1178132--3/11/2008--NNN_2002_VALUE_FUND

related topics

{investment, property, distribution}

{loan, real, estate}

{interest, director, officer}

{tax, income, asset}

{debt, indebtedness, cash}

{financial, litigation, operation}

{cost, regulation, environmental}

{loss, insurance, financial}

{stock, price, share}

{personnel, key, retain}

If any of the parties to a future sale agreement default thereunder, or if a sale does not otherwise close, our liquidating distributions to our unit holders may be delayed or reduced. If we are unable to find a buyer for our one remaining unconsolidated property at our expected sales price, our liquidating distributions to our unit holders may be delayed or reduced. Decreases in property values may reduce the amount that we receive upon the sale of our one remaining unconsolidated property. 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 unit holders may be delayed and/or reduced. If our liquidation costs or unpaid liabilities are greater than we expect, our liquidating distributions to our unit holders may be delayed and/or reduced. If we are not able to sell our one remaining unconsolidated property in a timely manner, we may experience severe liquidity problems, may not be able to meet our obligations to our creditors and ultimately may become subject to bankruptcy proceedings. We expect to incur significant costs in connection with Exchange Act compliance and we may become subject to liability for any failure to comply. 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. If we are unable to retain our Manager and sufficient executives and staff members of our Manager to complete our plan of liquidation in a reasonably expeditious manner, our liquidating distributions to our unit holders might be delayed or reduced. Our unit holders may not receive any profits resulting from the sale of our one remaining unconsolidated property, 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 adoption of our plan of liquidation. There can be no assurance that our plan of liquidation will result in greater returns to our unit holders on their investment within a reasonable period of time, than our unit holders would receive through other alternatives reasonably available to us. Our Manager may amend our plan of liquidation without unit holder approval. Our Manager will have the authority to sell our one remaining unconsolidated property under terms less favorable than those assumed for the purpose of estimating our net liquidation value range. Our plan of liquidation may lead to unit holder litigation which could result in substantial costs and distract our Manager. Our Manager s executives and our Manager have conflicts of interest that differ from our unit holders as a result of the liquidation. Our plan of liquidation has caused our accounting basis to change, which could require us to write-down our assets. We may be unable to sell our interest in a limited liability company at our expected value. Unit holders 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. Other Risks of Our Business The pending SEC investigation of our Manager could result in lawsuits or other legal actions against us or our affiliates. As a result of our failure to timely file our Form 10 and other reports and documents required by the Exchange Act in 2004, we may be subject to SEC enforcement action or other legal action. Erroneous disclosure in the prior performance tables in our private placement offering documents could result in lawsuits or other actions against us or our Manager which could have an adverse effect upon our business and results of operations. Distributions by us have included and will continue to 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 unit holders investments and our unit holders may lose some or all of their investments. If our one remaining unconsolidated property is unable to generate sufficient funds to pay its expenses, liabilities or distributions, our liquidating distributions to our unit holders may be reduced and/or delayed. Our one remaining unconsolidated property faces significant competition. The sale of our assets could cause our unit holders to recognize income in excess of cash distributions to our unit holders. 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 unit holders. Lack of diversification and illiquidity of real estate may make it difficult for us to sell underperforming properties or recover our investment in our one remaining unconsolidated property. 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 our one remaining unconsolidated property. Due to our ownership of only a single property interest in the Congress Center property, we are dependent upon those tenants that generate significant rental income at Congress Center, which may have a negative impact on our financial condition if these tenants are unable to meet their rental obligations to us. 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 unit holders best interests and may subject these investments to increased risks. There is currently no public market for our units. Therefore, it will likely be difficult for our unit holders to sell their units and, if our unit holders are able to sell their units in a fully liquid manner, our unit holders may elect to do so at a substantial discount from the price our unit holders paid for these matters. We do not expect to register as an investment company under the Investment Company Act of 1940 and, therefore, we will not be subject to the requirements imposed on an investment company by such Act. If we are required to register as an investment company under the Investment Company Act of 1940, the additional expenses and operational limitations associated with such registration may reduce our unit holders investment return. Our success will be dependent on the performance of our Manager as well as key employees of our Manager. 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. Additionally, restrictive covenants in our loan documents may restrict our operating activities. The pending SEC investigation of our Manager could result in defaults or alleged defaults under our loan documents or limit our ability to obtain debt financing in the future. If we purchased our one remaining unconsolidated property at a time when the commercial real estate market was experiencing substantial influxes of capital investment and competition for properties, the real estate we purchased may not appreciate or may decrease in value. We have terminated our regular monthly distributions; future distributions are at the discretion of our Manager. Our past performance is not a predictor of our future results. The conflicts of interest of our Manager s executives with us mean we will not be managed by our Manager solely in the best interests of our unit holders.

Full 10-K form ▸

1178132--3/11/2008--NNN_2002_VALUE_FUND_LLC