1164246--4/15/2009--G_REIT_Liquidating

related topics

{investment, property, distribution}

{loan, real, estate}

{debt, indebtedness, cash}

{interest, director, officer}

{tax, income, asset}

{cost, regulation, environmental}

{loss, insurance, financial}

{product, liability, claim}

The recent downturn in the credit markets may increase the cost of borrowing, and may make it difficult for prospective buyers of our properties to obtain financing, which would have a material adverse effect on our liquidation. We may be unable to secure funding for future capital improvements, which could adversely impact our ability to attract or retain tenants and subsequently fund our operations. Our use of borrowings to fund or partially fund acquisitions and improvements on properties in the past, and our potential use of borrowings to fund improvements in the future, 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 mortgage loan documents may restrict our operating or acquisition activities. Our ability to dispose of our properties and our ability to pay liquidating distributions to our beneficiaries are subject to general economic and regulatory factors we cannot control or predict. We may delay or reduce our estimated liquidating distributions to our beneficiaries. We may be unable to sell our unconsolidated property interest at our expected value. Our co-ownership arrangements with affiliated entities may not reflect solely our beneficiaries best interests and may subject these investments to increased risks. If any party to a future sale agreement with respect to our remaining assets defaults thereunder, or if the sale does not otherwise close, our liquidating distributions may be delayed or reduced. Decreases in property values may reduce the amount that we receive upon a sale of our remaining assets. If we are unable to maintain the occupancy rates of currently leased space and lease currently available space, if tenants default under their leases or other obligations to us during the liquidation process or if our cash flow during the liquidation is otherwise less than we expect, our liquidating distributions to our beneficiaries may be delayed or reduced. If our liquidation costs or unpaid liabilities are greater than we expect, our liquidating distributions to our beneficiaries may be delayed or reduced. There can be no assurance that the plan of liquidation will result in greater returns to our beneficiaries on their investment within a reasonable period of time, than our beneficiaries would receive through other alternatives reasonably available to us. If we are unable to retain our advisor to complete the plan of liquidation, our liquidating distributions might be delayed or reduced. Our beneficiaries may not receive any profits resulting from the sale of one or more of our remaining assets, or receive such profits in a timely manner, because we may provide financing to the purchaser of such property. Our beneficiaries may recognize taxable income as a result of the transfer of GREIT s assets and liabilities to us. The value of our portfolio may be adversely affected by the adoption of the plan of liquidation. Our Trustees may amend the plan of liquidation without further beneficiary approval. Our Trustees have the authority to sell our remaining assets under terms less favorable than those assumed for the purpose of estimating our net liquidation value range. Approval of the plan of liquidation may lead to litigation which could result in substantial costs and distract our Trustees and advisor. Our advisor has conflicts of interest that may influence its performance under the plan of liquidation and may cause it to manage our liquidation in a manner not solely in the best interests of our beneficiaries. Our adoption of the plan of liquidation caused our accounting basis to change, which could require us to write-down our remaining assets. Beneficiaries 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 GREIT s initial and secondary public offering documents could result in lawsuits or other actions against us which could have a material adverse effect upon our business and results of operations. Due to the risks involved in the ownership of real estate, there is no guarantee of any return on our beneficiaries investments and our beneficiaries may lose some or all of their investment. If our unconsolidated property is unable to generate sufficient funds to pay its expenses, liabilities or distributions, our liquidating distributions to our beneficiaries may be reduced and/or delayed. 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 beneficiaries. 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. If one of our insurance carriers does not remain solvent, we may not be able to fully recover on our claims. The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to repay debt obligations and fund operations. Our consolidated properties depend upon the Texas and California 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 beneficiaries best interests and may subject these investments to increased risks. There is currently no public market for our units of beneficial interest and the units of beneficial interest may not be transferred except by operation of law or upon the death of a beneficiary. Our unconsolidated property may not have sufficient cash flow to cover its required debt service payment, which could result in its foreclosure and unexpected debt service expenses upon refinancing, both of which could have an adverse impact on our operations and cash flow. Additionally, restrictive covenants in our loan documents may restrict our disposition activities. 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 liquidating distributions. An increase in the operating costs of our government-leased properties would harm our cash flow and ability to pay liquidating distributions. Since our cash flow is not assured, we may not pay distributions in the future. The conflicts of interest of our advisor and its executive officers with us may mean that we will not be managed by our advisor solely in the best interests of our beneficiaries.

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1164246--4/15/2009--G_REIT_Liquidating_Trust