As filed with the Securities and Exchange Commission on December 28, 2009

Registration No. 333-163550

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to Form S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

GRUBB & ELLIS COMPANY

Delaware		6531		94-1424307
(State or other jurisdiction of		(Primary Standard Industrial		(I.R.S. Employer
incorporation or organization)		Classification Code Number)		Identification Number)

Copies to:
Clifford A. Brandeis, Esq.
Zukerman Gore Brandeis & Crossman, LLP
875 Third Avenue
New York, New York 10022
(212) 223-6700

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

CALCULATION OF REGISTRATION FEE

									Proposed Maximum					Proposed Maximum
	Title of Each Class of			Amount to be					Aggregate Offering					Aggregate Offering					Amount of
	Securities to be Registered			Registered					Price Per Unit					Price(1)					Registration Fee
	12% Cumulative Participating Perpetual Convertible Preferred Stock, $0.01 par value per share				125,000					$100				$	12,500,000				$	697.50	(2)
	Common Stock, $0.01 par value per share				7,575,750	(3)				—					—					—	(4)

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

PROSPECTUS

Grubb & Ellis Company

7,575,750 Shares of Common Stock
125,000 Shares of 12% Cumulative Participating Perpetual Convertible Preferred Stock

     This prospectus relates to up to 125,000 shares of our outstanding 12% Cumulative Participating Perpetual Convertible Preferred Stock, which we refer to herein as our “12% Preferred Stock” or “Preferred Stock”, and up to 7,575,750 shares of our common stock issuable upon conversion of our 12% Preferred Stock that may be sold by the selling stockholders identified in this prospectus. The selling stockholders acquired the shares of 12% Preferred Stock offered by this prospectus in a private placement of our securities. We are registering the offer and sale of such shares of 12% Preferred Stock and such shares of common stock to satisfy registration rights we have granted. We will not receive any of the proceeds from the sale of the shares of 12% Preferred Stock or shares of common stock by the selling stockholders. We have agreed to bear all expenses of registration of our common stock offered by this prospectus. The selling stockholders, or their transferees, pledgees, donees or other successors in interest, may sell their 12% Preferred Stock and shares of common stock issuable upon conversion of our 12% Preferred Stock by the methods described under “Plan of Distribution.”

     We will pay cumulative dividends on the 12% Preferred Stock from and including the date of original issuance in the amount of $12.00 per share each year, which is equivalent to 12% of the initial liquidation preference per share. Dividends on the Preferred Stock will be payable when, as and if declared, quarterly in arrears, on March 31, June 30, September 30 and December 31, beginning on December 31, 2009. In addition, in the event of any cash distribution to holders of the common stock, par value $0.01 per share, of our company, referred to as our common stock, holders of our 12% Preferred Stock will be entitled to participate in such distribution as if such holders had converted their shares of Preferred Stock into common stock. Generally, we may not redeem the 12% Preferred Stock before November 15, 2014. On or after November 15, 2014, we may, at our option, redeem the 12% Preferred Stock, in whole or in part, by paying an amount equal to 110% of the sum of the initial liquidation preference per share plus any accrued and unpaid dividends to and including the date of redemption. Holders of our 12% Preferred Stock may require us to repurchase all, or a specified whole number, of their Preferred Stock upon the occurrence of a fundamental change (i) prior to November 15, 2014, at a repurchase price equal to 110% of the sum of the initial liquidation preference plus accumulated but unpaid dividends to but excluding the fundamental change repurchase date and (ii) from November 15, 2014 until prior to November 15, 2019 at a repurchase price equal to 100% of the sum of the initial liquidation preference plus accumulated but unpaid dividends to but excluding the fundamental change repurchase date. In addition, if a holder elects to convert their Preferred Stock in connection with certain change in control events prior to November 15, 2014, we may increase the conversion rate by a number of additional shares of common stock deliverable upon conversion of such Preferred Stock. The 12% Preferred Stock has no stated maturity, and will not be subject to any sinking fund or mandatory redemption.

     The 12% Preferred Stock is convertible, at the holder’s option, into our common stock at a conversion rate of 60.606 shares of our common stock per share of Preferred Stock, which represents a conversion price of approximately $1.65 per share of common stock. Except as required by law, the holders of the Preferred Stock vote together with the holders of the common stock as one class on all matters on which holders of common stock vote. The Preferred Stock votes as a separate class with respect to certain matters. Holders of the Preferred Stock when voting with the common stock are entitled to voting rights equal to the number of shares of common stock into which the Preferred Stock is convertible, on an “as if” converted basis.

     Our common stock is listed on the New York Stock Exchange under the symbol “GBE.” On December 23, 2009, the last reported sales price for our common stock was $1.35.

     There is currently no established market for the 12% Preferred Stock. We do not intend to apply for listing of the 12% Preferred Stock on any securities exchange or for inclusion of the 12% Preferred Stock in any automated quotation system.

     There are significant risks associated with an investment in our securities. See “Risk Factors” beginning on page 5.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is December   , 2009.

SUMMARY

          This summary highlights selected information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding whether to invest in the preferred stock or the common stock. For a more complete understanding of our company and this offering, we encourage you to read this entire document, including the “Risk Factors” section, the financial information included in this prospectus, and the other documents incorporated by reference herein before deciding to invest in the preferred stock or the common stock. In this prospectus, references to “Grubb & Ellis,” “we,” “us” and “our” refer to Grubb & Ellis Company, a Delaware corporation, and its subsidiaries unless otherwise stated or the context indicates otherwise.

Company Overview

          Grubb & Ellis Company, a Delaware corporation founded 50 years ago in Northern California, is one of the country’s largest and most respected commercial real estate services and investment management firms. On December 7, 2007, the Company effected a stock merger (the “Merger”) with NNN Realty Advisors, Inc. (“NNN”), a real estate asset management company and nationally recognized sponsor of public non-traded real estate investment trusts (“REITs”), as well as a sponsor of tax deferred tenant-in-common (“TIC”) 1031 property exchanges and other investment programs. Upon the closing of the Merger, a change of control occurred. The former stockholders of NNN acquired approximately 60% of the Company’s issued and outstanding common stock.

          With 127 owned and affiliate offices worldwide (54 owned and approximately 73 affiliates) and more than 6,000 professionals, including a brokerage sales force of more than 1,800 brokers, the Company offers property owners, corporate occupants and program investors comprehensive integrated real estate solutions, including transactions, management, consulting and investment advisory services supported by proprietary market research and extensive local market expertise.

          In certain instances throughout this prospectus phrases such as “legacy Grubb & Ellis” or similar descriptions are used to reference, when appropriate, Grubb & Ellis prior to the Merger. Similarly, in certain instances throughout this prospectus the term NNN, “legacy NNN” or similar phrases are used to reference, when appropriate, NNN Realty Advisors, Inc. prior to the Merger.

          On March 16, 2009, management and the Audit Committee of the board of directors of the Company (the “Board of Directors” or “Board”) concluded that the Company’s previously issued audited financial statements for each of the fiscal years ended December 31, 2006 and 2007, the unaudited interim financial statements for each of the quarters ended March 31, June 30 and September 30, 2008 and selected financial data derived from the Company’s previously issued audited financial statements for the fiscal years ended December 31, 2005 and 2004 included in the Company’s securities filings thereafter should be restated. See “The Company—Restatement of Certain Financial Information and Special Investigation” below.

          Our principal executive offices are located at 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705. Our telephone number is (714) 667-8252. Our web address is www.grubb-ellis.com. Information contained in our web site is not incorporated by reference into this prospectus, and you should not consider information in our web site as part of this prospectus.

Transaction Services

          Grubb & Ellis has a track record of over 50 years of proven performance in the commercial real estate industry and is one of the largest real estate brokerage firms in the country, offering clients the experience of thousands of successful transactions and the expertise that comes from a nationwide platform. By focusing on the overall business objectives of its clients, Grubb & Ellis utilizes its research capabilities, extensive properties database and expert negotiation skills to create, buy, sell and lease opportunities for both users and owners of commercial real estate. With a comprehensive approach to transactions, Grubb & Ellis offers a full suite of services to clients, from site selection and sale negotiations to needs analysis, occupancy projections, prospect qualification, pricing recommendations, long-term value consultation, tenant representation and consulting services. As one of the most active and largest commercial real estate brokerages in the United States, Grubb & Ellis’ traditional real estate services provide added value to the Company’s real estate investment programs by offering a comprehensive market view and local area expertise. This powerful business combination allows the Company to identify attractive investment properties and quickly acquire them for the benefit of its program investors. In addition, select brokers have the opportunity to cross-sell product through the Company’s Investment Management platform.

Management Services

          Grubb & Ellis delivers integrated property, facility, asset, construction, business and engineering management services to a host of corporate and institutional clients. The Company offers customized programs that focus on cost-efficient operations and tenant retention.

          The Company manages a comprehensive range of properties including headquarters, facilities and class A office space for major corporations, including many Fortune 500 companies. Grubb & Ellis’ skills extend to management of industrial, manufacturing and warehousing facilities as well as data centers, retail outlets and multi-family properties for real estate users and investors.

          Additionally, Grubb & Ellis provides consulting services, including site selection, feasibility studies, exit strategies, market forecasts, appraisals, strategic planning and research services.

Investment Management

          The Company and its subsidiaries are leading sponsors of real estate investment programs that provide individuals and institutions the opportunity to invest in a broad range of real estate investment vehicles, including tax-deferred 1031 TIC exchanges, public non-traded REITs and real estate investment funds. During the year ended December 31, 2008, more than $984.3 million in investor equity was raised for these investment programs. As of December 31, 2008, the Company has more than $6.8 billion of assets under management related to the various programs that it sponsors. The Company has completed transaction acquisition and disposition volume totaling approximately $11.9 billion on behalf of more than 55,000 program investors since 1998.

Recent Events

Private Placement of 12% Preferred Stock

          On November 6, 2009, we consummated the issuance and sale of 900,000 shares of our 12% Preferred Stock in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. The Company received net proceeds from the offering of approximately $85 million after deducting expenses and after giving effect to the conversion of $5 million of subordinated debt previously provided in October, 2009 by an affiliate of the Company’s largest stockholder. The Company used the net proceeds to repay in full its indebtedness pursuant to the $75.0 million credit agreement entered into on December 7, 2007, by and among the Company, the guarantors named therein, and the financial institutions defined therein as lender parties, with Deutsche Bank Trust Company Americas, as lender and administrative agent (the “Credit Facility”). The Credit Facility was repaid at the agreed reduced principal amount equal to approximately 65% of the principal amount outstanding under such facility. The balance of the net proceeds from the offering will be used for general working capital purposes. The Company also granted a 45-day over-allotment option to the initial purchaser and placement agent for the offering, and pursuant to such over-allotment option, the Company sold an additional 65,700 shares of Preferred Stock for gross proceeds of $6.6 million, all of which will be used for working capital purposes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources’’ and “Description of Capital Stock—Preferred Stock.”

Hiring of Chief Executive Officer

          Effective November 16, 2009, Thomas P. D’Arcy joined the Company as its President, Chief Executive Officer and as a member of its Board of Directors. Mr. D’Arcy entered into a three year employment agreement with the Company subject to successive one-year extensions unless either party advises the other to the contrary at least 90 days prior to the expiration of the then current term. See “Executive Compensation—Employment Contracts and Compensation Arrangements—Thomas D’Arcy.”

Annual Meeting of Stockholders

          At the Company’s annual meeting of stockholders held on December 17, 2009 the Company’s common and preferred stockholders voted, among other things, to amend the Company’s amended and restated certificate of incorporation (the “certificate of incorporation”) to (i) increase the Company’s authorized number of shares of capital stock from 110,000,000 shares to 220,000,000 shares, of which 200,000,000 shares with a par value of $0.01 per share are designated common stock and of which 20,000,000 shares with a par value of $0.01 per share are designated preferred stock, and (ii) declassify the Board of Directors of the Company and fix the number of Directors to no less than three and no more than eight as determined by the Board of Directors from time to time. On December 17, 2009, subsequent to the conclusion of its annual meeting of stockholders, the Company amended its certificate of incorporation to effect the amendments approved by its stockholders at the annual meeting. At the Company’s 2009 annual stockholders’ meeting, the Company’s common and preferred stockholders also elected each of Thomas D’Arcy, C. Michael Kojaian, Robert J. McLaughlin, Devin I. Murphy, D. Fleet Wallace and Rodger D. Young as the six directors of the declassified Board of Directors, each to serve a term of one year, and ratified the appointment of Ernst & Young LLP as the Company’s independent auditing firm.

Selected Consolidated Financial Data

          Grubb & Ellis Realty Investors, LLC (“GERI”) (formerly Triple Net Properties, LLC), was the accounting acquirer of Triple Net Properties Realty, Inc. (“Realty”) and NNN Capital Corp., subsidiaries of our company acquired in the Merger. On December 7, 2007, GERI through NNN Realty Advisors, Inc. merged with Grubb & Ellis Company. NNN Realty Advisors, Inc. was the accounting acquiror. The selected historical consolidated financial data set forth below as of and for the years ended December 31, 2008 and 2007 (restated), and the selected consolidated operating and cash flow data for the year ended December 31, 2006 (restated), has been derived from the audited financial statements beginning on page F-2 of this prospectus. The selected historical financial data set forth below as of and for the years ended December 31, 2005 (restated) and 2004 (restated), and the selected consolidated balance sheet data as of December 31, 2006 (restated), has been derived from unaudited consolidated financial statements not included in this prospectus. The selected consolidated financial information set forth below as of September 30, 2009 and for each of the nine-month periods ended September 30, 2009 and 2008 is derived from our unaudited consolidated financial statements included in our quarterly report on Form 10-Q/A for the period ended September 30, 2009 beginning on page F-62 of this prospectus. The unaudited consolidated financial statements include all adjustments which we consider necessary for a fair statement of our financial position and results of operations for those periods. The results for the nine month periods ended September 30, 2009 and 2008 are not necessarily indicative of the results that might be expected for the entire year ending December 31, 2009 or any other period. Historical results are not necessarily indicative of the results that may be expected for any future period.

          The selected historical consolidated financial data for the years ended December 31, 2007 (restated), 2006 (restated), 2005 (restated) and 2004 (restated) has been restated to correct accounting errors related to the timing of revenue recognition relating to certain tenant-in-common investment programs sponsored by GERI and the consolidation of certain entities that should have been consolidated into our financial statements as described in Note 3 to the consolidated financial statements beginning on page F-2 of this prospectus. As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards Board No. 160, later codified in ASC 810-10, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51”, and also adopted FASB Position No. EITF 03-6-1, later codified in ASC 260-10, “Determining whether Instruments Granted in Share-Based Payment Transactions are Participating Securities.” The selected historical consolidated financial data set forth below should be read in conjunction with the consolidated financial statements beginning on page F-2 of this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

          The impact of the restatement on our financial statements for the year ended December 31, 2007 resulted in an increase in net income of $230,000, or less than $0.01 per basic and diluted share, an increase in total assets of $12.1 million, an increase in total liabilities of $5.5 million and an increase in minority interest liability of $11.2 million. The impact of the restatement on our financial statements for the year ended December 31, 2006 resulted in an increase in net income of $3.9 million, or $0.19 per basic and diluted share, an increase in total assets of $19.7 million, an increase in total liabilities of $18.1 million and an increase in minority interest liability of $6.3 million. The impact of the restatement on fiscal year 2005 resulted in a decrease in net income of $8.1 million, or $0.47 per basic and diluted share, an increase in total assets of $39.7 million, an increase in total liabilities of $47.4 million, and an increase in minority interest liability of $993,000. The impact of the restatement on our financial statements for the year ended December 31, 2004 resulted in a decrease in net income of $619,000, or $0.04 per basic and diluted share, and an increase in total liabilities of $619,000.

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
						Restated								Restated (1)				Restated (2)				Restated (3)				Restated (3)
(In thousands, except per share data)		(Unaudited)				(Unaudited)																(Unaudited)				(Unaudited)
Consolidated Statement of Operations Data:
Total services revenue		$	362,341			$	443,526			$	595,495			$	201,538			$	99,599			$	80,817			$	64,281
Total revenue			385,095				468,828				628,779				229,657				108,543				84,423				66,592
Total compensation costs			342,072				365,488				503,004				104,109				49,449				29,873				19,717
Total operating expense			480,088				533,874				929,407				195,723				97,633				71,035				51,082
Operating (loss) income			(94,933	)			(65,046	)			(300,628	)			33,934				10,910				13,388				15,510
(Loss) income from continuing operations			(96,349	)			(55,568	)			(318,668	)			23,741				21,012				13,679				15,628
Net (loss) income			(97,354	)			(74,258	)			(342,589	)			23,033				20,049				10,288				15,628
Net (loss) income attributable to Grubb & Ellis Company			(95,668	)			(67,960	)			(330,870	)			21,072				19,971				10,047				15,628
Basic (loss) earnings per share		$	(1.51	)		$	(1.07	)		$	(5.21	)		$	0.53			$	1.01			$	0.58			$	0.90
(Loss) income from continuing operations per share		$	(1.49	)		$	(0.79	)		$	(4.83	)		$	0.55			$	1.06			$	0.80			$	0.90
Diluted (loss) earnings per share		$	(1.51	)		$	(1.07	)		$	(5.21	)		$	0.53			$	1.01			$	0.58			$	0.90
Basic weighted average shares outstanding			63,618				63,574				63,515				38,652				19,681				17,200				17,407
Diluted weighted average shares outstanding			63,618				63,574				63,515				38,652				19,694				17,200				17,407
Dividends declared per common share			—			$	0.205			$	0.205			$	0.36			$	0.10				—				—
Consolidated Statement of Cash Flow Data:
Net cash (used in) provided by operating activities		$	(29,053	)		$	(34,120	)		$	(33,629	)		$	33,543			$	17,356			$	23,536			$	17,214
Net cash provided by (used in) investing activities			81,185				(66,719	)			(76,330	)			(486,909	)			(56,203	)			(35,183	)			(13,046	)
Net cash (used in) provided by financing activities			(75,673	)			85,937				93,616				400,468				140,525				10,251				(7,647	)

		September 30,				December 31,
		2009				2008				2007				2006				2005				2004
										Restated				Restated				Restated				Restated
		(Unaudited)												(Unaudited)				(Unaudited)				(Unaudited)
Consolidated Balance Sheet Data (at end of period):
Total assets		$	342,178			$	520,277			$	988,542			$	347,709			$	126,057			$	42,911
Long Term Liabilities:
Line of credit			62,709				63,000				8,000				—				8,500				3,545
Notes payable and capital lease obligations			107,953				107,203				107,343				843				887				—
Senior and participating notes			16,277				16,277				16,277				10,263				2,300				4,845
Redeemable preferred liability			—				—				—				—				6,077				5,717
Total Grubb & Ellis stockholders’ (deficit) equity			(16,410	)			70,171				404,056				217,125				20,081				16,164

RISK FACTORS

          Investing in our common stock and 12% Preferred Stock will be subject to risks, including risks inherent in our business. The value of your investment may decline and could result in a loss. You should carefully consider the following factors as well as other information contained in this prospectus before deciding to invest in our common stock or 12% Preferred Stock. Additional risks and uncertainties not presently known to us, or not identified below, may also materially adversely affect our business, liquidity, financial condition and results of operations.

Risks Related to our Equity Securities

The 12% Preferred Stock will rank senior to our common stock but junior to all of our liabilities and our subsidiaries’ liabilities, in the event of a bankruptcy, liquidation or winding-up.

          In the event of bankruptcy, liquidation or winding-up, our assets will be available to pay obligations on the 12% Preferred Stock only after all of our liabilities have been paid, but prior to any payments are made with respect to our common stock. In addition, the 12% Preferred Stock effectively ranks junior to all existing and future liabilities of our subsidiaries. The rights of holders of the 12% Preferred Stock to participate in the assets of our subsidiaries upon any liquidation or reorganization of any subsidiary will rank junior to the prior claims of that subsidiary’s creditors. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets remaining, after paying our liabilities, and our subsidiaries’ liabilities, to pay amounts due on any or all of the 12% Preferred Stock then outstanding.

          Additionally, unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of the 12% Preferred Stock, (1) dividends are payable only if and when declared by our Board of Directors or a duly authorized committee of the Board, and (2) as a Delaware corporation, we are restricted to making dividend payments and redemption payments only out of legally available assets. Further, the 12% Preferred Stock places no restrictions on our business or operations or on our ability to incur indebtedness or engage in any transactions except that a consent of holders representing at least a majority of the 12% Preferred Stock is required to amend our certificate of incorporation as to the terms of the 12% Preferred Stock or to issue additional 12% Preferred Stock that ranks senior to or, to the extent that 225,000 shares of the 12% Preferred Stock remain outstanding, on a parity with, the 12% Preferred Stock.

The market price of the 12% Preferred Stock will be directly affected by the market price of our common stock, which may be volatile.

          To the extent that a secondary market for the 12% Preferred Stock develops, we believe that the market price of the 12% Preferred Stock will be significantly affected by the market price of our common stock. We cannot predict how the shares of our common stock will trade in the future. This may result in greater volatility in the market price of the 12% Preferred Stock than would be expected for non-convertible stock. From the beginning of the year ended December 31, 2006 to December 23, 2009, the reported high and low sales prices for our common stock ranged from a low of $0.25 to a high of $14.50 per share.

          The market price of our common stock will likely fluctuate in response to a number of factors, including, without limitation, the following:

	•		our liquidity risk management, including our ratings, if any, our liquidity plan and potential transactions designed to enhance liquidity;
	•		actual or anticipated quarterly fluctuations in our operating and financial results;
	•		developments related to investigations, proceedings, or litigation that involves us;
	•		changes in financial estimates and recommendations by financial analysts;
	•		dispositions, acquisitions, and financings;
	•		additional issuances by us of common stock;
	•		additional issuances by us of other series or classes of preferred stock;
	•		actions of our common stockholders, including sales of common stock by stockholders and our directors and executive officers;
	•		changes in funding markets, including commercial paper, term debt, bank deposits and the asset-backed securitization markets;

	•		changes in confidence in real estate markets and real estate investments;
	•		fluctuations in the stock price and operating results of our competitors and real estate-related stocks in general;
	•		government reactions to current economic and market conditions; and
	•		regional, national and global political and economic conditions and other factors.

          The market price of our common stock may also be affected by market conditions affecting the stock markets in general and/or real estate stocks in particular, including price and trading fluctuations on the New York Stock Exchange. These conditions may result in (i) volatility in the level of, and fluctuations in, the market prices of stocks generally and, in turn, our common stock, and (ii) sales of substantial amounts of our common stock in the market, in each case that could be unrelated or disproportionate to changes in our operating performance.

          These broad market fluctuations may adversely affect the market prices of our common stock and, in turn, the 12% Preferred Stock.

          In addition, we expect that the market price of the 12% Preferred Stock will be influenced by yield and interest rates in the capital markets, our creditworthiness, and the occurrence of events affecting us that do not require an adjustment to the conversion rate.

There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock or the 12% Preferred Stock and may negatively impact the holders’ investment.

          We are not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or any substantially similar securities. In addition, with the applicable consent of holders of the 12% Preferred Stock, we may issue additional preferred stock that ranks senior to, or on a parity with, the 12% Preferred Stock. The market price of our common stock or 12% Preferred Stock could decline as a result of sales of a large number of shares of common stock or 12% Preferred Stock or similar securities in the market after this offering or the perception that such sales could occur. For example, if we issue preferred stock in the future that has a preference over our common stock with respect to the payment of dividends or upon our liquidation, dissolution, or winding-up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of holders of our common stock or the market price of our common stock could be adversely affected.

          In addition, each share of 12% Preferred Stock is convertible at the option of the holder thereof into shares of our common stock. The conversion of some or all of the 12% Preferred Stock will dilute the ownership interest of our existing common stockholders. Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of the outstanding shares of our common stock and the 12% Preferred Stock. In addition, the existence of our 12% Preferred Stock may encourage short selling or arbitrage trading activity by market participants because the conversion of our 12% Preferred Stock could depress the price of our equity securities. As noted above, a decline in the market price of the common stock may negatively impact the market price for the 12% Preferred Stock.

An active trading market for the 12% Preferred Stock does not exist and may not develop.

          The 12% Preferred Stock has no established trading market and is not listed on any securities exchange. Since the securities have no stated maturity date, investors seeking liquidity will be limited to selling their shares of 12% Preferred Stock in the secondary market or converting their shares of 12% Preferred Stock into shares of common stock and subsequently seeking to sell those shares of common stock. See “Risk Factors—If our common stock is delisted, your ability to transfer or sell your shares of the 12% Preferred Stock, or common stock upon conversion, may be limited and the market value of the 12% Preferred Stock will be adversely affected.” We cannot assure you that an active trading market in the 12% Preferred Stock will develop or, even if it develops, we cannot assure you that it will last. In either case the trading price of the 12% Preferred Stock could be adversely affected and the holders’ ability to transfer shares of 12% Preferred Stock will be limited. We were advised by the initial purchaser in the offering of the 12% Preferred Stock that it intends to make a market in the shares of our 12% Preferred Stock; however, it is not obligated to do so and may discontinue market-making at any time without notice. We cannot assure you that another firm or person will make a market in the 12% Preferred Stock.

The 12% Preferred Stock has not been rated.

          The 12% Preferred Stock has not been rated by any nationally recognized statistical rating organization. This factor may affect the trading price of the 12% Preferred Stock.

Holders of the 12% Preferred Stock do not have identical rights as holders of common stock until they acquire the common stock, but will be subject to all changes made with respect to our common stock.

          Except for voting and dividend rights, holders of the 12% Preferred Stock have no rights with respect to the common stock until conversion of their 12% Preferred Stock, including rights to respond to tender offers, but your investment in the 12% Preferred Stock may be negatively affected by such events. See “Description of 12% Preferred Stock—Voting Rights.” Even though the holders of the 12% Preferred Stock vote on an as-converted basis with holders of the common stock, upon conversion of the 12% Preferred Stock, holders will be entitled to exercise the rights of a holder of common stock only as to matters for which the record date occurs on or after the applicable conversion date and only to the extent permitted by law, although holders will be subject to any changes in the powers, preferences, or special rights of common stock that may occur as a result of any stockholder action taken before the applicable conversion date. Certain actions, including amendment of our certificate of incorporation, require the additional approval of a majority of holders of the common stock voting as a separate class (excluding shares of common stock issuable upon conversion of the 12% Preferred Stock).

The 12% Preferred Stock is perpetual in nature.

          The shares of 12% Preferred Stock represent a perpetual interest in us and, unlike indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. As a result, holders of the 12% Preferred Stock may be required to bear the financial risks of an investment in the 12% Preferred Stock for an indefinite period of time. Holders have no right to call for the redemption of the 12% Preferred Stock. Therefore, holders should be aware that they may be required to bear the financial risks of an investment in the 12% Preferred Stock for an indefinite period of time.

We are obligated to pay quarterly dividends with respect to our Preferred Stock.

          We are obligated to pay quarterly dividends with respect to the 12% Preferred Stock and in the event such dividends are in arrears for six or more quarters, whether or not consecutive, subject to certain limitations, holders representing a majority of shares of Preferred Stock (voting together as a class with the holders of all other classes or series of preferred stock upon which like voting rights have been conferred and are exercisable) will be entitled to nominate and vote for the election of two additional directors to serve on our Board of Directors (the “Preferred Stock Directors”), until all unpaid dividends with respect to the Preferred Stock and any other class or series of preferred stock upon which like voting rights have been conferred and are exercisable have been paid or declared and a sum sufficient for payment is set aside for such payment; provided that the election of any such Preferred Stock Directors will not cause us to violate the corporate governance requirements of the New York Stock Exchange (“NYSE”) (or any other exchange or automated quotation system on which our securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors; and provided further that the Board of Directors will, at no time, include more than two Preferred Stock Directors.

The conversion rate of the 12% Preferred Stock may not be adjusted for all dilutive events that may adversely affect the market price of the 12% Preferred Stock or the common stock issuable upon conversion of the 12% Preferred Stock.

          The number of shares of our common stock that holders are entitled to receive upon conversion of a share of 12% Preferred Stock is subject to adjustment for certain events arising from increases in dividends or distributions in common stock, subdivisions, splits, and combinations of the common stock, certain issuances of stock and stock purchase rights, debt, or asset distributions, cash distributions, self-tender offers and exchange offers, and certain other actions by us that modify our capital structure. See “Description of 12% Preferred Stock—Conversion Rights—Conversion Rate Adjustment—General.” We will not adjust the conversion rate for other events, including our issuances of common stock in connection with acquisitions or the exercise of options or restricted stock awards granted pursuant to equity plans approved by the Board, or, after the six-month anniversary of November 6, 2009, for cash. There can be no assurance that an event that adversely affects the value of the 12% Preferred Stock, but does not result in an adjustment to the conversion rate, will not occur. Further, if any of these other events adversely affects the market price of our common stock, it may also adversely affect the market price of the 12% Preferred Stock. In addition, we are not restricted from offering common stock in the future or engaging in other transactions that may dilute our common stock and we may issue additional shares of 12% Preferred Stock, which may dilute our common stock.

A change in control with respect to us may not constitute a merger, consolidation or sale of assets or a fundamental change for the purpose of the 12% Preferred Stock.

          The 12% Preferred Stock contains no covenants or other provisions to afford protection to holders in the event of certain mergers, consolidations or sales of assets with respect to us constituting a “change in control” on or after November 15, 2019 except upon the occurrence of certain mergers, consolidations or sales of assets. See “Description of 12% Preferred Stock—Conversion Rights—Conversion Rate Adjustment—Merger, Consolidation or Sale of Assets,” “Description of 12% Preferred Stock—Repurchase of Option of Holders Upon a Fundamental Change” and “Description of 12% Preferred Stock—Adjustment to Conversion Rate Upon Certain Change of Control Events.” Furthermore, the limited covenants with respect to a “fundamental change” or “change in control” may not include every change in control event that could cause the market price of the 12% Preferred Stock to decline. The adjustment to conversion rate described under “Description of 12% Preferred Stock—Adjustment to Conversion Rate upon Certain Change in Control Events” will not be applicable on or after November 15, 2014 and the repurchase right of preferred holders described under “—Repurchase at Option of Holders Upon a Fundamental Change” will not be applicable on or after November 15, 2019, and these

limitations may have the effect of discouraging third parties from pursuing a change in control of our company, which may otherwise be in the best interest of our stockholders. Any change in control with respect to us either before or after November 15, 2019 may negatively affect the liquidity, value or volatility of our common stock, and thus, negatively impact the value of the 12% Preferred Stock.

We may not have the funds necessary to repurchase the 12% Preferred Stock following a fundamental change.

          Holders of the notes have the right to require us to repurchase the 12% Preferred Stock in cash upon the occurrence of a fundamental change prior to November 15, 2019. We may not have sufficient funds to repurchase the 12% Preferred Stock at such time, and may not have the ability to arrange necessary financing on acceptable terms. In addition, our ability to purchase the 12% Preferred Stock may be limited by law or the terms of other agreements outstanding at such time. Moreover, a failure to repurchase the 12% Preferred Stock may also constitute an event of default, and result in the acceleration of the maturity of, any then existing indebtedness, under any indenture, credit agreement or other agreement outstanding at that time, which could further restrict our ability to make such payments.

The adjustment to conversion rate in respect of conversions following certain change in control events may not adequately compensate you.

          If certain change in control events occur prior to November 15, 2014, and a holder converts in connection with such change in control, we will, under certain circumstances, pay a adjustment to conversion rate in respect of any conversions of the 12% Preferred Stock that occur during the period beginning on the date notice of such fundamental change is delivered and ending on the change in control conversion date. See “Description of 12% Preferred Stock—Adjustment to Conversion Rate upon Certain Change in Control Events.” Although the adjustment to the conversion rate is designed to compensate holders for the lost option value of the holders’ 12% Preferred Stock, it is only an approximation of such lost value and may not adequately compensate the holders for their actual loss.

          Our obligation to adjust the conversion rate in respect of conversions following certain changes in control may be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness, as applied to such payments.

If our common stock is delisted, your ability to transfer or sell the 12% Preferred Stock, or common stock upon conversion, may be limited and the market value of the 12% Preferred Stock will be adversely affected.

          The 12% Preferred Stock does not contain protective provisions in the event that our common stock is delisted. Since the 12% Preferred Stock has no stated maturity date, holders may be forced to elect between converting their shares of the 12% Preferred Stock into illiquid shares of our common stock or holding their shares of the 12% Preferred Stock and receiving stated dividends on the stock when, as and if authorized by our Board of Directors and declared by us with no assurance as to ever receiving the liquidation preference of the 12% Preferred Stock. Accordingly, if our common stock is delisted, the holders’ ability to transfer or sell their shares of the 12% Preferred Stock, or common stock upon conversion, may be limited, and the market value of the 12% Preferred Stock will be adversely affected.

Holders of the 12% Preferred Stock may be unable to use the dividends-received deduction.

          Distributions paid to corporate U.S. holders (as defined herein) of the 12% Preferred Stock (or our common stock) may be eligible for the dividends-received deduction to the extent we have current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. As of December 31, 2008, we had an accumulated deficit of $333.3 million and we had a net loss of $330.9 million in the year ended December 31, 2008. As of September 30, 2009, we had an accumulated deficit of $428.9 million and a net loss of $95.7 million for the nine (9) month period ended September 30, 2009. There can be no assurance that we will have sufficient current or accumulated earnings and profits during future fiscal years for the distributions on the 12% Preferred Stock (or our common stock) to qualify as dividends for U.S. federal income tax purposes. If the distributions fail to qualify as dividends, U.S. holders would be unable to use the dividends-received deduction. Instead, distributions would be treated first as a tax-free return of capital to the extent of a U.S. holder’s adjusted tax basis in the 12% Preferred Stock and thereafter as capital gain. If a corporate U.S. holder’s tax basis in the 12% Preferred Stock (or our common stock) were reduced in this manner, then the amount of gain, if any, recognized by such holder on a subsequent disposition of such stock would be increased and such holder would not be eligible for a dividends-received deduction to offset such gain.

Holders may have to pay U.S. federal income tax if we adjust, or fail to adjust, the conversion rate of the 12% Preferred Stock in certain circumstances, even if holders do not receive a corresponding distribution of cash.

          Holders may be treated as having received a constructive distribution from us as a result of certain adjustments to (or certain failures to make adjustments to) the conversion rate or other terms of the 12% Preferred Stock. The tax treatment of any constructive distributions is not entirely clear. It is possible that such distribution could be treated as a taxable dividend for U.S. federal income tax purposes to the extent of our current and accumulated earnings and profits, even though holders do not receive any cash with respect to such constructive distribution. In addition, non-U.S. holders (as defined in “Certain U.S. Federal Income Tax Considerations”) of the 12% Preferred Stock may, in certain circumstances, be subject to U.S. federal withholding tax on any constructive distributions on the 12% Preferred Stock that are treated as taxable dividends, and we intend to withhold U.S. federal income tax with respect to any

such constructive taxable dividends from any payments made by us to such non-U.S. holders. You are advised to consult your independent tax advisor and read “Certain U.S. Federal Income Tax Considerations” regarding the U.S. federal income tax consequences of an adjustment to the conversion rate of the 12% Preferred Stock and the issuance of the 12% Preferred Stock at less than the liquidation preference amount.

Risks Related to the Company’s Business in General

The ongoing downturn in the general economy and the real estate market has negatively impacted and could continue to negatively impact the Company’s business and financial results.

     Periods of economic slowdown or recession, significantly reduced access to credit, declining employment levels, decreasing demand for real estate, declining real estate values or the perception that any of these events may occur, can reduce transaction volumes or demand for services for each of our business lines. The current recession and the downturn in the real estate market have resulted in and may continue to result in:

	•		a decline in acquisition, disposition and leasing activity;
	•		a decline in the supply of capital invested in commercial real estate;
	•		a decline in fees collected from investment management programs, which are dependent upon demand for investment in commercial real estate; and
	•		a decline in the value of real estate and in rental rates, which would cause the Company to realize lower revenue from:

	•		property management fees, which in certain cases are calculated as a percentage of the revenue of the property under management; and
	•		commissions or fees derived from property valuation, sales and leasing, which are typically based on the value, sale price or lease revenue commitment, respectively.

          The declining real estate market in the United States, the availability and cost of credit, increased unemployment, volatile oil prices, declining consumer confidence and the instability of United States banking and financial institutions, have contributed to increased volatility, an overall economic slowdown and diminished expectations for the economy and markets going forward. The fragile state of the credit markets, the fear of a global recession for an extended period and the current economic environment have impacted real estate services and investment management firms like ours through reduced transaction volumes, falling transaction values, lower real estate valuations, liquidity restrictions, market volatility, and the loss of confidence. As a consequence, similar to other real estate services and investment management firms, our stock price has declined significantly.

          Due the economic downturn, it may take us longer to dispose of real estate assets and investments and the selling prices may be lower than originally anticipated. If this occurs, fees from transaction services will be reduced. In addition, the performance of certain properties in the investment management portfolio may be negatively impacted, which would likewise affect our fees. As a result, the carrying value of certain of our real estate investments may become impaired and we could record losses as a result of such impairment or we could experience reduced profitability related to declines in real estate values. As of September 30, 2008, the Company initiated a plan to sell the properties it classified as real estate held for investment in its financial statements as of September 30, 2008. As of December 31, 2008, the Company’s Credit Facility included a covenant which required the sale of certain of these assets before March 31, 2009. The downturn in the global credit markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions as of March 31, 2009. Pursuant to the requirements of the Property, Plant, and Equipment Topic, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments during the year ended December 31, 2008.

          We are not able to predict the severity or duration of the current adverse economic environment or the disruption in the financial markets. The real estate market tends to be cyclical and related to the condition of the overall economy and to the perceptions of investors, developers and other market participants as to the economic outlook. The ongoing downturn in the general economy and the real estate market has negatively impacted and could continue to negatively impact the Company’s business and results of operations.

The ongoing adverse developments in the credit markets and the risk of continued market deterioration have adversely affected the Company’s revenues, expenses and operating results and may continue to do so.

          Our business lines are sensitive to credit cost and availability as well as market place liquidity. In addition, the revenues in all our businesses are dependent to some extent on overall volume of activity and pricing in the commercial real estate market. In 2008, the credit markets experienced an unprecedented level of disruption and uncertainty. This disruption and uncertainty has reduced the availability and significantly increased the cost of most sources of funding. In certain cases, sources of funding have been eliminated.

          Disruptions in the credit markets have adversely affected, and may continue to adversely affect, our business of providing services to owners, purchasers, sellers, investors and occupants of real estate in connection with acquisitions, dispositions and leasing of real property. If our clients are unable to obtain credit on favorable terms, there will be fewer completed acquisitions, dispositions and leases of property. In addition, if purchasers of real estate are not able to obtain favorable financing resulting in a lack of disposition opportunities for funds for whom we act as advisor, our fee revenues will decline and we may also experience losses on real estate held for investment.

          The recent decline in real estate values and the inability to obtain financing has either eliminated or severely reduced the availability of the Company’s historical funding sources for its investment management programs, and to the extent credit remains available for these programs, it is currently more expensive. The Company may not be able to continue to access sources of funding for its investment management programs or, if available to the Company, the Company may not be able to do so on favorable terms. Any decision by lenders to make additional funds available to the Company in the future for its investment management programs will depend upon a number of factors, such as industry and market trends in our business, the lenders’ own resources and policies concerning loans and investments, and the relative attractiveness of alternative investment or lending opportunities.

          The depth and duration of the current credit market and liquidity disruptions are impossible to predict. In fact, the magnitude of the recent credit market disruption has exceeded the expectations of most if not all market participants. This uncertainty limits the Company’s ability to develop future business plans and the Company believes that it limits the ability of other participants in the credit markets and the real estate markets to do so as well. This uncertainty may lead market participants to act more conservatively than in recent history, which may continue to depress demand and pricing in our markets.

We experienced additional, unanticipated costs and may have additional risk and further costs as a result of the restatement of our financial statements.

          As a result of the restatement of certain audited and unaudited financial data, and the special investigation in connection therewith, we incurred substantial, additional unanticipated costs for accounting and legal fees. The restatement and special investigation was also time-consuming and affected management’s attention and resources. Further, there are no assurances that we will not become involved in legal proceedings in the future in relation to these restatements. In connection with any such potential proceedings, any incurred expenses not covered by available insurance or any adverse resolution could have a material adverse effect on the Company. Any such future legal proceedings could also be time-consuming and distract our management from the conduct of our business.

We have received a notice from the NYSE that we did not meet its continued listing requirements. If we are unable to rectify this non-compliance in accordance with NYSE rules, our common stock will be delisted from trading on the NYSE, which could have a material adverse effect on the liquidity and value of our common stock.

          On August 11, 2009, we received notification from NYSE Regulation, Inc. that we were not in compliance with the NYSE’s continued listing standard requiring that we maintain an average market capitalization and stockholders’ equity of not less than $50 million. In connection with the NYSE’s rules, we submitted a business plan to the NYSE on November 3, 2009 evidencing how the Company intends to come into compliance with the continued listing standards and on November 9, 2009, we were advised that the NYSE’s Listing and Compliance Committee has accepted the Company’s business plan. Accordingly, we need to have an average market capitalization over a consecutive 30 trading day period of $50 million or total stockholders’ equity of $50 million by April 11, 2011 although we may come into compliance sooner, or based on two consecutive quarterly monitoring periods, which is an ongoing process. The NYSE conducts quarterly reviews during the 20-month period from August 11, 2009 through April 11, 2011.

          If we are unable to regain compliance with the NYSE’s continued listing standard within the required time frame, our common stock will be delisted from the NYSE. As a result, we likely would have our common stock quoted on the Over-the-Counter Bulletin Board (“OTC BB”) in order to have our common stock continue to be traded on a public market. Securities that trade on the OTC BB generally have less liquidity and greater volatility than securities that trade on the NYSE. Delisting from the NYSE also may preclude us from using certain state securities law exemptions, which could make it more difficult and expensive for us to raise capital in the future and more difficult for us to provide compensation packages sufficient to attract and retain top talent. In addition, because issuers whose securities trade on the OTC BB are not subject to the corporate governance and other standards imposed by the NYSE, and such issuers receive less news and analyst coverage, our reputation may suffer, which could result in a decrease in the trading price of our shares. The delisting of our common stock from the NYSE, therefore, could significantly disrupt the ability of investors to trade our common stock and could have a material adverse effect on the value and liquidity of our common stock.

The Company is in a highly competitive business with numerous competitors, some of which may have greater financial and operational resources than it does.

          The 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 on a regional and local level. The Company faces competition not only from other national real estate service providers, but also from global real estate service providers, boutique real estate advisory firms, consulting and appraisal firms. Depending on the product or service, the Company also faces competition from other real estate service providers, institutional lenders, insurance companies, investment banking firms, investment managers and accounting firms, some of which may have greater financial resources than the Company does. The Company is also subject to competition from other large national firms and from multi-national firms that have similar service competencies to it. Although many of the Company’s competitors are local or regional firms that are substantially smaller than it, some of its competitors are substantially larger than it on a local, regional, national or international basis. In general, there can be no assurance that the Company will be able to continue to compete effectively with respect to any of its business lines or on an overall basis, or to maintain current fee levels or margins, or maintain or increase its market share.

The TIC business in general, from which the Company has historically generated significant revenues, materially contracted in 2008.

          The Company has historically generated significant revenues from fees earned through the transaction structuring and property management of its TIC Programs. In 2008, however, with the nationwide decline in real estate values and the global credit crises, the TIC industry contracted significantly. According to the research of OMNI, approximately $3.7 billion of TIC equity was raised in 2006. In 2008, the amount of TIC equity raised declined by approximately 66% to $1.24 billion. Moreover, OMNI has indicated that based on the current year-to-date activity through the first part of 2009, should the current trends remain constant throughout the entire calendar year, the TIC industry would raise approximately $300.0 million in 2009, an approximately 90% decline from 2006. As the Company has historically generated a significant amount of revenue from its TIC operations, the rapid and steep decline in this industry may have a material, adverse effect on the Company’s business and results of operations if it is unable to generate revenues in its other business segments, of which there can be no assurances, to make up for the loss of TIC-related revenues.

As a service-oriented company, the Company depends on key personnel, and the loss of its current personnel or its failure to hire and retain additional personnel could harm its business.

          The Company depends on its ability to attract and retain highly skilled personnel. The Company believes that its future success in developing its business and maintaining a competitive position will depend in large part on its ability to identify, recruit, hire, train, retain and motivate highly skilled executive, managerial, sales, marketing and customer service personnel. Competition for these personnel is intense, and the Company may not be able to successfully recruit, assimilate or retain sufficiently qualified personnel. We use equity incentives to attract and retain our key personnel. In 2008, and the first quarter of 2009, our stock price declined significantly, resulting in the decline in value of previously provided equity awards, which may result in an increase risk of loss of key personnel. The performance of our stock may also diminish our ability to offer attractive incentive awards to new hires. The Company’s failure to recruit and retain necessary executive, managerial, sales, marketing and customer service personnel could harm its business and its ability to obtain new customers.

The Company plans to expand its business to include international operations that could subject it to social, political and economic risks of doing business in foreign countries.

          Although the Company does not currently conduct significant business outside the United States, the Company intends to expand its business to include international operations. There can be no assurance that the Company will be able to successfully expand its business in international markets. Current global economic conditions may restrict, limit or delay the Company’s ability to expand its business into international markets or make such expansion less economically feasible. If the Company expands into international markets, circumstances and developments related to international operations that could negatively affect the Company’s business or results of operations include, but are not limited to, the following factors:

	•		lack of substantial experience operating in international markets;
	•		lack of recognition of the Grubb & Ellis brand name in international markets;
	•		difficulties and costs of staffing and managing international operations;
	•		currency restrictions, which may prevent the transfer of capital and profits to the United States;
	•		diverse foreign currency fluctuations;
	•		changes in regulatory requirements;
	•		potentially adverse tax consequences;

	•		the responsibility of complying with multiple and potentially conflicting laws;
	•		the impact of regional or country-specific business cycles and economic instability;
	•		the geographic, time zone, language and cultural differences among personnel in different areas of the world;
	•		political instability; and
	•		foreign ownership restrictions with respect to operations in certain countries.

Additionally, the Company may establish joint ventures with foreign entities for the provision of brokerage services abroad, which may involve the purchase or sale of the Company’s equity securities or the equity securities of the joint venture participant(s). In these joint ventures, the Company may not have the right or power to direct the management and policies of the joint venture and other participants may take action contrary to the Company’s instructions or requests and against the Company’s policies and objectives. In addition, the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with the Company. If a joint venture participant acts contrary to the Company’s interest, then it could have a material adverse effect on the Company’s business and results of operations.

Failure to manage any future growth effectively may have a material adverse effect on the Company’s financial condition and results of operations.

          Management will need to successfully manage any future growth effectively. The Company has pursued an aggressive expansion strategy in the transaction services business. The integration and additional growth may place a significant strain upon management, administrative, operational and financial infrastructure. The Company’s ability to grow also depends upon its ability to successfully hire, train, supervise and manage additional executive officers and new employees, obtain financing for its capital needs, expand its systems effectively, allocate its human resources optimally, maintain clear lines of communication between its transactional and management functions and its finance and accounting functions, and manage the pressures on its management and administrative, operational and financial infrastructure. Additionally, managing future growth may be difficult due to the new geographic locations and business lines of the Company. There can be no assurance that the Company will be able to accurately anticipate and respond to the changing demands it will face as it integrates and continues to expand its operations, and it may not be able to manage growth effectively or to achieve growth at all. Any failure to manage the future growth effectively could have a material adverse effect on the Company’s business, financial condition and results of operations.

Our ability to access credit and capital markets may be adversely affected by factors beyond our control, including turmoil in the financial services industry, volatility in financial markets and general economic downturns.

          We used a significant portion of the net proceeds from the sale of the preferred stock to pay off and terminate the Credit Facility. As of the date of prospectus, we do not have any revolving credit or other credit facility in place and we do not have the ability to borrow funds under any revolving credit or other credit arrangements. We have relied upon access to the credit markets as a source of liquidity for the portion of our working capital requirements not provided by cash from operations. Market disruptions such as those currently being experienced in the United States and other countries may increase our cost of borrowing or adversely affect our ability to access sources of liquidity upon which we have relied to finance our operations and satisfy our obligations as they become due. These disruptions include turmoil in the financial services and real estate industries, including substantial uncertainty surrounding particular lending institutions, and general economic downturns. If we are unable to access credit at competitive rates or at all, or if our short-term or long-term borrowing costs dramatically increase, our ability to finance our operations, meet our short-term obligations and implement our operating strategy could be adversely affected.

Risks Related to the Company’s Transaction Services and Management Services Business

The Company’s quarterly operating results are likely to fluctuate due to the seasonal nature of its business and may fail to meet expectations, which may cause the price of its securities to decline.

          Historically, the majority of legacy Grubb & Ellis revenue has been derived from the transaction services that it provides. Such services are typically subject to seasonal fluctuations. Legacy Grubb & Ellis 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. 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. As a result, since a high proportion of these operating expenses are fixed, declines in revenue could disproportionately affect the Company’s operating results in a quarter. In addition, the Company’s quarterly operating results have fluctuated in the past and will likely continue to fluctuate in the future. If the Company’s quarterly operating results fail to meet expectations, the price of the Company’s securities could fluctuate or decline significantly.

If the properties that the Company manages fail to perform, then its business and results of operations could be harmed.

          The Company’s success partially depends upon the performance of the properties it manages. The Company could be adversely affected by the nonperformance of, or the deteriorating financial condition of, certain of its clients. The revenue the Company generates from its property management business is generally a percentage of aggregate rent collections from the properties. The performance of these properties will depend upon the following factors, among others, many of which are partially or completely outside of the Company’s control:

	•		the Company’s ability to attract and retain creditworthy tenants;
	•		the magnitude of defaults by tenants under their respective leases;
	•		the Company’s ability to control operating expenses;
	•		governmental regulations, local rent control or stabilization ordinances which are in, or may be put into, effect;
	•		various uninsurable risks;
	•		financial condition of certain clients;
	•		financial conditions prevailing generally and in the areas in which these properties are located;
	•		the nature and extent of competitive properties; and
	•		the general real estate market.

These or other factors may negatively impact the properties that the Company manages, which could have a material adverse effect on its business and results of operations.

If the Company fails to comply with laws and regulations applicable to real estate brokerage and mortgage transactions and other business lines, then it may incur significant financial penalties.

          Due to the broad geographic scope of the Company’s operations and the real estate services performed, the Company is subject to numerous federal, state and local laws and regulations specific to the services performed. For example, the brokerage of real estate sales and leasing transactions requires the Company to maintain brokerage licenses in each state in which it operates. If the Company fails to maintain its licenses or conducts brokerage activities without a license or violates any of the regulations applicable to our licenses, then it may be required to pay fines (including treble damages in certain states) or return commissions received or have our licenses suspended or revoked. In addition, because the size and scope of real estate sales transactions have increased significantly during the past several years, both the difficulty of ensuring compliance with the numerous state licensing regimes and the possible loss resulting from non-compliance have increased. Furthermore, the laws and regulations applicable to the Company’s business, both in the United States and in foreign countries, also may change in ways that increase the costs of compliance. The failure to comply with both foreign and domestic regulations could result in significant financial penalties which could have a material adverse effect on the Company’s business and results of operations.

The Company may have liabilities in connection with real estate brokerage and property and facilities management activities.

          As a licensed real estate broker, the Company and its licensed employees and independent contractors that work for it are subject to statutory due diligence, disclosure and standard-of-care obligations. Failure to fulfill these obligations could subject the Company or its employees to litigation from parties who purchased, sold or leased properties that the Company or they brokered or managed. The Company could become subject to claims by participants in real estate sales, as well as building owners and companies for whom we provide management services, claiming that the Company did not fulfill its statutory obligations as a broker.

          In addition, in the Company’s property and facilities management businesses, it hires and supervises third-party contractors to provide construction and engineering services for its managed properties. While the Company’s role is limited to that of a supervisor, the Company may be subject to claims for construction defects or other similar actions. Adverse outcomes of property and facilities management litigation could have a material adverse effect on the Company’s business, financial condition and results of operations.

Environmental regulations may adversely impact the Company’s business and/or cause the Company to incur costs for cleanup of hazardous substances or wastes or other environmental liabilities.

          Federal, state and local laws and regulations impose various environmental zoning restrictions, use controls, and disclosure obligations which impact the management, development, use, and/or sale of real estate. Such laws and regulations tend to discourage sales and leasing activities, as well as mortgage lending availability, with respect to some properties. A decrease or delay in such transactions may adversely affect the results of operations and financial condition of the Company’s real estate brokerage business. In addition, a failure by the Company to disclose environmental concerns in connection with a real estate transaction may subject it to liability to a buyer or lessee of property.

          In addition, in its role as a property manager, the Company could incur liability under environmental laws for the investigation or remediation of hazardous or toxic substances or wastes at properties it currently or formerly managed, or at off-site locations where wastes from such properties were disposed. Such liability can be imposed without regard for the lawfulness of the original disposal activity, or the Company’s knowledge of, or fault for, the release or contamination. Further, liability under some of these laws may be joint and several, meaning that one liable party could be held responsible for all costs related to a contaminated site. The Company could also be held liable for property damage or personal injury claims alleged to result from environmental contamination, or from asbestos-containing materials or lead-based paint present at the properties it manages. Insurance for such matters may not be available or sufficient.

          Certain requirements governing the removal or encapsulation of asbestos-containing materials, as well as recently enacted local ordinances obligating property managers to inspect for and remove lead-based paint in certain buildings, could increase the Company’s costs of legal compliance and potentially subject it to violations or claims. Although such costs have not had a material impact on its financial results or competitive position during fiscal year 2006, 2007 or 2008, or the nine-month period ending September 30, 2009, the enactment of additional regulations, or more stringent enforcement of existing regulations, could cause it to incur significant costs in the future, and/or adversely impact its brokerage and management services businesses.

Risks Related to the Company’s Investment Management and Broker-Dealer Business

Declines in asset value and reductions in distributions in investment programs could adversely affect the Company business, as it could cause harm to the Company’s reputation, cause the loss of management contracts and third-party broker-dealer selling agreements, limit the Company’s ability to sign future third-party broker-dealer selling agreements and potentially expose the Company to legal liability.

          The current market value of many of the properties owned through the Company’s investment programs have recently decreased as a result of the overall decline in the economy and commercial real estate generally. In addition, there have been reductions in distributions in numerous investment programs in 2008 and 2009, in certain instances to a zero percent distribution rate. Significant declines in value and reductions in distributions in the investment programs sponsored by the Company could adversely affect the Company’s reputation and the Company’s ability to attract investors for future investment programs. In addition, significant declines in value and reductions in distributions could cause the Company to lose asset and property management contracts for its investment management programs, cause the Company to lose third-party broker-dealer selling agreements for existing investment programs, including its REITs, and limit the Company’s ability to sign future third-party broker-dealer agreements. The loss of value may be significant enough to cause certain investment programs to go into foreclosure or result in a complete loss of equity for program investors. Significant losses in asset value and investor equity and reductions in distributions increase the risk of claims or legal actions by program investors. Any such legal liability could result in further damage to the Company’s reputation, loss of third-party broker-dealer selling agreements and incurrence of legal expenses.

The Company currently provides its Investment Management services primarily to its programs. Its revenue depends on the number of its programs, on the price of the properties acquired or disposed of by these programs, and on the revenue generated by the properties under its management.

          The Company derives fees for Investment Management services based on a percentage of the price of the properties acquired or disposed of by its programs and for management services based on a percentage of the rental amounts of the properties in its programs. The Company is responsible for the management of all of the properties owned by its programs, but as of December 31, 2008 it had subcontracted the property management of approximately 18.0% of its programs’ office, medical office and healthcare related facilities and retail properties (based on square footage) and 30.3% of its programs’ multi-family apartment units to third parties. For REITs, investment decisions are controlled by the Board of Directors of REITs that are independent of the Company. Investment decisions of these Boards affect the fees earned by the Company. As a result, if any of the Company’s programs are unsuccessful, both its Transaction Services and Investment Management services fees will be reduced, if any are paid at all. In addition, failures of the Company’s programs to provide competitive investment returns could significantly impair its ability to market future programs. The Company’s inability to spread risk among a large number of programs could cause it to be over-reliant on a limited number of programs for its revenues. There can be no assurance that the Company will maintain current levels of transaction and management services for its programs’ properties.

The Company may be unable to grow its programs, which would cause it to fail to satisfy its business strategy.

          A significant element of the Company business strategy is the growth in the number of its programs. The consummation of any future program will be subject to raising adequate capital for the investment, identifying appropriate assets for acquisition and effectively and efficiently closing the transactions. There can be no assurance that the Company will be able to identify and invest in additional properties or will be able to raise adequate capital for new programs in the future. If the Company is unable to consummate new programs in the future, it will not be able to continue to grow the revenue it receives from either transaction or management services.

The inability to access investors for the Company’s programs through broker-dealers or other intermediaries could have a material adverse effect on its business.

          The Company’s ability to source capital for its programs depends significantly on access to the client base of securities broker-dealers and other financial investment intermediaries that may offer competing investment products. The Company believes that its future success in developing its business and maintaining a competitive position will depend in large part on its ability to continue to maintain these relationships as well as finding additional securities broker-dealers to facilitate offerings by its programs or to find investors for the Company’s REITs, TIC Programs and other investment programs. The Company cannot be sure that it will continue to gain access to these channels. In addition, competition for capital is intense and the Company may not be able to obtain the capital required to complete a program. The inability to have this access could have a material adverse effect on its business and results of operations.

The termination of any of the Company’s broker-dealer relationships, especially given the limited number of key broker-dealers, could have a material adverse effect on its business.

          The Company’s securities programs are sold through third-party broker-dealers who are members of its selling group. While the Company has established relationships with its selling group, it is required to enter into a new agreement with each member of the selling group for each new program it offers. In addition, the Company’s programs may be removed from a selling broker-dealer’s approved program list at any time for any reason. The Company cannot assure you of the continued participation of existing members of its selling group nor can the Company make an assurance that its selling group will expand. While the Company continues to diversify and add new investment channels for its programs, a significant portion of the growth in recent years in the number of TIC Programs it sponsors and in its REITs has been as a result of capital raised by a relatively limited number of broker-dealers. Loss of any of these key broker-dealer relationships, or the failure to develop new relationships to cover the Company’s expanding business through new investment channels, could have a material adverse effect on its business and results of operations.

Misconduct by third-party selling broker-dealers or the Company’s sales force, could have a material adverse effect on its business.

          The Company relies on selling broker-dealers and the Company’s sales force to properly offer its securities programs to customers in compliance with its selling agreements and with applicable regulatory requirements. While these persons are responsible for their activities as registered broker-dealers, their actions may nonetheless result in complaints or legal or regulatory action against the Company.

A significant amount of the Company’s revenue has historically been derived from fees earned through the transaction structuring and property management of its TIC Programs, which programs rely primarily on Section 1031 of the Internal Revenue Code to provide for deferral of capital gains taxes to make these programs attractive. A change in this tax code section or a complete revocation of this section as it relates specifically to TICs could materially impact these programs.

          Section 1031 of the Internal Revenue Code provides for the deferral of capital gains taxes which would ordinarily arise from the sale of real estate through a tax-deferred exchange of property, which defers the recognition of capital gains tax until such time as the replacement property is sold in a taxable transaction. These transactions are referred to as 1031 exchanges. In 2002, the Internal Revenue Service, or IRS, issued advance ruling guidelines outlining the requirements for properly structured TIC arrangements, which the Company believes validate the TIC structure generally and as it employs it. However, as recently as May 2006, the Senate Finance Committee proposed a bill in the negotiations over the budget reconciliation tax-cutting package to modify Section 1031 treatment for TICs as a way to raise additional tax revenue. The proposal was unsuccessful, but the Company cannot assure you that in the future there will not be attempts to limit or disallow the tax deferral benefits for TIC transactions. For the year ended December 31, 2008, approximately 1.4% of the Company’s total revenue was derived from TIC acquisition fees, although this amount is declining due to a significant contraction in the industry in 2008 (see Risk Factor above, “The TIC business in general, from which the Company has historically generated significant revenues, materially contracted in 2008”) If the Company were no longer able to structure TIC Programs as 1031 exchanges for its investors, it could lose a significant amount of revenue in the future, which might materially affect its results of operations. Moreover, any attempt to limit or disallow the tax deferral benefits of the 1031 exchange generally would have a material adverse effect on the real estate industry generally and on the Company’s business and results of operations.

A significant amount of the Company’s programs are structured to provide favorable tax treatment to investors or REITs. If a program fails to satisfy the requirements necessary to permit this favorable tax treatment, the Company could be subject to claims by investors and its reputation for structuring these transactions would be negatively affected, which would have an adverse effect on its financial condition and results of operations.

          The Company structures TIC Programs and public non-traded REITs to provide favorable tax treatment to investors. For example, its TIC investors are able to defer the recognition of gain on sale of investment or business property if they enter into a 1031 exchange. Similarly, qualified REITs generally are not subject to federal income tax at corporate rates, which permits REITs to make larger distributions to investors (i.e. without reduction for federal income tax imposed at the corporate level). If the Company fails to properly structure a TIC transaction or if a REIT fails to satisfy the complex requirements for qualification and taxation as a REIT under the Internal Revenue Code, the Company could be subject to claims by investors as a result of additional tax they may be required to pay or because they are unable to receive the distributions they expected at the time they made their investment. In addition, any failure to satisfy applicable tax regulations in structuring its programs would negatively affect the Company’s reputation,

which would in turn affect its ability to earn additional fees from new programs. Claims by investors could lead to losses and any reduction in the Company’s fees would have a material adverse effect on its revenues.

Any future co-investment activities the Company undertakes could subject it to real estate investment risks which could lead to the need for substantial capital contributions, which may impact its cash flows and financial condition and, if it is unable to make them, could damage its reputation and result in adverse consequences to its holdings.

          The Company may from time to time invest its capital in certain real estate investments with other real estate firms or with institutional investors such as pension plans. Any co-investment will generally require the Company to make initial capital contributions, and some co-investment entities may request additional capital from the Company and its subsidiaries holding investments in those assets. These contributions could adversely impact the Company’s cash flows and financial condition. Moreover, the failure to provide these contributions could have adverse consequences to the Company’s interests in these investments. These adverse consequences could include damage to the Company’s reputation with its co-investment partners as well as dilution of ownership and the necessity of obtaining alternative funding from other sources that may be on disadvantageous terms, if available at all.

Geographic concentration of program properties may expose the Company’s programs to regional economic downturns that could adversely impact their operations and, as a result, the fees the Company is able to generate from them, including fees on disposition of the properties as the Company may be limited in its ability to dispose of properties in a challenging real estate market.

          The Company’s programs generally focus on acquiring assets satisfying particular investment criteria, such as type or quality of tenants. There is generally no or little focus on the geographic location of a particular property. The Company cannot guarantee, however, that its programs will have, or will be able to maintain, a significant amount of geographic diversity. Although the Company’s property programs are located in 31 states, a majority of these properties (by square footage) are located in Texas, California, Florida and North Carolina. Geographic concentration of properties exposes the Company’s programs to economic downturns in the areas where the properties are located. A regional recession or other major, localized economic disruption in a region, such as earthquakes and hurricanes, in any of these areas could adversely affect the Company’s programs’ ability to generate or increase their operating revenues, attract new tenants or dispose of unproductive properties. Any reduction in program revenues would effectively reduce the fees the Company generates from them, which would adversely affect the Company’s results of operations and financial condition.

The failure of Triple Net Properties, LLC, recently renamed Grubb & Ellis Realty Investors, LLC (“GERI”) and Triple Net Properties Realty, Inc. (“Realty”), subsidiaries of the Company acquired in the Merger, to hold certain required real estate licenses may subject Realty and the Company to penalties, such as fines, restitution payments and termination of management agreements, and to the suspension or revocation of certain broker licenses.

          Although Realty was required to have real estate licenses in states in which it acted as a broker for NNN’s investment programs and received real estate commissions prior to 2007, Realty did not hold a license in certain of those states when it earned fees for those services. In addition, almost all of GERI’s revenue was based on an arrangement with Realty to share fees from NNN’s programs. GERI did not hold a real estate license in any state, although most states in which properties of NNN’s programs were located may have required GERI to hold a license in order to share fees. As a result, Realty and the Company may be subject to penalties, such as fines (which could be a multiple of the amount received), restitution payments and termination of management agreements, and to the suspension or revocation of certain of Realty’s real estate broker licenses.

If third-party managers providing property management services for the Company’s programs’ office, medical office and healthcare related facilities, retail and multi-family properties are negligent in their performance of, or default on, their management obligations, the tenants may not renew their leases or the Company may become subject to unforeseen liabilities. If this occurs, it could have an adverse effect on the Company’s financial condition and operating results.

          The Company has entered into agreements with third-party management companies to provide property management services for a significant number of the Company’s programs’ properties, and the Company expects to enter into similar third-party management agreements with respect to properties the Company’s programs acquire in the future. The Company does not supervise these third-party managers and their personnel on a day-to-day basis and the Company cannot assure you that they will manage the Company’s programs’ properties in a manner that is consistent with their obligations under the Company’s agreements, that they will not be negligent in their performance or engage in other criminal or fraudulent activity, or that these managers will not otherwise default on their management obligations to the Company. If any of the foregoing occurs, the relationships with the Company’s programs’ tenants could be damaged, which may cause the tenants not to renew their leases, and the Company could incur liabilities resulting from loss or injury to the properties or to persons at the properties. If the Company is unable to lease the properties or the Company becomes subject to significant liabilities as a result of third-party management performance issues, the Company’s operating results and financial condition could be substantially harmed.

The Company or its new programs may be required to incur future indebtedness to raise sufficient funds to purchase properties.

          One of the Company’s business strategies is to develop new programs. The development of a new program requires the identification and subsequent acquisition of properties when the opportunity arises. In some instances, in order to effectively and efficiently complete a program, the Company may provide deposits for the acquisition of property or actually purchase the property and warehouse it temporarily for the program. If the Company does not have cash on hand available to pay these deposits or fund an acquisition, the Company or the Company’s programs may be required to incur additional indebtedness, which indebtedness may not be available on acceptable terms. If the Company incurs substantial debt, the Company could lose its interests in any properties that have been provided as collateral for any secured borrowing, or the Company could lose its assets if the debt is recourse to it. In addition, the Company’s cash flow from operations may not be sufficient to repay these obligations upon their maturity, making it necessary for the Company to raise additional capital or dispose of some of its assets. The Company cannot assure you that it will be able to borrow additional debt on satisfactory terms, or at all.

The Company may be required to repay loans the Company guaranteed that were used to finance properties acquired by the Company’s programs.

          From time to time the Company has provided guarantees of loans for properties under management. As of December 31, 2008, there were 151 properties under management with loan guarantees of approximately $3.5 billion in total principal outstanding with terms ranging from 1 to 10 years, secured by properties with a total aggregate purchase price of approximately $4.8 billion as of December 31, 2008. The Company’s guarantees consisted of the following as of December 31, 2008.

(In thousands)		December 31, 2008
Non-recourse/carve-out guarantees of debt of properties under management(1)		$	3,414,433
Non-recourse/carve-out guarantees of the Company’s debt(1)		$	107,000
Recourse guarantees of debt of properties under management		$	42,426
Recourse guarantees of the Company’s debt		$	10,000

          In addition, the consolidated variable interest entities (“VIEs”) and unconsolidated VIEs are jointly and severally liable on the non-recourse mortgage debt related to the interests in the Company’s TIC investments totaling $277.8 million and $385.3 million as of December 31, 2008, respectively.

          As property values and performance decline, the risk of exposure under these guarantees increases. Management evaluates these guarantees to determine if the guarantee meets the criteria required to record a liability in accordance with the requirements of the Guarantees Topic. As of December 31, 2008, the Company recorded a liability of $9.1 million related to recourse guarantees of debt of properties under management which matured in January and April 2009. Any other such liabilities were insignificant as of December 31, 2008 and 2007.

The revenue streams from the Company’s management services may be subject to limitation or cancellation.

          The agreements under which the Company provides advisory and management services to public non-traded REITs may generally be terminated by each REIT’s independent Board of Directors following a notice period, with or without cause. The Company cannot assure you that these agreements will not be terminated. Grubb & Ellis Healthcare REIT, Inc. (now Healthcare Trust of America, Inc.) did not renew its Advisory Agreement with the Grubb & Ellis Healthcare REIT Advisor, LLC, a subsidiary of the Company, upon the termination of the Advisory Agreement on September 20, 2009 and, as a result, the Company’s asset and property management fees have been reduced. In addition, if the Company has a significant amount of TIC Programs selling their properties or public non-traded REITs liquidating in the same period, the Company’s revenues would decrease unless it is able to find replacement programs to generate new fees. The Company is currently in the process of liquidating two of its public non-traded REITs and, as a result, the Company’s management fees from these REITs have been reduced due to the number of properties that have been sold. Any decrease in the Company’s fees, as a result of termination of a contract or customary close out or liquidation of a program, could have a material adverse effect on the Company’s business, results of operations and financial condition.

Future pressures to lower, waive or credit back the Company’s fees could reduce the Company’s revenue and profitability.

          The Company has on occasion waived or credited its fees for real estate acquisitions and financings for the Company’s TIC Programs to improve projected investment returns and attract TIC investors. There has also been a trend toward lower fees in some segments of the third-party asset management business, and fees paid for the management of properties in the Company’s TIC Programs or public non-traded REITs could follow these trends. In order for the Company to maintain its fee structure in a competitive environment, the Company must be able to provide clients with investment returns and service that will encourage them to be willing to pay such fees. The Company cannot assure you that it will be able to maintain its current fee structures. Fee reductions on existing or future new business could have a material adverse impact on the Company’s revenue and profitability.

Regulatory uncertainties related to the Company’s broker-dealer services could harm the Company’s business.

          The securities industry in the United States is subject to extensive regulation under both federal and state laws. Broker-dealers are subject to regulations covering all aspects of the securities business. The Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority (“FINRA”), and other self-regulatory organizations and state securities commissions can censure, fine, issue cease-and-desist orders to, suspend or expel a broker-dealer or any of its officers or employees. The ability to comply with applicable laws and rules is largely dependent on an internal system to ensure compliance, as well as the ability to attract and retain qualified compliance personnel. The Company could be subject to disciplinary or other actions in the future due to claimed noncompliance with these securities regulations, which could have a material adverse effect on the Company’s operations and profitability.

The Company depends upon its programs’ tenants to pay rent, and their inability to pay rent may substantially reduce certain fees the Company receives which are based on gross rental amounts.

          The Company’s programs are subject to varying degrees of risk that generally arise from the ownership of real estate. For example, the income the Company is able to generate from management fees is derived from the gross rental income on the properties in its programs. The rental income depends upon the ability of the tenants of the Company’s programs’ properties to generate enough income to make their lease payments to the Company. Changes beyond the Company’s control may adversely affect the tenants’ ability to make lease payments or could require them to terminate their leases. Either an inability to make lease payments or a termination of one or more leases could reduce the management fees the Company receives. These changes include, among others, the following:

	•		downturns in national or regional economic conditions where the Company’s programs’ properties are located, which generally will negatively impact the demand and rental rates;
	•		changes in local market conditions such as an oversupply of properties, including space available by sublease or new construction, or a reduction in demand for properties in the Company’s programs, making it more difficult for the Company’s programs to lease space at attractive rental rates or at all;
	•		competition from other available properties, which could cause the Company’s programs to lose current or prospective tenants or cause them to reduce rental rates; and
	•		changes in federal, state or local regulations and controls affecting rents, prices of goods, interest rates, fuel and energy consumption.

Due to these changes, among others, tenants and lease guarantors, if any, may be unable to make their lease payments.

          Defaults by tenants or the failure of any lease guarantors to fulfill their obligations, or other early termination of a lease could, depending upon the size of the leased premises and the Company’s ability as property manager to successfully find a substitute tenant, have a material adverse effect on the Company’s revenue.

Conflicts of interest inherent in transactions between the Company’s programs and the Company, and among its programs, could create liability for the Company that could have a material adverse effect on its results of operations and financial condition.

          These conflicts include but are not limited to the following:

	•		the Company experiences conflicts of interests with certain of its directors, officers and affiliates from time to time with regard to any of its investments, transactions and agreements in which it holds a direct or indirect pecuniary interest;
	•		since the Company receives both management fees and acquisition and disposition fees for its programs’ properties, the Company could be in conflict with its programs over whether their properties should be sold or held by the program and the Company may make decisions or take actions based on factors other than in the best interest of investors of a particular sponsored investor program;
	•		a component of the compensation of certain of the Company’s executives is based on the performance of the Company, its stock and particular programs, which could cause the executives to favor those programs over others;
	•		the Company may face conflicts of interests as to how it allocates property acquisition opportunities or prospective tenants among competing programs;
	•		the Company may face conflicts of interests if programs sell properties to each other or invest in each other; and

•

the Company’s executive officers will devote only as much of their time to a program as they determine is reasonably required, which may be substantially less than full time; during times of intense activity in other programs, these officers may devote less time and fewer resources to a program than are necessary or appropriate to manage the program’s business.

The Company cannot assure you that one or more of these conflicts will not result in claims by investors in its programs, which could have a material adverse effect on its results of operations and financial condition.

The offerings conducted to raise capital for the Company’s TIC Programs are done in reliance on exemptions from the registration requirements of the Securities Act. A failure to satisfy the requirements for the appropriate exemption could void the offering or, if it is already completed, provide the investors with rescission rights, either of which would have a material adverse effect on the Company’s reputation and as a result its business and results of operations.

          The securities of the Company’s TIC Programs are offered and sold in reliance upon a private placement offering exemption from registration under the Securities Act and applicable state securities laws. If the Company or its dealer-manager failed to comply with the requirements of the relevant exemption and an offering were in process, the Company may have to terminate the offering. If an offering was completed, the investors may have the right, if they so desired, to rescind their purchase of the securities. A rescission offer could also be required under applicable state securities laws and regulations in states where any securities were offered without registration or qualification pursuant to a private offering or other exemption. If a number of holders sought rescission at one time, the applicable program would be required to make significant payments which could adversely affect its business and as a result, the fees generated by the Company from such program. If one of the Company’s programs was forced to terminate an offering before it was completed or to make a rescission offer, the Company’s reputation would also likely be significantly harmed. Any reduction in fees as a result of a rescission offer or a loss of reputation would have a material adverse effect on the Company’s business and results of operations.

The inability to identify suitable refinance options may negatively impact investment program performance and cause harm to the Company’s reputation, cause the loss of management contracts and third-party broker-dealer selling agreements, limit the Company’s ability to sign future third-party broker-dealer selling agreements and potentially expose the Company to legal liability.

          The availability of real estate financing has greatly diminished over the past year as a result of the global credit crisis and overall decline in the real estate market. As a result, the Company may not be able to refinance some or all of the loans maturing in its investment management portfolio. Failure to obtain suitable refinance options may have a negative impact on investment returns and may potentially cause investments to go into foreclosure or result in a complete loss of equity for program investors. Any such negative impact on distributions, foreclosure or loss of equity in an investment program could adversely affect the Company’s reputation and the Company’s ability to attract investors for future investment programs. In addition, it could cause the Company to lose asset and property management contracts, cause the Company to lose third-party broker-dealer selling agreements for existing investment programs, including its REITs, and limit the Company’s ability to sign future third-party broker-dealer agreements. Significant losses in investor equity and reductions in distributions increase the risk of claims or legal actions by program investors. Any such legal liability could result in damage to the Company’s reputation, loss of third-party broker-dealer selling agreements and incurrence of legal expenses.

An increase in interest rates may negatively affect the equity value of the Company’s programs or cause the Company to lose potential investors to alternative investments, causing the fees the Company receives for transaction and management services to be reduced.

          Although in the last two years, interest rates in the United States have generally decreased, if interest rates were to rise, the Company’s financing costs would likely rise and the Company’s net yield to investors may decline. This downward pressure on net yields to investors in the Company’s programs could compare poorly to rising yields on alternative investments. Additionally, as interest rates rise, valuations of commercial real estate properties typically decline. A decrease in both the attractiveness of the Company’s programs and the value of assets held by these programs could cause a decrease in both transaction and management services revenues, which would have an adverse effect on the Company’s results of operations.

Increasing competition for the acquisition of real estate may impede the Company’s ability to make future acquisitions which would reduce the fees the Company generates from these programs and could adversely affect the Company’s operating results and financial condition.

          The commercial real estate industry is highly competitive on an international, national and regional level. The Company’s programs face competition from REITs, institutional pension plans, and other public and private real estate companies and private real estate investors for the acquisition of properties and for raising capital to create programs to make these acquisitions. Competition may prevent the Company’s programs from acquiring desirable properties or increase the price they must pay for real estate. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties. If the Company’s programs pay higher prices for properties, investors may experience a lower return on investment and be less inclined to invest in the Company’s next program which may decrease the Company’s profitability. Increased competition for properties may also preclude the Company’s programs from acquiring properties

that would generate the most attractive returns to investors or may reduce the number of properties the Company’s programs could acquire, which could have an adverse effect on the Company’s business.

Illiquidity of real estate investments could significantly impede the Company’s ability to respond to adverse changes in the performance of the Company’s programs’ properties and harm the Company’s financial condition.

          Because real estate investments are relatively illiquid, the Company’s ability to promptly facilitate a sale of one or more properties or investments in the Company’s programs in response to changing economic, financial and investment conditions may be limited. In particular, these risks could arise from weakness in the market for a property, changes in the financial condition or prospects of prospective purchasers, changes in regional, national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located. Fees from the disposition of properties would be materially affected if the Company were unable to facilitate a significant number of property dispositions for the Company’s programs.

Uninsured and underinsured losses may adversely affect operations.

          Should a property sustain damage or an occupant sustain an injury, the Company may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. In the event of a substantial property loss or personal injury, the insurance coverage may not be sufficient to pay the full damages. In the event of an uninsured loss, the Company could lose some or all of its capital investment, cash flow and anticipated profits related to one or more properties. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it not feasible to use insurance proceeds to replace a property after it has been damaged or destroyed. Under these circumstances, the insurance proceeds the Company receives, if any, might not be adequate to restore the Company’s economic position with respect to the property. In the event of a significant loss at one or more of the properties in the Company’s programs, the remaining insurance under the applicable policy, if any, could be insufficient to adequately insure the remaining properties. In this event, securing additional insurance, if possible, could be significantly more expensive than the current policy. A loss at any of these properties or an increase in premium as a result of a loss could decrease the income from or value of properties under management in the Company’s programs, which in turn would reduce the fees the Company receives from these programs. Any decrease or loss in fees could have a material adverse effect on the Company’s financial condition or results of operations.

          The Company carries commercial general liability, fire and extended coverage insurance with respect to the Company’s programs’ properties. The Company obtains coverage that has policy specifications and insured limits that the Company believes are customarily carried for similar properties. The Company cannot assure you, however, that particular risks that are currently insurable will continue to be insurable on an economic basis or that current levels of coverage will continue to be available. In addition, the Company generally does not obtain insurance against certain risks, such as floods.

Risks Related to the Company in General

Delaware law and provisions of the Company’s amended and restated certificate of incorporation and restated bylaws contain provisions that could delay, deter or prevent a change of control.

          The anti-takeover provisions of Delaware law impose various impediments on the ability or desire of a third party to acquire control of the Company, even if a change of control would be beneficial to its existing stockholders, and the Company will be subject to these Delaware anti-takeover provisions. Additionally, the Company’s amended and restated certificate of incorporation and its restated bylaws contain provisions that might enable its management to resist a proposed takeover of the Company. The provisions include:

	•		the authority of the Company’s Board of Directors to issue, without stockholder approval, preferred stock with such terms as the Company’s Board of Directors may determine;
	•		the authority of the Company’s Board of Directors to adopt, amend or repeal the Company’s bylaws; and
	•		a prohibition on holders of less than a majority of the Company’s outstanding shares of capital stock calling a special meeting of the Company’s stockholders.

These provisions could discourage, delay or prevent a change of control of the Company or an acquisition of the Company at a price that its stockholders may find attractive. These provisions also may discourage proxy contests and make it more difficult for the Company’s stockholders to elect directors and take other corporate actions. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of the Company’s common stock.

The Company has the ability to issue blank check preferred stock, which could adversely affect the voting power and other rights of the holders of its common stock.

          The Board of Directors has the right to issue “blank check” preferred stock, which may affect the voting rights of holders of common stock and could deter or delay an attempt to obtain control of the Company. There are currently nineteen million authorized and undesignated shares of preferred stock that could be so issued. The Company’s Board of Directors is authorized, without any further stockholder approval, to issue one or more additional series of preferred stock in addition to the currently outstanding 12% Preferred Stock. The Company is authorized to fix and state the voting rights, powers, designations, preferences and relative participation or other special rights of each such series of preferred stock and any qualifications, limitations and restrictions thereon. Preferred stock typically ranks prior to the common stock with respect to dividend rights, liquidation preferences, or both, and may have full, limited, or expanded voting rights. Accordingly, issuances of preferred stock could adversely affect the voting power and other rights of the holders of common stock and could negatively affect the market price of the Company’s common stock.

The Company has registration rights outstanding, which could have a negative impact on its share price if exercised.

          In addition to the shares of common stock and the 12% Preferred Stock that are being registered pursuant to the registration statement of which this prospectus is included within, pursuant to the Company’s registration rights agreement with Kojaian Ventures, L.L.C. and Kojaian Holdings, LLC, the holders of such rights could, in the future, cause the Company to file additional registration statements with respect to certain of its shares of common stock, which could have a negative impact on the market price of the Company’s common stock.

          In addition to the shares of common stock and the 12% Preferred Stock that are being registered pursuant to the registration statement of which this prospectus is included within, pursuant to the Company’s registration rights agreement with certain holders of 12% Preferred Stock, the holders of such rights could, in the future, cause the Company to file additional registration statements with respect to its shares of 12% Preferred Stock and common stock, which could have a negative impact on the market price of the Company’s common stock.

Future sales of the Company’s common stock could adversely affect its stock price

          There are an aggregate of 996,849 Company shares at September 30, 2009 subject to issuance upon the exercise of outstanding options. Accordingly, these shares will be available for sale in the open market, subject to vesting restrictions, and, in the case of affiliates, certain volume limitations. The sale of shares either pursuant to the exercise of outstanding options or as after the satisfaction of vesting restriction of certain restricted stock could also cause the price of the Company’s common stock to decline.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

          We are including the following discussion to inform you of some of the risks and uncertainties that can affect our company. Various statements contained in this prospectus, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements. We use words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should” and similar expressions to identify forward-looking statements. The forward-looking statements in this prospectus speak only as of the date of this prospectus; we disclaim any obligation to update these statements unless required by applicable securities laws, and we caution you not to rely on them unduly. You are further cautioned that any forward-looking statements are not guarantees of future performance. Our beliefs, expectations and intentions can change as a result of many possible events or factors, not all of which are known to us or are within our control, and a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such factors, risks and uncertainties include, but are not limited to:

	•		liquidity and availability of additional or continued sources of financing;
	•		the continued weakening national economy in general and the commercial real estate markets in particular;
	•		the continued global credit crises and capital markets disruption;
	•		changes in general economic and business conditions, including interest rates, the cost and availability of financing of capital for investment in real estate, clients’ willingness to make real estate commitments and other factors impacting the value of real estate assets;
	•		our ability to retain major clients and renew related contracts;
	•		the failure of properties sponsored or managed by us to perform as anticipated;
	•		the effects of the restatement of certain of our financial statements;
	•		our ability to compete in specific geographic markets or business segments that are material to us;
	•		the contraction of the TIC market; declining values of real assets and distributions on our programs;
	•		significant variability in our results of operations among quarters;
	•		our ability to retain our senior management and attract and retain qualified and experienced employees;
	•		our ability to comply with the laws and regulations applicable to real estate brokerage investment syndication and mortgage transactions;
	•		our exposure to liabilities in connection with real estate brokerage, real estate and property management activities;
	•		changes in the key components of revenue growth for large commercial real estate services companies;
	•		reliance of companies on outsourcing for their commercial real estate needs;
	•		trends in use of large, full-service real estate providers;
	•		diversification of our client base;
	•		improvements in operating efficiency;
	•		protection of our brand;
	•		trends in pricing for commercial real estate services;
	•		the effect of implementation of new tax and accounting rules and standards; and
	•		the other risks identified in this prospectus including, without limitation, those under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

          You should carefully consider these and other factors, risks and uncertainties before you make an investment decision with respect to the 12% Preferred Stock or our common stock.

THE COMPANY

General

          Grubb & Ellis Company, a Delaware corporation founded 50 years ago in Northern California, is one of the country’s largest and most respected commercial real estate services and investment management firms. On December 7, 2007, the Company effected a stock merger (the “Merger”) with NNN Realty Advisors, Inc. (“NNN”), a real estate asset management company and nationally recognized sponsor of public non-traded real estate investment trusts (“REITs”), as well as a sponsor of tax deferred tenant-in-common (“TIC”) 1031 property exchanges and other investment programs. Upon the closing of the Merger, a change of control occurred. The former stockholders of NNN acquired approximately 60% of the Company’s issued and outstanding common stock.

          With 127 owned and affiliate offices worldwide (54 owned and approximately 73 affiliates) and more than 6,000 professionals, including a brokerage sales force of more than 1,800 brokers, the Company offers property owners, corporate occupants and program investors comprehensive integrated real estate solutions, including transactions, management, consulting and investment advisory services supported by proprietary market research and extensive local market expertise.

          In certain instances throughout this prospectus, phrases such as “legacy Grubb & Ellis” or similar descriptions are used to reference, when appropriate, Grubb & Ellis prior to the Merger. Similarly, in certain instances throughout this prospectus the term NNN, “legacy NNN” or similar phrases are used to reference, when appropriate, NNN Realty Advisors, Inc. prior to the Merger.

Business Segment Reporting

          The Company currently reports its revenue by three operating business segments in accordance with the requirements of the Segment Reporting Topic, which includes providing acquisition, financing and disposition services with respect to its programs, asset management services related to its programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its TIC, REIT and other investment programs; Transaction Services, which comprises its real estate brokerage operations; and Management Services, which includes property management, corporate facilities management, project management, client accounting, business services and engineering services for unrelated third parties and properties owned by the programs it sponsors. Additional information on these business segments can be found in Note 19 to the consolidated financial statements included in this prospectus. Subsequent to the Merger, the legacy NNN reportable segments were realigned into a single operating and reportable segment called Investment Management. This realignment had no impact on the Company’s consolidated balance sheet, results of operations or cash flows.

          For the year ended December 31, 2008, the Company had revenues of approximately $628.8 million and loss from continuing operations of approximately $318.7 million.

Transaction Services

          Grubb & Ellis has a track record of over 50 years of proven performance in the commercial real estate industry and is one of the largest real estate brokerage firms in the country, offering clients the experience of thousands of successful transactions and the expertise that comes from a nationwide platform. By focusing on the overall business objectives of its clients, Grubb & Ellis utilizes its research capabilities, extensive properties database and expert negotiation skills to create, buy, sell and lease opportunities for both users and owners of commercial real estate. With a comprehensive approach to transactions, Grubb & Ellis offers a full suite of services to clients, from site selection and sale negotiations to needs analysis, occupancy projections, prospect qualification, pricing recommendations, long-term value consultation, tenant representation and consulting services. As one of the most active and largest commercial real estate brokerages in the United States, Grubb & Ellis’ traditional real estate services provide added value to the Company’s real estate investment programs by offering a comprehensive market view and local area expertise. This powerful business combination allows the Company to identify attractive investment properties and quickly acquire them for the benefit of its program investors. In addition, select brokers have the opportunity to cross-sell product through the Company’s Investment Management platform.

          The Company actively engages its brokerage force in the execution of its marketing strategy. Regional and metro-area managing directors, who are responsible for operations in each major market, facilitate the development of brokers. Through the Company’s specialty practice groups, known as “Specialty Councils,” key personnel share information regarding local, regional and national industry trends and participate in national marketing activities, including trade shows and seminars. This ongoing dialogue among brokers serves to increase their level of expertise as well as their network of relationships, and is supplemented by other more formal education, including recently expanded training programs offering sales and motivational training and cross-functional networking and business development opportunities.

          In some local markets where the Company does not have owned offices, it has affiliation agreements with independent real estate service providers that conduct business under the Grubb & Ellis brand. The Company’s affiliation agreements provide for exclusive mutual referrals in their respective markets, generating referral fees. The Company’s affiliation agreements are generally multi-year contracts. Through its affiliate offices, the Company has access to more than 1,000 brokers with local market research capabilities.

          The Company’s Corporate Services Group provides comprehensive coordination of all required real estate related services to help realize the needs of clients’ real estate portfolios and to maximize their business objectives. These services include consulting services, lease administration, strategic planning, project management, account management and international services. As of December 31, 2008, Grubb & Ellis had in excess of 1,800 brokers at its owned and affiliate offices, of which 814 brokers were at its owned offices, down from 927 at December 31, 2007. Approximately 67% and 33% of the Company’s Transaction Services revenue were from leasing and sale transactions, respectively, during 2008.

Management Services

          Grubb & Ellis delivers integrated property, facility, asset, construction, business and engineering management services to a host of corporate and institutional clients. The Company offers customized programs that focus on cost-efficient operations and tenant retention.

          The Company manages a comprehensive range of properties including headquarters, facilities and class A office space for major corporations, including many Fortune 500 companies. Grubb & Ellis’ skills extend to management of industrial, manufacturing and warehousing facilities as well as data centers, retail outlets and multi-family properties for real estate users and investors.

          Additionally, Grubb & Ellis provides consulting services, including site selection, feasibility studies, exit strategies, market forecasts, appraisals, strategic planning and research services.

          The Company is committed to providing unparalleled client service. In addition to expanding the scope of products and services offered, it is also focused on ensuring that it can support client relationships with best-in-class service. During 2008, the Company continued to expand the number of client service relationship managers, which provide a single point of contact to corporate clients with multi-service needs.

          Grubb & Ellis Management Services, the Company’s Management Services subsidiary, was recognized as Microsoft Corporation’s top vendor of 2007 from among more than 15,000 vendors. In addition, in 2008 Grubb & Ellis secured significant new management services contracts from Kraft Foods, Sharp Healthcare and Red Mountain West. The Company also secured significant contract renewals with Ingersoll Rand and Qwest Communications. At December 31, 2008, Grubb & Ellis managed approximately 231.0 million square feet, of which 184.1 million were from third parties and 46.9 million related to its investment management programs.

Investment Management

          The Company and its subsidiaries are leading sponsors of real estate investment programs that provide individuals and institutions the opportunity to invest in a broad range of real estate investment vehicles, including tax-deferred 1031 TIC exchanges, public non-traded REITs and real estate investment funds. During the year ended 2008 and the nine months ended September 30, 2009, respectively, the Company raised more than $984.3 million and $533.0 million in investor equity for its sponsored investment programs; as of September 30, 2009, the Company has more than $5.8 billion of assets under management related to the various programs that it sponsors. The Company has completed transaction acquisition and disposition volume totaling approximately $11.9 billion on behalf of more than 55,000 program investors since 1998.

          Investment management products are distributed through the Company’s broker-dealer subsidiary, Grubb & Ellis Securities Inc. (“GBE Securities”) (formerly NNN Capital Corp.). GBE Securities is registered with the SEC, FINRA and all 50 states. GBE Securities has agreements with an extensive network of broker dealers. These selling relationships provide access to thousands of licensed registered representatives. Part of the Company’s strategy is to expand its network of broker-dealers to increase the amount of equity that it raises in its various investment programs.

          Grubb & Ellis Realty Investors, LLC (“GERI”) (formerly Triple Net Properties, LLC), a subsidiary of the Company, is a recognized market leader in the securitized TIC industry as measured by total equity raised according to published reports of OMNI Research and Consulting LLC (“OMNI”). This product strategy allows investors to fractionally own large, institutional-quality real estate assets with the added advantage of qualifying for deferred tax benefits on real estate capital gains. The Company currently sponsors more than 150 TIC Programs and has taken more than 50 programs full cycle (from acquisition through disposition). The Company raised $176.9 million and $13.0 million, respectively, of TIC equity during the year ended December 31, 2008 and the nine months ended September 30, 2009.

          Public non-traded REITs are registered with the SEC but are not listed on any of the securities exchanges like a traded REIT. According to the published Stanger Report, Winter 2009, by Robert A. Stanger and Co., an independent financial advisor, approximately $10.3 billion was raised in this sector in 2008 and $6.2 billion is estimated to be raised in 2009. The Company currently sponsors two demographically focused programs that are actively raising capital, Grubb & Ellis Healthcare REIT II, Inc. and Grubb & Ellis Apartment REIT, Inc. The Company’s sponsored REIT programs raised $592.7 million and $518.0 million, respectively, during the year ended December 31, 2008 and the nine months ended September 30, 2009.

          In February 2008, the Company launched its Private Client Management program for high net worth investors. This platform provides comprehensive real estate investment and advisory services to high net worth investors, offering qualified individuals, entities and corporations, the opportunity to benefit from the potential advantages of real estate investment through a passive, sole-ownership vehicle that delivers discretion to the investor. Private Client Management is open to all qualified investors seeking to build or expand their commercial real estate portfolio, whether their investment objectives are tax-deferred 1031 exchange driven or not. The Company raised more than $193 million and $0, respectively, of equity through Private Client Management during the year ended December 31, 2008 and the nine months ended September 30, 2009.

          In 2008, the Company started a family of U.S. and global open end mutual funds that focus on real estate securities and manage private investment funds exclusively for qualified investors through its 51% ownership in Grubb & Ellis Alesco Global Advisors, LLC (“Alesco”). The Company, through its subsidiary, Alesco, serves as the general partner and investment advisor to six hedge fund limited partnerships, five of which are required to be consolidated: Grubb & Ellis AGA Realty Income Fund, LP, AGA Strategic Realty Fund, L.P., AGA Global Realty Fund LP and AGA Realty Income Partners LP, and one mutual fund which is required to be consolidated, Grubb & Ellis Realty Income Fund. Alesco had approximately $8 million of investment funds under management as of September 30, 2009.

          Through its multi-family platform, the Company provides investment management services for TIC and REIT apartment products and currently manages in excess of 13,000 apartment units through Grubb & Ellis Residential Management, Inc., the Company’s multi-family management services subsidiary.

Our Opportunity

          The Company seamlessly integrates its traditional transaction and management services with the innovative investment programs of GERI. All functions of the new Company work together to provide comprehensive service to clients and program investors. Teamed with a forward-looking investment strategy that seeks to capitalize on the nation’s changing demographics, the Company’s various service offerings support its investment programs to provide clients and program investors with a full array of solutions for multiple needs. The proprietary research and demographic investing strategy of the Company establishes a foundation upon which its investment programs are based. The real estate brokerage network of the Company offers keen insight into the available pool of assets nationwide, in order to maximize acquisition opportunities for program investors. The professional property and asset management services of the Company drive value to each of the investment programs from acquisition through ultimate disposition. The Company’s management believes that it has the vision, discipline and strategy to deliver innovative solutions across the full spectrum of commercial real estate, whether it is a need for space, strategic planning or a real estate investment product that meets specific return criteria.

          The Company re-branded its investment programs as Grubb & Ellis subsequent to the Merger to capitalize on the strength of the brand name. Its TIC Programs are sponsored by GERI, its REIT investment programs are now Grubb & Ellis Healthcare REIT II, Inc. and Grubb & Ellis Apartment REIT, Inc. and its FINRA registered broker-dealer is now Grubb & Ellis Securities, Inc. As part of the Company’s strategic plan, management has identified more than $20.0 million of expense synergies, on an annualized basis, a portion of which has been invested in enhancing the management team with the addition of several executives in key operational and management roles.

Property Acquisitions and Dispositions

          During the first half of 2007, the Company acquired three commercial properties—the Danbury Property in Danbury, Connecticut, Abrams Center in Dallas, Texas and 6400 Shafer Court in Rosemont, Illinois—for an aggregate contract price of $122.2 million, along with acquisition costs of approximately $1.3 million, and assumed obligations of approximately $542,000. The Company acquired the three properties pursuant to its warehousing strategy to accumulate these assets with the intention to hold them for future sale to Grubb & Ellis Realty Advisors, Inc. (“GERA”), the Company’s affiliated publicly traded special purpose acquisition company formed by the Company in September 2005. The Company funded its equity position in these acquisitions primarily with borrowings from its Credit Facility.

          Simultaneously with the acquisition of the third property in June 2007, the Company closed two non-recourse mortgage loan financings with Wachovia Bank, National Association in an aggregate amount of $120.5 million. The proceeds of the mortgage loans were used to finance the purchase of this third property, to fund certain required reserves for all three properties, to pay the lender’s fees and costs and to repay certain amounts borrowed by the Company through its Credit Facility with respect to the first two properties purchased.

          As a result of GERA failing to obtain the requisite consents of its stockholders in February 2008 to approve the acquisition of the three commercial office properties from the Company, GERA was unable to effect a business combination within the proscribed deadline of March 3, 2008 in accordance with its charter and was required to liquidate. Consequently, pursuant to a proxy statement filed by GERA with the SEC on March 24, 2008, at a special meeting of GERA’s stockholders held on April 14, 2008, the stockholders approved the dissolution and plan of liquidation of GERA. In the first quarter of 2008 the Company wrote-off its investment in GERA of approximately $5.8 million, including its stock and warrant purchases, operating advances and third party costs. The Company also paid third-party legal, accounting, printing and other costs (other than monies paid to stockholders of GERA on liquidation) associated with the dissolution and liquidation of GERA. In addition, the various exclusive service agreements that the Company had previously entered into with GERA for transaction services, property and facilities management, and project management, were no longer of any force or effect.

          As of September 30, 2008, the Company initiated a plan to sell five properties it classified as real estate held for investment in its financial statements as of September 30, 2008. These five properties are comprised of the three commercial properties that were initially intended to be transferred to GERA as discussed above (the “GERA Properties”) and two other properties that the Company previously acquired with the intention of transferring to a strategic office fund that ultimately was never launched. As of December 31, 2008, the Company had a covenant within its Credit Facility that required the sale of the GERA Properties before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions by March 31, 2009. Pursuant to the requirements of the Property, Plant and Equipment Topic, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments during the year ended December 31, 2008.

          On October 31, 2008, the Company entered into that certain Agreement for the Purchase and Sale of Real Property and Escrow Instructions to effect the sale of the Danbury Property located at 39 Old Ridgebury Road, Danbury, Connecticut, to an unaffiliated entity for a purchase price of $76 million. This agreement was amended and restated in its entirety by that certain Danbury Merger Agreement dated as of January 23, 2009, as amended by the First Amendment to Danbury Merger Agreement dated as of January 23, 2009 (the “First Danbury Amendment”), which reduced the purchase price to $73.5 million. In accordance with the terms of the Danbury Merger Agreement, as amended by the First Danbury Amendment, the Company received one half of the buyer’s deposits in an amount of $3.125 million from the buyer upon the execution of the Danbury Merger Agreement, which released deposit remained subject to the terms of the Danbury Merger Agreement and the remaining $3.125 million of deposits continued to be held in escrow pending the closing. On May 19, 2009, the Company and the buyer entered into the Second Amendment to the Danbury Merger Agreement (the “Second Danbury Amendment”) pursuant to which the remaining $3.125 million of deposits held in escrow were released to the Company (and remain subject to the terms of the Danbury Merger Agreement, as amended) and the purchase price was reduced to $72.4 million. The closing of the sale of the property pursuant to the Second Danbury Amendment closed on June 4, 2009.

Restatement of Certain Financial Information and Special Investigation

          On March 16, 2009, management and the Audit Committee of the Board of Directors of the Company concluded that the Company’s previously issued audited financial statements for each of the fiscal years ended December 31, 2006 and 2007, the unaudited interim financial statements for each of the quarters ended March 31, June 30 and September 30, 2008 and selected financial data derived from the Company’s previously issued audited financial statements for the fiscal years ended December 31, 2005 and 2004 included in the Company’s securities filings thereafter should be restated.

          The Audit Committee reached this conclusion after consulting with and upon the recommendation of management. The Audit Committee and management have discussed this conclusion with Ernst & Young LLP (“EY”), the Company’s independent registered public accounting firm, and management has discussed this conclusion with Deloitte & Touche LLP (“D&T”), the independent registered public accounting firm for NNN prior to the Merger.

          As a consequence, (i) the Company’s consolidated balance sheets as of December 31, 2006 and December 31, 2007, and for each of the quarters ended March 31, June 30, and September 30, 2008; (ii) the Company’s related consolidated statements of operations, stockholders’ equity and cash flows for each of the fiscal years ended December 31, 2004, December 31, 2005, December 31, 2006 and December 31, 2007 and for each of the quarters ended March 31, June 30 and September 30, 2008 and 2007, and the footnotes thereto; (iii) the related report of EY, with respect to the fiscal year ended December 31, 2007; and (iv) the related reports of D&T, with respect to the fiscal years ended December 31, 2004, December 31, 2005 and December 31, 2006, should no longer be relied upon. The restatement of the Company’s financial statements is based upon a review of the accounting treatment of certain transactions entered into by NNN with respect to certain tenant-in-common investment programs (“TIC Programs”) sponsored by NNN prior to the Merger. During this review, the Company discovered that NNN had recognized fee revenue in 2004, 2005, 2006 and 2007 and the Company had recognized fee revenue in the three interim periods in 2008 in advance of the period in which such fee revenue should have been recognized.

          After considering management’s recommendation and consulting with EY, the Audit Committee has determined that NNN incorrectly recognized fee revenue under the requirements of the Real Estate—Retail Land Topic and Real Estate—General Topic, in 2005, 2006 and 2007 and the three interim periods in 2008 in connection with certain TIC Programs in which NNN had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties. As a result of the recognition by NNN of the applicable fee revenue in the wrong accounting period, the Company reduced retained earnings as of January 1, 2006 by approximately $8.7 million; increased revenues in 2006 by approximately $518,000; and increased revenues in 2007 by approximately $251,000.

          The Audit Committee also has determined, after considering management’s recommendation and consulting with EY, that because NNN had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties, certain entities involved in the TIC Programs were variable interest entities in which the Company was the primary beneficiary and therefore are required to be consolidated in accordance with the requirements of the Consolidation Topic. The restatement also reflects the consolidation of these entities.

          The determination to restate the Company’s financial statements was prompted by the Audit Committee being made aware in mid-December 2008 of the existence of a letter agreement, wherein a former executive of NNN caused NNN to agree to provide certain investors with a right to exchange their investment in certain TIC Programs for an investment in a different TIC Program (the “Exchange Letter”). As a consequence, the Board of Directors formed a special committee (the “Special Committee”) to investigate the facts and circumstances surrounding the Exchange Letter and to determine whether there were any other similar agreements that might impact the Company’s previously issued financial statements. The Special Committee retained independent outside counsel, Manatt Phelps & Phillips, LLP (“Manatt”), to assist it with this investigation. In connection therewith, the Special Committee asked management to review the accounting treatment regarding the Exchange Letter and any other letter agreements that might be identified in the course of the special investigation. In the course of the special investigation, the Audit Committee and management became aware of additional letter agreements authorized by former executives of NNN (collectively, the “Additional Letters”), some providing for a right of exchange similar to that contained in the Exchange Letter and others in which NNN committed to provide certain investors in certain TIC Programs a specified rate of return. Manatt has concluded its investigation and advised the Board of Directors that it did not uncover in the course of its investigation any other letter agreements similar to the Exchange Letter and the Additional Letters. In connection with the restatement of certain of the Company’s financial statements as described herein and in Note 3 to the consolidated financial statements included in this prospectus, management of the Company re-evaluated the effectiveness of its disclosure controls and procedures both prior and subsequent to the Merger. As a result of this re-evaluation, management determined that there was a control deficiency that constituted a material weakness in the Company’s internal controls prior to the Merger that was not adequately remediated as of December 31, 2008. Accordingly, additional enhancements to the control environment have been implemented in 2009 to ensure that controls related to these material weaknesses are strengthened and will operate effectively.

Industry and Competition

          The U.S. commercial real estate services industry is large and highly fragmented, with thousands of companies providing asset management, investment management and brokerage services. In recent years the industry has experienced substantial consolidation, a trend that is expected to continue.

          The top 25 brokerage companies collectively completed nearly $1.2 trillion in investment sales and leasing transactions globally in 2007, according to the latest available survey published by National Real Estate Investor, which is the most recent available survey. The Company ranked 13th in this survey, including transactions in its affiliate offices.

          Within the management services business, according to a recent survey published in 2008 by National Real Estate Investor, the top 25 companies in the industry manage over 8.3 billion square feet of commercial property. The Company ranks as the seventh largest property management company in this survey with 265.6 million square feet under management at year end 2007, including property under management in its affiliate offices. The largest company in the survey had 1.9 billion square feet under management.

          The Company competes in a variety of service businesses 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 regional and national service providers, but also from global real estate providers, boutique real estate advisory firms and appraisal firms. Although many of the Company’s competitors are local or regional firms that are substantially smaller than the Company, some competitors are substantially larger than the Company on a local, regional, national and/or international basis. The Company’s significant competitors include CB Richard Ellis, Jones Lang LaSalle and Cushman & Wakefield, all of which have global platforms. The Company believes that it needs such a platform in order to effectively compete for the business of large multi-national corporations that are increasingly seeking a single real estate services provider.

          The Company believes there are only limited barriers to entry in its investment management business. Its programs face competition generally from REITs, institutional pension plans and other public and private real estate companies and private real estate investors for the acquisition of properties and for raising capital to create programs to make these acquisitions. It also competes against other real estate companies who may be chosen by a broker-dealer as an investment platform instead of the Company and with other broker-dealers and other properties for viable tenants for its programs’ properties. Finally, GBE Securities faces competition from institutions that provide or arrange for other types of financing through private or public offerings of equity or debt and from traditional bank financings. While there can be no assurances that the Company will be able to continue to compete effectively, maintain current fee levels or margins, or maintain or increase its market share, based on its competitive strengths, the Company believes that it can operate successfully in the future in this highly competitive industry. The ability to do so, however, depends upon the Company’s ability to, among other things, successfully manage through the current, unprecedented disruption and dislocation of the credit markets and the weakening national and global economics. Specifically, as our business involves the acquisition, disposition, and financing of commercial properties, many of such activities are dependent, either directly or indirectly, and in whole or in part, with the availability and cost of credit. The disruption in the global capital market which began in 2008 has adversely affected our businesses and will continue to do so until such time as credit is once again available at reasonable costs. In addition, the health of real estate investment and leasing markets is dependent on the level of economic activity on a regional and local basis. The significant slowdown in overall economic activity in 2008 has adversely affected many sectors of our business and will continue to do so until economic conditions change.

Environmental Regulation

          Federal, state and local laws and regulations impose environmental zoning restrictions, use controls, disclosure obligations and other restrictions that impact the management, development, use, and/or sale of real estate. Such laws and regulations tend to discourage sales and leasing activities, as well as the willingness of mortgage lenders to provide financing, with respect to some properties. If transactions in which the Company is involved are delayed or abandoned as a result of these restrictions, the brokerage business could be adversely affected. In addition, a failure by the Company to disclose known environmental concerns in connection with a real estate transaction may subject the Company to liability to a buyer or lessee of property.

          The Company generally undertakes a third-party Phase I investigation of potential environmental risks when evaluating an acquisition for a sponsored program. A Phase I investigation is an investigation for the presence or likely presence of hazardous substances or petroleum products under conditions that indicate an existing release, a post release or a material threat of a release. A Phase I investigation does not typically include any sampling. The Company’s programs may acquire a property with environmental contamination, subject to a determination of the level of risk and potential cost of remediation.

          Various environmental laws and regulations also can impose liability for the costs of investigating or remediation of hazardous or toxic substances at sites currently or formerly owned or operated by a party, or at off-site locations to which such party sent wastes for disposal. As a property manager, the Company could be held liable as an operator for any such contamination, even if the original activity was legal and the Company had no knowledge of, or did not cause, the release or contamination. Further, because liability under some of these laws is joint and several, the Company could be held responsible for more than its share, or even all, of the costs for such contaminated site if the other responsible parties are unable to pay. The Company could also incur liability for property damage or personal injury claims alleged to result from environmental contamination, or from asbestos-containing materials or lead-based paint present at the properties that it manages. Insurance for such matters may not always be available, or sufficient to cover the Company’s losses. Certain requirements governing the removal or encapsulation of asbestos-containing materials, as well as recently enacted local ordinances obligating property managers to inspect for and remove lead-based paint in certain buildings, could increase the Company’s costs of legal compliance and potentially subject the Company to violations or claims. Although such costs have not had a material impact on the Company’s financial results or competitive position in 2008, the enactment of additional regulations, or more stringent enforcement of existing regulations, could cause the Company to incur significant costs in the future, and/or adversely impact the brokerage and management services businesses. See Note 21 to the consolidated financial statements included in this prospectus.

Seasonality

          Notwithstanding the Company’s expanded business platform as a consequence of the Merger, a substantial portion of the Company’s revenues are derived from brokerage transaction services, which are seasonal in nature. As a consequence, the Company’s revenue stream and the related commission expense are also 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 from transaction services 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. Transaction services revenue represented 38.2% of the $628.8 million in total revenue for 2008.

Regulation

Transaction and Property Management Services

          The Company and its brokers, salespersons and, in some instances, property managers are regulated by the states in which it does business. These regulations may include licensing procedures, prescribed professional responsibilities and anti-fraud provisions. The Company’s activities are also subject to various local, state, national and international jurisdictions’ fair advertising, trade, housing and real estate settlement laws and regulations and are affected bylaws and regulations relating to real estate and real estate finance and development. Because the size and scope of real estate sales transactions have increased significantly during the past several years, both the difficulty of ensuring compliance with the numerous state statutory requirements and licensing regimes and the possible liability resulting from non-compliance have increased.

Dealer-Manager Services

          The securities industry is subject to extensive regulation under federal and state law. Broker-dealers are subject to regulations covering all aspects of the securities business. In general, broker-dealers are required to register with the SEC and to be members of FINRA or the NYSE. As a member of FINRA, GBE Securities’ broker-dealer business is subject to the requirements of the Securities Exchange Act of 1934 as amended (the “Exchange Act”) and the rules promulgated thereunder relating to broker-dealers and to the Rules of Fair Practice of FINRA. These regulations establish, among other things, the minimum net capital requirements for GBE Securities’ broker-dealer business. Such business is also subject to regulation under various state laws in all 50 states and the District of Columbia, including registration requirements.

Service Marks

          The Company has registered trade names and service marks for the “Grubb & Ellis” name and logo and certain other trade names. The “Grubb & Ellis” brand 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 numerous factors, including but not limited to the general economy, availability and terms of credit 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, demand for real estate investments and prices or lease terms for real estate. Consequently, the Company’s revenue from transaction services, investment management operations and property management fees, operating results, cash flow and financial condition are impacted by these factors, among others.

Private Placement of 12% Preferred Stock

          On November 6, 2009, we consummated the issuance and sale of 900,000 shares of our 12% Preferred Stock in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. Each share of 12% Preferred Stock is convertible into shares of our common stock. JMP Securities, Inc. acted as initial purchaser and placement agent with this private placement. We received net proceeds from the private placement of approximately $85 million after deducting expenses and after giving effect to the conversion of $5 million of subordinated debt previously provided by an affiliate of the Company’s largest stockholder. We used the net proceeds to repay in full the Company’s Credit Facility at the agreed reduced principal amount equal to approximately 65% of the principal amount outstanding under such facility. The balance of the net proceeds from the offering will be used for general working capital purposes. We also granted a 45-day over-allotment option to the initial purchaser and placement agent for the offering, and pursuant to such over-allotment option, we sold an additional 65,700 shares of Preferred Stock for gross proceeds of $6.6 million, all of which will be used for working capital purposes. This prospectus covers the resale by the selling stockholders of certain of the shares of 12% Preferred Stock and common stock issuable upon conversion of such 12% Preferred Stock previously issued.

Amendment and Repayment of Senior Secured Credit Facility

          We entered into an amendment and limited waiver to our Credit Facility, effective as of September 30, 2009 (the “Credit Facility Amendment”), that extended the time to effect a recapitalization under our Credit Facility from September 30, 2009 to November 30, 2009. Pursuant to the Credit Facility Amendment, we also received the right to prepay our Credit Facility in full at any time on or prior to November 30, 2009 at a discounted amount equal to 65% of the aggregate principal amount outstanding, which we refer to as the discount payment option. On November 6, 2009, concurrently with the closing of the private placement of 12% Preferred Stock, we repaid our Credit Facility in full at the discounted amount and the Credit Facility was terminated in accordance with its terms.

          As a condition to entering into the Credit Facility Amendment, the lenders to our Credit Facility required that Kojaian Management Corporation, an affiliate of our largest stockholder, effect a $5 million subordinated financing of the Company, which we refer to as the stockholder subordinated financing. On October 2, 2009, we completed the stockholder subordinated financing in the form of a senior subordinated convertible note bearing an interest rate of 12% per annum. Concurrently with the consummation of the private placement of 12% Preferred Stock, the principal amount of the senior subordinated convertible note was converted into 50,000 shares of 12% Preferred Stock.

Employees

          As of December 31, 2008, the Company had approximately 5,000 employees including more than 800 transaction professionals working in 54 owned offices. Nearly 2,600 employees serve as property and facilities management staff at the Company’s client-owned properties and the Company’s clients reimburse the Company fully for their salaries and benefits. The Company considers its relationship with its employees to be good and has not experienced any interruptions of its operations as a result of labor disagreements.

Properties

          The Company leases all of its office space through non-cancelable operating leases. The terms of the leases vary depending on the size and location of the office. As of December 31, 2008, the Company leased over 747,000 square feet of office space in 73 locations under leases which expire at various dates through June 30, 2020. For those leases that are not renewable, the Company believes that there are adequate alternatives available at acceptable rental rates to meet its needs, although there can be no assurances in this regard. Many of our offices that contain employees of the Transaction Services, Investment Management or Management Services segments also contain employees of other segments. The Company’s Corporate Headquarters are in Santa Ana, California. See Note 21 to the consolidated financial statements included in this prospectus for additional information.

Legal Proceedings

          On September 16, 2004, Triple Net Properties, LLC (which was re-named Grubb & Ellis Realty Investors, LLC (“GERI”) after the Merger), learned that the SEC Staff was conducting an investigation referred to as “In the matter of Triple Net Properties, LLC.” The SEC Staff requested information from Triple Net Properties, LLC relating to disclosure in the Triple Net Securities Offerings. The SEC Staff also requested information from NNN Capital Corp. (which was re-named GBE Securities after the Merger), the dealer-manager for the Triple Net securities offerings. The SEC Staff requested financial and other information regarding the Triple Net securities offerings and the disclosures included in the related offering documents from each of Triple Net Properties, LLC and NNN Capital Corp.

          On June 2, 2008, the Company was notified by the SEC Staff that the SEC closed the investigation without any enforcement action against the Company or its subsidiaries. As a result, the shares of common stock owned by Mr. Thompson, the founder of Triple Net Properties, LLC and the former Chairman of the Company that were being held in the escrow account pending the outcome of the SEC investigation were returned to Mr. Thompson and the escrow agreement was terminated.

General

          Grubb & Ellis and its subsidiaries are involved in various claims and lawsuits arising out of the ordinary conduct of its business, as well as in connection with its participation in various joint ventures and partnerships, 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.

Corporate Information

          Our principal executive offices are located at 1551 N. Tustin Avenue, Suite 300, Santa Ana, California 92705 and our telephone number is (714) 667-8252.

RATIO OF EARNINGS TO FIXED CHARGES

          The following table presents our historical ratios of earnings to fixed charges for the periods indicated.

          The ratios are based solely on historical financial information and no pro forma adjustments have been made.

		Nine months
		ended
		September 30,								Year ended December 31,
		2009				2008				2008				2007				2006				2005				2004
Fixed Charges
Interest and related amortization of borrowing costs			12,490				9,928				14,207				10,818				6,765				1,969				1,828
Estimate of the interest portion of rental expense			5,536				5,241				6,965				1,374				970				510				195
Fixed Charges			18,026				15,169				21,172				12,192				7,735				2,479				2,023
Earnings
Income (loss) from continuing operations before taxes			(95,762	)			(78,692	)			(319,495	)			38,494				13,571				13,679				16,247
Less: Equity in (losses) earnings of unconsolidated entities			(1,635	)			(10,602	)			(13,311	)			2,029				1,948				292				—
Plus: Distributions from unconsolidated entities			185				—				50				75				—				—				—
Non-controlling interest in subsidiaries with earnings and no fixed charges			—				—				(629	)			(839	)			(308	)			—				—
Plus: Fixed charges			18,026				15,169				21,172				12,192				7,735				2,479				2,023
Earnings (1)			(75,916	)			(52,921	)			(285,591	)			47,893				19,050				15,866				18,270
Ratio of earnings to fixed charges			—				—				—				3.9				2.5				6.4				9.0
The amount of coverage deficiency			93,942				68,090				306,763				—				—				—				—

USE OF PROCEEDS

          The proceeds from the sale of each of the selling stockholder’s common stock and 12% Preferred Stock will belong to that selling stockholder. We will not receive any proceeds from such sales.

PRICE AND RELATED INFORMATION CONCERNING REGISTERED SHARES

Market and Price Information

          The principal market for the Company’s common stock is the NYSE. The following table sets forth the high and low sales prices of the Company’s common stock on the NYSE for each of the first three quarters of the year ended December 31, 2009 and for each quarter of the years ended December 31, 2008 and 2007.

		2009								2008								2007
		High				Low				High				Low				High				Low
First Quarter		$	1.29			$	0.25			$	7.50			$	3.80			$	11.90			$	10.23
Second Quarter		$	1.31			$	0.50			$	7.50			$	3.61			$	13.25			$	10.69
Third Quarter		$	1.96			$	0.55			$	5.00			$	2.70			$	12.15			$	7.00
Fourth Quarter										$	2.88			$	0.81			$	9.57			$	4.95

          On December 23, 2009, the closing sale price of our common stock was $1.35.

          As of December 23, 2009, there were 1,051 registered holders of the Company’s common stock and 67,376,796 shares of common stock outstanding. Sales of substantial amounts of common stock, including shares issued upon the exercise of warrants or options or upon the conversion of preferred stock, or the perception that such sales might occur, could adversely affect prevailing market prices for the common stock.

DIVIDEND POLICY

          The Company declared first and second quarter cash dividends in 2008 for an aggregate of $0.2050 per share for the year. On July 11, 2008, the Company’s Board of Directors approved the suspension of future dividend payments. Legacy NNN declared aggregate quarterly cash dividends in 2007 of $0.33 per share and the Company declared a fourth quarter cash dividend in 2007 of $0.03 for an aggregate of $0.36 per share in cash dividends for the year.

          The 12% Preferred Stock are entitled to cumulative annual dividends of $12.00 per share payable quarterly on each of March 31, June 30, September 30 and December 31, commencing on December 31, 2009, when, as and if declared by the Board of Directors. Such dividends will accumulate and be paid in arrears on the basis of a 360-day year consisting of twelve 30-day months. Dividends on the 12% Preferred Stock will be paid in cash and accumulate and be cumulative from the most recent date to which dividends have been paid, or if no dividends have been paid, from and including November 6, 2009. Accumulated dividends on the 12% Preferred Stock will not bear interest. In addition, in the event of any cash distribution to holders of common stock, holders of 12% Preferred Stock will be entitled to participate in such distribution as if such holders of 12% Preferred Stock had converted their shares of 12% Preferred Stock into common stock. See “Description of Preferred Stock—Dividends.”

          The Company declared a cash dividend of $1.8333 per share of Preferred Stock payable on December 31, 2009 to holders of record as of the close of business on December 21, 2009.

Selected Consolidated Financial Data

          Grubb & Ellis Realty Investors, LLC (“GERI”) (formerly Triple Net Properties, LLC), a subsidiary of our company, was the accounting acquirer of Triple Net Properties Realty, Inc. (“Realty”) and NNN Capital Corp., subsidiaries of our company acquired in the Merger. On December 7, 2007, GERI through NNN Realty Advisors, Inc. merged with Grubb & Ellis Company. NNN Realty Advisors, Inc. was the accounting acquiror. The selected historical consolidated financial data set forth below as of and for the years ended December 31, 2008 and 2007 (restated), and the selected consolidated operating and cash flow data for the year ended December 31, 2006 (restated), has been derived from the audited financial statements beginning on page F-2 of this prospectus. The selected historical financial data set forth below as of and for the years ended December 31, 2005 (restated) and 2004 (restated), and the selected consolidated balance sheet data as of December 31, 2006 (restated), has been derived from unaudited consolidated financial statements not included in this prospectus. The selected consolidated financial information set forth below as of September 30, 2009 and for each of the nine-month periods ended September 30, 2009 and 2008 is derived from our unaudited consolidated financial statements included in our quarterly report on Form 10-Q/A for the period ended September 30, 2009 beginning on page F-62 of this prospectus. The unaudited consolidated financial statements include all adjustments which we consider necessary for a fair statement of our financial position and results of operations for those periods. The results for the nine months ended September 30, 2009 and 2008 are not necessarily indicative of the results that might be expected for the entire year ending December 31, 2009 or any other period. Historical results are not necessarily indicative of the results that may be expected for any future period.

          The selected historical consolidated financial data for the years ended December 31, 2007 (restated), 2006 (restated), 2005 (restated) and 2004 (restated) has been restated to correct accounting errors related to the timing of revenue recognition relating to certain tenant-in-common investment programs sponsored by GERI and the consolidation of certain entities that should have been consolidated into our financial statements as described in Note 3 to the consolidated financial statements beginning on page F-2 of this prospectus. As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards Board No. 160, later codified in ASC 810-10, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51”, and also adopted FASB Position No. EITF 03-6-1, later codified in ASC 260-10, “Determining whether Instruments Granted in Share-Based Payment Transactions are Participating Securities.” The selected historical consolidated financial data set forth below should be read in conjunction with the consolidated financial statements beginning on page F-2 of this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

          The impact of the restatement on our financial statements for the year ended December 31, 2007 resulted in an increase in net income of $230,000, or less than $0.01 per basic and diluted share, an increase in total assets of $12.1 million, an increase in total liabilities of $5.5 million and an increase in minority interest liability of $11.2 million. The impact of the restatement on our financial statements for the year ended December 31, 2006 resulted in an increase in net income of $3.9 million, or $0.19 per basic and diluted share, an increase in total assets of $19.7 million, an increase in total liabilities of $18.1 million and an increase in minority interest liability of $6.3 million. The impact of the restatement on fiscal year 2005 resulted in a decrease in net income of $8.1 million, or $0.47 per basic and diluted share, an increase in total assets of $39.7 million, an increase in total liabilities of $47.4 million, and an increase in minority interest liability of $993,000. The impact of the restatement on our financial statements for the year ended December 31, 2004 resulted in a decrease in net income of $619,000, or $0.04 per basic and diluted share, and an increase in total liabilities of $619,000.

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
						Restated								Restated (1)				Restated (2)				Restated (3)				Restated (3)
(In thousands, except per share data)		(Unaudited)				(Unaudited)																(Unaudited)				(Unaudited)
Consolidated Statement of Operations Data:
Total services revenue		$	362,341			$	443,526			$	595,495			$	201,538			$	99,599			$	80,817			$	64,281
Total revenue			385,095				468,828				628,779				229,657				108,543				84,423				66,592
Total compensation costs			342,072				365,488				503,004				104,109				49,449				29,873				19,717
Total operating expense			480,088				533,874				929,407				195,723				97,633				71,035				51,082
Operating (loss) income			(94,933	)			(65,046	)			(300,628	)			33,934				10,910				13,388				15,510
(Loss) income from continuing operations			(96,349	)			(55,568	)			(318,688	)			23,741				21,012				13,679				15,628
Net (loss) income			(97,354	)			(74,258	)			(342,589	)			23,032				20,049				10,288				15,628
Net (loss) income attributable to Grubb & Ellis Company			(95,668	)			(67,960	)			(330,870	)			21,072				19,971				10,047				15,628
Basic (loss) earnings per share		$	(1.51	)		$	(1.07	)		$	(5.21	)		$	0.53			$	1.01			$	0.58			$	0.90
(Loss) income from continuing operations per share		$	(1.49	)		$	(0.79	)		$	(4.83	)		$	0.55			$	1.06			$	0.80			$	0.90
Diluted (loss) earnings per share		$	(1.51	)		$	(1.07	)		$	(5.21	)		$	0.53			$	1.01			$	0.58			$	0.90
Basic weighted average shares outstanding			63,618				63,574				63,515				38,652				19,681				17,200				17,407
Diluted weighted average shares outstanding			63,618				63,574				63,515				38,652				19,694				17,200				17,407
Dividends declared per common share			—			$	0.205			$	0.205			$	0.36			$	0.10				—				—
Consolidated Statement of Cash Flow Data:
Net cash (used in) provided by operating activities		$	(29,053	)		$	(34,120	)		$	(33,629	)		$	33,543			$	17,356			$	23,536			$	17,214
Net cash provided by (used in) investing activities			81,185				(66,719	)			(76,330	)			(486,909	)			(56,203	)			(35,183	)			(13,046	)
Net cash (used in) provided by financing activities			(75,673	)			85,937				93,616				400,468				140,525				10,251				(7,647	)

		September 30,				December 31,
		2009				2008				2007				2006				2005				2004
										Restated				Restated				Restated				Restated
		(Unaudited)												(Unaudited)				(Unaudited)				(Unaudited)
Consolidated Balance Sheet Data (at end of period):
Total assets		$	342,178			$	520,277			$	988,542			$	347,709			$	126,057			$	42,911
Long Term Liabilities:
Line of credit			62,709				63,000				8,000				—				8,500				3,545
Notes payable and capital lease obligations			107,953				107,203				107,343				843				887				—
Senior and participating notes			16,277				16,277				16,277				10,263				2,300				4,845
Redeemable preferred liability			—				—				—				—				6,077				5,717
Total Grubb & Ellis Company stockholders’ (deficit) equity			(16,410	)			70,171				404,056				217,125				20,081				16,164

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

          The following discussion and analysis of the financial condition and results of operations should be read together with its financial statements and the related notes included elsewhere in this prospectus. The following discussion reflects Grubb & Ellis performance for the periods listed and may not be indicative of our future financial performance. In addition, some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to Grubb & Ellis plans and strategy for its business, includes forward-looking statements that involve risks, uncertainties and assumptions. Actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis as a result of many factors, including those discussed in the “Risk Factors” section of this prospectus.

Note Regarding Forward-Looking Statements

          The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects the restatement of previously issued financial statements, as discussed in Note 3 to the consolidated financial statements included in this prospectus.

          This registration statement and prospectus contains statements that are forward-looking and as such are not historical facts. Rather, these statements constitute projections, forecasts or forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. Forward-looking statements include information concerning the Company’s liquidity and possible or assumed future results of operations, including descriptions of the Company’s business strategies. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” “seek,” “will,” “may” or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of the historical trends, current conditions, expected future developments and other factors the Company believes are appropriate under these circumstances.

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

Overview and Background

          The Company is a commercial real estate services and investment management firm. The Merger was accounted for using the purchase method of accounting based on accounting principles generally accepted in the United States (“GAAP”) and as such, although structured as a reverse merger, NNN is considered the acquirer of legacy Grubb & Ellis. As a consequence, the operating results for the twelve months ended December 31, 2008 reflect the consolidated results of the Company as a result of the Merger, while the twelve months ended December 31, 2007 includes the full year operating results of legacy NNN and the operating results of legacy Grubb & Ellis for the period from December 8, 2007 through December 31, 2007. The year ended December 31, 2006 includes solely the operating results of legacy NNN.

          Unless otherwise indicated, all pre-Merger legacy NNN share data have been adjusted to reflect the conversion as a result of the Merger (see Note 22 to the consolidated financial statements included in this prospectus for additional information).

Critical Accounting Policies

          The Company’s consolidated financial statements have been prepared in accordance with GAAP. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in the accounting estimate are reasonably likely to occur from period to period. The Company believes that the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

Transaction Services

          Real estate sales commissions are recognized when earned which is typically the close of escrow. 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 and delivered by the Company to the client, unless future contingencies exist.

Investment Management

          The Company earns fees associated with its transactions by structuring, negotiating and closing acquisitions of real estate properties to third-party investors. Such fees include acquisition fees for locating and acquiring the property and selling it to various TIC investors, REITs and its various real estate funds. The Company accounts for acquisition and loan fees in accordance with the requirements of Real Estate—General Topic. In general, the Company records the acquisition and loan fees upon the close of sale to the buyer if the buyer is independent of the seller, collection of the sales price, including the acquisition fees and loan fees, is reasonably assured, and the Company is not responsible for supporting operations of the property. Organizational marketing expense allowance (“OMEA”) fees are earned and recognized from gross proceeds of equity raised in connection with offerings and are used to pay formation costs, as well as organizational and marketing costs. When the Company does not meet the criteria for revenue recognition under Real Estate—General Topic, revenue is deferred until revenue can be reasonably estimated or until the Company defers revenue up to its maximum exposure to loss. The Company earns disposition fees for disposing of the property on behalf of the REIT, investment fund or TIC. The Company recognizes the disposition fee when the sale of the property closes. The Company is entitled to loan advisory fees for arranging financing related to properties under management.

          The Company earns captive asset and property management fees primarily for managing the operations of real estate properties owned by the real estate programs, REITs and limited liability companies that invest in real estate or value funds it sponsors. Such fees are based on pre-established formulas and contractual arrangements and are earned as such services are performed. The Company is entitled to receive reimbursement for expenses associated with managing the properties; these expenses include salaries for property managers and other personnel providing services to the property. Each property in the Company’s TIC Programs may also be charged an accounting fee for costs associated with preparing financial reports. The Company is also entitled to leasing commissions when a new tenant is secured and upon tenant renewals. Leasing commissions are recognized upon execution of leases.

          Through its dealer-manager, the Company facilitates capital raising transactions for its programs its dealer-manager acts as a dealer-manager exclusively for the Company’s programs and does not provide securities services to any third party. The Company’s wholesale dealer-manager services are comprised of raising capital for its programs through its selling broker-dealer relationships. Most of the commissions, fees and allowances earned for its dealer-manager services are passed on to the selling broker-dealers as commissions and to cover offering expenses, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its selling broker-dealer relationships.

Management Services

          Management fees are recognized at the time the related services have been performed by the Company, unless future contingencies exist. In addition, in regard to management and facility service contracts, the owner of the property will typically reimburse the Company for certain expenses that are incurred on behalf of the owner, which are comprised primarily of on-site employee salaries and related benefit costs. The amounts which are to be reimbursed per the terms of the services contract, are recognized as revenue by the Company in the same period as the related expenses are incurred. In certain instances, the Company sub contracts its property management services to independent property managers, in which case the Company passes a portion of their property management fee on to the sub contractor, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its sub contractors.

Basis of Presentation and Principles of Consolidation

          The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned controlled subsidiaries’ variable interest entities (“VIEs”) in which the Company is the primary beneficiary and partnerships/LLCs in which the Company is the managing member or general partner and the other partners/members lack substantive rights (hereinafter collectively referred to as the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. For acquisitions of an interest in an entity or newly formed joint venture or limited liability company, the Company evaluates the entity to determine if the entity is deemed a VIE, and if the Company is deemed to be the primary beneficiary, in accordance with the requirements of the Consolidation Topic.

          The Company consolidates entities that are VIEs when the Company is deemed to be the primary beneficiary of the VIE. For entities in which (i) the Company is not deemed to be the primary beneficiary, (ii) the Company’s ownership is 50.0% or less and (iii) the Company has the ability to exercise significant influence, the Company uses the equity accounting method (i.e. at cost, increased or decreased by the Company’s share of earnings or losses, plus contributions less distributions). The Company also uses the equity method of accounting for jointly-controlled tenant-in-common interests. As events occur, the Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is to determine if there is a change in the original determinations and will report such changes on a quarterly basis.

Purchase Price Allocation

          In accordance with the requirements of the Business Combinations Topic, the purchase price of acquired properties is allocated to tangible and identified intangible assets and liabilities based on their respective fair values. The allocation to tangible assets (building and land) is based upon determination of the value of the property as if it were vacant using discounted cash flow models similar to those used by independent appraisers. Factors considered include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. Additionally, the purchase price of the applicable property is allocated to the above or below market value of in-place leases and the value of in-place leases and related tenant relationships.

          The value allocable to the above or below market component of the acquired in-place leases is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) the Company’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in identified intangible assets and below market lease values are included in liabilities in the accompanying consolidated financial statements and are amortized to rental revenue over the weighted-average remaining term of the acquired leases with each property.

          The total amount of identified intangible assets acquired is further allocated to in-place lease costs and the value of tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics considered in allocating these values include the nature and extent of the credit quality and expectations of lease renewals, among other factors. These allocations are subject to change within one year of the date of purchase based on information related to one or more events identified at the date of purchase that confirm the value of an asset or liability of an acquired property.

Impairment of Long-Lived Assets

          In accordance with the requirements of the Property, Plant, and Equipment Topic, long-lived assets are periodically evaluated for potential impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In the event that periodic assessments reflect that the carrying amount of the asset exceeds the sum of the undiscounted cash flows (excluding interest) that are expected to result from the use and eventual disposition of the asset, the Company would recognize an impairment loss to the extent the carrying amount exceeded the fair value of the property. The Company estimates the fair value using available market information or other industry valuation techniques such as present value calculations. This valuation review resulted in the recognition of an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments during the year ended December 31, 2008. No impairment losses were recognized for the years ended December 31, 2007 and 2006.

          The Company recognizes goodwill and other non-amortizing intangible assets in accordance with the requirements of the Intangibles—Goodwill and Other Topic. Under this Topic, goodwill is recorded at its carrying value and is tested for impairment at least annually or more frequently if impairment indicators exist at a level of reporting referred to as a reporting unit. The Company recognizes goodwill in accordance with the Intangibles—Goodwill and Other Topic and tests the carrying value for impairment during the fourth quarter of each year. The goodwill impairment analysis is a two-step process. The first step used to identify potential impairment involves comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. To estimate the fair value of its reporting units, the Company used a discounted cash flow model and market comparable data. Significant judgment is required by management in developing the assumptions for the discounted cash flow model. These assumptions include cash flow projections utilizing revenue growth rates, profit margin percentages, discount rates, market/economic conditions, etc. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated a potential impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit as calculated in step one, over the estimated fair values of the individual assets, liabilities and identified intangibles. During the fourth quarter of 2008, the Company identified the uncertainty surrounding the global economy and the volatility of the Company’s market capitalization as goodwill impairment indicators. The Company’s goodwill impairment analysis resulted in the recognition of an impairment charge of approximately $172.7 million during the year ended December 31, 2008 and $0 million during the nine months ended September 30, 2009. The Company also analyzed its trade name for impairment pursuant to the Intangibles—Goodwill and Other Topic and determined that the trade name was not impaired as of December 31, 2008. Accordingly, no impairment charge was recorded related to the trade name during the year ended December 31, 2008. In addition to testing goodwill and it’s trade name for impairment, the Company tested the intangible contract rights for impairment during the fourth quarter of 2008. The intangible contract rights represent the legal right to future disposition fees of a portfolio of real estate properties under contract. As a result of the current economic environment, a portion of these disposition fees may not be recoverable. Based on the Company’s analysis for the current and projected property values, condition of the properties and status of mortgage loans payable, the Company determined that there are certain properties for which receipt of disposition fees was improbable. As a result, the Company recorded an impairment charge of approximately $8.6 million related to the impaired intangible contract rights as of December 31, 2008 and $0.6 million during the nine months ended September 30, 2009.

Insurance and Claim Reserves

          The Company has maintained partially self-insured and deductible programs for, general liability, workers’ compensation and certain employee health care costs. In addition, the Company assumed liabilities at the date of the Merger representing reserves related to a self insured errors and omissions program of the acquired company. Reserves for all 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. As of the date of the Merger, the Company entered into a premium based insurance policy for all error and omission coverage on claims arising after the date of the Merger. Claims arising prior to the date of the Merger continue to be applied against the previously mentioned liability reserves assumed relative to the acquired company.

          The Company is also subject to various proceedings, lawsuits and other claims related to commission disputes and environmental, labor and other matters, and is required to assess the likelihood of any adverse judgments or outcomes to these matters. A determination of the amount of reserves, if any, for these contingencies is made after careful analysis of each individual issue. New developments in each matter, or changes in approach such as a change in settlement strategy in dealing with these matters, may warrant an increase or decrease in the amount of these reserves.

Recently Issued Accounting Pronouncements

          The Company follows the requirements of the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification. The Topic defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value instruments. In February 2008, the FASB amended the Topic to delay the effective date of the Fair Value Measurements and Disclosures for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). There was no effect on the Company’s consolidated financial statements as a result of the adoption of the Topic as of January 1, 2008 as it relates to financial assets and financial liabilities. For items within its scope, the amended Fair Value Measurements and Disclosures Topic deferred the effective date of the Fair Value Measurements and Disclosures to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company adopted this Topic as it relates to non-financial assets and non-financial liabilities in the first quarter of 2009 and the adoption did not have a material effect on consolidated net income.

          In February 2007, the FASB issued the requirements of the Financial Instruments Topic. The Topic permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company adopted the Topic on a prospective basis on January 1, 2008. The adoption of the Topic did not have a material impact on the consolidated financial statements since the Company did not elect to apply the fair value option for any of its eligible financial instruments or other items on the January 1, 2008 effective date.

          In December 2007, the FASB issued an amendment to the requirements of the Business Combinations Topic. The amendment requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. The Topic changed the accounting treatment and disclosure for certain specific items in a business combination. The Topic applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of the requirements of the Topic will materially affect the accounting for any future business combinations.

          In December 2007, the FASB issued an amendment to the requirements of the Consolidation Topic. The Consolidation Topic established new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The Topic requires that noncontrolling interests be presented as a component of consolidated stockholders’ equity, eliminates minority interest accounting such that the amount of net income attributable to the noncontrolling interests will be presented as part of consolidated net income in the accompanying consolidated statements of operations and not as a separate component of income and expense, and requires that upon any changes in ownership that result in the loss of control of the subsidiary, the noncontrolling interest be re-measured at fair value with the resultant gain or loss recorded in net income. The Topic became effective for fiscal years beginning on or after December 15, 2008. The Company adopted the requirements of the Topic on a retrospective basis on January 1, 2009. The adoption of the requirements of the Topic had an impact on the presentation and disclosure of noncontrolling (minority) interests in the consolidated financial statements. As a result of the retrospective presentation and disclosure requirements of the Topic, the Company is required to reflect the change in presentation and disclosure for all periods presented. Principal effect on the consolidated balance sheet as of December 31, 2008 related to the adoption of the requirements of the Topic was the change in presentation of minority interest from mezzanine to redeemable noncontrolling interest, as reported herein. Additionally, the adoption of the requirements of the Topic had the effect of reclassifying (income) loss attributable to noncontrolling interest in the consolidated statements of operations from minority interest to separate line items. The Topic also requires that net income (loss) be adjusted to include the net (income) loss attributable to the noncontrolling interest, and a new line item for net income (loss) attributable to controlling interest be presented in the consolidated statements of operations.

          In March 2008, the FASB issued the requirements of the Derivatives and Hedging Topic. The Topic is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The Topic achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. The Topic is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has adopted the requirements of the Derivatives and Hedging Topic in the first quarter of 2009 and the adoption did not have a material effect on its consolidated financial statements.

          In April 2008, the FASB issued an amendment to the requirements of the Intangibles — Goodwill and Other Topic. The requirements of the amended Topic is intended to improve the consistency between the useful life of recognized intangible assets, and the period of expected cash flows used to measure the fair value of the assets. The amendment changes the factors an entity should consider in developing renewal or extension assumptions in determining the useful life of recognized intangible assets. In addition the amended Topic requires disclosure of the entity’s accounting policy regarding costs incurred to renew or extend the term of recognized intangible assets, the weighted average period to the next renewal or extension, and the total amount of capitalized costs incurred to renew or extend the term of recognized intangible assets. The requirements of the amended Topic are effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company adopted the requirements of the amended Topic on January 1, 2009. The adoption of the amended Topic did not have a material impact on consolidated net income.

          In June 2008, the FASB issued an amendment to the requirements of the Earnings Per Share Topic, which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share under the two-class method, which apply to the Company because it grants instruments to employees in share-based payment transactions that meet the definition of participating securities, is effective retrospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company has adopted the requirements of the amended Topic in the first quarter of 2009 and the adoption did not have a material effect on its consolidated financial statements.

          In December 2008, the FASB issued an amendment to the requirements of the Transfers and Servicing Topic and an amendment to the requirements of the Consolidation Topic. The purpose of the amendment is to improve disclosures by public entities and enterprises. The amended Topic requires public entities to provide additional disclosures about transferors’ continuing involvements with transferred financial assets. The amended Topic requires public enterprises to provide additional disclosures about their involvement with variable interest entities. The requirements of the amended Topic are effective for financial statements issued for fiscal years and interim periods ending after December 15, 2008. For periods after the initial adoption date, comparative disclosures are required. The Company adopted the requirements of the amended Topic on December 31, 2008 and the adoption did not have a material effect on net income.

RESULTS OF OPERATIONS

Results of Operations for the year ended December 31, 2008

Overview

          The Company reported revenue of $628.8 million for the year ended December 31, 2008, compared with revenue of $229.7 million for the same period of 2007. Approximately $442.0 million of the increase was attributed to a full year of results from the Transaction Services and Management Services businesses. The remaining decrease of $42.9 million was attributed to a net decrease of $42.9 million in Investment Management revenue. The decrease in revenue as compared to the prior year period can be attributed to lower acquisition fees as a result of less tenant-in-common equity raised and lower disposition fees, only partially offset by an increase in acquisition fees related to our public non-traded REITs as a result of a significant increase in equity raised. Additionally, $6.8 million of property management fees related to captive management programs were recorded in management services revenue as the property management related to those programs was transferred subsequent to the Merger. The Company completed a total of 50 acquisitions and 9 dispositions on behalf of the investment programs it sponsors at values of approximately $1.2 billion and $225.8 million, respectively, during the year ended December 31, 2008. The net acquisitions from the Investment Management business allowed the Company to grow its captive assets under management by approximately 17.5% from $5.8 billion as of December 31, 2007 to $6.8 billion as of December 31, 2008.

          The net loss attributable to the Company for the year ended December 31, 2008 was $330.9 million, or $5.21 per diluted share, and included a non-cash charge of $181.3 million for goodwill and intangible assets impairment, a non-cash charge of $90.4 million for real estate related impairments (of which $32.9 million was recorded in the fourth quarter), a $28.0 million charge, $18.9 million of which is non-cash, which includes an allowance for bad debt on related party receivables and advances and an expected loss on the sale of two properties under management for which the Company has a recourse obligation, a second quarter non-cash charge of $8.9 million for depreciation and amortization related to the reclassification of five assets held for sale to assets held for investment, a first quarter net write-off of its investment in GERA of $5.8 million and $14.7 million of merger and integration related

costs. In addition, the year-to-date results included approximately $11.7 million of stock-based compensation, $1.2 million for amortization of contract rights and other identified intangible assets and $1.8 million of recognized loss on marketable equity securities.

          As of September 30, 2008, the Company initiated a plan to sell the properties it classified as real estate held for investment in its financial statements as of September 30, 2008. As of December 31, 2008, the Company had a covenant within its Credit Facility which required the sale of certain of these assets before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions by March 31 2009. Pursuant to the requirements of the Property, Plant, and Equipment Topic, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments as of December 31, 2008.

          As a result of the Merger in December 2007, the newly combined Company’s operating segments were evaluated for reportable segments. The legacy NNN reportable segments were realigned into a single operating and reportable segment called Investment Management. This realignment had no impact on the Company’s consolidated balance sheet, results of operations or cash flows.

          The Company reports its revenue by three operating business segments in accordance with the provisions of Segment Reporting of the FASB Codification. Transaction Services, which comprises its real estate brokerage operations; Investment Management which includes providing acquisition, financing and disposition services with respect to its programs, asset management services related to its programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its TIC, REIT and other investment programs; and Management Services, which includes property management, corporate facilities management, project management, client accounting, business services and engineering services for unrelated third parties and the properties owned by the programs it sponsors. Additional information on these business segments can be found in Note 19 to the consolidated financial statements included in this prospectus.

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

          The following summarizes comparative results of operations for the periods indicated.

		Year Ended
		December 31,								Change
		2008				2007(1)				$				%
(In thousands)						Restated
Revenue
Transaction services		$	240,250			$	35,522			$	204,728				576.3	%
Investment management			101,581				149,651				(48,070	)			(32.1	)
Management services			253,664				16,365				237,299				1,450.0
Rental related			33,284				28,119				5,165				18.4
Total revenue			628,779				229,657				399,122				173.8
Operating Expense
Compensation costs			503,004				104,109				398,895				383.2
General and administrative			119,660				44,251				75,409				170.4
Depreciation and amortization			16,028				9,321				6,707				72.0
Rental related			21,377				20,839				538				2.6
Interest			14,207				10,818				3,389				31.3
Merger related costs			14,732				6,385				8,347				130.7
Real estate related impairments			59,114				—				59,114				—
Goodwill and intangible asset impairment			181,285				—				181,285				—
Total operating expense			929,407				195,723				733,684				374.9
Operating (Loss) Income			(300,628	)			33,934				(334,562	)			(985.9	)
Other (Expense) Income
Equity in (losses) earnings of unconsolidated entities			(13,311	)			2,029				(15,340	)			(756.0	)
Interest & dividend income			902				2,996				(2,094	)			(69.9	)
Other			(6,458	)			(465	)			(5,993	)			(1,288.8	)
Total other (expense) income			(18,867	)			4,560				(23,427	)			(514.1	)
Income from continuing operations before income tax (provision) benefit			(319,495	)			38,494				(357,989	)			(930.0	)
Income tax (provision) benefit			827				(14,753	)			15,580				105.6

		Year Ended
		December 31,								Change
		2008				2007(1)				$				%
(In thousands)						Restated
Income from continuing operations			(318,668	)			23,741				(342,409	)			(1,442.3	)
Discontinued Operations
(Loss) from discontinued operations — net of taxes			(24,278	)			(960	)			(23,318	)			2,429.0
Gain on disposal of discontinued operations — net of taxes			357				252				105				41.7
Total loss from discontinued operations			(23,921	)			(708	)			(23,213	)			3,278.7
Net (loss) income		$	(342,589	)		$	23,033			$	(365,622	)			(1,587.4	)
Net (loss) income attributable to noncontrolling interest			(11,719	)			1,961				(13,680	)			(697.6	)
Net (loss) income attributable to Grubb & Ellis Company		$	(330,870	)		$	21,072			$	(351,942	)			(1,670.2	)

Revenue

Transaction Services Revenue

          The Company earns revenue from the delivery of transaction and management services to the commercial real estate industry. Transaction fees include commissions from leasing, acquisition and disposition, and agency leasing assignments as well as fees from appraisal and consulting services. Management fees, which include reimbursed salaries, wages and benefits, comprise the remainder of the Company’s Transaction Services revenue, and include fees related to both property and facilities management outsourcing as well as project management and business services.

          The Transaction Services segment was acquired from the legacy Grubb & Ellis on December 7, 2007 which includes brokerage commission, valuation and consulting revenue. As of December 31, 2008, legacy Grubb & Ellis had 814 brokers, down from 927 as of December 31, 2007.

Investment Management Revenue

          Investment Management revenue of $101.6 million for the year ended December 31, 2008, which includes transaction, captive management and dealer-manager businesses, was comprised primarily of transaction fees of $43.4 million, asset and property management fees of $38.0 million and dealer-manager fees of $15.1 million.

          Transaction related fees decreased $39.8 million, or 47.8%, to $43.4 million for the year ended December 31, 2008, compared to approximately $83.2 million for the same period in 2007. The year-over-year decrease in transaction fees was primarily due to decreases of $14.6 million in real estate acquisition fees, $13.5 million in real estate disposition fees, $5.0 million in OMEA fees, and $6.6 million in other transaction related fees.

          Acquisition fees decreased approximately $14.6 million, or 31.3%, to $32.1 million for the year ended December 31, 2008, compared to approximately $46.7 million for the same period in 2007. The year-over-year decrease in acquisition fees was primarily attributed to a decrease of approximately $19.1 million in fees earned from the Company’s TIC Programs and a decrease of approximately $2.8 million in fees earned from the Company’s other real estate funds and joint ventures, partially offset by an increase of $3.1 million from the non-traded REIT programs and $4.2 million from Private Client Management. During the year ended December 31, 2008, the Company acquired 50 properties on behalf of its sponsored programs for an approximate aggregate total of $1.2 billion, compared to 77 properties for an approximate aggregate total of $2.0 billion during the same period in 2007.

          Disposition fees decreased approximately $13.5 million, or 74.5%, to approximately $4.6 million for the year ended December 31, 2008, compared to approximately $18.2 million for the same period in 2007. The decrease reflects lower sales volume and lower sales values due to current market conditions. Fees on dispositions as a percentage of aggregate sales price was 2.6% for the year ended December 31, 2008, compared to 2.4% for the same period in 2007, primarily due to a change in the mix of properties sold. Offsetting the disposition fees during the year ended December 31, 2008 and 2007 was $1.2 million and $3.2 million, respectively, of amortization of identified intangible contract rights associated with the acquisition of Realty as they represent the right to future disposition fees of a portfolio of real properties under contract.

          OMEA fees decreased approximately $5.0 million, or 54.3%, to $4.2 million for the year ended December 31, 2008, compared to approximately $9.1 million for the same period in 2007. OMEA fees as a percentage of equity raised for the year ended December 31, 2008 was 2.4%, compared to 2.0% for the same period in 2007. The decrease in OMEA fees earned was primarily due to a decline in TIC equity raised, declining to $176.9 million in TIC equity raised in 2008, compared to $452.2 million in TIC equity raised in 2007.

          The Company completed a total of 50 acquisitions and 9 dispositions on behalf of the investment programs it sponsors at values in excess of $1.2 billion and $225.8 million, respectively, during 2008. The net acquisitions from the Investment Management business allowed the Company to grow its captive assets under management by more than 17.0% during 2008. As of December 31, 2008, the value of the Company’s assets under management was in excess of $6.8 billion.

          Captive management fees were down approximately 7.5% year-over-year and include the movement of approximately $6.8 million of revenue to the Company’s Management Services segment. Exclusive of this transfer of revenue, captive management fees increased approximately 9.1% year-over-year.

Management Services Revenue

          Management Services revenue includes asset and property management fees as well as reimbursed salaries, wages and benefits from the Company’s third party property management and facilities outsourcing services, along with business services fees. Management Services revenue was $253.7 million for the year ended December 31, 2008 and $16.4 million from December 8, 2007 through December 31, 2007. Following the closing of the merger, Grubb & Ellis Management Services assumed management of nearly 27.1 million square feet of NNN’s 46.9 million-square-foot captive investment management portfolio. As of December 31, 2008, the Company managed 231.0 million square feet of property.

Rental Revenue

          Rental revenue includes pass-through revenue for the master lease accommodations related to the Company’s TIC Programs.

Operating Expense Overview

          Operating expenses increased $733.7 million, or 374.9%, to $929.4 million for the year ended December 31, 2008, compared to $195.7 million for the same period in 2007. The increase includes approximately $455.6 million due to the legacy Grubb & Ellis business, $59.1 million in real estate related impairments, $181.3 million in goodwill and intangible asset impairments, a $28.0 million charge which includes an allowance for bad debt on related party receivables and advances and an expected loss on the sale of two properties under management for which the Company has a recourse obligation, $8.3 million due to additional merger related costs and $4.2 million in additional non-cash stock based compensation.

Compensation costs

          Compensation costs increased $398.9 million, or 383.2%, to $503.0 million for the year ended December 31, 2008, compared to $104.1 million for the same period in 2007 due to approximately $406.3 million of compensation costs attributed to legacy Grubb & Ellis’ operations. Compensation costs related to the investment management business decreased approximately 9.4% to $56.6 million, for the year ended December 31, 2008, compared to $62.5 million for the same period in 2007. Included in the compensation cost was non-cash stock compensation expense which increased by $4.2 million to $11.7 million for the year ended December 31, 2008 compared to $7.5 million for the same period in 2007.

General and Administrative

          General and administrative expense increased approximately $75.4 million, or 170.4%, to $119.7 million for the year ended December 31, 2008, compared to $44.3 million for the same period in 2007 due to approximately $48.4 million of general and administration expenses attributed to legacy Grubb & Ellis operations and an increase of $27.0 million related to the investment management business, primarily due to an increase in allowances for bad debt on related party receivables and advances.

          General and administrative expense was 19.0% of total revenue for the year ended December 31, 2008, compared with 19.3% for the same period in 2007.

Depreciation and Amortization

          Depreciation and amortization increased approximately $6.7 million, or 72.0%, to $16.0 million for the year ended December 31, 2008, compared to $9.3 million for the same period in 2007. The increase includes approximately $6.3 million due to the legacy Grubb & Ellis business. Included in depreciation and amortization expense was approximately $3.5 million for amortization of other identified intangible assets.

Rental Expense

          Rental expense includes pass-through expenses for master lease accommodations related to the Company’s TIC Programs.

Interest Expense

          Interest expense increased approximately $3.4 million, or 31.3%, to $14.2 million for the year ended December 31, 2008, compared to $10.8 million for the same period in 2007. Interest expense is primarily comprised of interest expense related to the Company’s Credit Facility.

Real Estate Related Impairments

          The Company recognized an impairment charge of approximately $59.1 million during the year ended December 31, 2008 related to two of its properties held for investment and certain unconsolidated real estate investments. The impairment charges were recognized against the carrying value of the investments during the year ended December 31, 2008. In addition, the Company recognized approximately $31.2 million in real estate related impairments related to four properties held for sale as of December 31, 2008, for which the net income (loss) of the properties are classified as discontinued operations. See Discontinued Operations discussion below.

Goodwill and Intangible Assets Impairment

          The Company recognized a goodwill and intangible assets impairment charge of approximately $181.3 million during the year ended December 31, 2008. The total impairment charge of $181.3 million is comprised of $172.7 million related to goodwill impairment and $8.6 million related to the impairment of intangible contract rights. The Company recognizes goodwill in accordance with the requirements of the Intangibles—Goodwill and Other Topic and tests the carrying value for impairment during the fourth quarter of each year. The goodwill impairment analysis is a two-step process. The first step used to identify potential impairment involves comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. To estimate the fair value of its reporting units, the Company used a discounted cash flow model and market comparable data. Significant judgment is required by management in developing the assumptions for the discounted cash flow model. These assumptions include cash flow projections utilizing revenue growth rates, profit margin percentages, discount rates, market/economic conditions, etc. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated a potential impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit as calculated in step one, over the estimated fair values of the individual assets, liabilities and identified intangibles. During the fourth quarter of 2008, the Company identified the uncertainty surrounding the global economy and the volatility of the Company’s market capitalization as goodwill impairment indicators. The Company’s goodwill impairment analysis resulted in the recognition of an impairment charge of approximately $172.7 million during the year ended December 31, 2008. The Company also analyzed its trade name for impairment pursuant to the Intangibles—Goodwill and Other Topic and determined that the trade name was not impaired as of December 31, 2008. Accordingly, no impairment charge was recorded related to the trade name during the year ended December 31, 2008. In addition to testing goodwill and its trade name for impairment, the Company tested the intangible contract rights for impairment during the fourth quarter of 2008. The intangible contract rights represent the legal right to future disposition fees of a portfolio of real estate properties under contract. As a result of the current economic environment, a portion of these disposition fees may not be recoverable. Based on our analysis for the current and projected property values, condition of the properties and status of mortgage loans payable associated with these contract rights, the Company determined that there are certain properties for which receipt of disposition fees was improbable. As a result, the Company recorded an impairment charge of approximately $8.6 million related to the impaired intangible contract rights as of December 31, 2008.

Equity in Earnings (Losses) of Unconsolidated Real Estate

          In the first quarter of 2008, the Company wrote off its investment in GERA, which resulted in a net impact of approximately $5.8 million, including $4.5 million related to stock and warrant purchases and $1.3 million related to operating advances and third party costs. Equity in losses also includes $10.3 million in equity in earnings related to seven LLCs that are consolidated pursuant to the requirements of the Consolidation Topic. The consolidated LLCs record equity in earnings based on the LLCs pro rata ownership interest in the underlying unconsolidated properties.

Discontinued Operations

          In accordance with the requirements of the Property, Plant and Equipment Topic for the year ended December 31, 2008, discontinued operations included the net income (loss) of four properties and two limited liability company (“LLC”) entities classified as held for sale as of December 31, 2008. The net loss of $23.9 million during the year ended December 31, 2008 includes approximately $31.2 million of real estate related impairments. During October 2008, the Company initiated a plan to sell the properties it classified as held for investment in its financial statements as of September 30, 2008. As of December 31, 2008, the Company had a covenant within its Credit Facility which required the sale of certain of these assets before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions by March 31, 2009. Pursuant to this topic, the Company assessed the value of the assets. The impairment charges were recognized against the carrying value of the properties during the year ended December 31, 2008. (See Note 20 to the consolidated financial statements included in this prospectus for additional information.)

Income Tax

          The Company recognized a tax provision from continuing operations of approximately $0.8 million for the year ended December 31, 2008, compared to a tax benefit of $14.8 million for the same period in 2007. In 2008 and 2007, the reported effective income tax rates were (.26%) and 38.33%, respectively. The 2008 effective tax rate was negatively impacted by impairments of Goodwill and the recording of a valuation allowance against deferred tax assets to the extent the realization of the associated tax benefit is not more-likely-than-not. Based on management’s evaluation of the Company’s tax position, it is believed the amounts related to the valuation allowances are appropriately accrued. The Company’s deferred tax assets are primarily attributable to impairments of various real estate holdings. (See Note 25 to the consolidated financial statements included in this prospectus for additional information.)

Net (Loss) Income

          As a result of the above items, the Company recognized a net loss attributable to Grubb & Ellis of approximately $330.9 million, or $5.21 per diluted share for the year ended December 31, 2008, compared to net income attributable to Grubb & Ellis Company of $21.1 million, or $0.53 per diluted share, for the same period in 2007.

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

          The following summarizes comparative results of operations for the periods indicated.

		Year Ended
		December 31,								Change
		2007(1)				2006(2)				$				%
(In thousands)		Restated				Restated
Revenue
Transaction services		$	35,522			$	—			$	35,522				—	%
Investment management			149,651				99,599				50,052				50.3
Management services			16,365				—				16,365				—
Rental related			28,119				8,944				19,175				214.4
Total revenue			229,657				108,543				121,114				111.6
Operating Expense
Compensation costs			104,109				49,449				54,660				110.5
General and administrative			44,251				30,188				14,063				46.6
Depreciation and amortization			9,321				1,808				7,513				415.5
Rental related			20,839				9,423				11,416				121.2
Interest			10,818				6,765				4,053				59.9
Merger related costs			6,385				—				6,385				—
Total operating expense			195,723				97,633				98,090				100.5
Operating (Loss) Income			33,934				10,910				23,024				211.0
Other Income (Expense)
Equity in (losses) earnings of unconsolidated entities			2,029				1,948				81				4.2
Interest & dividend income			2,996				713				2,283				320.2
Other			(465	)			—				(465	)			—
Total other (expense) income			4,560				2,661				1,899				71.4
Income from continuing operations before income tax provision (benefit)			38,494				13,571				24,923				183.6
Income tax benefit (provision)			(14,753	)			7,441				(22,194	)			(298.3	)
Income from continuing operations			23,741				21,012				2,729				13.0
Discontinued Operations
(Loss) from discontinued operations — net of taxes			(960	)			(1,031	)			71				6.9
Gain on disposal of discontinued operations — net of taxes			252				68				184				270.6
Total loss from discontinued operations			(708	)			(963	)			255				26.5
Net (loss) income			23,033				20,049				2,984				14.9
Net (loss) income attributable to noncontrolling interest			1,961				78				1,883				2,414.1
Net (loss) income attributable to Grubb & Ellis Company		$	21,072			$	19,971			$	1,101				5.5

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

Revenue

Transaction Services Revenue

          The Company earns revenue from the delivery of transaction and management services to the commercial real estate industry. Transaction fees include commissions from leasing, acquisition and disposition, and agency leasing assignments as well as fees from appraisal and consulting services. Management fees, which include reimbursed salaries, wages and benefits, comprise the remainder of the Company’s Transaction Services revenue, and include fees related to both property and facilities management outsourcing as well as project management and business services.

          Transaction Services segment was acquired from the legacy Grubb & Ellis on December 7, 2007 which includes brokerage commission, valuation and consulting revenue. As of December 31, 2007, the Company had 927 brokers, up from 917 at December 31, 2006.

Investment Management Revenue

          Investment management revenue of $149.7 million for the year ended December 31, 2007, which includes transaction, captive management and dealer-manager businesses, was comprised primarily of transaction fees of $83.2 million, asset and property management fees of $41.0 million and dealer-manager fees of $18.0 million.

          Transaction related fees increased $27.0 million, or 48.0%, for the year ended December 31, 2007, primarily due to increases of $20.7 million in real estate acquisition fees, $2.5 million in real estate disposition fees, $1.4 million in OMEA fees and $2.4 million in other transaction related fees.

          Acquisition fees increased $20.7 million, or 79.4%, to $46.7 million for the year ended December 31, 2007, compared to $26.0 million for the same period in 2006. Net fees as a percentage of aggregate acquisition price increased to 2.3% for the twelve months ended December 31, 2007, compared to 1.9% for the same period in 2006, which resulted in $8.5 million in additional fees earned during 2007. During the year ended December 31, 2007, the Company acquired 77 properties (including six which were still owned as of December 31, 2007) on behalf of its sponsored programs for an approximate aggregate total of $2.0 billion, compared to 45 properties for an approximate aggregate total of $1.4 billion during the same period in 2006. This increase in acquisition volume in 2007 resulted in an additional $11.9 million in net fees.

          The $2.5 million increase in real estate disposition fees for the year ended December 31, 2007 was primarily due to an increase in fees realized from the sales of properties, with $18.2 million in net fees realized from the disposition of 28 properties, with an average sales price of $31.3 million per property for the year ended December 31, 2007, compared to $15.7 million in fees realized from the disposition of 22 properties for the same period in 2006 with an average sales price of $37.9 million per property. Included in the fees realized from the sales of properties were $5.7 million in fees earned as a result of the continuing liquidation of G REIT, Inc. (“G REIT”) for the year ended December 31, 2007, compared to $5.3 million for the same period in 2006. The disposition fees were reduced during the years ended December 31, 2007 and 2006 in the amount of $3.2 million and $0.4 million, respectively, as a result of amortizing the identified intangible contract rights associated with the acquisition of Realty as they represent the right to future disposition fees of a portfolio of real properties under contract. Fees on dispositions as a percentage of aggregate sales price was 2.4% for the year ended December 31, 2007, compared to 1.9% for the same period in 2006 (excluding one property sold in 2006 for which the Company waived the entire amount of the disposition fee), primarily due to a change in the mix of properties sold.

          OMEA fees increased $1.4 million, or 18.2%, to $9.1 million for the twelve months ended December 31, 2007, compared to $7.7 million for the same period in 2006. OMEA fees as a percentage of equity raised for the year ended December 31, 2007 was 2.0%, compared to 1.5% for the same period in 2006. The increase in OMEA fees earned was primarily due to $2.5 million in non-recurring credits issued in 2006 partially offset by $0.9 million due to lower TIC equity raised in 2007 of $451.0 million, compared to $510.0 million in TIC equity raised in 2006.

          The diversified platform created as a result of the merger has already generated new revenue opportunities. The Company’s largest TIC investment during the fourth quarter of 2007 was generated from the net proceeds of a Transaction Services client that was re-invested on a tax deferred basis through GERI’s TIC platform.

          The Company completed a total of 77 acquisitions and 30 dispositions on behalf of the investment programs it sponsors at values in excess of $2.0 billion and $880.0 million, respectively, during 2007. The net acquisitions from the Investment Management business allowed the Company to grow its captive assets under management by more than 27.0% during 2007. At December 31, 2007, the value of the Company’s assets under management was in excess of $5.7 billion.

          The $6.4 million, or 18.6%, increase in captive management revenue was primarily due to an increase in property and asset management fees of $6.2 million, or 18.6%, to $41.0 million for the year ended December 31, 2007, compared to $34.6 million for 2006. This increase was primarily the result of the growth in recurring revenue, as total square footage of assets under management increased to an average of approximately 29.4 million for the year ended December 31, 2007, compared to approximately 26.2 million for the same period in 2006. Property and asset management fees per average square foot were $1.39 for the year ended December 31, 2007, compared to $1.32 for the same period in 2006. The increase in property and asset management fees per average square foot was primarily due to a change in product mix. During 2007, assets managed under TIC Programs and within Grubb & Ellis Healthcare REIT, Inc. (“Healthcare REIT”) and Grubb & Ellis Apartment REIT, Inc. (“Apartment REIT”) increased to approximately 83.7% of average assets under management compared to 75.7% in 2006, while assets managed under G REIT and T REIT, Inc. (“T REIT”) decreased to approximately 5.7%, compared to 17.6% in 2006 as a result of the liquidation of those entities. Property and asset management fees in TIC Programs earn up to 6% and in Healthcare REIT and Apartment REIT earn up to approximately 4% plus 1% of each REIT’s average invested assets, while G REIT and T REIT programs earn approximately 4%.

Management Services Revenue

          Management Services revenue includes asset and property management fees as well as reimbursed salaries, wages and benefits from the Company’s third party property management and facilities outsourcing services, along with business services fees. Revenue was $16.4 million from December 8, 2007 through December 31, 2007. Following the closing of the merger, Grubb & Ellis Management Services assumed management of nearly 23 million square feet of NNN’s 41.7 million-square-foot captive investment management portfolio. At December 31, 2007, the Company managed 216 million square feet of property.

Rental Revenue

          Rental revenue includes pass-through revenue for the master lease accommodations related to the Company’s TIC Programs.

Operating Expense Overview

          Operating expenses increased $98.1 million, or 100.5%, for the year ended December 31, 2007, compared to the same period in 2006. Of the $98.1 million, $47.0 million was due to the Grubb & Ellis legacy business from December 8, 2007 to December 31, 2007. The remaining $51.1 million of the increase was attributed to legacy NNN’s Investment Management business, including $20.8 million in rental related expense, $10.2 million resulting from operations of the Company’s broker-dealer acquired in December 2006, $5.5 million in compensation related costs, $7.5 million in non-cash stock based compensation, $6.4 million in merger related costs, offset by a decrease of $4.7 million in interest expense and a net decrease of approximately $0.5 million in other operating costs.

Compensation costs

          Compensation costs increased $54.7 million, or 110.5%, to $104.1 million for the year ended December 31, 2007, compared to $49.4 million for the same period in 2006. Approximately $41.7 million of the increase was attributed to compensation costs from legacy Grubb & Ellis’ operations from December 8 through December 31, 2007. The remaining $13.0 million of the increase was related to the investment management business which increased to $62.5 million, or 26.3%, for the year ended December 31, 2007, compared to $49.5 million for the same period in 2006. The increase of $5.5 million, or 11.1%, in compensation related costs, which included $2.1 million in reimbursable salaries, wages and benefits, was primarily due to an increase in full-time equivalent employees of approximately 89%. Contributing to the increase in compensation costs was $7.5 million in non-cash stock based compensation.

General and Administrative

          General and administrative expense increased $14.1 million, or 46.6%, to $44.3 million for the year ended December 31, 2007, compared to $30.2 million for the same period in 2006. Approximately $4.7 million of the increase was attributed to general and administration expenses from the legacy Grubb & Ellis operations from December 8, 2007 through December 31, 2007. The remaining $9.4 million of the increase was related to the investment management business which increased to $39.6 million for the year ended December 31, 2007, compared to $30.2 million for the same period in 2006. The increase was primarily due to a $10.2 million increase resulting from operations of the Company’s broker-dealer acquired in December 2006, partially offset by decrease of $1.2 million related to non-recurring credits granted to certain investors in 2006.

Depreciation and Amortization

          Depreciation and amortization increased $7.5 million, or 415.5%, to $9.3 million for the year ended December 31, 2007, compared to $1.8 million for the same period in 2006. Approximately $885,000 of the increase was attributed to depreciation and amortization expense from the legacy Grubb & Ellis operations from December 8 through December 31, 2007, and an additional $6.7 million related to properties held for investment.

Rental Expense

          Rental expense includes pass-through expenses for master lease accommodations related to the Company’s TIC Programs.

Interest Expense

          Interest expense increased $4.1 million, or 59.9%, to $10.8 million for the year ended December 31, 2007, compared to $6.8 million for the same period in 2006. The increase was related to approximately $0.6 million in interest expense from legacy Grubb & Ellis operations from December 8 through December 31, 2007, $4.7 million related to investment management business and two properties held for investment.

Discontinued Operations

          In 2007, GERI acquired 13 properties to resell to its sponsored programs. In accordance with the requirements of the Property, Plant and Equipment Topic, for the year ended December 31, 2007, discontinued operations included the net income (loss) of one property and its associated limited liability company (“LLC”) entity sold to a joint venture, two properties and the associated LLCs resold to Healthcare REIT and ten properties and their associated LLCs classified as held for sale as of December 31, 2007. In addition, for the year ended December 31, 2007, discontinued operations included the net income (loss) of four properties and two LLCs owned by the Company and classified as held for sale. (See Note 20 to the consolidated financial statements included in this prospectus for additional information).

Income Tax

          The Company incurred a tax provision of $14.8 million for the year ended December 31, 2007, compared to a tax benefit of $7.4 million for the same period in 2006. Effective with the close of NNN’s 144A private equity offering on November 16, 2006, GERI became a wholly-owned subsidiary, which caused a change in GERI’s tax status from a non-taxable partnership to a taxable C corporation. The change in tax status required NNN to recognize a one time income tax benefit of $6.0 million for the future tax effects attributable to temporary differences between GAAP basis and tax accounting principles as of the effective date of November 15, 2006. The $25.6 million decrease in tax expense was primarily a result of the nonrecurring tax benefit noted above coupled with the inclusion of 12 months of book income in 2007 versus six weeks of book income in 2006 due to the change in tax status. In addition, the Company is subject to the highest federal income tax rate of 35% in 2007, compared to a 34% statutory tax rate in 2006. (See Note 25 to the consolidated financial statements included in this prospectus for additional information).

Net (loss) Income Attributable to Grubb & Ellis Company

          As a result of the above items, net income attributable to Grubb & Ellis Company increased $1.1 million to $21.1 million, or $0.53 per fully diluted share, for the year ended December 31, 2007, compared to net income attributable to Grubb & Ellis Company of $20.0 million, or $1.01 per fully diluted share, for the same period in 2006.

Results of Operations for the nine months ended September 30, 2009

Overview

          The Company reported revenue of approximately $385.1 million for the nine months ended September 30, 2009, compared with revenue of $468.8 million for the same period in 2008. The decrease was primarily the result of decreases in Transaction Services and Investment Management revenue of $54.4 million and $40.6 million, respectively, partially offset by increases in Management Services revenue of $13.8 million.

          The net loss attributable to Grubb & Ellis Company for the first nine months of 2009 was $95.7 million, or $1.51 per diluted share, and includes a non-cash charge of $16.6 million for real estate related impairments and a $21.6 million charge, which includes an allowance for bad debt and write-offs of related party receivables and advances. In addition, the nine month results included approximately $8.7 million of stock-based compensation and $5.7 million for amortization of other identified intangible assets.

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

          The following summarizes comparative results of operations for the periods indicated.

		Nine Months Ended
		September 30,								Change
(In thousands)		2009				2008				$				%
Revenue
Management services		$	199,636			$	185,855			$	13,781				7.4	%
Transaction services			118,793				173,191				(54,398	)			(31.4	)
Investment management			43,912				84,480				(40,568	)			(48.0	)
Rental related			22,754				25,302				(2,548	)			(10.1	)
Total revenue			385,095				468,828				(83,733	)			(17.9	)
Operating Expense
Compensation costs			342,072				365,488				(23,416	)			(6.4	)
General and administrative			83,801				84,387				(586	)			(0.7	)
Depreciation and amortization			8,368				13,692				(5,324	)			(38.9	)
Rental related			16,159				15,384				775				5.0
Interest			12,490				9,928				2,562				25.8
Merger related costs			—				10,217				(10,217	)			(100.0	)
Real estate related impairments			16,615				34,778				(18,163	)			(52.2	)
Goodwill and intangible assets impairment			583				—				583				100.0
Total operating expense			480,088				533,874				(53,786	)			(10.1	)
Operating Loss			(94,993	)			(65,046	)			(29,947	)			(46.0	)
Other (Expense) Income
Equity in losses of unconsolidated entities			(1,635	)			(10,602	)			8,967				84.6
Interest income			472				757				(285	)			(37.6	)
Other income (loss)			394				(3,801	)			4,195				110.4
Total other income (expense)			(769	)			(13,646	)			12,877				94.4
Loss from continuing operations before income tax (provision) benefit			(95,762	)			(78,692	)			(17,070	)			(21.7	)
Income tax (provision) benefit			(587	)			23,124				(23,711	)			(102.5	)
Loss from continuing operations			(96,349	)			(55,568	)			(40,781	)			(73.4	)
Discontinued Operations
Gain (loss) from discontinued operations, net of taxes			(379	)			(18,871	)			18,492				98.0
(Loss) gain on disposal of discontinued operations, net of taxes			(626	)			181				(807	)			(445.9	)
Total loss from discontinued operations			(1,005	)			(18,690	)			17,685				94.6
Net loss			(97,354	)			(74,258	)			(23,096	)			(31.1	)
Net (loss) income from noncontrolling interests			(1,686	)			(6,298	)			4,612				73.2
Net loss attributable to Grubb & Ellis Company		$	(95,668	)		$	(67,960	)		$	(27,708	)			(40.8	)%

Revenue

Transaction and Management Services Revenue

          Management Services revenue increased $13.8 million or 7.4% to $199.6 million for the nine months ended September 30, 2009 which reflects an increase in square feet under management of 15.3 million or 7.4% to 221.2 million total square feet under management as of September 30, 2009. Management Services revenue, which is primarily property management fees and reimbursable salaries, also includes property management fee revenue of approximately $5.2 million and $5.6 million for the nine months ended September 30, 2009 and 2008, respectively, from the management of a significant portion of GERI’s captive property portfolio by Grubb & Ellis Managements Services.

          Transaction Services revenue decreased $54.4 million or 31.4% to $118.8 million for the nine months ended September 30, 2009. Transaction Services revenue primarily includes brokerage commission, valuation and consulting revenue. The Company’s Transaction Services business was negatively impacted by the current economic environment, which has reduced commercial real estate transaction velocity, particularly investment sales.

Investment Management Revenue

          Investment Management revenue decreased $40.6 million or 48.0% to $43.9 million for the nine months ended September 30, 2009. Investment Management revenue reflects revenue generated through the fee structure of the various investment products which included acquisition, loan and disposition fees of approximately $7.5 million and captive management fees of $24.9 million. These fees include acquisition, disposition, financing, and property and asset management. Key drivers of this business are the dollar value of equity raised, the amount of transactions that are generated in the investment product platforms and the amount of assets under management.

          In total, $533.0 million in equity was raised for the Company’s investment programs for the nine months ended September 30, 2009, compared with $760.5 million in the same period in 2008. The decrease was driven by a decrease in TIC equity raised and private client wealth management, partially offset by an increase in equity raised by the Company’s public non-traded REITs. During the nine months ended September 30, 2009, the Company’s public non-traded REIT programs raised $518.0 million, an increase of 30.8% from the $396.1 million equity raised in the same period in 2008. The Company’s TIC 1031 exchange programs raised $13.0 million in equity during the nine months ended September 30, 2009, compared with $152.9 million in the same period in 2008. The decrease in TIC equity raised for the nine months ended September 30, 2009 reflects the continued decline in current market conditions.

          Acquisition and loan fees decreased approximately $23.1 million, or 75.5%, to approximately $7.5 million for the nine months ended September 30, 2009, compared to approximately $30.5 million for the same period in 2008. The decrease in acquisition fees was primarily attributed to a decrease of $12.2 million in fees earned from the Company’s non-traded REIT programs, a decrease in fees from the Private Client Management platform, formerly known as Wealth Management, of $4.4 million, and a decrease of $6.5 million in fees from the TIC programs. During the nine months ended September 30, 2009, the Company acquired 6 properties on behalf of its sponsored programs for an approximate aggregate total of $240.3 million, compared to 46 properties for an approximate aggregate total of $1.0 billion during the same period in 2008.

          Disposition fees decreased approximately $4.6 million, or 100%, to zero for the nine months ended September 30, 2009, compared to approximately $4.6 million for the same period in 2008. Offsetting the disposition fees during the nine months ended September 30, 2008 was approximately $1.2 million of amortization of identified intangible contract rights associated with the acquisition of Realty as they represent the right to future disposition fees of a portfolio of real properties under contract. No amortization of identified intangible contract rights was recorded for the nine months ended September 30, 2009 because no disposition fees were recorded.

          Captive management decreased approximately $3.5 million or 12.4% to $24.9 million for the nine months ended September 30, 2009 which primarily reflects an increase in the deferral of fees.

Rental Revenue

          Rental revenue includes pass-through revenue for the master lease accommodations related to the Company’s TIC programs. Rental revenue also includes revenue from two properties held for investment.

Operating Expense Overview

          The Company’s operating expense of $480.1 million for the nine months ended September 30, 2009, representing a decrease of $53.8 million compared to the same period in 2008. The Company recognized real estate impairments of $16.6 million during the nine months ended September 30, 2009, a decrease of $18.2 million compared to real estate impairments of $34.8 million in the same period of 2008. In addition, compensation costs decreased $23.4 million due to lower commissions paid and synergies created as a result of the Merger and merger related costs decreased $10.2 million. Depreciation and amortization expense decreased $5.3 million when compared to the prior period primarily due to depreciation charges related to two properties held for investment in 2008 and 2009. Partially offsetting the overall decrease was an increase in interest expense of $2.6 million for the nine months ended September 30, 2009.

Compensation Costs

          Compensation costs decreased approximately $23.4 million, or 6.4%, to $342.1 million for the nine months ended September 30, 2009, compared to approximately $365.5 million for the same period in 2008 due to a decrease in commissions paid of approximately $32.6 million related to the Transactions Services portfolio as a result of decrease in activity and a decrease of approximately $5.1 million primarily related to the Investment Management business as a result of a reduction in headcount and decreases in salaries partially offset by an increase of $14.3 million as a result of an increase in reimbursable salaries, wages and benefits due to the growth in the Management Services portfolio.

General and Administrative

          General and administrative expense decreased approximately $0.6 million, or 0.7%, to $83.8 million for the nine months ended September 30, 2009, compared to approximately $84.4 million for the same period in 2008. The decrease reflects an increase of approximately $5.1 million in bad debt expense which is offset by decreases in items related to management’s cost saving efforts.

          General and administrative expense was 21.8% of total revenue for the nine months ended September 30, 2009, compared with 18.0% for the same period in 2008.

Depreciation and Amortization

          Depreciation and amortization expense decreased approximately $5.3 million, or 38.9%, to $8.4 million for the nine months ended September 30, 2009, compared to approximately $13.7 million for the same period in 2008. The decrease is primarily due to two properties the Company held for investment as of September 30, 2009. One of these properties was held for sale through June 30, 2009 and the other was held for sale through September 30, 2009. In accordance with the provisions of Property, Plant, and Equipment Topic, management determined that the carrying value of each property, before each property was classified as held for investment (adjusted for any depreciation and amortization expense and impairment losses that would have been recognized had the asset been continuously classified as held for investment) was greater than the carrying value net of selling costs, of the property at the date of the subsequent decision not to sell. Therefore, the Company made no additional adjustments to the carrying value of the asset as of September 30, 2009 and no depreciation expense was recorded during the period each property was held for sale. Included in depreciation and amortization expense was $2.4 million for amortization of other identified intangible assets.

Rental Expense

          Rental expense includes pass-through expenses for master lease accommodations related to the Company’s TIC programs. Rental expense also includes expense from two properties held for investment.

Interest Expense

          Interest expense increased approximately $2.6 million, or 25.8%, to $12.5 million for the nine months ended September 30, 2009, compared to $9.9 million for the same period in 2008. The increase in interest expense includes $1.5 million related to the reimbursement of mezzanine interest costs on certain TIC programs. In addition, interest costs related to the Credit Facility reflect an increase of $0.5 million due to additional borrowings, an increase in the interest rate to LIBOR plus 800 basis points from LIBOR plus 300 basis points as a result of the third amendment to the Credit Facility and an increase of $0.4 million related to the write off of loan fees related to the Credit Facility.

Real Estate Related Impairments

          The Company recognized impairment charges of approximately $16.6 million during the nine months ended September 30, 2009, which includes $9.8 million related to certain unconsolidated real estate investments and $6.8 million related to property held for investment as of September 30, 2009. Impairment charges of $10.2 million were recognized against the carrying value of the investments and charges of $6.4 million were recorded as an other contingent liability related to commitments associated with certain of the Company’s TIC programs during the nine months ended September 30, 2009. In addition, the Company recognized approximately $1.8 million related to two properties sold during the nine months ended September 30, 2009, for which the net income (loss) of the properties are classified as discontinued operations. See Discontinued Operations discussion below. The Company recognized an impairment charge of approximately $34.8 million during the nine months ended September 30, 2008. The impairment charge was recognized against the carrying value of the investments as of September 30, 2008.

Discontinued Operations

          In accordance with the requirements of the Property, Plant, and Equipment Topic, for the nine months ended September 30, 2009 and 2008, discontinued operations included the results of operations of four properties and one limited liability company (“LLC”) entity classified as held for sale during the period. The net loss of $1.0 million during the nine months ended September 30, 2009 includes approximately $0.6 million in loss on sale, net of taxes, related to the sale of the Danbury Property on June 3, 2009 and $1.8 million of real estate related impairments.

Income Tax

          The Company recognized a tax expense of approximately $0.6 million for the nine months ended September 30, 2009, compared to a tax benefit of $23.1 million for the same period in 2008. The net $23.7 million increase in tax expense was primarily a result of the $36.4 million valuation allowance recorded against continuing operations to offset tax benefits from the impairment of real estate held for sale recorded in discontinued operations during the nine months ended September 30, 2009 as compared to the same period in 2008. For the nine months ended September 30, 2009 and September 30, 2008, the reported effective income tax rates were (0.613%) and 29.39%, respectively. The change in the effective tax rate is primarily due to the impact of the $36.4 million valuation allowance. (See Note 19 to the consolidated financial statements included in this prospectus for additional information.)

Net Loss Attributable to Grubb & Ellis Company

          As a result of the above items, the Company recognized a net loss of $95.7 million, or $1.51 per diluted share, for the nine months ended September 30, 2009, compared to a net loss of $68.0 million, or $1.07 per diluted share, for the same period in 2008.

Commitments, Contingencies and Other Contractual Obligations

          Contractual Obligations — The Company leases office space throughout the United States through non-cancelable operating leases, which expire at various dates through 2016.

          There have been no significant changes in the Company’s contractual obligations since December 31, 2008.

          TIC Program Exchange Provision — Prior to the Merger, NNN entered into agreements in which NNN agreed to provide certain investors with a right to exchange their investment in certain TIC Programs for an investment in a different TIC program. NNN also entered into an agreement with another investor that provided the investor with certain repurchase rights under certain circumstances with respect to their investment. The agreements containing such rights of exchange and repurchase rights pertain to initial investments in TIC programs totaling $31.6 million. In July 2009 the Company received notice from an investor of their intent to exercise such rights of exchange and repurchase with respect to an initial investment totaling $4.5 million. The Company is currently evaluating such notice to determine the nature and extent of the right of such exchange and repurchase, if any.

          The Company deferred revenues relating to these agreements of $0.3 million and $0.5 million for the nine months ended September 30, 2009 and 2008, respectively. Additional losses of $14.3 million and $4.5 million related to these agreements were recorded during the quarter ended December 31, 2008 and during the nine months ended September 30, 2009, respectively, to reflect the impairment in value of properties underlying the agreements with investors. As of September 30, 2009, the Company had recorded liabilities totaling $22.6 million related to such agreements, consisting of $3.8 million of cumulative deferred revenues and $18.8 million of additional losses related to these agreements.

          Guarantees — From time to time the Company provides guarantees of loans for properties under management. As of September 30, 2009, there were 147 properties under management with loan guarantees of approximately $3.5 billion in total principal outstanding with terms ranging from one to 10 years, secured by properties with a total aggregate purchase price of approximately $4.8 billion. As of December 31, 2008, there were 151 properties under management with loan guarantees of approximately $3.5 billion in total principal outstanding with terms ranging from one to 10 years, secured by properties with a total aggregate purchase price of approximately $4.8 billion. In addition, each consolidated VIE is joint and severally liable, along with the other investors in each relative TIC, on the non-recourse mortgage debt related to the VIE’s interests in the relative TIC investment. This non-recourse mortgage debt totaled $277.2 million and $277.8 million as of September 30, 2009 and December 31, 2008, respectively.

          The Company’s guarantees consisted of the following as of September 30, 2009 and December 31, 2008:

		September 30,				December 31,
(In thousands)		2009				2008
Non-recourse/carve-out guarantees of debt of properties under management(1)		$	3,438,375			$	3,414,433
Non-recourse/carve-out guarantees of the Company’s debt(1)		$	107,000			$	107,000
Recourse guarantees of debt of properties under management		$	39,717			$	42,426
Recourse guarantees of the Company’s debt		$	10,000			$	10,000

	•		a voluntary bankruptcy or similar insolvency proceeding of any borrower;
	•		a “transfer” of the property or any interest therein in violation of the loan documents;
	•		a violation by any borrower of the special purpose entity requirements set forth in the loan documents;
	•		any fraud or material misrepresentation by any borrower or any guarantor in connection with the loan;