inc., the parent company of
Landauer Associates,  Inc. ("LAI"), as part of the consideration  granted in the
acquisition  of LAI.  The warrant has a five-year  life,  expiring in July 2004,
while all other warrants expire in January 2002.

EMPLOYEE STOCK PURCHASE PLAN

The Grubb & Ellis Company  Employee  Stock  Purchase Plan was adopted  effective
August 1, 1997,  and provides for the purchase of up to 750,000 shares of common
stock by  employees  of the  Company at a 15%  discount  from market  price,  as
defined, through payroll deductions.  The numbers of shares purchased under this
plan were  182,683,  272,310 and 135,963  during the fiscal years ended June 30,
2001, 2000 and 1999, respectively.

                                       37
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   STOCK OPTIONS, WARRANTS, STOCK PURCHASE AND 401(K) PLANS (CONTINUED)

EMPLOYEE 401 (K) PLAN

The Company has a 401(k) plan  covering  eligible  employees  and provides  that
employer  contributions  may be made in  common  stock of the  Company  or cash.
Discretionary contributions by the Company for the plans (net of forfeitures and
reimbursements received pursuant to property and corporate facilities management
services  agreements)  amounted  to  approximately  $1,083,000,   $514,000,  and
$891,000 for the fiscal years ended June 30, 2001, 2000 and 1999, respectively.

PRO FORMA INFORMATION

Pro forma information regarding net income and earnings per share is required by
Statement  123,  and has been  determined  as if the Company had  accounted  for
options granted  subsequent to July 1, 1996, and therefore includes grants under
the 1990  Amended and Restated  Stock  Option  Plan,  1993 Stock Option Plan for
Outside  Directors,  1998  Stock  Option  Plan and 2000  Stock  Option  Plan and
purchases made under the Grubb & Ellis  Employee Stock Purchase Plan,  under the
fair  value  method  of that  Statement.  The fair  value  for the  options  was
estimated  at the date of grant  using a  Black-Scholes  option  pricing  model.
Weighted-average assumptions for options granted for fiscal years 2001, 2000 and
1999, respectively, are as follows:

                                            2001          2000          1999
                                         ----------    ----------    ----------

Risk free interest rates                     5.23%         5.99%         4.74%
Dividend yields                                 0%            0%            0%
Volatility factors of the expected
  market price of the common stock           .587          .598          .627
Weighted-average expected lives          6.00 years    6.00 years    6.00 years

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
changes in these assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of options  granted.  The weighted average fair
values of options  granted by the Company in fiscal  years  2001,  2000 and 1999
using this model were $4.86, $2.90 and $4.40 respectively.

The  effects  on fiscal  year  2001,  2000 and 1999 pro forma net income and pro
forma  earnings per common share of  amortizing  to expense the  estimated  fair
value of stock options are not necessarily  representative of the effects on net
income to be reported in future  years due to such things as the vesting  period
of the stock options, and the potential for issuance of additional stock options
in future years. For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting period. The pro
forma  effect of applying  Statement  123's fair value  method to the  Company's
stock-based awards results in net income (loss) of approximately

                                       38
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   STOCK OPTIONS, WARRANTS AND STOCK PURCHASE AND 401 (K) PLANS (CONTINUED)

($246,000),  $14,614,000  and  $6,645,000,  basic  earnings  (loss) per share of
($.01), $.74 and $.34, and diluted earnings (loss) per share of ($.01), $.69 and
$.31 for the fiscal years ended June 30, 2001, 2000 and 1999, respectively.

STOCK REPURCHASE PLAN

In August 1999, the Company  announced a program through which it may repurchase
up to $3.0  million of its common  stock on the open market from time to time as
market  conditions  warrant.  As of June 30, 2001,  the Company had  repurchased
359,900 shares of stock at an aggregate price of approximately $2.0 million.  No
shares were repurchased under this program during fiscal year 2001.

8.   RELATED PARTY TRANSACTIONS

Revenue  earned by the Company for services  rendered to  affiliates,  including
joint ventures,  officers and directors and their affiliates, was as follows for
the fiscal years ended June 30, 2001, 2000 and 1999 (in thousands):

                                                  2001         2000        1999
                                                -------      -------      ------

Advisory services fees                          $10,391      $10,182      $6,810

Management services and other fees              $ 9,342      $ 6,615      $3,859

The  Company  entered  into  certain  contractual  employment  and  compensation
agreements with its new chief executive, financial and operating officers during
and subsequent to fiscal year 2001.  Terms of these agreements  included,  among
other things, i) signing bonuses totaling $528,500,  ii) guaranteed initial year
bonuses totaling $810,000, iii) loans totaling $1.8 million with repayment terms
tied to retention bonuses and continued  employment,  iv) retention bonuses, net
of taxes, sufficient to repay the executive loan obligations in (iii) above, and
v) options to purchase 850,000 shares of the Company's common stock, exercisable
at current market prices.  All payments related to the signing bonuses and loans
were made to the officers on or before August 15, 2001.

9.   COMMITMENTS AND CONTINGENCIES

NONCANCELABLE OPERATING LEASES

The Company has  noncancelable  operating lease obligations for office space and
certain equipment ranging from one to nine years, and sublease  agreements under
which the Company acts as sublessor.  The office space leases provide for annual
rent increases based on the Consumer Price Index,  or other specific terms,  and
typically require payment of property taxes, insurance and maintenance costs.

                                       39
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

Future minimum  payments under  noncancelable  operating  leases with an initial
term of one year or more were as follows at June 30, 2001 (in thousands):

                Year Ending June 30,           Lease Obligations
                --------------------           -----------------
                        2002                       $15,128
                        2003                        11,813
                        2004                         9,005
                        2005                         7,236
                        2006                         4,619
                     Thereafter                      6,234

Lease and rental expense for the fiscal years ended June 30, 2001, 2000 and 1999
amounted to $22,288,000, $21,268,000, and $18,708,000, respectively.

LITIGATION

JOHN W. MATHEWS,  ET AL. V. KIDDER,  PEABODY & CO., ET AL. AND HSM INC., ET AL.,
filed on January 23, 1995 in the United  States  District  Court for the Western
District of  Pennsylvania,  is a class action on behalf of  approximately  6,000
limited  partners  who invested  approximately  $85 million in three public real
estate limited partnerships (the "Partnerships")  during the period beginning in
1982  and  continuing   through  1986.  The  defendants   include  HSM  Inc.,  a
wholly-owned  subsidiary of the Company,  and several  subsidiaries of HSM Inc.,
along with other parties unrelated to HSM Inc. The complaint alleges  violations
under  the  Racketeer   Influenced  and  Corrupt   Organizations  Act  ("RICO"),
securities  fraud,  breach of  fiduciary  duty and  negligent  misrepresentation
surrounding the defendants' organization,  promotion, sponsorship and management
of the  Partnerships.  Specific  damages were not pled, but treble,  punitive as
well as compensatory damages and restitution were sought.

On August 18, 2000,  the district court issued an opinion  granting  defendants'
motions for summary  judgment  dismissing the federal RICO claims as time-barred
under the  statute  of  limitations.  As to the state law  claims  for breach of
fiduciary duty and negligent  misrepresentation,  the court declined to exercise
supplemental  jurisdiction  and  dismissed  them  without  prejudice.  The court
declined to rule on  defendants'  motion to decertify  the class  because it was
moot.  Plaintiffs  appealed the summary  judgment to the Third  Circuit Court of
Appeals.  On July 31, 2001,  the appeals court affirmed and upheld the dismissal
of the Plaintiffs' claims. The Plaintiffs'  petition for rehearing was denied on
August 28, 2001.

                                       40
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

The  Company  has,  and intends to continue  to,  vigorously  defend the MATHEWS
action, and believes it has meritorious  defenses to contest the claims asserted
by the plaintiffs.  Based upon available information, the Company is not able to
determine the financial  impact,  if any, of such action,  but believes that the
outcome  will not have a  material  adverse  effect on the  Company's  financial
position or results of operations.

ENVIRONMENTAL

A  corporate  subsidiary  of  the  Company  owns  a 33%  interest  in a  general
partnership,  which in turn owns  property  in the  State of Texas  which is the
subject  of an  environmental  assessment  and  remediation  effort,  due to the
discovery of certain  chemicals related to a release of dry cleaning solvents in
the soil and groundwater of the partnership's  property and adjacent properties.
Prior assessments had determined that minimal costs would be incurred to correct
the situation.  However,  findings at and around the partnership's property have
increased the probability that additional  remediation  costs will be necessary.
The  partnership  is  working  with  the  Texas  Natural  Resource  Conservation
Commission and the local  municipality to implement a multi-faceted  plan, which
includes both  remediation  and ongoing  monitoring of the affected  properties.
Each of the  partnership's  partners  has  recently  contributed  new capital to
finance the continuing  assessment and remediation  efforts. The Company's share
of  anticipated  costs to remediate  and monitor this  situation is estimated at
approximately  $600,000.  As of June 30,  2001,  approximately  $120,000 of this
amount has been paid,  and the remaining  $480,000 has been  reflected as a loss
reserve  for such  matters in the  consolidated  balance  sheet.  The  Company's
management  believes  that the outcome of these  events will not have a material
adverse effect on the consolidated financial position of the Company.

GENERAL

The Company is involved in various other claims and lawsuits  arising out of the
conduct of its business,  as well as in  connection  with its  participation  in
various joint ventures,  partnerships,  a trust and appraisal business,  many of
which may not be covered by the Company's insurance policies.  In the opinion of
management,  the eventual outcome of such claims and lawsuits is not expected to
have a material adverse effect on the Company's financial position or results of
operations.

10.  CONCENTRATION OF CREDIT RISK

Financial  instruments  that  potentially  subject  the  Company to credit  risk
consist principally of trade receivables and interest-bearing investments. Users
of real estate services account for a substantial  portion of trade  receivables
and  collateral  is  generally  not  required.  The risk  associated  with  this
concentration  is limited due to the large number of users and their  geographic
dispersion.

                                       41
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.  CONCENTRATION OF CREDIT RISK (CONTINUED)

The Company places  substantially all of its  interest-bearing  investments with
major financial  institutions  and limits the amount of credit exposure with any
one financial institution.

The Company believes it has limited exposure to the extent of non-performance by
the  counterparties of each interest rate swap agreement as each counterparty is
a major  financial  institution  and  the  Company  does  not  anticipate  their
non-performance.

11.  SELF TENDER OFFER

On December 15, 2000, the Company  commenced a self-tender  offer to purchase up
to 7.0 million shares of its outstanding common stock at a price of $7 per share
in cash.  Shares  issuable  upon the exercise of  outstanding  stock options and
warrants  were also  eligible for the  buyback.  On January 25, 2001 the Company
announced the expiration of the offer period.

The Company  subsequently  disbursed net proceeds of approximately $48.8 million
to buy  back and  concurrently  retire  7.0  million  shares  of  common  stock,
including  281,901  shares from  options  exercised by  optionholders,  and fund
direct costs of the self-tender offer.

Holders of the Company's  outstanding  stock warrants chose not to exercise such
warrants and tender any underlying shares in respect of the warrants. The tender
offer  was  financed  through  a $40  million  term loan (see Note 5 of Notes to
Consolidated  Financial  Statements)  and $8.8  million  of the  Company's  cash
reserves.  Direct expenses totaling approximately $795,000 related to the tender
offer were charged to stockholders' equity during the fiscal year ended June 30,
2001.

The option exercises,  and the subsequent  repurchase of the resulting shares by
the  Company   through  the   completion  of  the  tender  offer,   resulted  in
non-recurring  compensation  expense of  approximately  $970,000  to the Company
during the quarter  ended March 31,  2001.  APB Opinion No. 25,  Accounting  for
Stock Issued to Employees, and related interpretations require that compensation
expense be recognized to the extent that the fair value of stock  repurchased by
a company  exceeds the exercise  price of the underlying  option,  whenever such
purchases are made within six months of the option exercise date.

12.  IMPAIRMENT AND OTHER NON-RECURRING EXPENSE

In accordance  with Financial  Accounting  Standards No. 121 "Accounting for the
Impairment  of Long Lived Assets and for Long Lived  Assets to be Disposed  of",
the net  carrying  value of  goodwill is  reviewed  by  management  if facts and
circumstances  suggest  that  an  impairment  may  exist.  Such  impairment  was
identified  related to the  remaining  goodwill  associated  with the April 1998
acquisition of White Commercial Real Estate. A significant majority of the sales
force  terminated  their  relationship  with the  Company,  and the  office  was
subsequently   closed  with  the  remaining  staff  relocated  to  the  Oakland,
California office. The Company believed that the future estimated

                                       42
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.  IMPAIRMENT AND OTHER NON-RECURRING EXPENSE (CONTINUED)

undiscounted  cash flows of this  operation  were not  sufficient to support the
carrying  value of such  goodwill,  and wrote off the remaining  asset  totaling
$2,150,000,  and  recorded  such charge to other  non-recurring  expenses in the
fiscal year ended June 30, 2001.

The  Company  also  incurred  other  non-recurring  expense  totaling  $736,000,
primarily  professional services fees, related to its recent review of strategic
initiatives,  including potential acquisitions,  sales and mergers,  $970,000 of
stock option  compensation  expense  related to the in the money  portion of the
options  exercised  in  connections  with  the  Company's   self-tender   offer,
$1,516,000 of executive  severance  costs  related to recent  senior  management
changes,  and  $850,000  related to a  write-down  of the  carrying  basis of an
investment in commercial real estate services  internet  venture.  The Company's
decision  to  write-down  its  interest  in the  internet  venture  was due to a
dilution in the Company's  ownership  position,  as well as  uncertainty  in the
venture's ability to achieve its business plan.

During the fiscal year ended June 30, 2000, the Company  recorded a $2.7 million
charge for  incremental  non-recurring  costs related to the resignation of Neil
Young, the Company's chairman and chief executive officer,  on May 25, 2000. The
Company and Mr. Young  entered into a separation  agreement  which  provides for
payments  totaling  $2.7  million,  prior to  certain  contingent  amounts.  The
payments  include $1.6 million in return for cancellation of options to purchase
465,000 shares of common stock of the Company.

13.  CHANGE IN ACCOUNTING PRINCIPLE

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial  Statements.  SAB
101 summarizes the SEC staff's views  regarding the recognition and reporting of
revenues in  financial  statements.  At June 30, 2001,  the Company  changed its
method of  accounting  for  revenue  recognition  for  leasing  commissions  and
consulting fees, in compliance with SAB 101, as a cumulative  effect of a change
in accounting principle,  effective July 1, 2000. As such, operating results for
the year ended June 30, 2001 are presented in compliance  with the  requirements
of this  accounting  change.  Historically,  the Company had recognized  leasing
commissions  at the  earlier of  receipt  of full  payment or receipt of partial
payment  when  lease  and  commissions  agreements  had  been  executed  and  no
significant contingencies existed. The Company had recognized consulting fees as
employee  time was  incurred  on a  project.  Under the new  accounting  method,
adopted  retroactive to July 1, 2000, the Company's leasing commissions that are
payable upon certain  events such as tenant  occupancy or  commencement  of rent
will  now be  recognized  upon  the  occurrence  of such  events.  In  addition,
consulting fees will be recognized  under SAB 101 generally upon the delivery of
agreed upon services to the client.  While this  accounting  change  affects the
timing of  recognition  of leasing and  consulting  revenues (and  corresponding
services  commission  expense),  it does not impact the Company's cash flow from
operations.

                                       43
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.  CHANGE IN ACCOUNTING PRINCIPLE (CONTINUED)

The  cumulative  effect of the  accounting  change for prior years resulted in a
reduction  to income for fiscal  year 2001 of $3.1  million,  net of  applicable
taxes of $2.1  million.  The  effect of the  change  in fiscal  year 2001 was to
increase revenues by $2.6 million and income before the cumulative effect of the
accounting  change by $632,000,  or $.04 per diluted common share. The effect of
the change on income for each  quarter of fiscal  year 2001 is  provided in Note
16.

14.  BUSINESS ACQUISITIONS AND RELATED INDEBTEDNESS

FISCAL 1999 ACQUISITIONS

On July 22, 1998, the Company acquired substantially all of the assets of Bishop
Hawk,  Inc.  for total  consideration  of  approximately  $11.1  million,  which
included  seller  financing  of  approximately  $2.5  million.  The  Company has
recorded the  acquisition  under the  purchase  method of  accounting,  with all
operations  subsequent  to the  acquisition  date  reflected  in  the  Company's
financial  statements.  The notes to the  seller  were  repaid  in  installments
through  July 2000,  and bore  interest at a weighted  average rate of 9.14% per
annum. The Company was obligated to make certain incentive based payments to the
seller, contingent upon the achievement of defined revenue levels for the twelve
months  following the  acquisition  date. Such revenue levels were not achieved,
and  therefore  no  further  contingent   obligation  remains  related  to  this
acquisition.  In connection  with this  acquisition,  the Company  incurred $3.5
million of  borrowings  under its credit  facility,  all of which were repaid by
August 1998.

In  December  1998,  the  Company  acquired  substantially  all of the assets of
Williams  Property Venture d/b/a Smithy Braedon Oncor  International  and Smithy
Braedon Oncor International Management Inc. (collectively "Smithy Braedon"). The
Company also  acquired  substantially  all of the assets of  Commercial  Florida
Realty Partners,  Inc.  ("Commercial  Florida") and Island Realty Service Group,
Inc.  ("Island  Realty")  in February  1999.  The  Company  has  recorded  these
acquisitions  under  the  purchase  method  of  accounting,  and all  operations
subsequent to the  respective  acquisition  dates are reflected in the Company's
financial statements.

The  purchase  prices of these three  acquisitions  totaled  approximately  $8.3
million,  including seller provided  financing of  approximately  $347,000 which
bore interest at an annual rate of 7.5% and was repaid through January 2000. The
Company was also obligated to pay additional purchase price amounts,  which were
contingent on revenue levels  achieved  during the twelve to twenty-four  months
following the acquisitions.  Due to the contingent nature of these payments, the
Company  recorded  this portion of the  purchase  prices only to the extent they
were paid to the sellers. Additional such payments of $568,000 and $535,000 were
paid to the sellers during the fiscal years 2001 and 2000, respectively,  and no
further obligations exist at June 30, 2001.

                                       44
<PAGE>


                             GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.  BUSINESS ACQUISITIONS AND RELATED INDEBTEDNESS (CONTINUED)

FISCAL 2000 ACQUISITION

On July 30,  1999,  the  Company  acquired  substantially  all of the  assets of
Landauer  Associates,   Inc.  a  real  estate  valuation  and  consulting  firm.
Consideration  to the seller at closing  included  cash, a common stock  warrant
(see Note 7 of Notes to Consolidated Financial  Statements),  and the assumption
of certain  liabilities.  The Company has  recorded  the  acquisition  under the
purchase method of accounting,  and all operations subsequent to the acquisition
date are reflected in the Company's financial statements.

Substantially all of the purchase prices in the fiscal years 2001, 2000 and 1999
acquisitions were allocated to goodwill.

PRO FORMA INFORMATION (UNAUDITED)

The following unaudited pro forma financial  information reflects the operations
of the Company,  assuming the above five  acquisitions had occurred on July 1 of
each year (in thousands, except share data):

                                                    Fiscal year ended
                                                      June 30, 1999
                                                    -----------------
         Total revenue                                   $ 341,827
         Income before taxes                                13,158

         Net income                                          8,752
         Earnings per share:
             Basic                                            0.44
             Diluted                                          0.41

The  Company's  results of  operations  for  fiscal  year  2000,  which  include
operations  acquired from Landauer  Associates,  Inc.  subsequent to the date of
acquisition,  do not  materially  differ from pro forma  results that would have
been obtained for that period.

Pro forma  information  does not purport to be  indicative  of the results  that
would have been  obtained  had these  events  occurred at the  beginning  of the
periods presented, and is not intended to be a projection of future results.

15.  SEGMENT INFORMATION

The Company  has two  reportable  segments - Advisory  Services  and  Management
Services.

The Advisory Services segment advises buyers, sellers,  landlords and tenants on
the sale,  leasing  and  valuation  of  commercial  property  and  includes  the
Company's national accounts groups and national affiliate program operations.

                                       45
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.  SEGMENT INFORMATION (CONTINUED)

The  Management  Services  segment  provides  property  management,  leasing and
related services for owners of investment  properties and facilities  management
services for corporate users.

The  fundamental  distinction  between  the  Advisory  Services  and  Management
Services  segments  lies in the nature of the revenue  streams and related  cost
structures.  Advisory Services  generates  revenues primarily on a commission or
project fee basis.  Therefore,  the personnel  responsible  for providing  these
services  are  compensated  primarily  on a  commission  basis.  The  Management
Services  revenues  are  generated  primarily  by long  term  (one year or more)
contractual  fee  arrangements.   Therefore,   the  personnel   responsible  for
delivering these services are compensated primarily on a salaried basis.

The Company  evaluates  segment  performance  and allocates  resources  based on
earnings before  interest,  taxes,  depreciation  and  amortization  ("EBITDA"),
excluding other  non-recurring or extraordinary  items. EBITDA as presented with
respect to the  Company's  reportable  segments is an important  measure of cash
generated by the Company's operating  activities.  EBITDA is similar to net cash
flow from operations  because it excludes  certain non-cash items,  however,  it
also  excludes  interest and income  taxes.  Management  believes that EBITDA is
relevant  because it assists  investors in evaluating  the Company's  ability to
service its debt by providing a commonly  used measure of cash  available to pay
interest.  EBITDA  also  facilitates  comparison  of the  Company's  results  of
operations with those  companies  having  different  capital  structures.  Other
companies may define EBITDA differently, and, as a result, such measures may not
be comparable to the Company's EBITDA.

In evaluating segment performance, the Company's management utilizes EBITDA as a
measure of the  segment's  ability to  generate  cash flow from its  operations.
Other items  contained  within the  measurement of net income,  such as interest
expense and taxes,  and  non-recurring  items,  are generated and managed at the
corporate  administration level rather than the segment level. In addition,  net
income  measures  also  include   non-cash  amounts  such  as  depreciation  and
amortization expense.

                                           Advisory     Management      Company
                                           Services      Services        Totals
                                           --------     ----------      --------
                                                   (Amounts in thousands)
Fiscal year ended June 30, 2001
    Total Revenues                         $351,587       $60,228       $411,815
    EBITDA                                   25,705         2,214         27,919
    Total Assets                             66,461        21,134         87,595

Fiscal year ended June 30, 2000
    Total Revenues                         $348,165       $65,370       $413,535
    EBITDA                                   33,716         5,256         38,972
    Total Assets                             89,087        22,590        111,677

Fiscal year ended June 30, 1999
    Total Revenues                         $260,071       $54,030       $314,101
    EBITDA                                   16,320         3,186         19,506


                                       46
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.  SEGMENT INFORMATION (CONTINUED)

RECONCILIATION OF SEGMENT EBITDA TO STATEMENTS OF INCOME (IN THOUSANDS):

                                              FISCAL YEAR ENDED JUNE 30,
                                       ----------------------------------------
                                         2001            2000            1999
                                       --------        --------        --------

Total Segment EBITDA                   $ 27,919        $ 38,972        $ 19,506
Less:
Depreciation & amortization             (11,635)        (10,521)         (7,328)
Non-recurring expenses                   (6,222)         (2,650)             --
Net interest income (expense)               218              87            (123)
                                       --------        --------        --------
    Income before income taxes         $ 10,280        $ 25,888        $ 12,055
                                       ========        ========        ========

RECONCILIATION OF SEGMENT ASSETS TO BALANCE SHEET (IN THOUSANDS):

                                                          AS OF JUNE 30,
                                                    ----------------------------
                                                      2001                 2000
                                                    -------             --------

Total segment assets                                $87,595             $111,677
Deferred taxes                                        4,831                4,265
                                                    -------             --------

    Total Assets                                    $92,426             $115,942
                                                    =======             ========

                                       47
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          FISCAL YEAR ENDED JUNE 30, 2001
                                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                   First Quarter        Second Quarter        Third Quarter        Fourth Quarter
                                                   =============         =============        =============         =============
<S>                                                <C>                   <C>                  <C>                   <C>
Operating revenue as restated                      $     108,029         $     141,658        $      80,209         $      81,919
                                                   =============         =============        =============         =============

Operating income (loss)                            $       4,770         $       9,576        $      (2,411)        $      (2,020)
                                                   =============         =============        =============         =============

Income (loss) before extraordinary
  item and cumulative effect                       $       3,032         $       4,943        $      (1,485)        $      (1,582)
                                                   =============         =============        =============         =============

Net (loss) income                                  $        (101)        $       4,537        $      (1,485)        $      (1,582)
                                                   =============         =============        =============         =============

Income (loss) before extraordinary
  item and cumulative effect
  per common share:

Basic-                                             $         .15         $         .25        $        (.10)        $        (.12)
                                                   =============         =============        =============         =============

  Weighted average common shares outstanding              19,856                19,922               15,028                13,315
                                                   =============         =============        =============         =============

Diluted-                                           $         .14         $         .24        $        (.10)        $        (.12)
                                                   =============         =============        =============         =============

  Weighted average common shares outstanding              21,020                20,879               15,028                13,315
                                                   =============         =============        =============         =============

EBITDA                                             $       7,717         $      15,411        $       1,459         $       3,332
                                                   =============         =============        =============         =============

Common stock market price range (high: low)        $6.50 : $5.50         $6.38 : $4.13        $6.30 : $4.80         $6.07 : $4.50
                                                   =============         =============        =============         =============
</TABLE>

Previously reported quarterly results for fiscal year 2001 have been restated to
comply with the SAB 101  accounting  change  (see Note 13 of Notes to  Financial
Statements).  First  quarter  results  have  been  reduced  by the $3.1  million
cumulative effect of the accounting change for prior years. In addition,  second
quarter results include an extraordinary loss $406,000, net of taxes.

The table below  reflects  the impact of the  adoption of SAB 101 to each of the
previously reported quarterly results of fiscal year 2001.

<TABLE>
<CAPTION>
                                                               Income (Loss) on the    Current Period Effect
                                                               Basis of the Previous    of Accounting Change            Adjusted
(In thousands)                                                   Accounting Policy         (net of taxes)              Income (1)
-----------------------------------------------                --------------------    ---------------------        ---------------
<S>                                                               <C>                      <C>                      <C>
Income (loss) for the year ended June 30, 2001:
Quarter ended September 30, 2000                                  $         2,518          $           514          $         3,032
Quarter ended December 31, 2000                                             3,948                      589                    4,537
Quarter ended March 31, 2001                                                 (954)                    (531)                  (1,485)
Quarter ended June 30, 2001                                                (1,642)                      60                   (1,582)
                                                                  ---------------          ---------------          ---------------

Income Before Cumulative Effect                                   $         3,870          $           632          $         4,502
                                                                  ===============          ===============          ===============
</TABLE>

(1)  Represents adjusted income before cumulative effect on prior years.

                                       48
<PAGE>


                              GRUBB & ELLIS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                                                             FISCAL YEAR ENDED JUNE 30, 2000
                                                                         (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                        ----------------------------------------------------------------------------
                                                        First Quarter       Second Quarter        Third Quarter       Fourth Quarter
                                                        -------------        -------------        -------------        -------------
<S>                                                     <C>                  <C>                  <C>                  <C>
Operating revenue                                       $      95,201        $     117,287        $      93,567        $     107,480
                                                        =============        =============        =============        =============

Operating income                                        $       5,510        $       9,817        $       4,412        $       5,678
                                                        =============        =============        =============        =============


Net income                                              $       3,341        $       5,691        $       2,660        $       4,598
                                                        =============        =============        =============        =============

Net income per common share:

Basic-                                                  $        0.17        $        0.29        $        0.14               $0 .23
                                                        =============        =============        =============        =============

   Weighted average common shares outstanding                  19,851               19,764               19,676               19,794
                                                        =============        =============        =============        =============

Diluted-                                                       $0 .16        $        0.27        $        0.13        $        0.22
                                                        =============        =============        =============        =============

   Weighted average common shares outstanding                  21,072               21,063               20,894               21,089
                                                        =============        =============        =============        =============

EBITDA                                                  $       7,978        $      12,778        $       7,122        $      11,094
                                                        =============        =============        =============        =============

Common stock market price range (high: low)             $5.94 : $4.63        $6.00 : $4.56        $6.00 : $4.56        $6.88 : $5.25
                                                        =============        =============        =============        =============
</TABLE>

                                       49
<PAGE>


ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

None.




                                       50
<PAGE>


                              GRUBB & ELLIS COMPANY
                                    PART III
--------------------------------------------------------------------------------


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  called for by Item 10 is  incorporated  by reference  from the
registrant's  definitive  proxy statement to be filed pursuant to Regulation 14A
under the Securities Exchange Act of 1934 (the "Exchange Act") no later than 120
days after the end of the 2001 fiscal year.

ITEM 11.  EXECUTIVE COMPENSATION

The  information  called for by Item 11 is  incorporated  by reference  from the
registrant's  definitive  proxy statement to be filed pursuant to Regulation 14A
under the  Exchange  Act no later than 120 days after the end of the 2001 fiscal
year.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  called for by Item 12 is  incorporated  by reference  from the
registrant's  definitive  proxy statement to be filed pursuant to Regulation 14A
under the  Exchange  Act no later than 120 days after the end of the 2001 fiscal
year.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  called for by Item 13 is  incorporated  by reference  from the
registrant's  definitive  proxy statement to be filed pursuant to Regulation 14A
under the  Exchange  Act no later than 120 days after the end of the 2001 fiscal
year.

                                       51
<PAGE>


                              GRUBB & ELLIS COMPANY
                                     PART IV
--------------------------------------------------------------------------------


ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)   The following documents are filed as part of this report:

1.    The following Report of Independent  Auditors and  Consolidated  Financial
      Statements are submitted herewith:

            Report of Independent Auditors

            Consolidated Balance Sheets at June 30, 2001 and June 30, 2000.

            Consolidated Statements of Income for the years ended June 30, 2001,
            2000 and 1999.

            Consolidated  Statements of Stockholders' Equity for the years ended
            June 30, 2001, 2000 and 1999

            Consolidated  Statements  of Cash Flows for the years ended June 30,
            2001, 2000 and 1999.

            Notes to Consolidated Financial Statements.

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  to
            include all  amendments  through  November 1, 1994,  which was filed
            with the Delaware  Secretary of State on May 19, 1995,  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

                                       52
<PAGE>


            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         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.

      (4)   INSTRUMENTS  DEFINING  THE  RIGHTS OF  SECURITY  HOLDERS,  INCLUDING
            INDENTURES.

4.1         First  Amendment  to  Warrant  No.  18,  held  by  Warburg,   Pincus
            Investors,  L.P.,  exercisable for 687,358 shares of common stock of
            the Registrant  extending the  expiration  date to January 29, 2002,
            incorporated  herein by reference to Exhibit 4.2 to the Registrant's
            Quarterly Report on Form 10-Q filed on November 13, 1996.

4.2         First Amendment to Warrant No. 19, held Warburg,  Pincus  Investors,
            L.P.,  exercisable  for  325,000  shares  of  common  stock  of  the
            Registrant  extending  the  expiration  date to  January  29,  2002,
            incorporated  herein by reference to Exhibit 4.3 to the Registrant's
            Quarterly Report on Form 10-Q filed on November 13, 1996.

4.3         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.

4.4         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.

4.5         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.

4.6         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.

4.7         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.

4.8         Stock Subscription  Warrant No. 20 dated December 11, 1996 issued to
            Joe F. Hanauer  Trust,  incorporated  herein by reference to Exhibit
            4.11 to the  Registrant's  Quarterly  Report on Form  10-Q  filed on
            February 13, 1997.

4.9         Stock Subscription  Warrant No. 21 dated December 11, 1996 issued to
            Warburg, Pincus Investors, L.P., incorporated herein by reference to
            Exhibit 4.12 to the Registrant's Quarterly Report on Form 10-Q filed
            on February 13, 1997.

                                       53
<PAGE>


4.10        Stock Subscription  Warrant No. 22 dated December 11, 1996 issued to
            Joe F. Hanauer  Trust,  incorporated  herein by reference to Exhibit
            4.13 to the  Registrant's  Quarterly  Report on Form  10-Q  filed on
            February 13, 1997.

4.11        Stock Subscription  Warrant No. 23 dated December 11, 1996 issued to
            Warburg, Pincus Investors, L.P., incorporated herein by reference to
            Exhibit 4.14 to the Registrant's Quarterly Report on Form 10-Q filed
            on February 13, 1997.

4.12        Form of Amendment No. 1 to Stock Subscription  Warrants No. 8, 9, 13
            and 15  issued  to Joe F.  Hanauer  Trust,  incorporated  herein  by
            reference to Exhibit 4.15 to the  Registrant's  Quarterly  Report on
            Form 10-Q filed on February 13, 1997.

4.13        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.

4.14        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 (b)(1) to the
            Registrant's  Amendment No. 2 to Tender Offer  Statement on Schedule
            TO/A filed on January 10, 2001.

4.15        Note executed by the  Registrant  in favor of Bank of America,  N.A.
            dated as of December 31, 2000,  incorporated  herein by reference to
            Exhibit (b)(2) to the  Registrant's  Amendment No. 2 to Tender Offer
            Statement on Schedule TO/A filed on January 10, 2001.

4.16        Note  executed by the  Registrant  in favor of LaSalle Bank National
            Association  dated as of December 31, 2000,  incorporated  herein by
            reference to Exhibit (b)(3) to the  Registrant's  Amendment No. 2 to
            Tender Offer Statement on Schedule TO/A filed on January 10, 2001.

4.17        Note executed by the  Registrant in favor of American  National Bank
            and  Trust  Company  of  Chicago  dated  as of  December  31,  2000,
            incorporated   herein  by  reference   to  Exhibit   (b)(4)  to  the
            Registrant's  Amendment No. 2 to Tender Offer  Statement on Schedule
            TO/A filed on January 10, 2001.

4.18        Swingline  Loan Note executed by the  Registrant in favor of Bank of
            America,  N.A. in the amount of $2,000,000  dated as of December 31,
            2000,  incorporated  herein by  reference  to Exhibit  (b)(5) to the
            Registrant's  Amendment No. 2 to Tender Offer  Statement on Schedule
            TO/A filed on January 10, 2001.

4.19        First Amendment dated August 22, 2001 to 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.

On an  individual  basis,  instruments  other than  Exhibits  listed above under
Exhibit 4 defining the rights of holders of long-term debt of the Registrant and
its  consolidated  subsidiaries  and  partnerships  do not exceed ten percent of
total consolidated assets and are, therefore, omitted; however, the Company will
furnish  supplementally  to the  Commission  any such  omitted  instrument  upon
request.

                                       54
<PAGE>


      (10)  MATERIAL CONTRACTS

10.1*       Employment  Agreement entered into between Barry M. Barovick and the
            Registrant  dated as of May 15, 2001,  incorporated  by reference to
            Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed
            on May 12, 2001.

10.2*       Stock Purchase  Agreement entered into between Barry M. Barovick and
            the  Registrant  dated as of May 15,  2001,  incorporated  herein by
            reference to Exhibit 4.8 to the Registrant's  registration statement
            on Form S-8 filed on June 15, 2001 (File No. 333-63136).

10.3*       Loan  Agreement  and Retention  Bonus  Program  entered into between
            Barry M. Barovick and the  Registrant,  and Promissory Note executed
            by Mr. Barovick, dated as of May 15, 2001.

10.4*       Employment  Agreement  entered into between Mark R. Costello and the
            Registrant dated as of July 5, 2001.

10.5*       Loan Agreement and Retention Bonus Program entered into between Mark
            R. Costello and the Registrant,  and Promissory Note executed by Mr.
            Costello, dated as of July 23, 2001.

10.6*       Employment  Agreement  entered  into  between  Ian Y.  Bress and the
            Registrant dated as of June 18, 2001.

10.7*       General Release and Separation  Agreement  entered into between Neil
            Young  and  Grubb  &  Ellis  Company  dated  as  of  May  30,  2000,
            incorporated herein by reference to Exhibit 10.1 to the Registrant's
            Current Report on Form 8-K filed on August 2, 2000.

10.8*       Separation  Agreement  entered  into  between  Steven D. Scruggs and
            Grubb & Ellis Company  dated as of September  12, 2000  incorporated
            herein by reference to Exhibit  10.1 to the  Registrant's  Quarterly
            Report on Form 10-Q filed on February 14, 2001.

10.9*       Separation  Agreement  entered into between  Brian D. Parker and the
            Registrant dated as of June 28, 2001.

10.10*      Separation  Agreement  entered  into  between John G. Orrico and the
            Registrant dated as of August 22, 2001.

10.11*      Change of Status and Separation Agreement entered into between Blake
            Harbaugh and the Registrant dated as of July 26, 2001.

10.12*      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).

10.13*      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).

                                       55
<PAGE>


10.14*      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.

10.15*      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.
            . 10.16*  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.

10.17*      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.

10.18*      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.

10.19*      Executive  Change of Control Plan,  effective as of May 10, 1999 and
            attached form of Acknowledgement  Agreement,  incorporated herein by
            reference to Exhibit 10.7 to the Registrant's  Annual Report on Form
            10-K filed on September 28, 1999.

10.20*      First Amendment to the Executive  Change of Control Plan,  effective
            as of February 10, 2000, incorporated herein by reference to Exhibit
            10.6 to the Registrant's  Quarterly Report on Form 10-Q filed on May
            12, 2000.

10.21*      Second Amendment to the Executive Change of Control Plan,  effective
            as of June 1, 2000, and attached form of Acknowledgement  Agreement,
            incorporated   herein  by   reference   to  Exhibit   10.12  to  the
            Registrant's Annual Report on Form 10-K filed on September 28, 2000.

10.22*      Executive  Incentive Bonus and Severance Plan,  effective as of June
            1, 2000,  incorporated  herein by reference to Exhibit  10.13 to the
            Registrant's Annual Report on Form 10-K filed on September 28, 2000.

10.23       Pledge  Agreement  between  Landauer Realty Group,  Inc. and Bank of
            America,  N.A., as  Administrative  Agent,  dated as of December 31,
            2000,  incorporated  herein  by  reference  to  Exhibit  10.3 to the
            Registrant's  Quarterly  Report on Form 10-Q filed on  February  14,
            2001.

10.24       Pledge Agreement  between the Registrant and Bank of America,  N.A.,
            as Administrative Agent, dated as of October 15, 1999,  incorporated
            herein by reference to Exhibit  10.1 to the  Registrant's  Quarterly
            Report on Form 10-Q filed on November 12, 1999.

10.25       Pledge Agreement between Grubb & Ellis Management Services, Inc. and
            Bank of America,  N.A., as Administrative Agent, dated as of October
            15, 1999  incorporated  herein by  reference  to Exhibit 10.2 to the
            Registrant's  Quarterly  Report on Form 10-Q filed on  November  12,
            1999.

                                       56
<PAGE>


10.26       Pledge  Agreement  between HSM Inc.  and Bank of America,  N.A.,  as
            Administrative  Agent,  dated as of October  15,  1999  incorporated
            herein by reference to Exhibit  10.3 to the  Registrant's  Quarterly
            Report on Form 10-Q filed on November 12, 1999.

10.27       Guarantee and Collateral  Agreement by the Registrant and certain of
            its   Subsidiaries   in  favor  of  Bank  of   America,   N.A.,   as
            Administrative  Agent,  dated as of October  15,  1999  incorporated
            herein by reference to Exhibit  10.4 to the  Registrant's  Quarterly
            Report on Form 10-Q filed on November 12, 1999.

10.28       Collateral  Trademark  Security Agreement by the Registrant in favor
            of Bank of  America,  N.A.,  as  Administrative  Agent,  dated as of
            October 15, 1999 incorporated herein by reference to Exhibit 10.5 to
            the Registrant's Quarterly Report on Form 10-Q filed on November 12,
            1999.

*Management contract or compensatory plan or arrangement.

(21)        SUBSIDIARIES OF THE REGISTRANT

(23)        CONSENT OF INDEPENDENT AUDITORS
            23.1   Consent of Ernst & Young LLP

(24)        POWERS OF ATTORNEY AND RESOLUTIONS OF THE BOARD OF DIRECTORS

(B)         REPORTS FILED ON FORM 8-K - NONE

                                       57
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

GRUBB & ELLIS COMPANY

(REGISTRANT)

/s/ BARRY M. BAROVICK                                         September 28, 2001
--------------------------------------------------------------
Barry M. Barovick
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

PRINCIPAL EXECUTIVE OFFICER

/s/ BARRY M. BAROVICK                                         September 28, 2001
--------------------------------------------------------------
Barry M. Barovick
President and Chief Executive Officer

PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

/s/ IAN Y. BRESS                                              September 28, 2001
--------------------------------------------------------------
Ian Y. Bress
Chief Financial Officer

DIRECTORS

            **                                                September 28, 2001
--------------------------------------------------------------
R. David Anacker, Director


/s/ BARRY M. BAROVICK                                         September 28, 2001
--------------------------------------------------------------
Barry M. Barovick, Director


            **                                                September 28, 2001
--------------------------------------------------------------
Joe F. Hanauer, Director


            **                                                September 28, 2001
--------------------------------------------------------------
C. Michael Kojaian, Director


            **                                                September 28, 2001
 -------------------------------------------------------------
Reuben S. Leibowitz, Director


            **                                                September 28, 2001
--------------------------------------------------------------
Ian C. Morgan, Director


            **                                                September 28, 2001
--------------------------------------------------------------
Todd A. Williams, Director


/S/ ROBERT J. WALNER
--------------------------------------------------------------------------------
**By: Robert J. Walner, Attorney-in-Fact, pursuant to Powers Of Attorney

                                       58
<PAGE>


                     GRUBB & ELLIS COMPANY AND SUBSIDIARIES
                            EXHIBIT INDEX ((LAMBDA))
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2001

EXHIBIT

(4)   INSTRUMENTS DEFINING THE RIGHT OF SECURITY HOLDERS INCLUDING INDENTURES

   4.19     First Amendment dated August 22, 2001 to 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.

   (10)  (10) MATERIAL CONTRACTS

   10.3     Loan  Agreement  and Retention  Bonus  Program  entered into between
            Barry M. Barovick and the  Registrant,  and Promissory Note executed
            by Mr. Barovick, dated as of May 15, 2001.

   10.4     Employment  Agreement  entered into between Mark R. Costello and the
            Registrant dated as of July 5, 2001.

   10.5     Loan Agreement and Retention Bonus Program entered into between Mark
            R. Costello and the Registrant,  and Promissory Note executed by Mr.
            Costello, dated as of July 23, 2001.

   10.6     Employment  Agreement  entered  into  between  Ian Y.  Bress and the
            Registrant dated as of June 18, 2001.

   10.9     Separation  Agreement  entered into between  Brian D. Parker and the
            Registrant dated as of June 28, 2001.

   10.10    Separation  Agreement  entered  into  between John G. Orrico and the
            Registrant dated as of August 22, 2001.

   10.11    Change of Status and Separation Agreement entered into between Blake
            Harbaugh and the Registrant dated as of July 26, 2001.

(21)  SUBSIDIARIES OF THE REGISTRANT

(23)  CONSENT OF INDEPENDENT AUDITORS

   23.1     Consent of Ernst & Young LLP

(24)  POWERS OF ATTORNEY

(A)   Exhibits  incorporated  by  reference  are listed in Item 14 (a) 3 of this
      Report

                                       59