Forward-Looking Statements

This Interim Report contains statements that are not historical facts and constitute projections, forecasts or forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements are not guarantees of performance. They involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company (as defined below) in future periods to be materially different from any future results, performance or achievements expressed or suggested by these statements. You can identify such statements by the fact that they do not relate strictly to historical or current facts. These statements use words such as "believe," "expect," "should," "strive," "plan," "intend," "estimate" and "anticipate" or similar expressions. When we discuss strategy or plans, we are making projections, forecasts or forward-looking statements. Actual results and stockholder's value will be affected by a variety of risks and factors, including, without limitation, international, national and local economic conditions and real estate risks and financing risks and acts of terror or war. Many of the risks and factors that will determine these results and values are beyond the Company's ability to control or predict. These statements are necessarily based upon various assumptions involving judgment with respect to the future. All such forward-looking statements speak only as of the date of this Report. The Company expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Factors that could adversely affect the Company's ability to obtain these results and value include, among other things:
(i) the slowdown in the volume and the decline in the transaction values of sales and leasing transactions, (ii) the general economic downturn and recessionary pressures on business in general, (iii) a prolonged and pronounced recession in real estate markets and values, (iv) the unavailability of credit to finance real estate transactions in general, and the Company's tenant-in-common programs in particular, (v) the reduction in borrowing capacity under the Company's current credit facility, and the additional limitations with respect thereto, (vi) the continuing ability to make interest and principal payments with respect to the Company's credit facility, (vii) an increase in expenses related to new initiatives, investments in people, technology, and service improvements, (viii) the success of current and new investment programs,
(ix) the success of new initiatives and investments, (x) the inability to attain expected levels of revenue, performance, brand equity and expense synergies resulting from the merger of Grubb & Ellis Company and NNN Realty Advisors in general, and in the current macroeconomic and credit environment in particular, and (xi) other factors described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on May 27, 2009.

Overview and Background

The Company reports its revenue by three business segments in accordance with the provisions of Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS No. 131"). Transaction Services, which comprises its real estate brokerage operations; Investment Management, which includes providing acquisition, financing and disposition services with respect to its investment programs, asset management services related to its programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its TIC, REIT and other investment programs; and Management Services, which includes property management, corporate facilities management, project management, client accounting, business services and engineering services for unrelated third parties and the properties owned by the programs it sponsors. Additional information on these business segments can be found in Note 13 of Notes to Consolidated Financial Statements in Item 1 of this Report.

Critical Accounting Policies

A discussion of the Company's critical accounting policies, which include principles of consolidation, revenue recognition, impairment of goodwill, deferred taxes, and insurance and claims reserves, can be found in its Annual Report on Form 10-K for the year ended December 31, 2008. There have been no material changes to these policies in 2009.

In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value instruments. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (the "FSP"). The FSP amends SFAS No. 157 to delay the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). There was no effect on the Company's consolidated financial statements as a result of the adoption of SFAS No. 157 as of January 1, 2008 as it relates to financial assets and financial liabilities. For items within its scope, the FSP defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company adopted SFAS No. 157 as it relates to non-financial assets and non-financial liabilities in the first quarter of 2009, which did not have a material impact on the consolidated financial statements.

In December 2007, the FASB issued revised SFAS No. 141, Business Combinations, ("SFAS No. 141R"). SFAS No. 141R changed the accounting for business combinations and requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R changed the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted SFAS No. 141(R) on a prospective basis on January 1, 2009. The adoption of SFAS No. 141(R) will materially affect the accounting for any future business combinations.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51, ("SFAS No. 160"). SFAS No. 160 established new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 requires that noncontrolling interests be presented as a component of consolidated stockholders' equity, eliminates minority interest accounting such that the amount of net income attributable to the noncontrolling interests is presented as part of consolidated net income in the accompanying consolidated statements of operations and not as a separate component of income and expense, and requires that upon any changes in ownership that result in the loss of control of the subsidiary, the noncontrolling interest be re-measured at fair value with the resultant gain or loss recorded in net income. SFAS No. 160 became effective for fiscal years beginning on or after December 15, 2008. The Company adopted SFAS No. 160 on a prospective basis on January 1, 2009, except for the presentation and disclosure requirements which were applied retrospectively for all periods presented. The adoption of SFAS No. 160 had an impact on the presentation and disclosure of noncontrolling (minority) interests in the consolidated financial statements. As a result of the retrospective presentation and disclosure requirements of SFAS No. 160, the Company is required to reflect the change in presentation and disclosure for all periods presented. Principal effect on the consolidated balance sheet as of December 31, 2008 related to the adoption of SFAS No. 160 was the change in presentation of the mezzanine section of the minority interest to redeemable noncontrolling interest, as reported herein. Additionally, the adoption of SFAS No. 160 had the effect of reclassifying (income) loss attributable to noncontrolling interest in the consolidated statements of operations from minority interest to separate line items. SFAS No. 160 also requires that net income (loss) be adjusted to include the net (income) loss attributable to the noncontrolling interest, and a new line item for net income (loss) attributable to controlling interest be presented in the consolidated statements of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities ("SFAS No. 161"). SFAS No. 161 is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. SFAS No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity's liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to

enable financial statement users to locate important information about derivative instruments. SFAS No. 161 became effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company adopted SFAS No. 161 in the first quarter of 2009. The adoption of SFAS No. 161 did not have a material impact on the consolidated financial statements.

In April 2008, the FASB issued FSP SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, ("FSP SFAS 142-3"). FSP SFAS 142-3 is intended to improve the consistency between the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets, ("SFAS No. 142"), and the period of expected cash flows used to measure the fair value of the assets under SFAS No. 141R. FSP SFAS 142-3 amends the factors an entity should consider in developing renewal or extension assumptions in determining the useful life of recognized intangible assets. In addition to the required disclosures under SFAS No. 142, FSP SFAS 142-3 requires disclosure of the entity's accounting policy regarding costs incurred to renew or extend the term of recognized intangible assets, the weighted average period to the next renewal or extension, and the total amount of capitalized costs incurred to renew or extend the term of recognized intangible assets. FSP SFAS 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company adopted FSP SFAS 142-3 on January 1, 2009. The adoption of FSP SFAS 142-3 did not have a material impact on the consolidated financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities ("FSP EITF 03-6-1"), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF 03-6-1, which will apply to the Company because it grants instruments to employees in share-based payment transactions that meet the definition of participating securities, is effective retrospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company adopted FSP EITF 03-6-1 in the first quarter of 2009. The adoption of FSP EITF 03-6-1 did not have a material impact on the consolidated financial statements.

In April 2009, the FASB issued FSP FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, or FSP FAS No. 107-1 and APB Opinion No. 28-1. FSP SFAS No. 107-1 and APB Opinion No. 28-1 relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP FAS 107-1 and APB Opinion No 28-1 are effective for interim and annual periods ending after March 15, 2009. The adoption of FSP SFAS No. 107-1 and APB Opinion No. 28-1 is not expected to have a material impact on our consolidated financial statements.

RESULTS OF OPERATIONS

Overview

The Company reported revenue of approximately $118.3 million for the three months ended March 31, 2009, compared with revenue of $150.4 million for the same period in 2008. The decrease was primarily the result of decreases in Transaction Services and Investment Management revenue of $25.6 million and $9.8 million, respectively, partially offset by increases in Management Services revenue of $3.8 million.

The net loss attributable to controlling interest for the first three months of 2009 was $41.5 million, or $0.65 per diluted share, and includes a non-cash charge of $12.0 million for real estate related impairments and a $4.8 million charge, which includes an allowance for bad debt on related party receivables and advances. In addition, the first quarter results included approximately $3.0 million of stock-based compensation and $806,000 for amortization of other identified intangible assets.

As of September 30, 2008, the Company initiated a plan to sell the properties it classified as real estate held for investment in its financial statements as of September 30, 2008. As of March 31, 2009, the Company has a covenant within its credit agreement which requires the sale of one of these assets before June 1, 2009, and the recent downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions. Pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, this resulted in an assessment of the value of the assets given this reduced potential ownership hold period. This valuation review resulted in the Company recognizing an impairment charge of approximately $6.8 million against the carrying value of the properties for the three months ended March 31, 2009.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

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


                                                    Three Months Ended
                                                        March 31,                        Change
                                                   2009           2008             $               %
(In thousands)

Revenue
Management services                              $  65,531      $  61,756      $   3,775              6.1 %
Transaction services                                33,533         59,148        (25,615 )          (43.3 )
Investment management                               15,498         25,306         (9,808 )          (38.8 )
Rental related                                       3,743          4,158           (415 )          (10.0 )

Total revenue                                      118,305        150,368        (32,063 )          (21.3 )

Operating Expense
Compensation costs                                 113,271        122,173         (8,902 )           (7.3 )
General and administrative                          26,913         21,652          5,261             24.3
Depreciation and amortization                        2,441          2,478            (37 )           (1.5 )
Rental related                                       4,015          3,789            226              6.0
Interest                                             1,970            878          1,092            124.4
Merger related costs                                     -          2,869         (2,869 )         (100.0 )
Real estate related impairments                      5,222              -          5,222                -

Total operating expense                            153,832        153,839             (7 )              -

Operating Loss                                     (35,527 )       (3,471 )      (32,056 )         (923.5 )

Other (Expense) Income
Equity in losses of unconsolidated entities         (1,231 )       (5,505 )        4,274             77.6
Interest income                                        145            305           (160 )          (52.5 )
Other expense                                         (725 )         (520 )         (205 )          (39.4 )

Total other income (expense)                        (1,811 )       (5,720 )        3,909             68.3

Loss from continuing operations before income
tax (provision) benefit                            (37,338 )       (9,191 )      (28,147 )         (306.2 )
Income tax (provision) benefit                      (2,328 )        3,839         (6,167 )         (160.6 )

Loss from continuing operations                    (39,666 )       (5,352 )      (34,314 )         (641.1 )

Discontinued Operations
Loss from discontinued operations, net of
taxes                                               (3,614 )       (1,015 )       (2,599 )         (256.1 )
Gain on disposal of discontinued operations,
net of taxes                                             -             73            (73 )         (100.0 )

Total loss discontinued operations                  (3,614 )         (942 )       (2,672 )         (283.7 )

Net loss                                           (43,280 )       (6,294 )      (36,986 )         (587.6 )
Net (loss) income from noncontrolling
interests                                           (1,778 )            4         (1,782 )      (44,550.0 )

Net loss attributable to Grubb & Ellis Company   $ (41,502 )    $  (6,298 )    $ (35,204 )         (559.0 )

Revenue

Transaction and Management Services Revenue

The Company earns revenue from the delivery of transaction and management services to the commercial real estate industry. Transaction fees include commissions from leasing, acquisition and disposition, and agency leasing assignments as well as fees from appraisal and consulting services. Management fees, which include reimbursed salaries, wages and benefits, comprise the remainder of the Company's services revenue, and include fees related to both property and facilities management outsourcing as well as project management and business services. 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. As of March 31, 2009, the Company managed approximately 241.2 million square feet of property compared to 218.0 million square feet for the same period in 2008.

Management Services revenue of $65.5 million for the three months ended March 31, 2009 includes revenue from the transfer of management of a significant portion of GERI's captive property portfolio to Grubb & Ellis Managements Services of $2.2 million.

Transaction Services revenue, including brokerage commission, valuation and consulting revenue, was $33.5 million for the three months ended March 31, 2009. The Company's Transaction Services business was negatively impacted by the current economic environment, which has reduced commercial real estate transaction velocity, particularly investment sales.

Investment Management Revenue

Investment Management revenue of $15.5 million for the three months ended March 31, 2009 reflected the revenue generated through the fee structure of the various investment products, which included acquisition and disposition fees of approximately $2.0 million and captive management fees of $8.5 million. These fees include acquisition, disposition, financing, and property and asset management. Key drivers of this business are the dollar value of equity raised, the amount of transactions that are generated in the investment product platforms and the amount of assets under management.

In total, $210.1 million in equity was raised for the Company's investment programs for the three months ended March 31, 2009, compared with $263.7 million in the same period in 2008. The decrease was driven by a decrease in TIC equity raised, partially offset by an increase in equity raised by the Company's public non-traded REITs. During the three months ended March 31, 2009, the Company's public non-traded REIT programs raised $197.8 million, 166.6% more than the $74.2 million equity raised in the same period in 2008. The Company's TIC 1031 exchange programs raised $10.3 million in equity during the first quarter of 2009, compared with $52.1 million in the same period in 2008. The decrease in TIC equity raised for the three months ended March 31, 2009 reflects the continued decline in current market conditions.

Acquisition fees decreased approximately $8.1 million, or 79.9%, to approximately $2.0 million for the three months ended March 31, 2009, compared to approximately $10.1 million for the same period in 2008. The quarter-over-quarter decrease in acquisition fees was primarily attributed to a decrease of $3.3 million in fees earned from the Company's non-traded REIT programs, a decrease in fees from the Private Client Management platform, formerly known as Wealth Management, of $3.0 million, and a decrease of $3.6 million in fees from the TIC programs, offset by $1.9 million in recognition of deferred acquisition fees during the three months ended. During the three months ended March 31, 2009, the Company acquired 3 properties on behalf of its sponsored programs for an approximate aggregate total of $36.4 million, compared to 19 properties for an approximate aggregate total of $348.9 million during the same period in 2008.

Disposition fees decreased approximately $320,000, or 100%, to zero for the three months ended March 31, 2009, compared to approximately $320,000 for the same period in 2008. There were no disposition fees earned by the Company during the three months ended March 31, 2009. Offsetting the disposition fees during the three months ended March 31, 2008 was approximately $423,000 of amortization of identified intangible contract rights associated with the acquisition of Triple Net Properties Realty, Inc. ("Realty") as they represent the right to future disposition fees of a portfolio of real properties under contract. There was no amortization of identified intangible contract rights for the three months ended March 31, 2009.

Captive management fees were down approximately 1.1% year-over-year and include the movement of approximately $2.2 million of revenue to the Company's management services segment. Exclusive of this transfer of revenue, captive management fees increased approximately 25.7% year-over-year.

Rental Revenue

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

Operating Expense Overview

The Company's operating expense of $153.8 million for the three months ended March 31, 2009 remained flat year over year when compared to the same period in 2008. Although there was an insignificant change in overall operating expenses, the Company recognized real estate impairments of $5.2 million during the three months ended March 31, 2009. Additionally an increase in interest expense of $1.1 million due an increase in notes payable secured by properties held for sale balance and increases in general and administrative expense of $5.3 million for the three months ended March 31, 2009. Offsetting these increases were decreases in compensation costs from synergies created as a result of the Merger of $8.9 million and decreases of merger related costs of $2.9 million.

Compensation Costs

Compensation costs decreased approximately $8.9 million, or 7.3%, to $113.3 million for the three months ended March 31, 2009, compared to approximately $122.2 million for the same period in 2008 due to a decrease in commissions paid of approximately $14.6 million due to the seasonality of the Company's business as the Company has typically experienced its lowest quarter revenue from Transaction Services in the quarter ending March 31, 2009 partially offset by an increase in compensation costs of $4.5 million as a result of an increase in reimbursable salaries, wages and benefits due to the growth in the Management Services portfolio.

General and Administrative

General and administrative expense increased approximately $5.3 million, or 24.3%, to $26.9 million for the three months ended March 31, 2009, compared to approximately $21.7 million for the same period in 2008 due to an increase of approximately $4.8 million in bad debt expense and a $2.6 million increase in legal and audit fees related to the year end audit and restatement partially offset by various decreases related to management's cost saving efforts.

General and administrative expense was 22.7% of total revenue for the three months ended March 31, 2009, compared with 14.4% for the same period in 2008.

Depreciation and Amortization

Depreciation and amortization remained flat at approximately $2.4 million for the three months ended March 31, 2009, compared to approximately the same period in 2008. Included in depreciation and amortization expense was $806,000 for amortization of other identified intangible assets.

Rental Expense

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

Interest Expense

Interest expense increased approximately $1.1 million, or 124.4%, to $2.0 million for the three months ended March 31, 2009, compared to $878,000 for the same period in 2008. Interest expense is primarily comprised of interest expense related to the Company's line of credit.