G REIT Plans Liquidating Trust

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SANTA ANA, CA-G REIT, a specialty REIT advised by Grubb & Ellis subsidiary Triple Net Properties that owns buildings occupied by government tenants, intends to enter into a liquidating trust on Jan. 22 to wind up the company’s affairs and liquidate its assets. The specialty REIT, which was incorporated in 2001, has sold a large portion of its assets in the past two years as part of a long-range liquidation plan and expects to dispose of its six remaining investments this year, according to its public filings.

“Although we can provide no assurances, we currently expect to sell all of our assets by March 31, 2008 and anticipate completing our plan of liquidation by June 30, 2008,” it states in one of its recent filings. As of Sept. 30, G REIT owned interests in six properties totaling 1.6 million sf, with 49.2% of that space occupied by government-related tenants.

The formation of the liquidating trust is one of the final steps aimed toward the eventual dissolution of G REIT, which sold nine properties last year after disposing of 10 properties in 2006 under a liquidation plan approved by its stockholders in February 2006. Proceeds from the sales have been distributed to stockholders.

The idea behind G REIT is that government-oriented tenants provide a stable source of rent and, when they grow, are likely to expand within the same buildings they already occupy. G REIT acquired all of its properties separately from Triple Net, but Triple Net acts as adviser to the REIT and manages the latter’s day-to-day operations. Triple Net became a wholly owned indirect subsidiary of Grubb & Ellis with the recent merger of NNN Realty Advisors and Grubb & Ellis.

The G REIT liquidation has involved high-profile office building sales in a number of markets, including a sale last year in which the REIT disposed of the 573,000-sf One World Trade Center office complex in Long Beach for $148.9 million and a deal in August in which the Santa Ana-based firm sold its 211,000-sf Madrona Buildings office complex in Torrance for $52.5 million. G REIT’s liquidation is similar to that of another specialty REIT called T REIT that was advised by Triple Net.

T REIT was formed in 1998 to invest in office, retail, industrial and service properties in states that do not have state income taxes in order to take advantage of greater economic growth that was anticipated in those states. Both were established as nontraded REITs, so-called because their shares do not trade publicly but are owned by shareholders who must meet certain qualifications to own the stock.