1260429--3/31/2009--NNN_2003_VALUE_FUND

related topics

{investment, property, distribution}

{debt, indebtedness, cash}

{loan, real, estate}

{interest, director, officer}

{tax, income, asset}

{loss, insurance, financial}

{stock, price, share}

{personnel, key, retain}

{product, liability, claim}

{customer, product, revenue}

{regulation, change, law}

{cost, regulation, environmental}

We have guaranteed a portion of the mortgage loan payable on our 901 Civic Center property and if we are unable to sell our 901 Civic Center property before the mortgage loan comes due, the lender may call our guaranty which would have a material adverse effect on our operations and liquidity. We will rely on the disposition of a number of our properties to generate cash and fund our operations. 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 investment. If we acquire assets, or have acquired assets, at a time when the commercial real estate market is or was experiencing substantial influxes of capital investment and competition for properties, the real estate we purchase, or have purchased, may not appreciate or may decrease in value. We depend upon our tenants to pay rent, and their inability to pay rent may substantially reduce our revenues and cash available for our operations. If we are unable to find buyers for our properties at their expected sales prices, the resulting shortfall would have a material adverse effect on our operations. If we are unable to pay the outstanding balances and all accrued interest on our mortgage loans that mature within the next 12 months, the respective lenders may declare us in default of the loans and exercise their remedies under the loan agreements, including foreclosure on the properties, which could have a material adverse effect on our operating activities and cash flow. If we do not meet certain minimum financial covenants required by loans secured by our properties, or obtain waivers from the lenders, the lenders may declare us in default and exercise remedies under the loan agreements, including foreclosures on the properties, which could have a material adverse effect on our operating activities and cash flow. The recent downturn in the credit markets may increase the cost of borrowing, and may make it difficult for us to obtain extensions or renewals or refinancings for our maturing mortgages and for prospective buyers of our properties to obtain financing, which would have a material adverse effect on our operations. 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 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 results of operations, our ability to pay distributions to our unit holders and our ability to dispose of our properties are subject to general economic and regulatory factors we cannot control or predict. 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 acquisition of value-added properties increases the risk of owning real estate and could adversely affect our results of operations, our ability to make distributions to our unit holders and our ability to dispose of properties in a timely manner. Distributions paid by us have, and may in the future, include a return of capital. We could be treated as a publicly-traded partnership for U.S. federal income tax purposes. Our properties face significant competition. Competition with entities that have greater financial resources may limit our real estate investment opportunities. We incur significant and potentially increasing costs in connection with Exchange Act and Sarbanes-Oxley Act compliance and we may become subject to liability for any failure to comply. Erroneous disclosures in the prior performance tables in our private placement offering could result in lawsuits or other actions against us which could have a material adverse effect upon our business and results of operations. 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 may face competition from other properties owned, operated or managed by our manager or its affiliates. Losses for which we either could not or did not obtain insurance will significantly increase our losses 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. Our co-ownership arrangements contain risks not present in wholly owned properties. 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, they may elect to do so at a substantial discount from the price our unit holders paid. Our success is dependent on the performance of our manager, its executive officers and employees. Since our cash flow is not assured, we may not pay distributions in the future. Our manager s past performance is not a predictor of our future results. We do not expect to register as an investment company under the Investment Company Act of 1940 and, therefore, our unit holders will not be entitled to its benefits and protections; and our operating in a manner to avoid registration may reduce cash available for distributions to unit holders. If we are required to register as an investment company under the Act, the additional expenses and operational limitations associated with such registration may reduce our unit holders investment return. Increases in our insurance rates could adversely affect our cash flow and our ability to fund our operations. Our properties are subject to property taxes that may increase in the future, which could adversely affect our ability to sell them to fund our operations. The conflicts of interest of our manager and its executive officers with us may mean that we will not be managed by our manager solely in the best interests of our unit holders.

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1260429--3/31/2009--NNN_2003_VALUE_FUND_LLC