GBE Grubb & Ellis Company Common Stock

SANTA ANA, Calif., Nov. 8 /PRNewswire-FirstCall/ -- NNN Realty Advisors, Inc., a full-service nationwide commercial real estate asset management and services firm, today announced financial results for the third quarter ended September 30, 2007. NNN Realty Advisors (the Company) reported revenue of $53.1 million, earnings per share (EPS) of $0.10 and earnings before interest, taxes, depreciation and amortization (EBITDA) of $16.5 million. Excluding $4.7 million of non-cash and non-recurring items, net of taxes, normalized revenue was $47.0 million, normalized EPS was $0.21 and normalized EBITDA was $14.8 million. Business Highlights * On November 2, 2007, the Securities and Exchange Commission (SEC) declared the Registration Statement related to the proposed merger between NNN Realty Advisors and Grubb & Ellis Company (NYSE:GBE) effective, allowing for a shareholder vote on December 6, 2007 * Cash and cash equivalents totaled $51.9 million, which reflects a reduction of $25.0 million to fund a deposit held in escrow related to the Company's proposed merger with Grubb & Ellis Company * Raised $547.4 million on a year-to-date basis ($341.3 million in tenant- in-common (TIC) programs and $206.1 million in SEC-Registered non-traded real estate investment trust (REIT) programs), which represents a 50% increase over the $364.3 million raised through the first nine months of 2006 * Expanded the portfolio of properties under management to 39.1 million square feet, valued at approximately $5.4 billion, with the completion of 59 acquisitions year-to-date valued in excess of $1.6 billion * Increased the number of TIC investors to more than 3,900, which represents a 26% increase from the 3,100 investors as of the beginning of the year * Increased the number of investors in NNN Healthcare/Office REIT, Inc. and NNN Apartment REIT, Inc., to more than 5,300 and 2,400, respectively * Paid a dividend for the third quarter of 2007 of $0.09 per common share on October 15, 2007 to stockholders of record as of September 28, 2007 * Distributions of $247.7 million year-to-date to TIC investors * Distributions of $152.4 million year-to-date to SEC-registered non- traded REIT investors, of which $2.9 million and $1.8 million were paid to investors in the Healthcare/Office REIT and Apartment REIT, respectively. These payments represent a yield of 7.25% and 6.90% in the Healthcare/Office REIT and Apartment REIT, respectively. The remaining distributions were primarily made to investors in G REIT as a result of the continuing liquidation of that non-traded REIT. "The ability of NNN Realty Advisors to successfully execute our business plan through the fluctuations in the capital markets during the third quarter demonstrates the fundamental strength of our company," commented Scott D. Peters, CEO and president of NNN Realty Advisors. "Upon completion of the merger with Grubb & Ellis Company, we expect to leverage their well- established brand to further strengthen and expand the market reach of the various investment programs sponsored by NNN Realty Advisors." NNN Realty Advisors was formed in September 2006 to acquire Triple Net Properties, LLC (Triple Net Properties); Triple Net Properties Realty, Inc. (Realty); and NNN Capital Corp., (Capital Corp.) and to bring the businesses conducted by those companies under one corporate umbrella. In November of 2006, NNN Realty Advisors completed a $160.0 million private placement of common stock to institutional investors and certain accredited investors with 16 million shares of its common stock sold in the offering at $10.00 per share. Net proceeds from the offering totaled approximately $146.0 million. Triple Net Properties was the predecessor to NNN Realty Advisors prior to November 16, 2006 and therefore the results of operations for the three and nine months ended September 30, 2006 do not include the earnings of the acquired subsidiaries, but instead include the results of Triple Net Properties for the full period. NNN Realty Advisors presents financial results based on accounting principles generally accepted in the United States of America, or GAAP, as well as selected non-GAAP financial measures intended to reflect its normalized results of operations. The Company believes these normalized financial results provide investors with additional insight into its underlying results of operations. Normalized financial results exclude non- cash and other non-recurring items as fully described in the reconciliation of GAAP financial measures to non-GAAP normalized financial measures in the accompanying financial data. Third Quarter Financial Results GAAP net income totaled $4.1 million for the three months ended September 30, 2007, an increase of $4.6 million from GAAP net loss of $0.5 million for the comparable period in 2006. The $4.6 million increase in GAAP net income was driven by an $18.3 million increase in total services revenue, partially offset by a $5.6 million increase in total services expense. Other operating revenue and expenses, net, decreased approximately $5.9 million, of which $4.6 million resulted from additional depreciation and amortization related to two properties held for sale to the Strategic Office Fund (Fund) for which the Company will be the sponsor. Since the Company will continue to maintain a 6% ownership interest in the Fund, under GAAP the equity method of accounting is used, with the results of these two properties reflected in continuing operations. The remaining $1.3 million resulted from an increase in general and administrative costs, primarily related to compensation related costs (including $0.2 million of non-cash stock compensation). Also offsetting the year-over-year revenue increase was a loss from equity method investments of $0.5 million and an increase in income tax expense of $2.0 million. Effective with the close of NNN Realty Advisors' $160.0 million private placement offering in November 2006, Triple Net Properties became a wholly-owned subsidiary, which caused a change in Triple Net Properties' tax status from a non-taxable partnership to a taxable C corporation. Normalized results exclude the $4.6 million ($2.7 million net of tax) of depreciation and amortization, which was reflected in continuing operations under GAAP, as it is expected that these two properties will be sold to the Fund at their original cost during the first quarter of 2008. Excluding $4.7 million of non-cash and non-recurring items, normalized net income for the third quarter of 2007 was $8.8 million or $0.21 per diluted share. EBITDA was $16.5 million for the third quarter of 2007 and includes $5.0 million related to the two properties held for sale to the Fund mentioned above. Excluding the $5.0 million related to the two properties held for sale to the Fund, but adding back $3.3 million of other non-cash and non-recurring items, normalized EBITDA was $14.8 million for the three months ended September 30, 2007. Cash flows from operating activities were $9.4 million for the three months ended September 30, 2007. Nine Month Financial Results (1) GAAP net income was $17.9 million for the nine months ended September 30, 2007 an increase of $1.9 million, or 11.7%, from GAAP net income of $16.0 million for the comparable period in 2006. The $1.9 million increase was due to a $39.5 million increase in total services revenue and a $2.1 million increase in interest income from cash invested from the $160.0 million private placement offering in November 2006. These increases were partially offset by a $20.6 million increase in total services expense and a $7.8 million decrease in other operating revenue and expenses, net. Of note, $4.6 million of the $7.8 million decrease resulted from additional depreciation and amortization related to the aforementioned two properties held for sale to the Fund. The remainder of the $7.8 million decrease was related to an increase in general and administrative costs, of which $1.7 million was related to compensation related costs (including $0.2 million of non-cash stock based compensation) and $1.4 million was related to legal expenses, primarily related to the Mission Residential and Core litigation matters. Also offsetting the year-over-year increase was an $11.4 million increase in income tax expense. Excluding $9.6 million of non-cash and non-recurring items, the Company's normalized net income for the nine months ended September 30, 2007 was $27.5 million or $0.65 per diluted share. EBITDA totaled $39.5 million for the nine months ended September 30, 2007 and includes $5.0 million related to the two held for sale properties mentioned above. Excluding the $5.0 related to these two properties, but adding back $8.4 million of non-cash and non-recurring items, our normalized EBITDA was $42.9 million for the nine months ended September 30, 2007, an increase of 59% over normalized EBITDA of $27.0 million for the nine months ended September 30, 2006. Cash flows from operating activities were $22.4 million for the nine months ended September 30, 2007. (1) Refer to the supplemental financial schedule for additional financial information related to the nine months ending September 30, 2007 and 2006. Real Estate Portfolio As of September 30, 2007, the Company provided management services for a diverse portfolio of 187 properties, encompassing over 39.1 million square feet of office, healthcare office, multi-family and retail properties in 29 states that were acquired by NNN Realty Advisors for approximately $5.4 billion in the aggregate. Merger Agreement with Grubb & Ellis Company As previously announced on May 22, 2007, the Company entered into a merger agreement with Grubb & Ellis Company. The proposed merger, which has been approved by the boards of directors of both NNN Realty Advisors and Grubb & Ellis, will combine one of the world's leading full-service commercial real estate organizations with a leading sponsor of commercial real estate programs to create a diversified services business providing a complete range of transaction, management, consulting and investment services. The combined company will possess a strong platform for continued growth. On November 2, 2007, the SEC declared effective the Registration Statement on Form S-4 related to the merger. A shareholder meeting to vote on the matter has been scheduled for December 6, 2007. Pursuant to the agreement, the merger will be effected through the issuance of 0.88 shares of Grubb & Ellis common stock for each share of NNN Realty Advisors common stock outstanding. The transaction is expected to close in the fourth quarter of 2007, subject to approval by stockholders of both companies and other customary closing conditions for transactions of this type. Following the merger, NNN Realty Advisors stockholders will own approximately 59 percent of the combined company. NNN Realty Advisors, Inc. NNN Realty Advisors (http://www.nnnrealtyadvisors.com/) is a nationwide commercial real estate asset management and services firm that sponsors real estate investment programs to provide investors with the opportunity to engage in tax-deferred exchanges of real property and to invest in other real estate investment vehicles, including public non-traded real estate investment trusts and real estate investment funds. NNN Realty Advisors is the parent company of Triple Net Properties, LLC, Triple Net Properties Realty, Inc. and NNN Capital Corp., a FINRA-registered broker-dealer. NNN Realty Advisors is the sponsor of commercial real estate investment programs; including tax-deferred 1031 tenant-in-common (TIC) exchanges and two recently launched public non-traded real estate investment trusts, NNN Apartment REIT and NNN Healthcare/Office REIT. NNN Realty Advisors currently manages a portfolio of commercial real estate valued at approximately $5.4 billion. THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SHARES. In connection with the proposed merger, NNN Realty Advisors and Grubb & Ellis have filed a joint proxy statement/prospectus with the Securities and Exchange Commission as part of a registration statement regarding the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus of NNN Realty Advisors and Grubb & Ellis because it contains important information about NNN Realty Advisors and Grubb & Ellis and the proposed merger. Investors and security holders may obtain copies of the joint proxy statement/prospectus and the definitive proxy statement/prospectus, and other documents filed by NNN Realty Advisors and Grubb & Ellis with the SEC at the SEC's website at http://www.sec.gov/. The definitive joint proxy statement/prospectus and other relevant documents may also be obtained free of charge from NNN Realty Advisors and Grubb & Ellis by directing such request to: NNN Realty Advisors, Inc., 1551 N. Tustin Avenue, Suite 300, Santa Ana, CA 92705, 714-667-8252 x861, Attention: Michael Rispoli or to Grubb & Ellis Company, 500 West Monroe, Suite 2800, Chicago, IL 60661, 312-698-6707, Attention: Janice McDill. Investors and security holders are urged to read the joint proxy statement/prospectus and other relevant material when they become available before making any voting or investment decisions with respect to the merger. NNN Realty Advisors, Grubb & Ellis and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of NNN Realty Advisors and Grubb & Ellis, respectively, in connection with the merger. Information about NNN Realty Advisors' and Grubb & Ellis' directors and executive officers is set forth in the joint proxy statement/prospectus, which can be found on the SEC's website at http://www.sec.gov/. FORWARD-LOOKING LANGUAGE This press release contains "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Any statement in this press release about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward looking statements. Such statements include, but are not limited to, statements about the benefits of the proposed merger involving NNN Realty Advisors and Grubb & Ellis, including the combined company's plans, objectives, expectations and intentions with respect to future operations, products and services. Any forward-looking statements are based upon the current beliefs and expectations of NNN Realty Advisors' and Grubb & Ellis' management and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements of transactions of Grubb & Ellis, NNN Realty Advisors and their affiliates or industry results or the benefits of the proposed merger to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: changes in NNN Realty Advisors' results of operations; uncertainties relating to the implementation of the NNN Realty Advisors' real estate investment and asset management strategies; changes in general economic and real estate conditions; the failure to realize synergies and cost-savings from the transaction or delay in the realization thereof; the inability to combine the businesses of NNN Realty Advisors and Grubb & Ellis successfully, or that such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; increased operating costs and business disruption following the merger, including adverse effects on employee retention and on business relationships with third parties; the failure of NNN Realty Advisors and Grubb & Ellis stockholders to approve the transaction; the ability to obtain governmental approvals of the transaction on a timely basis; the effects of general and local economic and real estate conditions; reliance on the largest stockholders as well as other key executive officers, the loss of any such key executive officers or the failure to hire and retain qualified employees; and the ability to expand the Grubb & Ellis footprint internationally. Additional information or factors which could impact the companies and the forward-looking statements contained herein are included in each company's filings with the Securities and Exchange Commission, including the companies' joint proxy statement/prospectus. Any forward looking statements speak only as of the date on which they are made and the companies assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. NNN REALTY ADVISORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 (1) 2007 2006 (1) (In thousands, except per share data) (Unaudited) (Unaudited) SERVICES REVENUE Transaction $22,414 $10,544 $62,617 $39,948 Management 11,550 10,215 32,407 28,482 Dealer-Manager 5,069 - 12,913 - Total services revenue 39,033 20,759 107,937 68,430 OTHER REVENUE Rental 13,006 2,303 17,625 6,849 Interest 986 833 2,405 2,304 Other 118 108 261 108 Total other revenue 14,110 3,244 20,291 9,261 TOTAL REVENUE 53,143 24,003 128,228 77,691 OPERATING EXPENSE Compensation costs 17,098 13,609 45,042 31,559 General and administrative 10,233 6,377 29,953 18,984 Depreciation and amortization 5,034 507 6,017 1,548 Rental related expense 8,869 2,519 13,743 7,062 Interest expense 5,641 1,478 6,685 2,739 Loss on disposal of property and equipment - 1 17 135 Total operating expense 46,875 24,491 101,457 62,027 OPERATING INCOME (LOSS) 6,268 (488) 26,771 15,664 OTHER INCOME (EXPENSE) Equity in earnings (loss) of unconsolidated entities (519) (19) (40) 418 Interest income 919 57 2,183 57 Realized gain (loss) on marketable securities (700) - 411 - Total other income (expense) (300) 38 2,554 475 Income (loss) from continuing operations before minority interest and income tax provision 5,968 (450) 29,325 16,139 Minority interest (155) (48) (111) (48) Income (loss) from continuing operations before income tax provision 6,123 (402) 29,436 16,187 Income tax provision 2,039 - 11,423 - Income (loss) from continuing operations 4,084 (402) 18,013 16,187 Total loss from discontinued operations (30) (138) (88) (138) NET INCOME (LOSS) $4,054 $(540) $17,925 $16,049 Basic earnings (loss) per share Income (loss) from continuing operations $0.10 $(0.02) $0.43 $0.83 (Loss) from discontinued operations - (0.01) - (0.01) Net earnings (loss) per share $0.10 $(0.03) $0.43 $0.82 Diluted earnings (loss) per share Income (loss) from continuing operations $0.10 $(0.02) $0.43 $0.83 (Loss) from discontinued operations - (0.01) - (0.01) Net earnings (loss) per share $0.10 $(0.03) $0.43 $0.82 Shares used in computing basic net earnings (loss) per share 41,943 19,598 41,943 19,554 Shares used in computing diluted net earnings (loss) per share 42,127 19,598 42,057 19,554 (1) Based on Generally Accepted Accounting Principles (GAAP). Triple Net Properties was the predecessor to NNN Realty Advisors prior to November 16, 2006. The operating results for the three and nine months ended September 30, 2006 includes the results of Triple Net Properties only. Triple Net Properties' tax status was a non-taxable partnership and, accordingly, did not reflect a tax provision. NNN REALTY ADVISORS, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP NORMALIZED FINANCIAL MEASURES Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (In thousands, except per share data) (Unaudited) (Unaudited) GAAP revenue $53,143 $24,003 $128,228 $77,691 Non-cash amortization of identified intangible contract rights (a) 799 - 2,620 - Strategic Office Fund properties (b)(6,949) (6,949) Normalized revenue $46,993 $24,003 $123,899 $77,691 GAAP net income (loss) $4,054 $(540) $17,925 $16,049 Non-cash amortization of identified intangible contract rights (a) 799 - 2,620 - Non-cash amortization of other intangible assets (c) 57 - 57 - Non-cash stock based compensation (d) 2,416 2,134 5,014 2,134 Strategic Office Fund properties (b) 4,679 - 4,679 - Non-recurring legal expense (e) 80 - 477 - Non-recurring credits (f) - 2,539 - 2,539 Prepayment penalty (g) - 550 - 550 Documentary/transfer taxes and other closing costs (h) - 1,171 - 1,171 SEC investigation (i) - 320 - 320 Other non-recurring expense (j) - - 341 - Tax adjustment (k)(3,335) - (3,630) - Normalized net income $8,750 $6,174 $27,483 $22,763 Normalized diluted earnings per share $0.21 $0.32 $0.65 $1.16 GAAP net income (loss) $4,054 $(540) $17,925 $16,049 Interest expense 484 1,478 1,528 2,739 Interest income (915) (57) (2,178) (57) Realized (gain) loss on sale of securities 700 - (411) - Depreciation and amortization (including $57 thousand of intangible asset amortization) 484 507 1,467 1,548 Strategic Office Fund interest expense 5,157 - 5,157 - Strategic Office Fund interest income (4) - (4) - Strategic Office Fund depreciation and amortization 4,550 - 4,550 - Taxes - GAAP 2,039 - 11,423 - EBITDA $16,549 $1,388 $39,457 $20,279 Normalized net income $8,750 $6,174 $27,483 $22,763 Interest expense 484 1,478 1,528 2,739 Interest income (915) (57) (2,178) (57) Realized (gain) loss on sale of securities 700 - (411) - Depreciation and amortization (excluding $57 thousand of intangible asset amortization) 427 507 1,410 1,548 Taxes - normalized 5,374 - 15,053 - Normalized EBITDA $14,820 $8,102 $42,885 $26,993 GAAP to Non-GAAP Normalized Adjustments: (a) Represents the non-cash amortization of identified intangible contract rights associated with the acquisition of Realty. (b) At September 30, 2007, the Company was holding two properties on its balance sheet for sale to the Strategic Office Fund, an institutional investment fund for which the Company will be the sponsor and will maintain a continuing 6% ownership interest. Pursuant to the provisions of SEC Staff Accounting Bulletin 103, Topic Z, "Accounting and Disclosure Regarding Discontinued Operations", the Company must account for these properties as part of continuing operations since it plans to account for the Strategic Office Fund on the equity method of accounting. The property operations increased the Company's EBITDA by $5.0 million but decreased the GAAP net income by $2.4 million, primarily as a result of $4.6 million of depreciation and amortization that would not have been recorded had the properties been included in discontinued operations. Normalized results exclude the $4.6 million of depreciation and amortization which has been recorded as a result of accounting for these properties as part of continuing operations. (c) Represents amortization of other intangible assets. (d) Non-cash stock based compensation expense based on the fair value of all stock options and restricted stock in accordance with Statement of Financial Accounting Standards (SFAS) No. 123 (R), "Accounting for Stock Based Compensation". (e) Non-recurring legal expense, primarily associated with the Mission Residential litigation matter. (f) Non-recurring credits granted to investors in three programs. (g) Prepayment penalty for early redemption of redeemable preferred liability. (h) Documentary/transfer taxes and other closing costs that the company paid for programs it sponsored. (i) Costs associated with the SEC investigation. (j) Other non-recurring expense primarily related to a one-time corporate transaction. (k) Impact of normalized adjustments to the GAAP provision for income taxes. The following measures are considered "non-GAAP financial measures" under SEC guidelines: (i) Normalized revenue (ii) Normalized net income (iii) Normalized diluted earnings per share (iv) EBITDA, and (v) Normalized EBITDA (1) EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization. Management believes EBITDA is useful in evaluating the Company's performance compared to that of other companies in the same industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisition, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, management uses EBITDA as a measure to evaluate the performance of the Company's various business lines and for other discretionary purposes, including as a significant component when measuring the Company's performance under the employee incentive programs. However, EBITDA is not a recognized measurement under U.S. Generally Accepted Accounting Principles, or GAAP, and when analyzing the Company's operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in the Company's debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and the Company's ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. The Company has presented normalized revenue, normalized net income, normalized EBITDA and EBITDA to assist investors in understanding its normalized results of operations on an on-going basis. The Company is providing these non-GAAP financial measures to investors to enable them to perform additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. Management believes that these are important measures in the evaluation of the Company's results of operations. Investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different than non-GAAP financial measures presented by other companies. NNN REALTY ADVISORS, INC. CONSOLIDATED BALANCE SHEET September 30, December 31, 2007 2006 (In thousands, except per share data) (Unaudited) ASSETS Current Assets: Cash and cash equivalents $51,875 $102,226 Restricted cash/reserves 22,502 4,009 Investment in marketable securities 4,177 2,334 Accounts receivable from related parties - net 38,175 28,843 Advances to related parties - net 16,499 9,668 Notes receivable from related party - net 2,200 10,008 Real estate deposits and preacquisition costs 5,363 17,169 Prepaid expenses and other assets 38,191 3,420 Properties held for sale - net of accumulated depreciation 145,153 40,260 Assets held for sale - net 14,700 9,333 Total current assets 338,835 227,270 Investments in unconsolidated entities 18,863 11,413 Total properties held for investment 134,735 3,835 Property and equipment - net 4,882 4,123 Goodwill 60,183 60,183 Identified intangible assets - net 33,275 20,306 Other assets - net 2,873 913 Total Assets $593,646 $328,043 LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY Current Liabilities: Lines of credit $- $- Accounts payable and accrued expenses 36,820 33,601 Due to related parties 3,083 4,095 Current portion of capital lease obligations 292 184 Current portion of notes payable related to properties held for investment 33,125 4,491 Mortgage loans payable secured by properties held for sale 135,974 46,906 Liabilities of properties held for sale - net 489 595 Other liabilities 12,262 726 Total current liabilities 222,045 90,598 Long-term liabilities: Participating notes 16,277 10,263 Mortgage loans payable secured by properties held for investment 107,318 442 Capital lease obligations 587 401 Deferred tax liability - 3,184 Total Liabilities 346,227 104,888 MINORITY INTEREST 12,793 1,211 STOCKHOLDERS' EQUITY Common Stock 437 423 Additional paid in capital 217,501 212,635 Retained earnings 17,108 8,912 Accumulated other comprehensive (loss) (420) (26) Total Equity $234,626 $221,944 TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY $593,646 $328,043 NNN Realty Advisors, Inc. Supplemental Financial Schedule Nine Months Ended September 30, 2007 2006 (In thousands) (Unaudited) Segment Data: Acquisition fees $33,613 $16,799 Disposition fees (excluding amortization of intangible contract rights of $2.6 million for the nine months ended September 30, 2007) 18,743 11,512 Loan fees 5,140 3,266 OMEA fees 6,441 6,782 Amortization of intangible contract rights (2,620) - Other transaction revenue 1,300 1,589 Transaction services revenue $62,617 $39,948 Compensation expense $21,095 $13,458 Operating and administrative expense 11,890 13,030 Transaction services expense $32,985 $26,488 Transaction services margin $29,632 $13,460 Transaction services margin % 47.3% 33.7% Management services revenue $32,407 $28,482 Compensation expense 20,787 17,754 Operating and administrative expense 7,149 5,519 Management services expense $27,936 $23,273 Management services margin $4,471 $5,209 Management services margin % 13.8% 18.3% Dealer-manager revenue $12,913 $ - Compensation expense 974 - Operating and administrative expense 8,512 - Dealer-manager expense $9,486 $ - Dealer-manager margin $3,427 $ - Dealer-manager margin % 26.5% - Other operating revenue $20,291 $9,261 Other operating expense 31,049 12,266 Other operating margin $(10,758) $(3,005) Transaction Services Data: Total properties acquired 59 27 Total aggregate purchase price of properties acquired $1,620,578 $1,040,672 Total acquisition fee revenue $33,613 $16,799 Acquisition fee as a percentage of purchase price [A] 2.1% 1.6% Total properties disposed 24 16 Total aggregate sales value at disposition $753,366 $610,538 Total disposition fee revenue (excluding amortization of intangible contract rights of $2.6 million for the nine months ended September 30, 2007) $18,743 $11,512 Disposition fee as a percentage of aggregate sales value [B] 2.5% 1.9% OMEA as a percentage of TIC equity raised 1.9% 1.9% Aggregate value of loans brokered $732,079 $755,300 Property Management Data: Average square feet of property under management (excluding multi family) 28,103 25,904 Property and asset management fee revenue $27,619 $24,835 Property and asset management fee per average square foot $1.31 $1.28 Total multi family outsourced square feet of property under management 8,606 4,425 Total non-multi family outsourced square feet of property under management 6,277 7,718 Total square feet of property under management 39,147 30,911 [A] Excluding the purchase price of $140.5 million related to the two properties held for sale to the Strategic Office Fund and $154.8 million of purchase price related to five other properties that were consolidated at September 30, 2007, the acquisition fee as a percentage of purchase price for the nine months ended September 30, 2007 was 2.5%. [B] Disposition fee as a percentage of aggregate sales value for the nine months ended September 2006, was impacted by the sale of $267.3 million of G REIT assets at a 1.5% fee. DATASOURCE: Triple Net Properties, LLC CONTACT: Scott D. Peters, Chief Executive Officer and President, Francene LaPoint, Chief Financial Officer, 1-877-IRS-1031, +1-714-667-8252, or media, Jill Swartz, +1-714-667-8252, ext. 251, , all of NNN Realty Advisors, Inc. Web site: http://www.nnnrealtyadvisors.com/

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