1260429--3/31/2010--NNN_2003_VALUE_FUND

related topics

{investment, property, distribution}

{debt, indebtedness, cash}

{loan, real, estate}

{tax, income, asset}

{interest, director, officer}

{cost, regulation, environmental}

{loss, insurance, financial}

{operation, natural, condition}

{personnel, key, retain}

{stock, price, share}

{condition, economic, financial}

We will rely on the disposition of our properties to generate cash to fund our operations and pay distributions to our unit holders. Since our cash flow is not assured, we may not pay distributions in the future. Our use of borrowings to fund or partially fund our previous 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. If we are not able to sell our properties 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. Most, if not all, of our properties were purchased at a time when the commercial real estate market was experiencing substantial influxes of capital investment and competition for properties; therefore, our properties may not maintain their current value and may experience further decreases in value. Due to the risks involved in the ownership of real estate, including adverse real estate market conditions and our dependence upon our tenants to pay rent, there is no guarantee of any return on our unit holders investments and our unit holders may lose some or all of their remaining investment. 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 financial position, results of operations and cash flows and has created substantial doubt about our ability to continue as a going concern. Upon the sale of our properties we may have to pay prepayment fees or defeasance charges on our mortgages. Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our unit holders. The ongoing market disruptions may adversely affect our operating results and financial condition. 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. If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect our cash flows from operations. If we are subjected to a forced or voluntary liquidation, our unit holders may not receive any profits resulting from the sale of one of our properties, or receive such profits in a timely manner, because we may provide financing to the purchaser of such property. 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. Our previous acquisition of value-added properties increases the risk of owning real estate and could adversely affect our results of operations, our ability to pay distributions to our unit holders and our ability to dispose of properties in a timely manner. Distributions paid by us have included, and may in the future include, a return of capital. Our properties face significant competition. 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. 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 success is dependent on the performance of our manager, its executive officers and employees. Our properties may face competition from other properties owned, operated or managed by our manager or its affiliates. Our manager s past performance is not a predictor of our future results. 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. 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. We may dispose of assets to affiliates of our manager, which could result in us entering into transactions on less favorable terms than we would receive from a third party. The absence of arm s length bargaining may mean that our agreements are not as favorable to unit holders as these agreements otherwise would have been. 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. Increases in our insurance rates could adversely affect our cash flow and our ability to fund our operations. Terrorist attacks and other acts of violence or war may affect the markets in which we operate and have a material adverse effect on our financial condition, results of operations and our unit holders investment. Costs of complying with governmental laws and regulations related to environmental protection and human health and safety may be high. 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. We could be treated as a publicly-traded partnership for U.S. federal income tax purposes. 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 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. 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.

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1260429--3/31/2010--NNN_2003_VALUE_FUND_LLC