REAL ESTATE PURCHASE AND SALE AGREEMENT

REAL ESTATE PURCHASE AND SALE AGREEMENT

APARTMENTS AT CANYON RIDGE, LLC,
a Delaware limited liability company, SELLER

and

GRUBB & ELLIS REALTY INVESTORS, LLC,
a Virginia limited liability company, BUYER

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INDEX TO

REAL ESTATE PURCHASE AND SALE AGREEMENT

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REAL ESTATE PURCHASE AND SALE AGREEMENT

THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (this “Agreement”), is made as of the       day of July, 2008 (the “Agreement Date”) by and between APARTMENTS AT CANYON RIDGE, LLC, a Delaware limited liability company, herein referred to as “Seller” and GRUBB & ELLIS REALTY INVESTORS, LLC, a Virginia limited liability company, its permitted successors and/or assigns, collectively herein referred to as “Buyer.”

R E C I T A L S:

WHEREAS, Seller desires to sell certain improved real property along with certain related personal and intangible property, and Buyer desires to purchase said real, personal and intangible property on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the mutual undertakings set forth herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Buyer and Seller hereby agree as follows:

1.  Property Included in Sale . Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase from Seller, the following:

(a) That certain real property commonly known as 3868 Central Pike Road, Hermitage, Tennessee, and more particularly described in Exhibit A attached hereto (the “Real Property”);

(b) Seller’s interest in all rights, privileges and easements appurtenant to the Real Property, including, without limitation, all minerals, oil, gas and other hydrocarbon substances as well as all development rights, air rights, water, water rights (and water stock, if any) relating to the Real Property and any easements, rights-of-way or other appurtenances used in connection with the beneficial use and enjoyment of the Real Property;

(c) Seller’s interest in all improvements and fixtures located on the Real Property, including all buildings and structures presently located on the Real Property, all apparatus, equipment and appliances used in connection with the operation or occupancy of the Real Property, such as heating and air conditioning systems and facilities used to provide any utility services, refrigeration, ventilation, garbage disposal, recreation or other services on the Real Property (all of which are collectively referred to as the “Improvements”);

(d) Seller’s interest in any tangible or intangible personal property owned by Seller and used in the ownership, use and operation of the Real Property and Improvements, including, without limitation, the right to use any trade name (excepting those including the name “Principal”), trademarks, service marks, building and property names and building signs used in connection with the Real Property and the Improvements, including the names “Canyon Ridge Apartments” and all variations thereof (the “Personal Property”) and any contract or lease rights, agreements, utility contracts, management, maintenance and service contracts or other rights relating to the ownership, use and operation of the Real Property (the “Service Contracts”);

All of the items referred to in subparagraphs (a), (b), (c) and (d) above are hereinafter collectively referred to as the “Property.”

2.  Purchase Price/Remedies .

(a) The total purchase price (the “Purchase Price”) for the Property is Thirty-Six Million Fifty Thousand and 00/100 Dollars ($36,050,000.00). The Purchase Price is payable by wire transfer of immediately available funds in U.S. dollars via the federal bank wire transfer system deliverable no later than 12:00 p.m. Central on the Closing Date (as defined herein) to LandAmerica American Title Company — 1951, Attn: Debby S. Moore, 2505 N. Plano Road, Suite 3100, Richardson, Texas 75082 (telephone: 214.570.0200 (x103); fax: 214.570.0210) (the “Title Company”) at Closing.

(b) Within two (2) business days of the Agreement Date, Buyer shall deposit into escrow with the Title Company the sum of Three Hundred Sixty Thousand Five Hundred and 00/100 Dollars ($360,500.00) as the earnest money deposit (the “Initial Deposit”) payable by wire transfer of immediately available funds in U.S. dollars via the federal bank wire transfer system. Provided that Buyer has not terminated this Agreement prior to the Approval Date, Buyer shall deposit an additional Three Hundred Sixty Thousand Five Hundred and 00/100 Dollars ($360,500.00) (the “Additional Deposit”) within two (2) business days after the Approval Date. (The Initial Deposit and the Additional Deposit are collectively referred to herein as the “Deposit”.) Any interest earned by the Deposit shall be considered part of the Deposit. Except as otherwise provided in this Agreement, the Deposit shall be held by the Title Company in a federally insured interest bearing account and applied against the cash portion of the Purchase Price at Closing.

(c) In the event Buyer shall be in or alleged to be in default hereunder, Seller shall deliver a written notice to Buyer within five (5) business days of learning of such default, stating with particularity the alleged default of Buyer and the action required by Buyer to cure such default, whereupon Buyer shall have ten (10) business days after receipt of such written notice in which to cure the alleged default to Seller’s reasonable satisfaction (and the Closing Date shall be delayed, if necessary, until the end of such ten (10) business day period). Seller shall not be required to give notice of default, opportunity to cure or delay the Closing Date if Buyer’s default is the failure to deliver the items required by paragraphs 2(b), 7(c) and 7(d) of this Agreement. In the event after the expiration of the ten (10) business day cure period set forth in the previous sentence, the purchase and sale provided for under this Agreement does not close due to Buyer’s default and no fault of Seller, Buyer and Seller hereby agree that Seller will be damaged thereby. Therefore, Seller and Buyer hereby agree that the Deposit shall represent and be liquidated damages payable to Seller in such event as a fair and reasonable sum to recompense Seller in light of Seller’s removal of the Property from the market and the costs incurred, labor and services performed and the loss of its bargain, all of which are difficult to ascertain. These liquidated damages shall constitute Seller’s sole and exclusive remedy except for those certain indemnifications of Seller by Buyer otherwise provided for in this Agreement.

(d) In the event that Seller shall be in default hereunder, Buyer’s sole and exclusive remedy shall be either: (i) deliver a written notice to Seller within five (5) business days of learning of such default, stating with particularity the alleged default of Seller and the action required by Seller to cure such default, and stating Buyer’s intent to terminate this Agreement if the default is not cured, whereupon Seller shall have ten (10) business days after receipt of such written notice in which to cure the alleged default to Buyer’s reasonable satisfaction and to thereby prevent termination of this Agreement (and the Closing Date shall be delayed, if necessary, until the end of such ten (10) business day period), or in the event such default is not cured within such ten (10) business day period, terminate this Agreement by written notice to Seller and the Title Company, in which case the Deposit shall be returned to Buyer; or (ii) if Seller’s default results from its failure to transfer possession and title to the Property to Buyer at Closing, enforce specific performance. In no event under (i) or (ii) above shall Seller be liable to Buyer for any actual, punitive, speculative, consequential or other damages.

3.  Title to the Property . At the Closing, Seller shall convey to Buyer and Buyer shall accept from Seller marketable and insurable fee simple title to the Real Property, all rights, privileges and easements appurtenant thereto, and to the Improvements, by duly executed and acknowledged Special Warranty Deed attached hereto as Exhibit H (the “Deed”), subject only to the Permitted Exceptions. Evidence of delivery of marketable and insurable fee simple title shall be the issuance at Closing of a current ALTA Owner’s Policy of Title Insurance in the full amount of the Purchase Price by the Title Company, dated the day of Closing, insuring fee simple title to the Real Property, Improvements, and appurtenant rights, privileges and easements, in Buyer, subject only to the Permitted Exceptions and together with such endorsements as are reasonably required by Buyer (the “Title Policy”).

4.  Buyer’s Due Diligence . Buyer shall be allowed to conduct the following due diligence prior to purchasing the Property:

(a) Seller has provided Buyer with a copy of its existing title policy for review, and Buyer shall order, at Buyer’s expense, a title commitment for the Property (the “Title Report”). Seller has also provided Buyer with a copy of an existing as-built survey showing the location of all improvements and recorded easements on the Property as of the date of such survey, and Buyer shall also order, at Buyer’s expense, an updated survey of the Property sufficient to enable Buyer’s title company to issue an ALTA owner’s policy of title insurance (the “Survey”). The Title Report and the Survey are collectively referred to as the “Title Documents”. On or before 5:00 p.m. Central on July 7, 2008, Buyer may approve or disapprove (in its sole and absolute discretion) the Title Documents for the Property by delivering written notice to Seller (“Buyer’s Title Notice”) specifying each title defect or matter for which Buyer is requesting a cure by Seller (“Title Defect”) and each Title Company requirement (“Title Requirement”) which Buyer is requesting Seller to satisfy in order for the Title Policy to be issued for the Property at Closing. Buyer’s failure to deliver Buyer’s Title Notice to Seller within the time period specified above shall be a conclusive presumption that Buyer has approved the Title Documents and this Agreement shall remain in full force and effect. Within three (3) business days after receiving Buyer’s Title Notice, Seller shall deliver to Buyer written notice (“Seller’s Title Notice”) of those Title Defects which Seller covenants and agrees to either eliminate or cure to Buyer’s satisfaction by the Closing Date and those Title Requirements which Seller agrees to satisfy by the Closing Date. Seller’s failure to deliver Seller’s Title Notice to Buyer within the time period specified above shall be deemed to constitute Seller’s election not to eliminate or cure any such Title Defect or to satisfy any such Title Requirements; provided, however , that Seller shall in any case be obligated to remove all monetary encumbrances at or prior to Closing without Buyer having to notify Seller of same. If Seller elects (or is deemed to have elected) not to eliminate or cure any Title Defects or to not satisfy any Title Requirements, Buyer shall have the right, by written notice delivered to Seller within two (2) business days of Seller’s Title Notice (or the expiration of the three (3) business days in which Seller must provide Seller’s Title Notice), to either (i) waive its prior notice as to the Title Defects which Seller has elected (or is deemed to have elected) not to cure and those Title Requirements which Seller has elected (or is deemed to have elected) not to satisfy, or (ii) terminate this Agreement by delivering written notice to Seller, at which time the Deposit shall be returned to Buyer and the parties shall have no further obligations hereunder except for those which expressly survive termination. Buyer’s failure to deliver any written notice within such two (2) business day period shall be a conclusive presumption that Buyer has approved the uncured Title Documents and unsatisfied Title Requirements and this Agreement shall remain in full force and effect.

(b) Buyer’s review of the operating statements of the Property only for the previous two (2) calendar years as well as the current calendar year-to-date, provided same are available and in Seller’s actual possession.

(c) Buyer’s review of copies of any site plans and building drawings and specifications currently in the possession of Seller.

(d) Buyer’s review of copies of any maintenance and service agreements currently in force and in the possession of Seller. Buyer shall provide written notice to Seller no less than three (3) business days prior to the Approval Date of those agreements Buyer wishes to assume. In the absence of such notice, Seller shall terminate all agreements.

(e) Buyer’s review of a certain environmental report prepared for Seller and currently in the possession of Seller (as set forth on Exhibit K, the “Environmental Report”). Seller is providing the Environmental Report to Buyer for informational purposes only and Buyer shall not rely on the Environmental Report in determining whether to purchase the Property; provided, however , that the foregoing statement shall not prohibit Buyer from exercising its right to terminate prior to the Approval Date based on its own environmental due diligence. In the event the transaction contemplated herein does not close for any reason whatsoever, Buyer shall immediately return the Environmental Report to Seller.

(f) Buyer’s review of the Tenant files. Seller shall allow Buyer to review the tenant files (including tenant leases) at the office of the property manager during normal business hours upon one (1) business day’s notice. Files must be reviewed in the property manager’s office and no part thereof may be removed, copied or duplicated prior to Closing.

The items referred to above in subparagraphs 4(a)-(f) , any other items provided by Seller to Buyer in connection with Buyer’s inspection of the Property, or items reviewed at the Property by Buyer (e.g. if applicable, tenant files, plans and specifications) shall be collectively referred to as the “Due Diligence Items”; provided, however , that “Due Diligence Items” shall not include any items ordered and paid by Buyer (e.g., the updated title commitment and updated survey). Buyer acknowledges receipt of the Due Diligence Items on June 13, 2008.

The Due Diligence Items contain confidential material, data and information and by accepting delivery of same Buyer hereby acknowledges that the Due Diligence Items will be relied upon at Buyer’s own risk and further that as provided herein below will be kept confidential at all times by Buyer and its agents, employees and representatives (“Confidentiality Requirement”).

Buyer agrees that it shall make no copies of the Due Diligence Items. It may, however, make notes (such notes shall be deemed to be part of the Due Diligence Items). The Due Diligence Items will be kept confidential and shall not, without Seller’s prior written consent (which consent shall be granted or denied in Seller’s sole discretion), be disclosed by Buyer, or by its agents, representatives or employees, except Seller’s prior written consent shall not be required in order to disclose such information (i) to Buyer’s lender, (ii) its or their consultants, employees, attorneys or other parties assisting Buyer with the transaction contemplated by this Agreement, (iii) as required to be disclosed by applicable laws, rules or regulations, and (iv) to prospective tenant-in-common investors of Buyer. If such consent is granted, the Due Diligence Items shall not be disclosed prior to Seller’s receipt of an Acknowledgment and Disclaimer Agreement as attached hereto as Exhibit E from the person or entity to whom the Due Diligence Items is being disclosed. Moreover, Buyer agrees to reveal the Due Diligence Items only to those of its agents, representatives and employees (“Representatives”) who need to know the Due Diligence Items and who are informed by Buyer of the confidential nature of the Due Diligence Items. Buyer or its Representatives will not volunteer or disclose in any way to any person (i) the fact that the Due Diligence Items have been made available, (ii) any of the Due Diligence Items or any summaries or notes thereof, or (iii) any of the terms, conditions or other facts with respect to the Agreement except as otherwise provided herein.

Buyer hereby releases and discharges any and all claims it may have against Seller or its consultant arising out of the delivery of the Due Diligence Items to Buyer or any inaccuracy of the Due Diligence Items. Further, Buyer hereby agrees to indemnify and hold Seller harmless from any and all claims arising out of the delivery to Buyer of the Due Diligence Items; provided, however , that the foregoing indemnity excludes any claims arising out of the gross negligence or willful misconduct of Seller, its agents, representatives and employees.

Buyer agrees that if it, its Representatives commit a breach of any of the provisions of this Confidentiality Requirement, Seller shall have the right and remedy to institute proceedings to obtain immediate injunctive relief for any breach or threatened breach hereof, it being hereby acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Seller and its affiliates and that money damages will not provide an adequate remedy to Seller and its affiliates. This stipulation with respect to damages incurred by Seller upon a breach of this Confidentiality Requirement by Buyer shall be limited to use in an action for injunctive relief. Further, nothing herein shall be construed to limit any other remedy available to Seller.

(g) Buyer’s review of the physical, environmental, financial and all other characteristics and condition of the Property. Seller agrees to provide Buyer access to the Property following the Agreement Date for the purpose of performing, at Buyer’s sole cost and expense, studies, physical inspections, investigations and tests on the Property (the “Tests”) provided that no such Tests shall be conducted without at least one (1) business day’s prior written notice to Seller and Seller’s prior approval of such Tests. Seller’s execution of this Agreement shall constitute its consent to a non-invasive phase I environmental site assessment being performed on the Property. All forms of invasive Tests are prohibited without Seller’s prior written consent, which consent may be granted or withheld in Seller’s sole discretion. Invasive Tests hereunder include, but are not limited to, any tests or testing beyond a Phase I environmental site assessment, such as collecting or testing asbestos, water, radon, soil or air samples. Buyer’s access is further conditioned on Buyer providing Seller with certificates of insurance listing Seller as an additional insured on all insurance policies evidencing that Buyer’s agents or contractors performing the Tests have insurance in types and amounts satisfactory to Seller as determined by Seller in its reasonable discretion as more specifically set forth on Exhibit J attached hereto and hereby made a part hereof. Seller hereby acknowledges receipt of certificates of insurance on June 30, 2008, and Seller further acknowledges that such insurance certificates are satisfactory to Seller. Buyer shall be required to conduct such Tests in a manner as to not unreasonably disturb or interfere with the current use of the Property and upon completion of such Tests, Buyer agrees at its sole cost to restore the Property to the condition it was in immediately prior to such Tests, including, but not limited to the immediate removal of anything placed on the Property in connection with such Tests. Copies of any third-party reports, letters or other written information generated as a result of such Tests shall be provided to Seller if the sale contemplated by this Agreement does not close for any reason. Buyer shall indemnify, defend (with counsel reasonably satisfactory to Seller), protect, and hold Seller harmless from and against any and all liability, loss, cost, damage, or expense (including, without limitation, reasonable attorney’s fees and costs) (“Losses”) which Seller may sustain or incur by reason of or in connection with any Tests made by Buyer or Buyer’s agents or contractors relating to or in connection with the Property, or entries by Buyer or its agents or contractors onto the Property provided that, Buyer shall not be liable for any losses or liabilities resulting from Buyer’s investigations uncovering the existence of any environmental contamination or any other defects or conditions which adversely impact the Property, except to the extent that Buyer’s investigations exacerbate such conditions and cause Losses to Seller, and Buyer shall not be liable for any losses or liabilities resulting from the gross negligence or willful misconduct of Seller or its agents, representatives or employees. Notwithstanding any provision to the contrary in this Agreement, the indemnity obligations of Buyer under this Agreement shall survive any termination of this Agreement or the delivery of the Deed and the transfer of title pursuant to this Agreement.

If on or before 5:00 p.m. Central on July 14, 2008 (the “Approval Date”), Buyer disapproves any of the Due Diligence Items or the physical and environmental condition of the Property or otherwise decides in its sole discretion not to acquire the Property for any or no reason by providing Seller with written notice, this Agreement shall terminate without any further liability on the part of either party (except for Buyer’s indemnity obligations set forth in paragraph 4 above). In the event of such termination, the Initial Deposit (which amount shall be credited to Seller), shall be returned to Buyer after Buyer returns to Seller all Due Diligence Items and any copies of same. If by 5:00 p.m. Central on the Approval Date Buyer approves the Due Diligence Items and the physical and environmental condition of the Property by providing Seller with written notice, then this Agreement shall remain in full force and effect, Buyer shall deposit the Additional Deposit as set forth in paragraph 2(b) above, and the Deposit shall be held by the Title Company and credited to Seller at Closing as provided herein. If by 5:00 p.m. Central on the Approval Date Buyer does not waive or deem satisfied in writing the Due Diligence Items and the physical and environmental condition of the Property, there shall be a conclusive presumption that Buyer has approved the Due Diligence Items and the physical and environmental condition of the Property, this Agreement shall remain in full force and effect, Buyer shall deposit the Additional Deposit as set forth in paragraph 2(b) above, and the Deposit shall be held by the Title Company and credited to Seller at Closing as provided herein.

5.  Buyer’s Conditions to Closing . The following conditions are conditions precedent to Buyer’s obligation to purchase the Property:

(a) Seller maintaining the Property in its present condition until Closing, reasonable wear and tear excepted. In the event that, prior to Closing, the Property, or any part thereof, is destroyed or materially damaged, and such damage exceeds Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), or if condemnation proceedings are commenced against the Property, Buyer shall have the right, exercisable by giving notice of such decision to Seller within ten (10) business days after receiving written notice of such damage, destruction or condemnation proceedings, to terminate this Agreement, in which case neither party shall have any further rights or obligations hereunder. In the event of such termination, the Deposit shall be returned to Buyer. If Buyer elects to accept the Property in its then condition, all proceeds of insurance or condemnation awards payable to Seller by reason of such damage, destruction or condemnation shall be paid or assigned to Buyer and Seller shall credit the Purchase Price to the extent of any deductible under any policies of insurance, which credit shall not exceed the amount of such damages, and Seller shall not compromise, settle or adjust any claims to such proceeds or awards without Buyer’s prior written consent. In the event the casualty damage to the Property is Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) or less, Seller shall have the option to repair or replace such damage prior to Closing. In the event Seller is unwilling or unable to repair or replace such damage, Seller shall, within three (3) business days of its determination of the amount of such damage, notify Buyer of such fact (“Seller’s Notice”) and Buyer shall have the right, exercisable by giving Seller notice within ten (10) business days after receiving Seller’s Notice, either to (i) terminate this Agreement, in which case neither party shall have any further rights or obligations hereunder except any indemnification obligations of Buyer, and the Deposit shall be returned to Buyer and any documents shall be returned to the party depositing the same, or (ii) to accept the Property in its then condition and proceed with the purchase, in which case Buyer shall accept payment or assignment of applicable insurance proceeds, if any, from policies of insurance maintained and paid for by Seller covering the Property up to the amount necessary to make the necessary repairs or restorations and Seller shall credit the Purchase Price to the extent of any deductible under any policies of insurance, which credit shall not exceed the amount of such damages. If Buyer elects to proceed under clause (ii) above, Seller shall not compromise, settle or adjust any claims to such proceeds or awards without Buyer’s prior written consent.

(b) Delivery by Seller at Closing of the Deed and the other items described in Section 7(b) hereof.

(c) Performance by Seller as and when required by this Agreement of each and every term, covenant, condition and agreement required to be performed by Seller pursuant to this Agreement.

(d) Neither Seller nor any agent, representative or employee of Seller shall have introduced any hazardous substances on the Property other than those substances, if any, present as of the Approval Date, or as the same may be found in standard office products or cleaning materials in reasonable quantities and in compliance with all laws.

In the event that the conditions set forth above in this paragraph 5 are not satisfied (and Buyer is not otherwise in default of this Agreement), Buyer may terminate this Agreement, subject to paragraph 2(d) hereof, or waive satisfaction of the condition and close escrow in either instance by giving written notice to Seller. In the event of such termination, for reasons described in (b) – (c) above, the Deposit shall be returned to Buyer.

6.  Seller’s Conditions to Closing . The following conditions are conditions precedent to Seller’s obligation to sell the Property:

(a) The approval of the applicable committee of Seller (the “Committee”), which approval Buyer acknowledges Seller will not seek until the Approval Date has passed and Buyer has failed to exercise its right of termination of this Agreement under paragraph 4. Seller makes no representation with regard to the likelihood of approval of this Agreement or the transaction contemplated herein by its Committee. Seller shall have a period of ten (10) business days after the Approval Date to obtain such approval by its Committee. If for any reason Seller’s Committee does not approve this Agreement or the transaction contemplated herein, this Agreement shall terminate, the Title Company shall return the Deposit to Buyer and neither party shall have any further obligations or rights hereunder.

(b) Delivery by Buyer at Closing of the Purchase Price and the executed Assignment and Assumption of Lessor’s Interest in Leases in the form attached hereto as Exhibit B.

(c) Performance by Buyer as and when required by this Agreement of each and every term, covenant, condition and agreement required to be performed by Buyer pursuant to this Agreement.

In the event that the conditions in this paragraph 6 are not satisfied, Seller may elect, at its sole discretion, to terminate this Agreement or waive satisfaction of the condition and close escrow. In the event of such termination, for reasons described in (b) or (c) above, the Deposit shall be retained by Seller and shall be non-refundable to Buyer.

7.  The Closing .

(a) The Closing hereunder shall be held and delivery of all items to be made at the Closing under the terms of this Agreement shall be made at the offices of the Title Company on August 15, 2008, or such other date prior thereto as Buyer and Seller may mutually agree in writing; provided, however, should such date fall during the final two (2) business days of any calendar month, the date shall automatically be extended to the first business day of the following calendar month such that Closing will not occur during the final two (2) business days of any calendar month (the “Closing Date”). Except as otherwise provided herein, such date may not be extended without the prior written approval of both Seller and Buyer. In the event the Closing does not occur on or before the Closing Date, the Title Company shall, subject to the provisions of paragraph 2, and unless it is notified by both parties to the contrary, within three (3) business days after the Closing Date, return to the depositor thereof items which may have been deposited pursuant to this Agreement. Any such return shall not, however, relieve either party hereto of any liability it may have for its wrongful failure to close.

(b) At or before the Closing, Seller shall deliver to escrow the following:

(i) the Deed conveying to Buyer the Property as required by paragraph 3 above;

(ii) originals or copies of all leases (and amendments thereto, if any) (the “Leases”) and lease files in Seller’s actual and physical possession covering any portion of the Property, any security deposit