1260429--4/2/2007--NNN_2003_VALUE_FUND

related topics

{investment, property, distribution}

{loan, real, estate}

{debt, indebtedness, cash}

{interest, director, officer}

{competitive, industry, competition}

{loss, insurance, financial}

{tax, income, asset}

{personnel, key, retain}

{stock, price, share}

{cost, regulation, environmental}

{financial, litigation, operation}

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. Our properties face significant competition. Competition with entities that have greater financial resources may limit our investment opportunities. We expect to incur significant costs in connection with Exchange Act compliance and we may become subject to liability for any failure to comply. The pending SEC investigation of our Manager could result in lawsuits or other actions against us which could negatively impact our ability to pay distributions to our unit holders. 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. Our properties depend upon the Texas economy and the demand for commercial property. 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. 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 will likely 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. Our use of borrowings to 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 loan documents may restrict our operating or acquisition 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 purchase assets at a time when the commercial real estate market is experiencing substantial influxes of capital investment and competition for properties, the real estate we purchase may not appreciate or may decrease in value. 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, 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 Act, the additional expenses and operational limitations associated with such registration may reduce our unit holders investment return. Dramatic increases in insurance rates could adversely affect our cash flow and our ability to make cash distributions to our unit holders. The conflicts of interest of our Manager and its executive officers with us described below 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--4/2/2007--NNN_2003_VALUE_FUND_LLC