SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 21, 2007
GRUBB & ELLIS COMPANY
(Exact Name of Registrant
as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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1-8122
(Commission File Number)
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94-1424307
(IRS Employer Identification No.)
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1551 North Tustin Avenue, Suite 300
Santa Ana, California
(Address of Principal Executive Offices)
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92705
(Zip Code)
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Registrants telephone number, including area code:
(714) 667-8252
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
The information reported in Item 2.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 2.01. Completion of Acquisition and Disposition of Assets.
Triple Net Properties, LLC (Triple Net Properties), an indirect wholly-owned subsidiary of
Grubb & Ellis Company (Grubb & Ellis or the Company), is a sponsor for tenant-in-common (TIC)
programs through various affiliated entities. Consequently, Triple Net Properties, directly or
indirectly, from time to time enters into agreements to acquire, and subsequently acquires, various
commercial properties and temporarily warehouses such properties for sale to these TIC programs.
On December 21, 2007, an affiliate of Triple Net Properties, NNN Eastern Wisconsin Medical
Portfolio, LLC (NNN Eastern Wisconsin) acquired from Aurora Medical Group, Inc. (Aurora), an
unaffiliated third party, a portfolio of six (6) medical office properties located in Wautoma,
Greenville, Suamico, Kiel, Plymouth and Waterford, Wisconsin (the Properties) for a purchase
price of $41,000,000, plus closing costs. The Properties were acquired pursuant to a Commercial
Offer to Purchase Agreement entered into on November 21, 2007, and amended on November 29, 2007, by
Aurora and Triple Net (the Purchase Agreement). Pursuant to the terms of the Purchase Agreement,
Triple Net assigned its rights under the Purchase Agreement to NNN Eastern Wisconsin. Upon the
closing of the Purchase Agreement, NNN Eastern Wisconsin leased back to Aurora all six (6) medical
office properties, each pursuant to a substantially identical fifteen (15) year triple net lease
(subject to a five year extension), and with Aurora responsible for all capital expenditures and
improvements during the term of each lease (each an Aurora Lease). The Aurora Leases have an
aggregate annual base rent of $2,984,078, with a 6% increase every three years. In connection with
entering into each Aurora Lease, Aurora executed both a Subordination, Non-Disturbance and
Attornment Agreement (the Subordination Agreement), and an Estoppel Certificate (the Estoppel
Certificate), in favor of PNC, and an affiliate of Aurora, Aurora Health Care, Inc., executed a
guaranty with respect to each Aurora Lease in favor of NNN Eastern Wisconsin (the Guaranty).
The purchase of the Properties was financed pursuant to the PNC Senior Loan (as defined in
Item 2.03 below) with PNC Bank, National Association (PNC) and with an additional mezzanine loan
(the PNC Mezzanine Loan) from PNC. An acquisition fee of $1,230,000, or 3% of the purchase
price, was deferred upon initial purchase by NNN Realty Advisors, Inc., a wholly-owned subsidiary
of the Company, in accordance with accounting principles generally accepted in the United States of
America (GAAP). On December 28, 2007, approximately 50%, or $615,000 of the acquisition fee will
be recognized using the equity method of accounting.
The foregoing is a summary of the terms and conditions of the Purchase Agreement, each Aurora
Lease, Subordination Agreement, Estoppel Certificate and Guaranty and does not purport to be a
complete discussion of any of such documents. Accordingly, the foregoing is qualified in
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its entirety by reference to the full text of the Purchase Agreement, each Aurora Lease,
Subordination Agreement, Estoppel Certificate and Guaranty. The Purchase Agreement and a form of
Aurora Lease, Subordination Agreement, Estoppel Certificate and Guaranty is annexed to this Current
Report on Form 8-K as Exhibit10.1, Exhibit 10.2, Exhibit 10.3, Exhibit 10.4, Exhibit 10.5 and
Exhibit 10.6, respectively.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant
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On December 21, 2007, in order to effect the acquisition of the Properties, NNN Eastern
Wisconsin entered into (i) a $32,300,000 senior loan with PNC (the PNC Senior Loan) and (ii) a
$3,400,000 mezzanine loan with PNC (the PNC Mezzanine Loan). The sums due under the PNC Senior
Loan and the PNC Mezzanine Loan are secured by a Mortgage, Security Agreement, Assignment of Leases
and Rents and Fixture Filing executed by NNN Eastern Wisconsin in favor of PNC dated December 21,
2007 (the Mortgage).
The PNC Senior Loan is evidenced by a promissory note (the PNC Promissory Note) that matures
on January 1, 2018 and bears an interest at a rate of 6.46% per annum through maturity.
Interest-only payments commence on February 1, 2008 and on the first day of each calendar month
thereafter until and including January 1, 2013. Commencing February 1, 2013, and on the first day
of each month thereafter up to and including December 1, 2017, a constant monthly payment of
$203,309 is due. The balance of the principal sum, together with all unpaid interest and all other
amounts owed pursuant to the PNC Promissory Note, is due and payable on January 1, 2018. The PNC
Senior Loan may not be prepaid, generally, prior to November 1, 2017, except in the event of
casualty loss or condemnation. Commencing January 1, 2011, and continuing through October 31,
2017, the PNC Senior Loan, except in the event of casualty loss or condemnation, can only be
prepaid, in whole or in part, provided PNC does not complete a sale of the PNC Senior Loan in
connection with the issuance of commercial mortgage-backed securities within 12 months following
the funding of the PNC Senior Loan, and if such prepayment also includes the simultaneous payment
of the greater of (i) 1% of the outstanding principal balance of the PNC Promissory Note at the
time of prepayment, or (ii) a yield maintenance amount as defined in the PNC Promissory Note;
thereafter, the Senior PNC Loan may be prepaid, in whole or in part, without premium or yield
maintenance. The PNC Senior Loan contains customary representations, warranties, covenants and
indemnities.
The PNC Mezzanine Loan is evidenced by a promissory note that matures on February 19, 2008
(the PNC Mezzanine Note) and pays interest-only monthly on funding through the last day of the
calendar month of December 31, 2007 and on February 1, 2008 in arrears. Interest under the PNC
Mezzanine Note is a variable rate, equal to the sum of 200 basis points plus the then applicable
30-Day LIBOR Rate.
The foregoing is a summary of the terms and conditions of each of the PNC Promissory Note, the
PNC Mezzanine Note and the Mortgage and does not purport to be a complete discussion of any
documents. Accordingly, the foregoing is qualified in its entirety by reference to the full text
of the PNC Promissory Note, the PNC Mezzanine Note and the Mortgage, each of
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which is annexed to this Current Report on Form 8-K as Exhibit 10.7, 10.8 and 10.9, respectively.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
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(b)
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On December 22, 2007, the Company, by unanimous written consent of its board of
directors, changed its fiscal year end from the 30
th
day of June of each year
to the 31
st
day of December of each year, effective as of December 31, 2007.
The Companys Annual Report on Form 10-K for the year ended December 31, 2007 will cover
the transition period.
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Item 8.01. Other Events
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On December 22, 2007, the Company, by unanimous written consent of its board of directors,
reaffirmed the appointment of Francene LaPoint as Executive Vice President, Accounting and Finance,
whose financial duties will relate primarily to NNN Realty Advisors, Inc., to hold office until her
successor has been appointed and qualified, or until her earlier death, resignation or removal.
On December 28, 2007, Triple Net Properties issued a press release announcing the acquisition
of the Properties. A copy of the press release, which is hereby incorporated into this filing in
its entirety, is attached to this Current Report on Form 8-K as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
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(a) Financial Statements.
It is not practical to provide the required financial statements at this time. Such financial
statements will be filed as an amendment to this Current Report on Form 8-K no later than 71 days
after the deadline for filing this Form 8-K.
b) Pro Forma Financial Information.
See paragraph (a) above.
(d) Exhibits.
10.1
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Commercial Offer to Purchase by and between Aurora Health Care, Inc. and Triple Net
Properties, LLC, dated November 21, 2007.
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10.2
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First Amendment to Offer to Purchase by and between Aurora Medical Group, Inc. and Triple Net
Properties, LLC, dated November 29, 2007.
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10.3
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Form of Lease among NNN Eastern Wisconsin Medical Portfolio, LLC and Aurora Medical Group,
Inc., dated as of December 21, 2007.
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10.4
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Form of Subordination, Non-Disturbance and Attornment Agreement, between Aurora Medical
Group, Inc. and PNC Bank, National Association dated as of December 21, 2007.
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10.5
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Form of Estoppel Certificate from Aurora Medical Group, Inc. to PNC Bank, National
Association, dated as of December 21, 2007.
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10.6
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Form of Guaranty executed by Aurora Health Care, Inc. in favor of NNN Eastern Wisconsin
Medical Portfolio, LLC dated December 21, 2007.
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10.7
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Promissory Note for $32,300,000 senior loan of NNN Eastern Wisconsin Medical Portfolio, LLC
to the order of PNC Bank, National Association, dated December 21, 2007.
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10.8
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Promissory Note for $3,400,000 mezzanine loan by NNN Eastern Wisconsin Medical Portfolio, LLC
to the order of PNC Bank, National Association, dated December 21, 2007.
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10.9
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Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing by NNN
Eastern Wisconsin Medical Portfolio, LLC in favor of PNC Bank, National Association, dated
December 21, 2007.
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99.1
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Press Release, (Triple Net Properties Acquires Eastern Wisconsin Medical Portfolio in
Wisconsin), dated December 28, 2007, of Triple Net Properties, LLC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GRUBB & ELLIS COMPANY
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Date: December 28, 2007
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By:
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/s/ Scott D. Peters
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Name:
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Scott D. Peters
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Title:
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Chief Executive Officer and
President
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EXHIBIT INDEX
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Item
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Number
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Description
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10.1
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Commercial Offer to Purchase by and between Aurora Health Care, Inc. and Triple Net
Properties, LLC, dated November 21, 2007.
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10.2
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First Amendment to Offer to Purchase by and between Aurora Medical Group, Inc. and Triple Net
Properties, LLC, dated November 29, 2007.
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10.3
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Form of Lease among NNN Eastern Wisconsin Medical Portfolio, LLC and Aurora Medical Group,
Inc., dated as of December 21, 2007.
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10.4
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Form of Subordination, Non-Disturbance and Attornment Agreement, between Aurora Medical
Group, Inc. and PNC Bank, National Association dated as of December 21, 2007.
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10.5
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Form of Estoppel Certificate from Aurora Medical Group, Inc. to PNC Bank, National
Association, dated as of December 21, 2007.
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10.6
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Form of Guaranty executed by Aurora Health Care, Inc. in favor of NNN Eastern Wisconsin
Medical Portfolio, LLC dated December 21, 2007.
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10.7
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Promissory Note for $32,300,000 senior loan of NNN Eastern Wisconsin Medical Portfolio, LLC
to the order of PNC Bank, National Association, dated December 21, 2007.
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10.8
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Promissory Note for $3,400,000 mezzanine loan by NNN Eastern Wisconsin Medical Portfolio, LLC
to the order of PNC Bank, National Association, dated December 21, 2007.
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10.9
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Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing by NNN
Eastern Wisconsin Medical Portfolio, LLC in favor of PNC Bank, National Association, dated
December 21, 2007.
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99.1
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Press Release, (Triple Net Properties Acquires Eastern Wisconsin Medical Portfolio in
Wisconsin), dated December 28, 2007, of Triple Net Properties, LLC.
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