As filed with the Securities and Exchange Commission on March 24, 2010

Registration No. 333-163550

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2 to Form S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

GRUBB & ELLIS COMPANY

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

1551 North Tustin Avenue, Suite 300
Santa Ana, California 92705
(714) 667-8252
(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)

Thomas D’Arcy
Chief Executive Officer and President
Grubb & Ellis Company
1551 North Tustin Avenue, Suite 300
Santa Ana, California 92705
(714) 667-8252
(Name, address, including zip code, and telephone number, including area code, of agent for service)

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 12b-2 of the Exchange Act. (Check one):

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

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 shareowners identified in this prospectus. The selling shareowners 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 shareowners. We have agreed to bear all expenses of registration of our common stock offered by this prospectus. The selling shareowners, 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 March 19, 2010, the last reported sales price for our common stock was $2.04.

     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 March 24, 2010.

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 (“the Company” or “Grubb & Ellis”), a Delaware corporation founded over 50 years ago, is one of the country’s largest and most respected commercial real estate services and investment management firms. 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.

          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 tenant-in-common (“TIC”) investments and other investment programs. Upon the closing of the Merger, a change of control occurred. The former shareowners of NNN acquired approximately 60% of the Company’s issued and outstanding common stock.

          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.

          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.

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 and retail outlets 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 expanding the scope of products and services offered, while ensuring that it can support client relationships with best-in-class service. During 2009, 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.

          In 2009 Grubb & Ellis secured significant new management services contracts from Kraft, Wachovia Corporation and Zurich Alternative Asset Management. The Company also secured significant contract renewals with Citigroup, General Motors, Microsoft and Wells Fargo. As of December 31, 2009, Grubb & Ellis managed approximately 240.7 million square feet, of which 24.3 million square feet related to its sponsored investment programs.

Transaction Services

          Grubb & Ellis has a track record of over 50 years 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. There are 126 owned and affiliate offices worldwide (53 owned and approximately 73 affiliates) and more than 6,000 professionals, including a brokerage sales force of more than 1,800 brokers. By focusing on the overall business objectives of its clients, Grubb & Ellis utilizes its research capabilities, extensive properties database and 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.

          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, key personnel share information regarding local, regional and national industry trends and participate in national marketing activities, including trade shows and seminars. This ongoing communication 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 training programs offering sales and motivational training and cross-functional networking and business development opportunities.

          In many local markets where the Company does not have owned offices, it has affiliation agreements with independent real estate services 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, 2009, Grubb & Ellis had in excess of 1,800 brokers at its owned and affiliate offices, of which 824 brokers were at its owned offices, up from 805 at December 31, 2008.

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 public non-traded REITs, TIC investments, mutual funds and other real estate investment funds. The Company brands its investment programs as Grubb & Ellis in order to capitalize on the strength of the Grubb & Ellis brand name and to leverage the Company’s various platforms. During the year ended December 31, 2009, more than $554.7 million in investor equity was raised for these sponsored investment programs. As of December 31, 2009, the Company has more than $5.7 billion of assets under management related to the various programs that it sponsors. The Company has completed transaction acquisition and disposition volume totaling approximately $12.3 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”). GBE Securities is registered with the Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority (“FINRA”) and all 50 states. GBE Securities has agreements with an extensive network of broker dealers with selling relationships providing 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.

          The Company and Grubb & Ellis Equity Advisors, LLC, (“GEEA”) a subsidiary of the Company, sponsor and advise public non-traded REITs that are registered with the SEC but are not listed on a national securities exchange like a traded REIT. According to the published Stanger Report, Winter 2010, by Robert A. Stanger and Co., an independent investment banking firm, approximately $6.7 billion was raised in the non-traded REIT sector in 2009. As of December 31, 2009, the Company sponsors two demographically focused programs that are actively raising capital, Grubb & Ellis Healthcare REIT II, Inc. and Grubb & Ellis Apartment REIT, Inc. In addition, the Company raised equity for and provided advisory services to Grubb & Ellis Healthcare REIT, Inc. (now Healthcare Trust of America, Inc.) until August 28, 2009 and September 20, 2009, respectively. Public non-traded REITs sponsored or advised by the Company and its affiliates raised $536.9 million in combined capital in 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 general partner and investment advisor to one limited partnership and as investment advisor to three mutual funds as of December 31, 2009. One of the limited partnerships, Grubb & Ellis AGA Real Estate Investment Fund LP, is required to be consolidated in accordance with the Consolidation Topic. As of December 31, 2009, Alesco had $8.0 million of investment funds under management.

          In mid-2009, the Company formed Energy & Infrastructure Advisors, LLC, a joint venture between Grubb & Ellis and the Meridian Companies that intends to sponsor retail and institutional products focused on investment opportunities in the energy and infrastructure sector.

          Grubb & Ellis Realty Investors, LLC (“GERI”) (formerly Triple Net Properties, LLC), a subsidiary of the Company, had 146 sponsored TIC programs under management and has taken more than 60 programs full cycle (from acquisition through disposition) as of December 31, 2009.

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

Recent Events

Private Placement of 12% Preferred Stock

          In the fourth quarter of 2009, the Company consummated the issuance and sale of an aggregate of 965,700 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 $90.1 million after deducting the initial purchaser’s discounts and certain offering expenses and after giving effect to the conversion of $5.0 million of subordinated debt previously provided in October, 2009 by an affiliate of the Company’s largest shareowner. 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 corporate 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 Shareowners

          At the Company’s annual meeting of shareowners held on December 17, 2009 the Company’s common and preferred shareowners

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 shareowners, the Company amended its certificate of incorporation to effect the amendments approved by its shareowners at the annual meeting. At the Company’s 2009 annual shareowners’ meeting, the Company’s common and preferred shareowners 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

          The following tables set forth the selected historical consolidated financial data for Grubb & Ellis Company and its subsidiaries, as of and for the years ended, December 31, 2009, 2008, 2007, 2006, and 2005. The selected historical consolidated balance sheet data set forth below as of December 31, 2009 and 2008 and the selected consolidated operating and cash flow data for the three years in the period ending December 31, 2009 has been derived from the audited financial statements beginning on page F-2 of this prospectus. The selected consolidated operating and cash flow data set forth below as of and for the year ended December 31, 2006, and the selected consolidated balance sheet data as of December 31, 2007, has been derived from audited consolidated financial statements not included in this prospectus as adjusted for reclassifications required by the Property, Plant and Equipment Topic for discontinued operations. The selected historical financial data set forth below as of and for the year ended December 31, 2005 has been derived from unaudited consolidated financial statements not included in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period. 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.”

		Year Ended December 31,
(In thousands, except per share data)		2009				2008				2007(1)				2006(2)				2005(3)
Consolidated Statement of Operations Data:
Total services revenue		$	505,360			$	595,495			$	201,538			$	99,599			$	80,817
Total revenue			535,645				628,779				229,657				108,543				84,423
Total compensation costs			469,538				503,004				104,109				49,449				29,873
Total operating expense			641,551				929,407				195,723				97,633				71,035
Operating (loss) income			(105,906	)			(300,628	)			33,934				10,910				13,388
(Loss) income from continuing operations			(82,985	)			(318,668	)			23,741				21,012				13,679
Net (loss) income			(80,499	)			(342,589	)			23,033				20,049				10,288
Net (loss) income attributable to Grubb & Ellis Company			(78,838	)			(330,870	)			21,072				19,971				10,047
Basic (loss) earnings per share attributable to Grubb & Ellis Company		$	(1.27	)		$	(5.21	)		$	0.53			$	1.01			$	0.58
(Loss) income from continuing operations per share attributable to Grubb & Ellis Company		$	(1.31	)		$	(4.83	)		$	0.55			$	1.06			$	0.80
Diluted (loss) earnings per share attributable to Grubb & Ellis Company		$	(1.27	)		$	(5.21	)		$	0.53			$	1.01			$	0.58
Basic weighted average shares outstanding			63,645				63,515				38,652				19,681				17,200
Diluted weighted average shares outstanding			63,645				63,515				38,653				19,694				17,200
Dividends declared per common share		$	—			$	0.205			$	0.36			$	0.10			$	—
Dividends declared per preferred share		$	1.8333			$	—			$	—			$	—			$	—
Consolidated Statement of Cash Flow Data:
Net cash (used in) provided by operating activities		$	(61,965	)		$	(33,629	)		$	33,543			$	17,356			$	23,536
Net cash provided by (used in) investing activities			97,214				(76,330	)			(486,909	)			(56,203	)			(35,183	)
Net cash (used in) provided by financing activities			(29,133	)			93,616				400,468				140,525				10,251

		December 31,
		2009				2008				2007				2006				2005
Consolidated Balance Sheet Data (at end of period):
Total assets		$	357,324			$	520,277			$	988,542			$	347,709			$	126,057
Long Term Liabilities:
Line of credit			—				—				8,000				—				8,500
Notes payable and capital lease obligations			107,755				107,203				107,343				843				887

		December 31,
		2009				2008				2007				2006				2005
Senior notes			16,277				16,277				16,277				10,263				2,300
Redeemable preferred liability			—				—				—				—				6,077
Preferred stock (12% cumulative participating perpetual convertible)			90,080				—				—				—				—
Total Grubb & Ellis shareowners’ equity			1,327				70,171				404,056				217,125				20,081

Non-GAAP Financial Measures

          EBITDA and Adjusted EBITDA are non-GAAP measures of performance. EBITDA provides an indicator of economic performance that is unaffected by debt structure, changes in interest rates, changes in effective tax rates or the accounting effects of capital expenditures and acquisitions because EBITDA excludes net interest expense, interest income, income taxes, depreciation, amortization, discontinued operations and impairments related to goodwill and intangible assets.

          The Company uses Adjusted EBITDA as an internal management measure for evaluating performance and as a significant component when measuring performance under employee incentive programs. Management considers Adjusted EBITDA an important supplemental measure of the Company’s performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results. Management also believes that Adjusted EBITDA is a useful tool for measuring the Company’s ability to meet its future capital expenditures and working capital requirements.

          EBITDA and Adjusted EBITDA are not a substitute for GAAP net income or cash flow and do not provide a measure of the Company’s ability to fund future cash requirements. Other companies may calculate EBITDA and Adjusted EBITDA differently than the Company has and, therefore, EBITDA and Adjusted EBITDA have material limitations as a comparative performance measure. The following table reconciles EBITDA and Adjusted EBITDA with the net loss attributable to Grubb & Ellis Company for the years ended December 31, 2009 and 2008. As a result of the Merger on December 7, 2007, the year ended December 31, 2007 is not comparable to the year ended December 31, 2008. Therefore, a reconciliation of EBITDA and Adjusted EBITDA for the year ended December 31, 2008 compared to the year ended December 31, 2007 has not been provided as it would not be meaningful.

		Year Ended
		December 31,								Change
(In thousands)		2009				2008				$				%
Net loss attributable to Grubb & Ellis Company		$	(78,838	)		$	(330,870	)		$	252,032				76.2	%
Discontinued operations			(2,486	)			23,921				(26,407	)			(110.4	)
Interest expense			15,446				14,207				1,239				8.7
Interest income			(555	)			(902	)			347				38.5
Depreciation and amortization			12,324				16,028				(3,704	)			(23.1	)
Goodwill and intangible assets impairment			738				181,285				(180,547	)			(99.6	)
Taxes			(1,175	)			(827	)			(348	)			(42.1	)
EBITDA(1)			(54,546	)			(97,158	)			42,612				43.9
Gain related to the repayment of the credit facility, net			(21,935	)			—				(21,935	)			—
Charges related to sponsored programs			23,348				27,771				(4,423	)			(15.9	)
Real estate related impairment			17,372				59,114				(41,742	)			(70.6	)
Write off of investment in Grubb & Ellis Realty Advisors, net			—				5,828				(5,828	)			(100.0	)
Share-based based compensation			10,876				11,907				(1,031	)			(8.7	)
Amortization of signing bonuses			7,535				7,603				(68	)			(0.9	)
Loss on marketable securities			—				1,783				(1,783	)			(100.0	)
Merger related costs			—				14,732				(14,732	)			(100.0	)
Amortization of contract rights			—				1,179				(1,179	)			(100.0	)
Real estate operations			(7,959	)			(9,993	)			2,034				20.4
Other			1,319				163				1,156				709.2
Adjusted EBITDA(1)		$	(23,990	)		$	22,929			$	(46,919	)			(204.6	)%

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 March 19, 2010, 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 shareowners, including sales of common stock by shareowners 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 (“NYSE”). 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 shareowners. 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 shareowner 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. 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 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 shareowners. 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, 2009, we had an accumulated deficit of $412.1 million and we had a net loss of $78.8

million in the year ended December 31, 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 our 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 us 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. Pursuant to the requirements of the Property, Plant, and Equipment Topic, we assess the value of our assets and real estate investments. This valuation review resulted in us recognizing an impairment charge of approximately $24.0 million against the carrying value of the properties and real estate investments during the year ended December 31, 2009.

          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 our business and results of operations.

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

          Our segments 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 and 2009, 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 our historical funding sources for our investment management programs, and to the extent credit remains available for these programs, it is currently more expensive. We may not be able to continue to access sources of funding for our investment management programs or, if available to us, we may not be able to do so on favorable terms. Any decision by lenders to make additional funds available to us in the future for our 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 our ability to develop future business plans and we believe 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 in 2009 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.

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.

          There can be no assurances that our anticipated cash flow from operations will be sufficient to meet all of our cash requirements. We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges. We have historically relied upon access to the credit markets from time to time as a source of liquidity for the portion of our working capital requirements not provided by cash from operations. We used a significant portion of the net proceeds from the sale of the 12% Preferred Stock to pay off and terminate our Credit Facility and have not secured a new credit facility or line or credit with which to borrow funds. 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 capital. 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.

We have received a notice from the NYSE that we did not meet our 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 shareowners’ 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 shareowners’ 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 18-month period from August 11, 2009 through February 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 TIC business in general, from which we have historically generated significant revenues, materially contracted in 2009.

          We have historically generated significant revenues from fees earned through the transaction structuring and property management of our TIC programs. In 2009, however, with the nationwide decline in real estate values and the global credit crisis, the TIC industry contracted significantly. According to data from OMNI Research & Consulting, approximately $3.7 billion of TIC equity was raised in 2006. In 2009, the amount of TIC equity raised declined by approximately 94% to $228.7 million. As we have historically generated a significant amount of revenue from our TIC operations, the rapid and steep decline in this industry may have a material, adverse effect on our business and results of operations if it is unable to generate revenues in our other business segments, of which there can be no assurances, to make up for the loss of TIC-related revenues. We do not anticipate the TIC market to recover in the near term.

The decline in value of many of the properties purchased by TIC and real estate fund investors in our sponsored programs as a result of the downturn in the real estate market, and the potential loss of investor equity in these programs, may negatively affect our reputation and ability to sell future sponsored programs.

          The declining real estate market has resulted in declining values for many of the properties purchased by investors in our sponsored TIC and real estate fund programs. In addition, the lack of available credit has negatively impacted the ability to refinance these

properties at loan maturity. As a consequence, the TIC and fund program investors may be forced to dispose of their properties at selling prices lower than the original purchase price. In addition, some properties may be valued at less than the outstanding loan amount and may be subject to default and foreclosure by the lender. Sales of these real estate assets at less than original purchase price, loan defaults or foreclosures will result in the loss of investor equity. Losses by investors may negatively affect the reputation of our investment management business and our ability to sell current or future sponsored programs and earn fees. Any decrease in our fees could have a material adverse effect on our business, results of operations and financial condition.

We are in a highly competitive business with numerous competitors, some of which may have greater financial and operational resources than we do.

          We compete 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. We face 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, we also face 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 we do. We are also subject to competition from other large national firms and from multi-national firms that have similar service competencies to us. Although many of our competitors are local or regional firms that are substantially smaller than us, some of our competitors are substantially larger than us on a local, regional, national or international basis. In general, there can be no assurance that we will be able to continue to compete effectively with respect to any of our business lines or on an overall basis, or to maintain current fee levels or margins, or maintain or increase our market share.

As a service-oriented company, we depend upon the retention of senior management and key personnel, and the loss of our current personnel or our failure to hire and retain additional personnel could harm our business.

          Our success is dependent upon our ability to retain our executive officers and other key employees and to attract and retain highly skilled personnel. We believe that our future success in developing our business and maintaining a competitive position will depend in large part on our 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 we 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 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. Our failure to recruit and retain necessary executive, managerial, sales, marketing and customer service personnel could harm our business and our ability to obtain new customers.

We may expand our business to include international operations so that we may be more competitive, but in doing so it could subject us to social, political and economic risks of doing business in foreign countries.

          Although we do not currently conduct significant business outside the United States, we are considering an expansion of our international operations so that we may be more competitive. Currently, our lack of international capabilities sometimes places us at a competitive disadvantage when prospective clients are seeing one real estate services provider that can service their needs both in the United States and overseas. There can be no assurances that we will be able to successfully expand our business in international markets. Current global economic conditions may restrict, limit or delay our ability to expand our business into international markets or make such expansion less economically feasible. If we expand into international markets, circumstances and developments related to international operations that could negatively affect our 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, we may establish joint ventures with foreign entities for the provision of brokerage services abroad, which may involve the purchase or sale of our equity securities or the equity securities of the joint venture participant(s). In these joint ventures, we 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 our instructions or requests and against our policies and objectives. In addition, the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with ours. If a joint venture participant acts contrary to our interest, then it could have a material adverse effect on our business and results of operations.

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

          We will need to successfully manage any future growth effectively. The integration and additional growth may place a significant strain upon management, administrative, operational and financial infrastructure. Our ability to grow also depends upon our ability to successfully hire, train, supervise and manage additional executive officers and new employees, obtain financing for our capital needs, expand our systems effectively, allocate our human resources optimally, maintain clear lines of communication between our transactional and management functions and our finance and accounting functions, and manage the pressures on our 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 we will be able to accurately anticipate and respond to the changing demands we will face as we integrate and continue to expand our operations, and we 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 our business, financial condition and results of operations.

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

Our quarterly operating results are likely to fluctuate due to the seasonal nature of our business and may fail to meet expectations, which may cause the price of our securities to decline.

          Historically, the majority of our revenue has been derived from the transaction services that it provides. Such services are typically subject to seasonal fluctuations. We typically experience the 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, our 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 our operating results in a quarter. In addition, our quarterly operating results have fluctuated in the past and will likely continue to fluctuate in the future. If our quarterly operating results fail to meet expectations, the price of our securities could fluctuate or decline significantly.

If the properties that we manage fail to perform, then our business and results of operations could be harmed.

          Our success partially depends upon the performance of the properties we manage. We could be adversely affected by the nonperformance of, or the deteriorating financial condition of, certain of our clients. The revenue we generate from our 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 our control:

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our ability to attract and retain creditworthy tenants;

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the magnitude of defaults by tenants under their respective leases;

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our ability to control operating expenses;

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governmental regulations, local rent control or stabilization ordinances which are in, or may be put into, effect;

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various uninsurable risks;

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financial condition of certain clients;

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financial conditions prevailing generally and in the areas in which these properties are located;

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the nature and extent of competitive properties; and

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the general real estate market.

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

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

          Due to the broad geographic scope of our operations and the real estate services performed, we are 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 us to maintain brokerage licenses in each state in which it operates. If we fail to maintain our licenses or conduct brokerage activities without a license or violate any of the regulations applicable to our licenses, then we 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 our 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 our business and results of operations.

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

          As a licensed real estate broker, we and our licensed employees and independent contractors that work for us are subject to statutory due diligence, disclosure and standard-of-care obligations. Failure to fulfill these obligations could subject us or our employees to litigation from parties who purchased, sold or leased properties that we or they brokered or managed. We 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 we did not fulfill our statutory obligations as a broker.

          In addition, in our property and facilities management businesses, we hire and supervise third-party contractors to provide construction and engineering services for our managed properties. While our role is limited to that of a supervisor, we 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 our business, financial condition and results of operations.

Environmental regulations may adversely impact our business and/or cause us 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 our real estate brokerage business. In addition, a failure by us 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 our role as a property manager, we could incur liability under environmental laws for the investigation or remediation of hazardous or toxic substances or wastes at properties we 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 our 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. We 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 we manage. 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 our cost of legal compliance and potentially subject us to violations or claims. Although such costs have not had a material impact on our financial results or competitive position during fiscal year 2007, 2008 or 2009, the enactment of additional regulations, or more stringent enforcement of existing regulations, could cause us to incur significant costs in the future, and/or adversely impact our brokerage and management services businesses.

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

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

          The current market value of many of the properties owned through our investment programs have decreased as a result of the overall decline in the economy and commercial real estate markets. In addition, there have been reductions in distributions in numerous investment programs in 2008 and 2009, in many instances to a zero percent distribution rate. Significant declines in value and reductions in distributions in the investment programs sponsored by us could adversely affect our reputation and our ability to attract investors for future investment programs. In addition, significant declines in value and reductions in distributions could cause us to lose asset and property management contracts for our investment management programs, cause us to lose third-party broker-dealer selling agreements for existing investment programs, including our REITs, and limit our 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 increases the risk of claims or legal actions by program investors. Any such legal liability could result in further damage to our reputation, loss of third-party broker-dealer selling agreements and incurrence of legal expenses which could have a material adverse effect on our business, results of operations and financial condition.

We currently provide our Investment Management services primarily to our investment programs. Our revenue depends on the number of our programs, on the price of the properties acquired or disposed, and on the revenue generated by the properties under our management.

          We derive fees for Investment Management services based on a percentage of the price of the properties acquired or disposed of by our programs and for management services based on a percentage of the rental amounts of the properties in our programs. We are responsible for the management of all of the properties owned by our programs, but as of December 31, 2009 we had subcontracted the property management of approximately 11.0% of our programs’ office, medical office and healthcare related facilities and retail properties (based on square footage) and 16.3% of our 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 us. Investment decisions of these Boards affect the fees we earn. As a result, if any of our programs are unsuccessful, our Investment Management services fees will be reduced, if any are paid at all. In addition, failure of our programs to provide competitive investment returns could significantly impair our ability to market future programs. Our inability to spread risk among a large number of programs could cause us to be over-reliant on a limited number of programs for our revenues. There can be no assurance that we will maintain current levels of transaction and management services for our programs’ properties.

We may be required to repay loans we guaranteed that were used to finance properties acquired by our programs.

          From time to time we or our investment management subsidiaries provided guarantees of loans for properties under management. As of December 31, 2009, there were 146 properties under management with loan guarantees of approximately $3.6 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, 2009. Our guarantees consisted of non-recourse/carve-out guarantees of debt of properties under management, non-recourse/carve-out guarantees of our debt, recourse guarantees of debt of properties under management and recourse guarantees of our debt.

          A “non-recourse/carve-out” guarantee imposes personal liability on the guarantor in the event the borrower engages in certain acts prohibited by the loan documents. Each non-recourse carve-out guarantee is an individual document entered into with the mortgage lender in connection with the purchase or refinance of an individual property. While there is not a standard document evidencing these guarantees, liability under the non-recourse carve-out guarantees generally may be triggered by, among other things, any or all of the following:

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a voluntary bankruptcy or similar insolvency proceeding of any borrower;

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a “transfer” of the property or any interest therein in violation of the loan documents;

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a violation by any borrower of the special purpose entity requirements set forth in the loan documents;

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any fraud or material misrepresentation by any borrower or any guarantor in connection with the loan;

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the gross negligence or willful misconduct by any borrower in connection with the property, the loan or any obligation under the loan documents;

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the misapplication, misappropriation or conversion of (i) any rents, security deposits, proceeds or other funds, (ii) any insurance proceeds paid by reason of any loss, damage or destruction to the property, and (iii) any awards or other amounts received in connection with the condemnation of all or a portion of the property;

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any waste of the property caused by acts or omissions of borrower of the removal or disposal of any portion of the property after an event of default under the loan documents; and

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the breach of any obligations set forth in an environmental or hazardous substances indemnification agreement from borrower.

          Certain violations (typically the first three listed above) render the entire debt balance recourse to the guarantor regardless of the actual damage incurred by lender, while the liability for other violations is limited to the damages incurred by the lender. Notice and cure provisions vary between guarantees. Generally the guarantor irrevocably and unconditionally guarantees to the lender the payment and performance of the guaranteed obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration or maturity or otherwise, and the guarantor covenants and agrees that it is liable for the guaranteed obligations as a primary obligor. As of December 31, 2009, to the best of our knowledge, there is no amount of debt owed by us as a result of the borrowers engaging in prohibited acts.

          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 our TIC investments totaling $277.0 million and $154.8 million as of December 31, 2009, respectively.

          As property values and performance decline, the risk of exposure under these guarantees increases. We initially evaluate these guarantees to determine if the guarantee meets the criteria required to record a liability in accordance with the Guarantees Topic. As of December 31, 2009 and 2008, we had recourse guarantees of $33.9 million and $42.4 million, respectively, relating to debt of properties under management. As of December 31, 2009, approximately $9.8 million of these recourse guarantees relate to debt that has matured or is not currently in compliance with certain loan covenants. In evaluating the potential liability relating to such guarantees, we consider factors such as the value of the properties secured by the debt, the likelihood that the lender will call the guarantee in light of the current debt service and other factors. As of December 31, 2009 and 2008, we recorded a liability of $3.8 million and $9.1 million, respectively, related to our estimate of probable loss related to recourse guarantees of debt of properties under management which matured in January and April 2009.

          Our evaluation of the potential liability may prove to be inaccurate and liabilities may exceed estimates. In the event that actual losses materially exceed estimates, individual investment management subsidiaries may not be able to pay such obligations as they become due. Failure of any investment management subsidiary to pay our debts as they become due would likely have a materially negative impact on the ongoing business of the Company, and the investment management operations in particular.

We may be unable to grow our investment programs, which would cause us to fail to satisfy our business strategy.

          A significant element of our business strategy is the growth in the size and number of our investment programs. The success of each investment program will depend on raising adequate capital for the investment, identifying appropriate assets for acquisition and effectively and efficiently closing the transactions. There can be no assurance that we will be able to identify and invest in additional properties or will be able to raise adequate capital to grow or launch new programs in the future. If we are unable to grow our existing vehicles or consummate new programs in the future, growth of the revenue we receive from transaction and management services may be negatively affected.

The revenue streams from our management services for sponsored programs are subject to limitation or cancellation.

          The agreements under which we provide advisory and management services to public non-traded REITs we have sponsored may generally be terminated by each REIT’s independent Board of Directors following a notice period, with or without cause. We cannot assure you that these agreements will not be terminated. Grubb & Ellis Healthcare REIT, Inc. (now Healthcare Trust of America, Inc. as of August 31, 2009) did not renew its Advisory Agreement with our subsidiary upon the termination of the Advisory Agreement on September 20, 2009 and, as a result, our asset and property management fees have been reduced.

          The management agreements under which we provide property management services to our sponsored TIC programs may generally be terminated by a single TIC investor with cause upon 30 days notice or without cause annually upon renewal. Appointment of a new property manager requires unanimous agreement of the TIC investors and, generally, the approval of the lender. We have received termination notices on approximately one-third of our managed TIC properties resulting in the termination of one property management agreement during 2009. Although we are disputing these terminations, it is not likely that we will be able to retain all of the management contracts for these properties. Loss of a significant number of contracts and fees could have a material adverse effect on our business, results of operations and financial condition.

The inability to access investors for our programs through broker-dealers or other intermediaries could have a material adverse effect on our business.

          Our ability to source capital for our programs depends significantly on access to the client base of securities broker-dealers and other financial investment intermediaries that may offer competing investment products. We believe that our future success in developing our business and maintaining a competitive position will depend in large part on our ability to continue to maintain these relationships as well as finding additional securities broker-dealers to facilitate offerings by our programs or to find investors for our REITs, TIC programs and other investment programs. We cannot be sure that we will continue to gain access to these channels. In addition, competition for capital is intense and we 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 our business and results of operations.

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

          Our securities programs are sold through third-party broker-dealers who are members of our selling group. While we have established relationships with our selling group, we are required to enter into a new agreement with each member of the selling group for each new program we offers. In addition, our programs may be removed from a selling broker-dealer’s approved program list at any time for any reason. We cannot assure you of the continued participation of existing members of our selling group nor can we make an assurance that our selling group will expand. While we continue to diversify and add new investment channels for our programs, a significant portion of the growth in recent years in the number of TIC programs we sponsor and in our 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 our expanding business through new investment channels, could have a material adverse effect on our business and results of operations.

Misconduct by third-party selling broker-dealers or our sales force, could have a material adverse effect on our business.

          We rely on selling broker-dealers and our sales force to properly offer our securities programs to customers in compliance with our 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 us.

A significant amount of our 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, we could be subject to claims by investors and our

reputation for structuring these transactions would be negatively affected, which would have an adverse effect on our financial condition and results of operations.

          We structure TIC programs and public non-traded REITs to provide favorable tax treatment to investors. For example, our 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 we fail 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, we 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 our programs would negatively affect our reputation, which would in turn affect our ability to earn additional fees from new programs. Claims by investors could lead to losses and any reduction in our fees would have a material adverse effect on our revenues.

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

          We may from time to time invest our 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 us to make initial capital contributions, and some co-investment entities may request additional capital from us and our subsidiaries holding investments in those assets. These contributions could adversely impact our cash flows and financial condition. Moreover, the failure to provide these contributions could have adverse consequences to our interests in these investments. These adverse consequences could include damage to our reputation with our 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 our programs to regional economic downturns that could adversely impact their operations and, as a result, the fees we are able to generate from them, including fees on disposition of the properties as we may be limited in our ability to dispose of properties in a challenging real estate market.

          Our 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. We cannot guarantee, however, that our programs will have, or will be able to maintain, a significant amount of geographic diversity. Although our property programs are located in 29 states, a majority of these properties (by square footage) are located in Texas, Georgia, California, Florida and North Carolina. Geographic concentration of properties exposes our 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 our 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 we generate from them, which would adversely affect our results of operations and financial condition.

If third-party managers providing property management services for our 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 we may become subject to unforeseen liabilities. If this occurs, it could have an adverse effect on our financial condition and operating results.

          We have entered into agreements with third-party management companies to provide property management services for a significant number of our programs’ properties, and we expect to enter into similar third-party management agreements with respect to properties our programs acquire in the future. We do not supervise these third-party managers and their personnel on a day-to-day basis and we cannot assure you that they will manage our programs’ properties in a manner that is consistent with their obligations under our 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 us. If any of the foregoing occurs, the relationships with our programs’ tenants could be damaged, which may cause the tenants not to renew their leases, and we could incur liabilities resulting from loss or injury to the properties or to persons at the properties. If we are unable to lease the properties or we become subject to significant liabilities as a result of third-party management performance issues, our operating results and financial condition could be substantially harmed.

We or our new programs may be required to incur future indebtedness to raise sufficient funds to purchase properties.

          One of our business strategies is to develop new investment 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, we may provide deposits for the acquisition of the property or actually purchase the property and warehouse it temporarily for the program. If we do not have cash on hand available to pay these deposits or fund an acquisition, we or our programs may be required to incur additional indebtedness, which indebtedness may not be available on acceptable terms. If we incur substantial debt, we could lose our interests in any properties that have been provided as collateral for any secured borrowing, or we could lose our assets if the debt is recourse to it. In addition, our cash flow from operations may not be sufficient to repay these obligations upon their maturity, making it necessary for us to raise additional capital or dispose of some of our assets. We cannot assure you that we will be able to borrow additional debt on satisfactory terms, or at all.

Future pressures to lower, waive or credit back our fees could reduce our revenue and profitability.

          We have on occasion waived or credited our fees for real estate acquisitions, financings, dispositions and management fees for our 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 our TIC programs or public non-traded REITs could follow these trends. In order for us to maintain our fee structure in a competitive environment, we must be able to provide clients with investment returns and service that will encourage them to be willing to pay such fees. We cannot assure you that we will be able to maintain our current fee structures. Fee reductions on existing or future new business could have a material adverse impact on our revenue and profitability.

Regulatory uncertainties related to our broker-dealer services could harm our 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 SEC, 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 our 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. We 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 our operations and profitability.

We depend upon our programs’ tenants to pay rent, and their inability to pay rent may substantially reduce certain fees we receive which are based on gross rental amounts.

          Our programs are subject to varying degrees of risk that generally arise from the ownership of real estate. For example, the income we are able to generate from management fees is derived from the gross rental income on the properties in our programs. The rental income depends upon the ability of the tenants of our programs’ properties to generate enough income to make their lease payments. Changes beyond our 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 we receive. These changes include, among others, the following:

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downturns in national or regional economic conditions where our programs’ properties are located, which generally will negatively impact the demand and rental rates;

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changes in local market conditions such as an oversupply of properties, including space available by sublease or new construction, or a reduction in demand for properties in our programs, making it more difficult for our programs to lease space at attractive rental rates or at all;

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competition from other available properties, which could cause our programs to lose current or prospective tenants or cause them to reduce rental rates; and

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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 our ability as property manager to successfully find a substitute tenant, have a material adverse effect on our revenue.

Conflicts of interest inherent in transactions between our programs and us, and among our programs, could create liability for us that could have a material adverse effect on our results of operations and financial condition.

          These conflicts include but are not limited to the following:

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we experience conflicts of interests with certain of our directors, officers and affiliates from time to time with regard to any of our investments, transactions and agreements in which we hold a direct or indirect pecuniary interest;

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since we receive both management fees and acquisition and disposition fees for our programs’ properties, we could be in conflict with our programs over whether their properties should be sold or held by the program and we may make decisions or take actions based on factors other than in the best interest of investors of a particular sponsored investor program;

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a component of the compensation of certain of our executives is based on particular programs, which could cause the executives to favor those programs over others;

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we may face conflicts of interests as to how we allocate property acquisition opportunities or prospective tenants among competing programs;

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we may face conflicts of interests if programs sell properties to each other or invest in each other; and

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our 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.

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

The offerings conducted to raise capital for our 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 our reputation and as a result our business and results of operations.

          The securities of our 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 we or our dealer-manager failed to comply with the requirements of the relevant exemption and an offering were in process, we 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 our business and as a result, the fees generated by us from such program. If one of our programs was forced to terminate an offering before it was completed or to make a rescission offer, our 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 our business and results of operations.

The inability to identify suitable refinance options may negatively impact investment program performance and cause harm to our reputation, cause the loss of management contracts and third-party broker-dealer selling agreements, limit our ability to sign future third-party broker-dealer selling agreements and potentially expose us 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, we may not be able to refinance some or all of the loans maturing in our 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 our reputation and our ability to

attract investors for future investment programs. In addition, it could cause us to lose asset and property management contracts, cause us to lose third-party broker-dealer selling agreements for existing investment programs, including our REITs, and limit our 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 our 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 our programs or cause us to lose potential investors to alternative investments, causing the fees we receive 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, our financing costs would likely rise and our net yield to investors may decline. This downward pressure on net yields to investors in our 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 our 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 our results of operations.

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

          The commercial real estate industry is highly competitive on an international, national and regional level. Our 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 our programs pay higher prices for properties, investors may experience a lower return on investment and be less inclined to invest in our next program which may decrease our profitability. Increased competition for properties may also preclude our programs from acquiring properties that would generate the most attractive returns to investors or may reduce the number of properties our programs could acquire, which could have an adverse effect on our business.

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

          Because real estate investments are relatively illiquid, our ability to promptly facilitate a sale of one or more properties or investments in our 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 we were unable to facilitate a significant number of property dispositions for our programs.

Risks Related to the Company in General

Delaware law and provisions of our 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 our existing shareowners, and we will be subject to these Delaware anti-takeover provisions. Additionally, our amended and restated certificate of incorporation and our restated bylaws contain provisions that might enable our management to resist a proposed takeover of the Company. The provisions include:

	•		the authority of our board to issue, without shareowner approval, preferred stock with such terms as our board may determine;
	•		the authority of our board to adopt, amend or repeal our bylaws; and
	•		a prohibition on holders of less than a majority of our outstanding shares of capital stock calling a special meeting of our shareowners.

These provisions could discourage, delay or prevent a change of control of the Company or an acquisition of the Company at a price

that our shareowners may find attractive. These provisions also may discourage proxy contests and make it more difficult for our shareowners 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 our common stock.

We have the ability to issue blank check preferred stock, which could adversely affect the voting power and other rights of the holders of our 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. Our Board of Directors is authorized, without any further shareowner approval, to issue one or more additional series of preferred stock in addition to the currently outstanding 12% Preferred Stock. We are 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 our common stock.

We have registration rights outstanding, which could have a negative impact on our share price if exercised.

          In addition to the registration rights granted to one of the institutional purchasers of the 12% Preferred Stock, which has been exercised, 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 our shares of common stock, which could have a negative impact on the market price of the Company’s common stock.

Future sales of our common stock could adversely affect our stock price.

          There are an aggregate of 469,746 Company shares as of December 31, 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 our common stock to decline.

Uninsured and underinsured losses may adversely affect operations.

          Should a property sustain damage or an occupant sustain an injury, we 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, we could lose some or all of our 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 we receive, if any, might not be adequate to restore our economic position with respect to the property. In the event of a significant loss at one or more of the properties in our 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 our programs, which in turn would reduce the fees we receive from these programs. Any decrease or loss in fees could have a material adverse effect on our financial condition or results of operations.

          We carry commercial general liability, fire and extended coverage insurance with respect to our programs’ properties. We obtain coverage that has policy specifications and insured limits that we believe are customarily carried for similar properties. We 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, we generally do not obtain insurance against certain risks, such as floods.

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;
	•		our ability to return advisory and management contracts on sponsored REIT and TIC programs, respectively;
	•		the failure of properties sponsored or managed by us to perform as anticipated;
	•		our exposure to liabilities in connection with sponsored investment programs;
	•		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 potential liability under loan guarantees in connection with investment programs;
	•		our ability to sign and retain selling agreements;
	•		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;
	•		liquidity and availability of additional or continued sources of financing for the Company’s investment programs;
	•		trends in use of large, full-service real estate providers;

	•		diversification of our client base;
	•		improvements in operating efficiency;
	•		protection of our brand;
	•		trends in pricing for commercial real estate services;
	•		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 (“the Company” or “Grubb & Ellis”), a Delaware corporation founded over 50 years ago, is one of the country’s largest and most respected commercial real estate services and investment management firms. 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.

          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 tenant-in-common (“TIC”) investments and other investment programs. Upon the closing of the Merger, a change of control occurred. The former shareowners of NNN acquired approximately 60% of the Company’s issued and outstanding common stock.

          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 provisions of Segment Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”): 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 investment programs it sponsors; Transaction Services, which comprises its real estate brokerage operations; and Investment Management, which includes providing acquisition, financing, disposition and asset management services with respect to its investment programs and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its REIT, TIC and other investment programs. Additional information on these business segments can be found in Note 25 of Notes to Consolidated Financial Statements in Item 8 of this Report.

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 and retail outlets 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 expanding the scope of products and services offered, while ensuring that it can support client relationships with best-in-class service. During 2009, 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.

          In 2009 Grubb & Ellis secured significant new management services contracts from Kraft, Wachovia Corporation and Zurich Alternative Asset Management. The Company also secured significant contract renewals with Citigroup, General Motors, Microsoft and Wells Fargo. As of December 31, 2009, Grubb & Ellis managed approximately 240.7 million square feet, of which 24.3 million square feet related to its sponsored investment programs.

Transaction Services

          Grubb & Ellis has a track record of over 50 years 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. There are 126 owned and affiliate offices worldwide (53 owned and approximately 73 affiliates) and more than 6,000 professionals, including a brokerage sales force of more than 1,800 brokers. By focusing on the overall business objectives of its clients, Grubb & Ellis utilizes its research capabilities, extensive properties database and 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.

          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, key personnel share information regarding local, regional and national industry trends and participate in national marketing activities, including trade shows and seminars. This ongoing communication 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 training programs offering sales and motivational training and cross-functional networking and business development opportunities.

          In many local markets where the Company does not have owned offices, it has affiliation agreements with independent real estate services 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, 2009, Grubb & Ellis had in excess of 1,800 brokers at its owned and affiliate offices, of which 824 brokers were at its owned offices, up from 805 at December 31, 2008.

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 public non-traded REITs, TIC investments, mutual funds and other real estate investment funds. The Company brands its investment programs as Grubb & Ellis in order to capitalize on the strength of the Grubb & Ellis brand name and to leverage the Company’s various platforms. During the year ended December 31, 2009, more than $554.7 million in investor equity was raised for these sponsored investment programs. As of

December 31, 2009, the Company has more than $5.7 billion of assets under management related to the various programs that it sponsors. The Company has completed transaction acquisition and disposition volume totaling approximately $12.3 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”). GBE Securities is registered with the Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority (“FINRA”) and all 50 states. GBE Securities has agreements with an extensive network of broker dealers with selling relationships providing 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.

          The Company and Grubb & Ellis Equity Advisors, LLC, (“GEEA”) a subsidiary of the Company, sponsor and advise public non-traded REITs that are registered with the SEC but are not listed on a national securities exchange like a traded REIT. According to the published Stanger Report, Winter 2010, by Robert A. Stanger and Co., an independent investment banking firm, approximately $6.7 billion was raised in the non-traded REIT sector in 2009. As of December 31, 2009, the Company sponsors two demographically focused programs that are actively raising capital, Grubb & Ellis Healthcare REIT II, Inc. and Grubb & Ellis Apartment REIT, Inc. In addition, the Company raised equity for and provided advisory services to Grubb & Ellis Healthcare REIT, Inc. (now Healthcare Trust of America, Inc.) until August 28, 2009 and September 20, 2009, respectively. Public non-traded REITs sponsored or advised by the Company and its affiliates raised $536.9 million in combined capital in 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 general partner and investment advisor to one limited partnership and as investment advisor to three mutual funds as of December 31, 2009. One of the limited partnerships, Grubb & Ellis AGA Real Estate Investment Fund LP, is required to be consolidated in accordance with the Consolidation Topic. As of December 31, 2009, Alesco had $8.0 million of investment funds under management.

          In mid-2009, the Company formed Energy & Infrastructure Advisors, LLC, a joint venture between Grubb & Ellis and the Meridian Companies that intends to sponsor retail and institutional products focused on investment opportunities in the energy and infrastructure sector.

          Grubb & Ellis Realty Investors, LLC (“GERI”) (formerly Triple Net Properties, LLC), a subsidiary of the Company, had 146 sponsored TIC programs under management and has taken more than 60 programs full cycle (from acquisition through disposition) as of December 31, 2009.

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

Company Strategy

          As one of the oldest and most recognized brands in the commercial real estate industry, Grubb & Ellis is known for its broad geographic reach, long-term client relationships and full-range of product and service offerings. The Company’s strategy is to leverage these attributes to become a larger, more robust real estate services and investment firm. The Company’s growth plan is focused on the achievement of four primary goals: increasing the scale and productivity of its leasing and investment sales brokerage operations; expanding its owner and occupier property and facilities management portfolio; growing its position in the sponsorship of public non-traded REITs and private investment programs to include institutional real estate investment management by utilizing the Company’s full-service platform, proprietary real estate research, specialty practice groups and local market knowledge; and entering related businesses in which the Company does not currently have a presence but which represent a natural extension of its strategy to provide best in class service and comprehensive solutions to clients.

Appointment of President, Chief Executive Officer and Director

          Effective November 16, 2009, the Board of Directors appointed Thomas P. D’Arcy as the Company’s president, chief executive officer and a member of the board of directors. Mr. D’Arcy replaced Gary H. Hunt, who had been serving as the Company’s interim president and chief executive officer.

          Prior to joining the Company, Mr. D’Arcy served in leadership positions at various public and private real estate companies for more than 27 years. He is currently the non-executive chairman of Inland Real Estate Corporation (NYSE:IRC), a $1.5 billion REIT where he has served as an independent director since 2005. Most recently, he was a principal in Bayside Realty Partners, a private real estate company focusing on acquiring, renovating and developing land and income-producing real estate. From 2001 to 2004, he was president and chief executive officer of Equity Investment Group, a private REIT and from 1989 to 2000 he served as chairman and chief executive officer of Bradley Real Estate, Inc. a NYSE-listed real estate investment trust. During his tenure at Bradley, Mr. D’Arcy significantly grew the company through restructuring and mergers and acquisitions, which led to its sale to Heritage Investment Trust in 2000, creating substantial value for its shareowners.

Private Placement of 12% Preferred Stock

          In the fourth quarter of 2009, the Company consummated the issuance and sale of an aggregate of 965,700 shares of 12% Cumulative Participating Perpetual Preferred Stock, par value $0.01 per share (the “12% Preferred Stock”). The Preferred Stock was sold to qualified institutional buyers and accredited investors in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) that apply to offers and sales of securities that do not involve a public offering. Accordingly, the 12% Preferred Stock was offered and sold only to (i) “qualified institutional buyers” (as defined in Rule 144A under the Securities Act), (ii) to a limited number of institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act), and (iii) to a limited number of individual “accredited investors” (as defined in Rule 501(a)(4), (5) or (6) of the Securities Act).

          Each share of 12% Preferred Stock is convertible into 60.606 shares of common stock of the Company, which represents a conversion price of approximately $1.65 per share of common stock. The Company received net proceeds from the private placement of approximately $90.1 million after deducting the initial purchaser’s discounts and certain offering expenses and after giving effect to the conversion of $5.0 million of subordinated debt previously provided by an affiliate of the Company’s largest shareowner. The Company used the net proceeds to pay transaction costs and repay in full the Company’s Credit Facility (as defined below) at the agreed reduced principal amount equal to approximately 65% of the principal amount outstanding under such facility (as more fully discussed in the section immediately following “Amendment and Repayment of Senior Secured Credit Facility”). The balance of the net proceeds from the offering will be used for general corporate purposes.

Amendment and Repayment of Senior Secured Credit Facility

          On December 7, 2007, the Company entered into a $75.0 million credit agreement (which was subsequently amended and restated) 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 Company entered into a further amendment and limited waiver to its Credit Facility, effective as of September 30, 2009 (the “Credit Facility Amendment”), that extended the time previously afforded the Company in May 2009, to effect a recapitalization under its Credit Facility from September 30, 2009 to November 30, 2009. Pursuant to the Credit Facility Amendment, the Company also received the right to prepay its 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. On November 6, 2009, concurrently with the initial closing of the private placement of its 12% Preferred Stock, the Company repaid its Credit Facility in full at the discounted amount and the Credit Facility was terminated in accordance with its terms. (See Note 19 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information)

          As a condition to entering into the Credit Facility Amendment, the lenders to the Company’s Credit Facility required that Kojaian Management Corporation, an affiliate of the Company’s largest shareowner, effect a $5.0 million subordinated financing of the Company. On October 2, 2009, the Company completed the shareowner subordinated financing in the form of a senior subordinated convertible note bearing an interest rate of 12% per annum. Concurrently with the initial closing 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.

Property Acquisitions and Dispositions

          During 2007, the Company acquired three commercial properties — the Danbury Corporate Center in Danbury, Connecticut (the “Danbury Property”), Abrams Center in Dallas, Texas (the “Abrams Property”) and 6400 Shafer Court in Rosemont, Illinois (the “Shafer Property”) — for an aggregate contract price of $122.2 million, along with acquisition costs of approximately $1.3 million, and assumed obligations of approximately $0.5 million. On June 3, 2009, the Company sold the Danbury Property to an unaffiliated entity for a sales price of $72.4 million.

          On December 29, 2009, GERA Abrams Centre LLC (“Abrams”) and GERA 6400 Shafer LLC (“Shafer” and together with Abrams, collectively, the “Borrower”), each a subsidiary of Company, modified the terms (the “Amendment”) of its $42.5 million loan initially due on July 9, 2009 (the “Loan”) by and among the Borrower and Tremont Net Funding II, LLC (the “Lender”).

          The Amendment to the Loan provided, among other things, for an extension of the term of the Loan until March 31, 2010 (the “Loan Extension Date”). In addition, the principal balance of the Loan was reduced from $42.5 million to $11.0 million in connection with the transfer of the Shafer Property from the Borrower to an affiliate of Lender for nominal consideration pursuant to a special warranty deed (the “Special Warranty Deed”) that was recorded on December 29, 2009.

          Pursuant to the Amendment, the Lender remains obligated under the Loan, in its reasonable discretion, to fund any shortfalls relating to tenant improvements and leasing commission expenses and to fund any operational shortfalls and debt service, provided that there is no event of default existing with respect to the Loan. The Amendment also granted the Lender a call option, and the Borrower a put option, with respect to the Abrams Property through the Loan Extension Date. Each of the Lender’s call option and the Borrower’s put option requires 10 business days prior written notice and provides for the transfer of the Abrams Property pursuant to a deed identical in all material respects to the Special Warranty Deed that was executed with respect to the Shafer Property. If neither the put option nor the call option is exercised by March 30, 2010, the Borrower has the right to file a deed conveying the Abrams Property to the Lender or its designee on March 31, 2010. The Amendment also released the Borrower and the guarantor under the Loan, from and against any claims, obligations and/or liabilities that the Lender or any of party related to or affiliated with the Lender, whether known or unknown, that such party had, has or may have in the future, arising from or related to the Loan.

          Pursuant to the Consolidation Topic, Management determined that control of the Abrams and Shafer properties did not rest with the Company, but rather the Lender, and thus, the Company deconsolidated these properties in the fourth quarter of 2009.

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 sales and leasing transaction services. In recent years the industry has experienced substantial consolidation, a trend that is expected to continue.

          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 to expand its platform in order to more effectively compete for the business of large multi-national corporations that are increasingly seeking a single real estate services provider.

          The top 25 brokerage companies collectively completed nearly $644.5 billion in investment sales and leasing transactions globally in 2008, according to the latest available survey published by National Real Estate Investor. The Company ranked 12th in this survey, including transactions in its affiliate offices.

          Within the management services business, according to a recent survey published in 2009 by National Real Estate Investor, the top 25 companies in the industry manage over 9.1 billion square feet of commercial property. The Company ranks as the seventh largest property management company in this survey with 246.9 million square feet under management at year end 2008, including property under management in its affiliate offices. The largest company in the survey had 2.2 billion square feet under management.

          The Company’s investment management business is subject to competition on a number of different levels. The Company competes with both large and small investment sponsors and faces threats from new entrants or entrants that pivot to focus on raising capital through the same channels as the Company. With regard to fundraising in the retail securities arena, GBE Securities faces competition to acquire limited shelf space in selling group firms and faces fundraising challenges from an industry-wide oversupply of product seeking limited investor dollars. As it increases its involvement in fundraising for institutional investments funds, the Company will face competition from a different group of well-financed institutional managers. Separate from fundraising competition, the investment programs themselves 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 the limited financing available to real estate investors.

          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 has the infrastructure and personnel to continue to operate 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 disruption and dislocation of the credit markets and the weak national and global economies. 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, on 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 2009 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. In addition, an increasing number of federal, state, local and foreign governments have enacted various treaties, laws and regulations that apply to environmental and climate change, in particular seeking to limit or penalize the discharge of materials such as green house gas into the environment or otherwise relating to the protection of the environment. As a property manager, the Company could be held liable as an operator for any such contamination or discharges, 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 discharges, 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 2009, 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.

Seasonality

          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 32.4% of total revenue for 2009.

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 of the size and scope of real estate sales transactions there is difficulty of ensuring compliance with the numerous state statutory requirements and licensing regimes and there is possible liability resulting from non-compliance.

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. 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 and to applicable FINRA rules. 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.

Employees

          As of December 31, 2009, the Company had over 5,000 employees including more than 800 transaction professionals working in 53 owned offices as well as over 1,000 independent contractors working in 73 affiliate offices. Nearly 3,000 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, 2009, the Company leased over 755,000 square feet of office space in 75 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 20 to the consolidated financial statements included in this prospectus for additional information.

          As of December 31, 2009, the Company owned two commercial office properties comprising 754,000 square feet of gross leasable area for an aggregate purchase price of $140.5 million, in two states. As of December 31, 2009, the mortgage debt related to these two properties totaled $107.0 million.

Legal Proceedings

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.

		Year ended December 31,
		2009				2008				2007				2006				2005
Fixed Charges
Interest and related amortization of borrowing costs			15,446				14,207				10,818				6,765				1,969
Estimate of the interest portion of rental expense			7,165				6,965				1,374				970				510
Fixed Charges			22,611				21,172				12,192				7,735				2,479
Earnings
(Loss) income from continuing operations before taxes			(84,160	)			(319,495	)			38,494				13,571				13,679
Less: Equity in (losses) earnings of unconsolidated entities			(1,148	)			(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			22,611				21,172				12,192				7,735				2,479
Earnings (1)			(60,216	)			(285,591	)			47,893				19,050				15,866
Ratio of earnings to fixed charges			—				—				3.9				2.5				6.4
The amount of coverage deficiency			82,827				306,763				—				—				—

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

     The following table presents our historical ratios of earnings to combined fixed charges and preferred stock dividends for the periods indicated.

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

		Year ended December 31,
		2009				2008				2007				2006				2005
Fixed Charges
Interest and related amortization of borrowing costs			15,446				14,207				10,818				6,765				1,969
Estimate of the interest portion of rental expense			7,165				6,965				1,374				970				510
Preferred stock dividends			1,770				—				—				—				—
Fixed Charges			24,381				21,172				12,192				7,735				2,479
Earnings
(Loss) income from continuing operations before taxes			(84,160	)			(319,495	)			38,494				13,571				13,679
Less: Equity in (losses) earnings of unconsolidated entities			(1,148	)			(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			24,381				21,172				12,192				7,735				2,479
Earnings (1)			(58,446	)			(285,591	)			47,893				19,050				15,866
Ratio of earnings to fixed charges			—				—				3.9				2.5				6.4
The amount of coverage deficiency			82,827				306,763				—				—				—

USE OF PROCEEDS

          The proceeds from the sale of each of the selling shareowner’s common stock and 12% Preferred Stock will belong to that selling shareowner. 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 quarter of the years ended December 31, 2009 and 2008.

		2009								2008
		High				Low				High				Low
First Quarter		$	1.29			$	0.25			$	7.50			$	3.80
Second Quarter		$	1.31			$	0.50			$	7.50			$	3.61
Third Quarter		$	1.96			$	0.55			$	5.00			$	2.70
Fourth Quarter		$	2.17			$	1.15			$	2.88			$	0.81

          On March 19, 2010, the closing sale price of our common stock was $2.04.

          As of March 19, 2010, there were 1,035 registered holders of the Company’s common stock and 69,313,092 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 common share for the year. On July 11, 2008, the Company’s Board of Directors approved the suspension of future dividend payments, and therefore does not anticipate paying cash dividends to common shareowners in the foreseeable future.

          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.”

          On December 11, 2009, the Company’s Board of Directors declared a dividend of $1.8333 per share on the 12% Preferred Stock to shareowners of record as of December 21, 2009, which was paid on December 31, 2009.

          On March 4, 2010, the Company’s Board of Directors declared a dividend of $3.00 per share on the 12% Preferred Stock to shareowners of record as of March 19, 2010, to be paid on March 31, 2010.

Selected Consolidated Financial Data

          The following tables set forth the selected historical consolidated financial data for Grubb & Ellis Company and its subsidiaries, as of and for the years ended, December 31, 2009, 2008, 2007, 2006, and 2005. The selected historical consolidated balance sheet data set forth below as of December 31, 2009 and 2008 and the selected consolidated operating and cash flow data for the three years in the period ending December 31, 2009 has been derived from the audited financial statements beginning on page F-2 of this prospectus. The selected consolidated operating and cash flow data set forth below as of and for the year ended December 31, 2006, and the selected consolidated balance sheet data as of December 31, 2007, has been derived from audited consolidated financial statements not included in this prospectus as adjusted for reclassifications required by the Property, Plant and Equipment Topic for discontinued operations. The selected historical financial data set forth below as of and for the year ended December 31, 2005 has been derived from unaudited consolidated financial statements not included in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period. 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.”

		Year Ended December 31,
(In thousands, except per share data)		2009				2008				2007(1)				2006(2)				2005(3)
Consolidated Statement of Operations Data:
Total services revenue		$	505,360			$	595,495			$	201,538			$	99,599			$	80,817
Total revenue			535,645				628,779				229,657				108,543				84,423
Total compensation costs			469,538				503,004				104,109				49,449				29,873
Total operating expense			641,551				929,407				195,723				97,633				71,035
Operating (loss) income			(105,906	)			(300,628	)			33,934				10,910				13,388
(Loss) income from continuing operations			(82,985	)			(318,668	)			23,741				21,012				13,679
Net (loss) income			(80,499	)			(342,589	)			23,033				20,049				10,288
Net (loss) income attributable to Grubb & Ellis Company			(78,838	)			(330,870	)			21,072				19,971				10,047
Basic (loss) earnings per share attributable to Grubb & Ellis Company		$	(1.27	)		$	(5.21	)		$	0.53			$	1.01			$	0.58
(Loss) income from continuing operations per share attributable to Grubb & Ellis Company		$	(1.31	)		$	(4.83	)		$	0.55			$	1.06			$	0.80
Diluted (loss) earnings per share attributable to Grubb & Ellis Company		$	(1.27	)		$	(5.21	)		$	0.53			$	1.01			$	0.58
Basic weighted average shares outstanding			63,645				63,515				38,652				19,681				17,200
Diluted weighted average shares outstanding			63,645				63,515				38,653				19,694				17,200
Dividends declared per common share		$	—			$	0.205			$	0.36			$	0.10			$	—
Dividends declared per preferred share		$	1.8333			$	—			$	—			$	—			$	—
Consolidated Statement of Cash Flow Data:
Net cash (used in) provided by operating activities		$	(61,965	)		$	(33,629	)		$	33,543			$	17,356			$	23,536
Net cash provided by (used in) investing activities			97,214				(76,330	)			(486,909	)			(56,203	)			(35,183	)
Net cash (used in) provided by financing activities			(29,133	)			93,616				400,468				140,525				10,251

		December 31,
		2009				2008				2007				2006				2005
Consolidated Balance Sheet Data (at end of period):
Total assets		$	357,324			$	520,277			$	988,542			$	347,709			$	126,057
Long Term Liabilities:
Line of credit			—				—				8,000				—				8,500
Notes payable and capital lease obligations			107,755				107,203				107,343				843				887
Senior notes			16,277				16,277				16,277				10,263				2,300
Redeemable preferred liability			—				—				—				—				6,077
Preferred stock (12% cumulative participating perpetual convertible)			90,080				—				—				—				—
Total Grubb & Ellis shareowners’ equity			1,327				70,171				404,056				217,125				20,081

Non-GAAP Financial Measures

          EBITDA and Adjusted EBITDA are non-GAAP measures of performance. EBITDA provides an indicator of economic performance that is unaffected by debt structure, changes in interest rates, changes in effective tax rates or the accounting effects of capital expenditures and acquisitions because EBITDA excludes net interest expense, interest income, income taxes, depreciation, amortization, discontinued operations and impairments related to goodwill and intangible assets.

          The Company uses Adjusted EBITDA as an internal management measure for evaluating performance and as a significant component when measuring performance under employee incentive programs. Management considers Adjusted EBITDA an important supplemental measure of the Company’s performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results. Management also believes that Adjusted EBITDA is a useful tool for measuring the Company’s ability to meet its future capital expenditures and working capital requirements.

          EBITDA and Adjusted EBITDA are not a substitute for GAAP net income or cash flow and do not provide a measure of the Company’s ability to fund future cash requirements. Other companies may calculate EBITDA and Adjusted EBITDA differently than the Company has and, therefore, EBITDA and Adjusted EBITDA have material limitations as a comparative performance measure. The following table reconciles EBITDA and Adjusted EBITDA with the net loss attributable to Grubb & Ellis Company for the years ended December 31, 2009 and 2008. As a result of the Merger on December 7, 2007, the year ended December 31, 2007 is not comparable to the year ended December 31, 2008. Therefore, a reconciliation of EBITDA and Adjusted EBITDA for the year ended December 31, 2008 compared to the year ended December 31, 2007 has not been provided as it would not be meaningful.

		Year Ended
		December 31,								Change
(In thousands)		2009				2008				$				%
Net loss attributable to Grubb & Ellis Company		$	(78,838	)		$	(330,870	)		$	252,032				76.2	%
Discontinued operations			(2,486	)			23,921				(26,407	)			(110.4	)
Interest expense			15,446				14,207				1,239				8.7
Interest income			(555	)			(902	)			347				38.5
Depreciation and amortization			12,324				16,028				(3,704	)			(23.1	)
Goodwill and intangible assets impairment			738				181,285				(180,547	)			(99.6	)
Taxes			(1,175	)			(827	)			(348	)			(42.1	)
EBITDA(1)			(54,546	)			(97,158	)			42,612				43.9
Gain related to the repayment of the credit facility, net			(21,935	)			—				(21,935	)			—
Charges related to sponsored programs			23,348				27,771				(4,423	)			(15.9	)
Real estate related impairment			17,372				59,114				(41,742	)			(70.6	)
Write off of investment in Grubb & Ellis Realty Advisors, net			—				5,828				(5,828	)			(100.0	)
Share-based based compensation			10,876				11,907				(1,031	)			(8.7	)
Amortization of signing bonuses			7,535				7,603				(68	)			(0.9	)
Loss on marketable securities			—				1,783				(1,783	)			(100.0	)
Merger related costs			—				14,732				(14,732	)			(100.0	)
Amortization of contract rights			—				1,179				(1,179	)			(100.0	)
Real estate operations			(7,959	)			(9,993	)			2,034				20.4
Other			1,319				163				1,156				709.2
Adjusted EBITDA(1)		$	(23,990	)		$	22,929			$	(46,919	)			(204.6	)%

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 prospectus and the registration statement of which it forms a part 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, 2009 and 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.

          Unless otherwise indicated, all pre-Merger legacy NNN share data have been adjusted to reflect the 0.88 conversion rate as a result of the Merger (see Note 10 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

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 subcontracts its property management services to independent property managers, in which case the Company passes a portion of their property management fee on to the subcontractor, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its subcontractors.

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 on behalf of its various REITs, TIC investors and the Company’s various sponsored real estate funds. The Company accounts for acquisition and loan fees in accordance with the requirements of the Real Estate — General Topic and the Real Estate — Retail Land 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 TIC 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 the Real Estate — Retail Land Topic and the 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. In certain circumstances, the Company is entitled to loan advisory fees for arranging financing related to properties under management.

          The Company earns 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 the Company 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, GBE Securities, the Company facilitates capital raising transactions for its sponsored programs. 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.

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, net in the accompanying consolidated balance sheets and are amortized to rental income over the remaining non-cancelable lease term of the acquired leases with each property. The amounts allocated to below market lease values are included in liabilities in the accompanying consolidated balance sheets and are amortized to rental income over the remaining non-cancelable lease term plus any below market renewal options 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 $24.0 million and $90.4 million against the carrying value of the properties and real estate investments during the years ended December 31, 2009 and 2008, respectively. No impairment losses were recognized for the year ended December 31, 2007.

          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 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 requirements of the Topic and determined that the trade name was not impaired as of December 31, 2009 and 2008. Accordingly, no impairment charge was recorded related to the trade name during the years ended December 31, 2009 and 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 2009 and 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 $0.7 million and $8.6 million related to the impaired intangible contract rights as of December 31, 2009 and 2008, respectively.

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

          For a discussion of recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies — Recently Issued Accounting Pronouncements, to the Consolidated Financial Statements that are a part of this prospectus.

RESULTS OF OPERATIONS

Results of Operations for the year ended December 31, 2009

Overview

          The Company reported revenue of $535.6 million for the year ended December 31, 2009, compared with revenue of $628.8 million for the same period of 2008. The decrease was primarily the result of decreases in Transaction Services and Investment Management revenue of $66.9 million and $44.3 million, respectively, partially offset by increases in Management Services revenue of $21.0 million. The decrease in revenue as compared to the prior year period can be attributed to fewer sales and leasing transactions, lower acquisition fees as a result of less TIC equity raise and lower disposition fees, only partially offset by an increase in Management Services revenue as a result of an increase in square feet under management. The decrease in net acquisitions from the

Investment Management business and the transition to self-management in 2009 and the termination of advisory and property management agreements with the Company by Healthcare Trust of America, Inc., formerly Grubb & Ellis Healthcare REIT, Inc., in September 2009 resulted in a reduction of the Company’s assets under management by approximately 15.0% from $6.8 billion as of December 31, 2008 to $5.8 billion as of December 31, 2009.

          The net loss attributable to Grubb & Ellis Company common shareowners for the year ended December 31, 2009 was $80.6 million, or $1.27 per diluted share, and included a non-cash charge of $0.7 million for intangible assets impairment, a non-cash charge of $24.0 million for real estate related impairments (of which $7.6 million was recorded in the fourth quarter) and a $24.8 million charge, which includes an allowance for bad debt primarily on related party receivables and advances. In addition, the year-to-date results include approximately $10.9 million of share-based compensation and $0.3 million for amortization of other identified intangible assets.

          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 the Segment Reporting Topic. 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; Transaction Services, which comprises its real estate brokerage operations; and Investment Management which includes providing acquisition, financing and disposition services with respect to its sponsored programs, asset management services related to its programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its real estate investment programs. Additional information on these business segments can be found in Note 25 of Notes to Consolidated Financial Statements in this prospectus.

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

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

		Year Ended
		December 31,								Change
(In thousands)		2009				2008				$				%
Revenue
Management services		$	274,684			$	253,664			$	21,020				8.3	%
Transaction services			173,394				240,250				(66,856	)			(27.8	)
Investment management			57,282				101,581				(44,299	)			(43.6	)
Rental related			30,285				33,284				(2,999	)			(9.0	)
Total revenue			535,645				628,779				(93,134	)			(14.8	)
Operating Expense
Compensation costs			469,538				503,004				(33,466	)			(6.7	)
General and administrative			80,078				99,829				(19,751	)			(19.8	)
Provision for doubtful accounts			24,768				19,831				4,937				24.9
Depreciation and amortization			12,324				16,028				(3,704	)			(23.1	)
Rental related			21,287				21,377				(90	)			(0.4	)
Interest			15,446				14,207				1,239				8.7
Merger related costs			—				14,732				(14,732	)			(100.0	)
Real estate related impairments			17,372				59,114				(41,742	)			(70.6	)
Goodwill and intangible asset impairment			738				181,285				(180,547	)			(99.6	)
Total operating expense			641,551				929,407				(287,856	)			(31.0	)
Operating Loss			(105,906	)			(300,628	)			194,722				64.8
Other (Expense) Income
Equity in losses of unconsolidated entities			(1,148	)			(13,311	)			12,163				91.4
Interest income			555				902				(347	)			(38.5	)
Gain on extinguishment of debt			21,935				—				21,935				—
Other			404				(6,458	)			6 862				106.3
Total other income (expense)			21,746				(18,867	)			40,613				215.3
Loss from continuing operations before income tax provision			(84,160	)			(319,495	)			235,335				73.7
Income tax benefit			1,175				827				348				42.1

		Year Ended
		December 31,								Change
(In thousands)		2009				2008				$				%
Loss from continuing operations			(82,985	)			(318,668	)			235,683				74.0
Discontinued Operations
Loss from discontinued operations — net of taxes			(4,956	)			(24,278	)			19,322				79.6
Gain on disposal of discontinued operations — net of taxes			7,442				357				7,085				1,984.6
Total income (loss) from discontinued operations			2,486				(23,921	)			26,407				110.4
Net Loss			(80,499	)			(342,589	)			262,090				76.5
Net loss attributable to noncontrolling interests			(1,661	)			(11,719	)			10,058				85.8
Net loss attributable to Grubb & Ellis Company			(78,838	)			(330,870	)			252,032				76.2
Preferred stock dividends			(1,770	)			—				(1,770	)			—
Net (loss) income attributable to Grubb & Ellis Company common shareowners		$	(80,608	)		$	(330,870	)		$	250,262				75.6	%

Revenue

Management Services Revenue

          Management Services revenue increased $21.0 million, or 8.3% to $274.7 million for the year ended December 31, 2009, compared to approximately $253.7 million for the same period in 2008 due to an increase in the square feet under management. As of December 31, 2009, the Company managed approximately 240.7 million square feet of commercial real estate and multi-family property, including 24.3 million square feet of the Company’s Investment Management portfolio compared to 231.0 million square feet of property as of December 31, 2008.

Transaction Services Revenue

          Transaction Services revenue decreased $66.9 million or 27.8% to $173.4 million for the year ended December 31, 2009, compared to approximately $240.3 million for the same period in 2008 due to reduced sales and leasing transaction volume and values as a result of the declining real estate market. Leasing activity represented approximately 80% of the total Transaction Services revenue in 2009, while investment sales accounted for 20% of total revenue. In 2008, the revenue breakdown was 77% leasing and 23% investment sales. As of December 31, 2009, Grubb & Ellis had 824 brokers, up from 805 as of December 31, 2008.

Investment Management Revenue

          Investment Management revenue decreased $44.3 million or 43.6% to $57.3 million for the year ended December 31, 2009, compared to approximately $101.6 million for the same period in 2008. Investment Management revenue reflects revenue generated through the fee structure of the various investment products which includes acquisition and loan fees of approximately $12.8 million and management fees from sponsored programs of $31.2 million. 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, $554.7 million in equity was raised for the Company’s investment programs for the year ended December 31, 2009, compared with $984.3 million in the same period in 2008. The decrease was driven by a decrease in TIC equity raised and Private Client Management equity raised. During the year ended December 31, 2009, the Company’s public non-traded REIT programs raised $536.9 million, a decrease of 9.4% from the $592.7 million equity raised in the same period in 2008. The Company’s TIC programs raised $15.5 million in equity during the year ended December 31, 2009, compared with $176.9 million in the same period in 2008. The decrease in TIC equity raised for the year ended December 31, 2009 reflects the continued decline in current market conditions. The decrease in equity raised by the Company’s public non-traded REITs is a result of the termination of the dealer-manager agreement of the Company’s first sponsored healthcare REIT in August 2009 and the start-up of the Company’s new Healthcare REIT II program which commenced sales on September 21, 2009. No equity was raised by Private Client Management in 2009 compared with $193.3 million in equity raised in 2008.

          Acquisition and loan fees decreased approximately $20.3 million, or 61.3%, to $12.8 million for the year ended December 31, 2009, compared to approximately $33.1 million for the same period in 2008. The year-over-year decrease in acquisition and loan fees was primarily attributed to a decrease of approximately $7.4 million in fees earned from the Company’s TIC programs, a decrease of approximately $8.6 million in fees earned from the Company’s non-traded REIT programs and a decrease of approximately $4.2 million in fees earned from Private Client Management.

          Disposition fees decreased approximately $4.6 million, or 100.0%, to zero for the year ended December 31, 2009, compared to approximately $4.6 million for the same period in 2008. Offsetting the disposition fees during the year ended December 31, 2008 was

$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.

          Management fees from sponsored programs decreased approximately $6.8 million or 17.9% to $31.2 million for the year ended December 31, 2009 which primarily reflects lower average fees on TIC programs and the termination of management services for the Company’s first sponsored healthcare REIT in September 2009.

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

          Operating expenses decreased $287.9 million, or 31.0%, to $641.6 million for the year ended December 31, 2009, compared to $929.4 million for the same period in 2008. This decrease reflects decreases in compensation costs from lower commissions paid and synergies created as a result of the Merger of $33.5 million and decreases of merger related costs of $14.7 million and general and administrative expense of $19.8 million offset by an increase in provision for doubtful accounts of $4.9 million. The Company recognized real estate impairments of $17.4 million during the year ended December 31, 2009, a decrease of $41.7 million over the same period last year. In addition, the Company recognized goodwill and intangible asset impairment of $0.7 million during the year ended

          December 31, 2009, a decrease of $180.5 million over the same period last year as the Company wrote off all of its goodwill during the year ended December 31, 2008. Partially offsetting the overall decrease was an increase in interest expense of $1.2 million for the year ended December 31, 2009 related to the Company’s line of credit.

Compensation Costs

          Compensation costs decreased approximately $33.5 million, or 6.7%, to $469.5 million for the year ended December 31, 2009, compared to approximately $503.0 million for the same period in 2008 due to a decrease in transaction commissions and related costs of $39.2 million as a result of a decrease in sales and leasing activity and a decrease in other compensation costs of $12.9 million related to a reduction in headcount and decreases in salaries partially offset by an increase in reimbursable salaries, wages and benefits of $18.6 million as a result of the growth in square feet under management. The following table summarizes compensation costs by segment for the periods indicated.

		Year Ended
		December 31,								Change
		2009				2008				$
MANAGEMENT SERVICES
Compensation costs		$	36,701			$	39,125			$	(2,424	)
Transaction commissions and related costs			12,623				8,581				4,042
Reimbursable salaries, wages and benefits			193,682				178,058				15,624
Total			243,006				225,764				17,242
TRANSACTION SERVICES
Compensation costs			44,274				50,272				(5,998	)
Transaction commissions and related costs			112,398				155,668				(43,270	)
Total			156,672				205,940				(49,268	)
INVESTMENT MANAGEMENT
Compensation costs			26,275				30,254				(3,979	)
Transaction commissions and related costs			84				18				66
Reimbursable salaries, wages and benefits			9,430				6,458				2,972
Total			35,789				36,730				(941	)
Compensation costs related to corporate overhead			34,071				34,570				(499	)
Total compensation costs		$	469,538			$	503,004			$	(33,466	)

General and Administrative

          General and administrative expense decreased approximately $19.7 million, or 19.8%, to $80.1 million for the year ended December 31, 2009, compared to $99.8 million for the same period in 2008 due to a decrease of $9.1 million related to an estimate of probable loss recorded during the year ended December 31, 2008 related to recourse guarantees of debt of properties under management and various decreases related to management’s cost saving efforts.

          General and administrative expense was 14.9% of total revenue for the year ended December 31, 2009, compared with 15.9% for the same period in 2008.

Provision for Doubtful Accounts

          Provision for doubtful accounts increased approximately $4.9 million, or 24.9%, to $24.8 million for the year ended December 31, 2009, compared to $19.8 million for the same period in 2008 primarily due to an increase in reserves on related party receivables and advances to sponsored investment programs.

Depreciation and Amortization

          Depreciation and amortization expense decreased approximately $3.7 million, or 23.1%, to $12.3 million for the year ended December 31, 2009, compared to approximately $16.0 million for the same period in 2008. The decrease is primarily due to two properties the Company held for investment as of December 31, 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 assets as of December 31, 2009 and no depreciation expense was recorded during the period each property was held for sale. Included in depreciation and amortization expense was $4.2 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 $1.2 million, or 8.7%, to $15.4 million for the year ended December 31, 2009, compared to $14.2 million for the same period in 2008. The increase in interest expense includes increases related to the Credit Facility due to additional borrowings in 2009, an increase in the interest rate to LIBOR plus 800 basis points from LIBOR plus 300 basis points as a result of the 3 ^rd amendment to the Credit Facility and the write off of loan fees related to the Credit Facility.

Merger Related Costs

          Merger related costs include transaction costs related to the Merger, facilities and systems consolidation costs and employment-related costs. The Company incurred $14.7 million of Merger related transaction costs during the year ended December 31, 2008 as a result of completing the Merger transaction on December 7, 2007.

Real Estate Related Impairments

          The Company recognized impairment charges of approximately $17.4 million during the year ended December 31, 2009, which includes $10.3 million related to certain unconsolidated real estate investments and funding commitments for obligations related to certain of the Company’s sponsored real estate programs and $7.1 million related to two properties held for investment as of December 31, 2009. The Company recognized an impairment charge of approximately $59.2 million during the year ended December 31, 2008, which includes $18.0 million related to certain unconsolidated real estate investments and $41.2 million related to two properties held for investment. In addition, the Company recognized impairment charges of approximately $6.6 million and $31.2 million during the year ended December 31, 2009 and 2008, respectively, related to two properties sold and two properties effectively abandoned under the accounting standards during the year ended December 31, 2009, 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. 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 requirements of the Intangibles — Goodwill and Other Topic and determined that the trade name was not impaired as of December 31, 2009 and 2008. Accordingly, no impairment charge was recorded related to the trade name during the years ended December 31, 2009 and 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 and during the year ended December 31, 2009. 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 management’s 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 $0.7 million and $8.6 million related to the impaired intangible contract rights during the years ended December 31, 2009 and 2008, respectively.

Equity in Earnings (Losses) of Unconsolidated Real Estate

          Equity in losses includes $1.1 million and $13.3 million for the years ended December 31, 2009 and 2008, respectively. Equity in losses of $1.1 million and $7.5 million were recorded during the years ended December 31, 2009 and 2008, respectively, related to the Company’s investment in five joint ventures and seven LLCs that are consolidated pursuant to the requirements of the Consolidation Topic. Equity in earnings (losses) are recorded based on the pro rata ownership interest in the underlying unconsolidated properties. In addition, equity in losses for the year ended December 31, 2008 includes a $5.8 million write off of the Company’s investment in GERA in the first quarter of 2008, which includes $4.5 million related to stock and warrant purchases and $1.3 million related to operating advances and third party costs.

Gain on Extinguishment of Debt

          Gain on extinguishment of debt includes a $21.9 million gain on forgiveness of debt related to the repayment of the Credit Facility in full at a discounted amount and termination of the Credit Facility on November 6, 2009.

Other Income (Expense)

          Other income of $0.4 million for the year ended December 31, 2009 includes investment income related to Alesco. Other expense of $6.5 million for the year ended December 31, 2008, includes $4.6 million of investment losses related to Alesco and a $1.8 million loss on sale of marketable equity securities.

Discontinued Operations

          In accordance with the requirements of the Property, Plant and Equipment Topic, discontinued operations includes the net income (loss) of two properties that were sold and two properties that were effectively abandoned under the accounting standards during the year ended December 31, 2009. The net income of $2.5 million for the year ended December 31, 2009 includes a $7.4 million gain on sale, net of taxes, related to the sale of the Danbury Property on June 3, 2009 and the deconsolidation of the Abrams and Shafer properties during the fourth quarter of 2009 and a $5.0 million loss from discontinued operations, net of taxes, which includes $6.6 million of real estate related impairments. The net loss of $23.9 million for the year ended December 31, 2008 includes a $0.4 million gain on sale, net of taxes, and a $24.3 million loss from discontinued operations, net of taxes, which includes $31.2 million of real estate related impairments.

Income Tax

          The Company recognized a tax benefit from continuing operations of approximately $1.2 million for the year ended December 31, 2009, compared to a tax benefit of $0.8 million for the same period in 2008. In 2009 and 2008, the reported effective income tax rates

were 1.40% and 0.3%, respectively. The 2009 effective income tax rate reflects the adoption of the requirements of the amended Consolidation Topic. The 2009 and 2008 effective tax rates include the effect of valuation allowances recorded against deferred tax assets to reflect our assessment that it is more likely than not that some portion of the deferred tax assets will not be realized. The Company’s deferred tax assets are primarily attributable to impairments of various real estate holdings, net operating losses and share-based compensation. (See Note 24 of the Notes to Consolidated Financial Statements in this prospectus for additional information.)

Net Loss Attributable to Noncontrolling Interests

          Net loss attributable to noncontrolling interests decreased by $10.1 million, or 85.8%, to $1.7 million during the year ended December 31, 2009, compared to net loss attributable to noncontrolling interests of $11.7 million for the same period in 2008. Net loss attributable to noncontrolling interests includes $3.7 million and $8.6 million in real estate related impairments recorded at the underlying properties during the years ended December 31, 2009 and 2008, respectively.

Net Loss Attributable to Grubb & Ellis Company

          As a result of the above items, the Company recognized a net loss of $78.8 million for the year ended December 31, 2009, compared to a net loss of $330.9 million for the same period in 2008.

Net Loss Attributable to Grubb & Ellis Company Common Shareowners

          The Company paid $1.8 million in preferred stock dividends during the year ended December 31, 2009 resulting in a net loss attributable to the Company’s common shareowners of $80.6 million, or $1.27 per diluted share, for the year ended December 31, 2009, compared to a net loss attributable to the Company’s common shareowners of $330.9 million, or $5.21 per diluted share, for the same period in 2008.

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

          As a result of the Merger on December 7, 2007, the operating results for 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 following summarizes comparative results of operations for the periods indicated.

		Year Ended
		December 31,								Change
(In thousands)		2008				2007(1)				$				%
Revenue
Management services		$	253,664			$	16,365			$	237,299				1,450.0	%
Transaction services			240,250				35,522				204,728				576.3
Investment management			101,581				149,651				(48,070	)			(32.1	)
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			99,829				42,860				56,969				132.9
Provision for doubtful accounts			19,831				1,391				18,440				1,325.7
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 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	)			(513.8	)
(Loss) income from continuing operations before income tax provision			(319,495	)			38,494				(357,989	)			(930.0	)
Income tax benefit (provision)			827				(14,753	)			15,580				105.6
(Loss) income from continuing operations			(318,668	)			23,741				(342,409	)			(1,442.3	)
Discontinued Operations