Summary Risk Factors

An investment in Griffin Capital Essential Asset REIT, Inc. is subject to risks, including the following:

  • There is currently no public trading market for our shares and there may never be one; therefore, it will be difficult for our stockholders to sell their shares.
  • If we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for the acquisition of properties, and our investors’ overall return may be reduced. We may use an unlimited amount from any source to pay our distributions.
  • Future distribution declarations are at the sole discretion of our Board of Directors and are not guaranteed.
  • In determining net asset value per share, we relied upon a valuation of our portfolio of properties as of December 31, 2012. Valuations and appraisals of our properties are estimates of fair value and may not necessarily correspond to realizable value upon the sale of such properties, therefore our net asset value per share may not reflect the amount that would be realized upon a sale of each of our properties.
  • If we, through our Advisor, are unable to find suitable investments, then we may not be able to achieve our investment objectives or pay distributions.
  • Our ability to operate profitably will depend upon the ability of our advisor to efficiently manage our day-to-day operations.
  • Our sponsor, advisor, property manager and their officers and certain of their key personnel will face competing demands relating to their time, which may cause our operating results to suffer.
  • Our advisor will face conflicts of interest relating to the incentive fee structure under our advisory agreement, which could result in actions that are not necessarily in the long-term best interests of our stockholders.
  • The Preferred Units rank senior to all classes or series of partnership interest in our Operating Partnership and therefore, any cash we have to pay distributions will be used to pay distributions to the Preferred Equity Investor first, which could have a negative impact on our ability to pay distributions to common stockholders.
  • Payment of fees and expenses to our advisor and its affiliates will reduce cash available for investment and distribution.
  • Many of our properties will depend upon a single tenant for all or a majority of their rental income, and our financial condition and ability to make distributions may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a lease termination.
  • We may not be able to sell our properties at a price equal to, or greater than, the price for which we purchased suchproperties, which may lead to a decrease in the value of our assets.
  • Adverse economic conditions may negatively affect our property values, returns and profitability.
  • If we breach covenants under our loan with Midland National Life Insurance Company, our unsecured credit facilitywith KeyBank National Association and other syndication partners, and our loan with AIG, we could be held in default under such loans, which could accelerate our repayment dates and materially adversely affect the value of an investment in us.
  • Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to make distributions to our stockholders.
  • Disruptions in the credit markets and real estate markets could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to our stockholders.
  • Failure to qualify as a REIT would adversely affect our operations and our ability to make distributions as wewill incur tax liabilities.
  • Our stockholders may have tax liability on distributions they elect to reinvest in our common stock.
  • Special considerations apply to employee benefit plans, IRAs, or other tax-favored benefit accounts investing in ourshares.
  • We have an accumulated deficit to date and our operations may not be profitable for the year ending December 31, 2014.