1164246--3/17/2006--G_REIT

related topics

{investment, property, distribution}

{loan, real, estate}

{interest, director, officer}

{debt, indebtedness, cash}

{tax, income, asset}

{cost, regulation, environmental}

{loss, insurance, financial}

{stock, price, share}

{personnel, key, retain}

{provision, law, control}

{financial, litigation, operation}

If our liquidation costs or unpaid liabilities are greater than we expect, our liquidating distributions may be delayed or reduced. If any of the parties to our future sale agreements default thereunder, or if these sales do not otherwise close, our liquidating distributions may be delayed or reduced. Pursuing our plan of liquidation may cause us to fail to qualify as a REIT, which would dramatically lower the amount of our liquidating distributions. Pursuing our plan of liquidation may cause us to be subject to federal income tax, which would reduce the amount of our liquidating distributions. The sale of our assets may cause us to be subject to a 100% excise tax on prohibited transactions, which would reduce the amount of our liquidating distributions. The pending SEC investigation of our Advisor could result in lawsuits or other actions against us or our affiliates. If we are unable to retain our Advisor, our executives and sufficient staff members to complete our plan of liquidation, our liquidating distributions might be delayed or reduced. Our stockholders may not receive any profits resulting from the sale of one or more of our properties, or receive such profits in a timely manner, because we may provide financing to the purchaser of such property. Our entity value may be adversely affected by our adoption of our plan of liquidation. There can be no assurance that our plan of liquidation will result in greater returns to our stockholders on their investment within a reasonable period of time than our stockholders would receive through other alternatives reasonably available to us at this time. Our board of directors may amend our approved plan of liquidation. Our board of directors will have the authority to sell our assets under terms less favorable that those assumed for the purpose of estimating our net liquidation value range. Approval of our plan of liquidation may lead to stockholder litigation which could result in substantial costs and distract our management. Our officers and directors and our Advisor have conflicts of interest that may influence their implementation of our plan of liquidation and may cause them to manage our liquidation in a manner not solely in the best interests of our stockholders. Distributing interests in a liquidating trust may cause our stockholders to recognize gain prior to the receipt of cash. Our adoption of our plan of liquidation caused our accounting basis to change, which could require us to write-down our assets. Stockholders could be liable to the extent of liquidating distributions received if contingent reserves are insufficient to satisfy our liabilities. We may have underestimated the amount of prepayment fees or defeasance charges on our mortgages. We expect to incur increasingly significant costs in connection with Sarbanes-Oxley compliance and we may become subject to liability for any failure to comply. Erroneous disclosures in the prior performance tables in our public offerings could result in lawsuits or other actions against us which could have a material adverse effect upon our business and results of operations. Distributions by us may include a return of capital. Due to the risks involved in the ownership of real estate, there is no guarantee of any return on our stockholders investments and our stockholders may lose some or all of their investment. Our properties face significant competition. We depend upon our tenants to pay rent, and their inability to pay rent may substantially reduce our revenues and cash available for distribution to our stockholders. Lack of diversification and illiquidity of real estate may make it difficult for us to sell underperforming properties or recover our investment in one or more properties. Lack of geographic diversity may expose us to regional economic downturns that could adversely impact our operations or our ability to recover our investment in one or more properties. Our properties depend upon the California and Texas economies and the demand for office space. Losses for which we either could not or did not obtain insurance will adversely affect our earnings and we may be unable to comply with insurance requirements contained in mortgage or other agreements due to high insurance costs. Our co-ownership arrangements with affiliated entities may not reflect solely our stockholders best interests and may subject these investments to increased risks. There is currently no public market for our common stock. Therefore, it will likely be difficult for our stockholders to sell their shares and, if our stockholders are able to sell their shares they will likely do so at a substantial discount from the price they paid. Our success will be dependent on the performance of our Advisor as well as key employees of our Advisor. Our use of borrowings to partially fund improvements on properties could result in foreclosures and unexpected debt service expenses upon refinancing, both of which could have an adverse impact on our operations and cash flow, and restrictive covenants in our loan documents may restrict our operating or acquisition activities. The pending SEC investigation of our Advisor could result in defaults or alleged defaults under our loan documents or limit our ability to obtain debt financing in the future. The real estate we purchased may not appreciate or may decrease in value. Because some of our principal tenants are U.S. government and state agencies, our properties may have a higher risk of terrorist attack than similar properties leased to non-governmental tenants. We depend on the U.S. government for a significant portion of our revenues. Any failure by the U.S. government to perform its obligations or renew its leases upon expiration may harm our cash flow and ability to pay distributions. An increase in the operating costs of our government-leased properties would harm our cash flow and ability to pay distributions. Since our cash flow is not assured, we may not pay distributions in the future. Our board of directors may alter our investment policies at any time without stockholder approval. Our Advisor s past performance is not a predictor of our future results. Certain provisions of Maryland law and our charter and bylaws could hinder, delay or prevent a change in control. The conflicts of interest described below may mean we will not be managed solely in the best interests of our stockholders. The absence of arm s length bargaining may mean that our agreements are not as favorable to our stockholders as these agreements otherwise would have been. If we fail to qualify as a REIT, our stockholders could be adversely affected. We may not be able to meet, or we may need to incur borrowings that would otherwise not be incurred to meet, REIT minimum distribution requirements.

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1164246--3/17/2006--G_REIT_INC