##### Table of Contents



UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      FORM 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to   Commission File Number 0-51295
      NNN 2003 Value Fund,
    LLC
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-0122092(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1551 N. Tustin
    Avenue, Suite 200
    Santa Ana, California(Address of principal
    executive offices)

92705(Zip Code)    (714) 667-8252
 (Registrants telephone
    number,including area code)
   N/A
 (Former name)
   þ o
  non-accelerated Rule 12b-2
 o o þ
  Rule 12b-2 o þ




---



##### 



NNN 2003
    VALUE FUND, LLC
    (A Delaware Corporation)
  TABLE OF
    CONTENTS
  PART I 
    FINANCIAL INFORMATIONItem 1.


Financial
    Statements

2Condensed
    Consolidated Balance Sheets as of September 30, 2006
    (Unaudited) and December 31, 2005 (Unaudited)

2Condensed
    Consolidated Statements of Operations and Comprehensive Income
    (Loss) for the Three and Nine Months Ended September 30,
    2006 and 2005 (Unaudited)

3Condensed
    Consolidated Statement of Unit Holders Equity for the Nine
    Months Ended September 30, 2006 (Unaudited)

4Condensed
    Consolidated Statements of Cash Flows for the Nine Months Ended
    September 30, 2006 and 2005 (Unaudited)

5Notes to Condensed
    Consolidated Financial Statements (Unaudited)

6Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations

22Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk

34Item 4.


Controls and
    Procedures

35PART II 
    OTHER INFORMATIONItem 1.


Legal
    Proceedings

36Item 1A.


Risk
    Factors

37Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds

38Item 3.


Defaults Upon
    Senior Securities

38Item 4.


Submission of
    Matters to a Vote of Security Holders

38Item 5.


Other
    Information

38Item 6.


Exhibits

38Signatures

39EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   1




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  NNN 2003
    VALUE FUND, LLC
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
 As of
    September 30, 2006 (Unaudited) and December 31, 2005
    (Unaudited)
  September 30,


December 31,2006


2005ASSETSReal estate investments:Operating properties, net

$
45,559,000


$
32,952,000Land held for development


730,000



730,000Properties held for sale, net


49,628,000



62,019,000Investments in unconsolidated real
    estate


7,749,000



5,631,000103,666,000



101,332,000Cash and cash equivalents


1,450,000



10,760,000Investment in marketable securities






1,860,000Accounts receivable, net


1,083,000



273,000Accounts receivable from related
    parties


698,000



721,000Restricted cash


3,269,000



4,049,000Real estate deposits and other
    pre-acquisition costs


18,000



Identified intangible assets, net


4,981,000



5,240,000Other assets 
    properties held for sale


16,612,000



17,861,000Other assets, net


898,000



794,000Notes receivable


2,420,000



2,300,000Total assets

$
135,095,000


$
145,190,000LIABILITIES, MINORITY INTERESTS
    AND UNIT HOLDERS EQUITYMortgage loans payable

$
37,156,000


$
26,415,000Mortgage loans payable secured by
    properties held for sale


47,000,000



67,077,000Accounts payable and accrued
    liabilities


3,469,000



3,833,000Accounts payable due to related
    parties


668,000



330,000Advances from related parties






1,385,000Other liabilities 
    properties held for sale, net


646,000



2,242,000Security deposits, prepaid rent
    and other liabilities


1,227,000



406,00090,166,000



101,688,000Minority interests


901,000



1,368,000Minority interests 
    properties held for sale


7,618,000



1,613,0008,519,000



2,981,000Commitments and contingencies
    (Note 13)Unit holders equity


36,410,000



40,522,000Accumulated other comprehensive
    loss






(1,000
)Total unit holders equity


36,410,000



40,521,000Total liabilities, minority
    interests and unit holders equity

$
135,095,000


$
145,190,000    2




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##### Table of Contents



NNN 2003
    VALUE FUND, LLCCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    AND COMPREHENSIVE INCOME (LOSS)
    For the Three and Nine Months Ended September 30, 2006 and
    2005 (Unaudited)
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Revenues:Rental income

$
1,172,000


$
492,000


$
3,381,000


$
1,248,000Expenses:Rental expenses


936,000



339,000



2,251,000



1,076,000General and administrative


217,000



138,000



584,000



405,000Depreciation and amortization


962,000



161,000



2,195,000



450,0002,115,000



638,000



5,030,000



1,931,000Loss before other income (expense)
    and discontinued operations


(943,000
)


(146,000
)


(1,649,000
)


(683,000
)Other income (expense):Interest expense (including
    amortization of deferred financing costs)


(977,000
)


(130,000
)


(2,310,000
)


(574,000
)Interest and dividend income


65,000



159,000



344,000



277,000Gain on sale of marketable
    securities






10,000



134,000



94,000Equity in earnings (losses) and
    gain on sale of unconsolidated real estate


(350,000
)


1,985,000



(754,000
)


1,871,000Other income


16,000







75,000



Minority interests


12,000



(286,000
)


14,000



(258,000
)Income (loss) from continuing
    operations before discontinued operations

$
(2,177,000
)

$
1,592,000


$
(4,146,000
)

$
727,000Discontinued operations:Gain (loss) on sale of real estate


(41,000
)


(4,000
)


6,197,000



3,407,000Income (loss) from discontinued
    operations


207,000



228,000



(909,000
)


556,000Net income (loss)

$
(2,011,000
)

$
1,816,000


$
1,142,000


$
4,690,000Comprehensive income (loss):Net income (loss)

$
(2,011,000
)

$
1,816,000


$
1,142,000


$
4,690,000Unrealized gain (loss) on
    marketable securities






(7,000
)


1,000



(17,000
)Comprehensive income (loss):

$
(2,011,000
)

$
1,809,000


$
1,143,000


$
4,673,000Net income (loss) per unit:Continuing operations 
    basic and diluted

$
(218.36
)

$
159.20


$
(415.56
)

$
72.70Discontinued
    operations  basic and diluted


16.65



22.40



530.02



396.30Total net income (loss) per
    unit  basic and diluted

$
(201.71
)

$
181.60


$
114.46


$
469.00Weighted average number of units
    outstanding  basic and diluted


9,970



10,000



9,977



10,000    3




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##### Table of Contents



NNN 2003
    VALUE FUND, LLCCONDENSED CONSOLIDATED STATEMENT OF UNIT HOLDERS EQUITY
    For the Nine Months Ended September 30, 2006
    (Unaudited)
  Number of Units


TotalBALANCE 
    December 31, 2005


10,000


$
40,521,000Units repurchased


(30
)


(134,000
)Distributions






(5,120,000
)Net income






1,142,000Unrealized gain on marketable
    securities






1,000BALANCE 
    September 30, 2006


9,970


$
36,410,000    4




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC



CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS

For the
    Nine Months Ended September 30, 2006 and 2005
    (Unaudited)  2006


2005CASH FLOWS FROM OPERATING
    ACTIVITIESNet income

$
1,142,000


$
4,690,000Adjustments to reconcile net income
    to net cash (used in) provided by operating activitiesGain on sale of real estate


(6,197,000
)


(3,407,000
)Gain on sale of marketable
    securities


(134,000
)


(94,000
)Depreciation and amortization
    (including deferred financing costs, deferred rent and above
    market leases)


2,221,000



1,586,000Distributions received in excess of
    earnings (losses) from investments in unconsolidated real estate


869,000



(1,106,000
)Minority interests


1,404,000



355,000Provision for doubtful accounts


114,000



4,000Change in operating assets and
    liabilities:Accounts receivable, including
    receivables from related parties


(950,000
)


180,000Other assets


(184,000
)


(548,000
)Accounts payable and accrued
    liabilities, including payables to related parties


954,000



(94,000
)Security deposits, prepaid rent and
    other liabilities


39,000



(523,000
)Net cash (used in) provided by
    operating activities


(722,000
)


1,043,000CASH FLOWS FROM INVESTING
    ACTIVITIESAcquisition of real estate
    operating properties


(14,810,000
)


(32,359,000
)Acquisition of investments in
    unconsolidated real estate


(2,657,000
)


(810,000
)Proceeds from sale of real estate
    operating properties


22,354,000



25,273,000Proceeds from sale of
    unconsolidated real estate






7,158,000Capital expenditures


(1,261,000
)


(3,735,000
)Purchase of marketable securities


(2,441,000
)


(6,996,000
)Proceeds from sale of marketable
    securities


4,436,000



4,822,000Restricted cash


877,000



214,000Real estate deposits and other
    pre-acquisition costs


(18,000
)


(25,000
)Net cash provided by (used in)
    investing activities


6,480,000



(6,458,000
)CASH FLOWS FROM FINANCING
    ACTIVITIESBorrowings on mortgages payable and
    other debt


10,741,000



34,067,000Principal repayments on mortgages
    payable and other debt


(20,077,000
)


(24,940,000
)Principal repayments on related
    party borrowings


(2,245,000
)


Minority interests contributions


4,778,000



Minority interests distributions


(3,011,000
)


(1,371,000
)Payment of deferred financing costs






(583,000
)Distributions


(5,120,000
)


(2,622,000
)Issuance of member units, net of
    offering costs


(134,000
)


Net cash (used in) provided by
    financing activities


(15,068,000
)


4,551,000NET DECREASE IN CASH AND CASH
    EQUIVALENTS


(9,310,000
)


(864,000
)CASH AND CASH
    EQUIVALENTS  beginning of period


10,760,000



9,896,000CASH AND CASH
    EQUIVALENTS  end of period

$
1,450,000


$
9,032,000SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATIONCash paid during the period for:Interest

$
4,444,000


$
842,000NONCASH INVESTING
    ACTIVITIESAccrual for tenant improvements and
    capital expenditures

$
47,000


$
599,000The following represents certain
    assets acquired and liabilities assumed in connection with our
    acquisitions and dispositions of operating properties and
    investments in unconsolidated real estateIncrease in intangible assets less
    intangible liabilities of acquisitions and dispositions

$
1,496,000


$
227,000Restricted cash

$
97,000


$
305,000Other assets

$
18,000


$
(82,000
)Accrued expenses and security
    deposits

$



$
(204,000
)Minority interests contributions

$
163,000


$
Notes receivable

$



$
2,300,000    5




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)
  1.
    Organization
    and Description of Business        2.
    Summary
    of Significant Accounting Policies  Interim
    Financial Data
  Form 10-K,
 6




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  Recently
    Issued Accounting Pronouncements
    Fair Value
    Measurement
  Considering the Effects of Prior Year
    Misstatements When Quantifying Current Year Misstatements
  Principles
    of Consolidation
  Consolidation of Variable Interest Entities
 7




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  Segments
    3.
    Investments
    in Real Estate  Operating
    Properties
    September 30,


December 31,2006


2005Buildings and tenant improvements

$
37,694,000


$
26,289,000Land


9,483,000



7,389,00047,177,000



33,678,000Less: accumulated depreciation


(1,618,000
)


(726,000
)$
45,559,000


$
32,952,000     2006
    Acquisition of Consolidated Property
  901 Civic
    Center Drive Building  Santa Ana,
    California
    2006
    Acquisition of Unconsolidated Property
   8




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  2006
    Dispositions of Consolidated Properties
  Oakey
    Building  Las Vegas, Nevada
    3500
    Maple  Dallas, Texas (partial sales)
    Investments
    in Unconsolidated Real Estate
    Ownership


September 30,


December 31,Description

Location


Percentage


2006


2005Enterprise Technology Center


Scotts Valley, CA



8.5
%

$
2,543,000


$
2,638,000Chase Tower


Austin, TX



14.8



2,302,000



Executive Center II
    & III


Austin, TX



41.1



2,904,000



2,993,000Total









$
7,749,000


$
5,631,000  9




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
    September 30,


December 31,2006


2005Balance Sheet Data:Assets (primarily real estate)

$
169,735,000


$
87,238,000Mortgage loans and other debt
    payable

$
106,573,000


$
50,851,000Other liabilities


18,118,000



6,614,000Equity


45,044,000



29,773,000Total liabilities and equity

$
169,735,000


$
87,238,000Our share of equity

$
7,749,000


$
5,631,000   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Revenues

$
5,795,000


$
16,698,000


$
12,895,000


$
33,080,000Rental and other expenses


7,476,000



15,631,000



15,508,000



33,100,000Net income (loss)

$
(1,681,000
)

$
1,067,000


$
(2,613,000
)

$
(20,000
)Equity in losses of unconsolidated
    real estate

$
(350,000
)

$
(7,000
)

$
(759,000
)

$
(121,000
)Gain on sale of unconsolidated
    real estate






1,992,000



5,000



1,992,000Equity in losses and gain on sale
    of unconsolidated real estate

$
(350,000
)

$
1,985,000


$
(754,000
)

$
1,871,000        10




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  4.
    Marketable
    Equity Securities    5.
    Identified
    Intangible Assets    September 30,


December 31,2006


2005In-place leases, above market
    leases and tenant relationships, net of accumulated amortization
    of $1,568,000 and $800,000 as of September 30, 2006 and
    December 31, 2005, respectively (with a weighted average
    life of 35 months, 53 months, and 62 months for
    in-place leases, above market leases, and tenant relationships,
    respectively, as of September 30, 2006 and a
    weighted-average life of 50 months, 57 months, and
    96 months for in-place leases, above market leases, and
    tenant relationships, respectively, as of December 31, 2005)

$
4,981,000


$
5,240,000     6.
    Other
    Assets    September 30,


December 31,2006


2005Deferred rent receivable

$
273,000


$
158,000Deferred financing costs, net of
    accumulated amortization of $274,000 and $92,000 as of
    September 30, 2006 and December 31, 2005, respectively


419,000



331,000Lease commissions, net of
    accumulated amortization of $33,000 and $10,000 as of
    September 30, 2006 and December 31, 2005, respectively


183,000



158,000Prepaid expenses, deposits and
    other


23,000



147,000Total other assets

$
898,000


$
794,000   7.
    Notes Receivable   11




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
    8.
    Mortgage
    Loans Payable and Other Debt          Other
    Debt
    9.
    Derivative
    Financial Instruments  Derivative Instruments and Hedging Activities.
 12




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
      Notional Amount

Index

Rate

Fair Value

Instrument

Maturity$10,550,000


LIBOR

5.40%

$(57,000)

SWAP

05/12/2008     10.
    Minority
    Interests    Date


MinorityEntity

Acquired


InterestsOakey Building, LLC


04/02/04



24.5
%NNN Enterprise Way, LLC


05/07/04



26.7
%3500 Maple  Other TIC
    members


12/27/05



36.5
%901 Civic Center Drive 
    NNN 901 Civic Center, LLC


04/24/06



3.1
%   11.
    Unit
    Holders Equity         13




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  12.
    Related
    Party Transactions  The
    Operating Agreement and Management Agreement
    and/or
  Property
    Management Fees
    Real
    Estate Acquisition Fee
  
  Real
    Estate Disposition Fee
    Lease
    Commissions
   14




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  Accounting
    Fees
    Related
    Party Accounts Receivable/Payable
    Related
    Party Financings
      NNN 2003Value Fund,Amount of


LLCs PortionProperty/Issue Date

Loan


of DebtExecutive Center II
    & III:06/08/05

$
1,000,000


$
411,00009/12/05


200,000



82,00010/18/05


240,000



99,00011/14/05


5,000



2,000Total

$
1,445,000


$
594,000   Advances
    from Related Parties
    13.
    Commitments
    and Contingencies  SEC
    Investigation
  In the matter of Triple Net Properties, LLC.
   15




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  Accounting for Contingencies.
  Prior
    Performance Tables
    No. 000-51295),
  Litigation
    Environmental
    Matters
   16




---



##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
    Other
    Unconsolidated
    Debt
    Mortgage and Other


NNN 2003


Mortgage and Other


NNN 2003Debt Balance as of


Value Fund,


Debt Balance as of


Value Fund,Ownership


September 30,


LLCs Portion


December 31,


LLCs PortionProperty

Percentage


2006


of Debt


2005


of DebtEnterprise Technology Center


8.5
%

$
35,108,000


$
2,984,000


$
35,580,000


$
3,024,000Chase Tower


14.8



55,476,000



8,210,000







Executive Center II
    & III


41.1



15,989,000



6,571,000



15,271,000



6,276,000Total





$
106,573,000


$
17,765,000


$
50,851,000


$
9,300,000       14.
    Concentration
    of Credit Risk   17




---



##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
      Percentage of








Lease2006 Annual


2006 Annual





Square


ExpirationTenant

Base Rent*


Base Rent


Property


Footage


DateHeritage Capital Corporation

$
1,444,000



13.8
%


3500 Maple



69,000



06/30/15     *
    
    Annualized rental income based on contractual base rent from
    leases in effect as of September 30, 2006.    Percentage of








Lease2005 Annual


2005 Annual





Square


ExpirationTenant

Base Rent*


Base Rent


Property


Footage


DateAdministaff Services, LP

$
1,012,000



20.3
%


Interwood



52,000



9/30/14Westwood College of Technology


763,000



15.3



Executive Center I



44,000



1/31/13Veritas Software Global, LLC


653,000



13.1



Woodside



24,000



8/31/06     *
    
    Annualized rental income based on contractual base rent from
    leases in effect as of September 30, 2005.  15.
    Discontinued
    Operations  Properties Held for Sale  Accounting for
    Impairment or Disposal of Long-Lived Assets
  Property

Date Purchased

Date Approved for Sale

Date Sold3500 Maple Building

December 27, 2005

December 27, 2005

14.0% sold on
    February 10, 2006
    21.5% sold on
    June 13, 2006*Oakey Building

April 2, 2004

June 8, 2005

January 24, 2006Southwood Tower

October 27, 2004

June 1, 2005

December 19, 2005Financial Plaza

October 29, 2004

January 15, 2005

April 13, 2005Satellite Place

November 29, 2004

December 17, 2004

February 24, 2005   *
    
    See Note 18, Subsequent Events for a further discussion
    regarding additional sales of our interest in the 3500 Maple
    property. 18




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Revenues

$
2,513,000


$
472,000


$
7,321,000


$
2,894,000Rental expenses


(1,396,000
)


(170,000
)


(4,164,000
)


(1,209,000
)Depreciation and amortization


(117,000
)


(37,000
)


(140,000
)


(738,000
)Income before other expense


1,000,000



265,000



3,017,000



947,000Interest income (expense)


(694,000
)


18,000



(2,508,000
)


(294,000
)Minority interests


(99,000
)


(55,000
)


(1,418,000
)


(97,000
)Income (loss) from discontinued
    operations


207,000



228,000



(909,000
)


556,000Gain (loss) on sale of real estate


(41,000
)


(4,000
)


6,197,000



3,407,000Income from discontinued operations

$
166,000


$
224,000


$
5,288,000


$
3,963,000     September 30,


December 31,2006


2005Operating properties, net of
    accumulated depreciation of $0 and $139,000 as of
    September 30, 2006 and December 31, 2005, respectively

$
49,628,000


$
62,019,000Identified intangible assets, net
    of accumulated amortization of $0 as of September 30, 2006
    and December 31, 2005


15,488,000



15,622,000Lease commissions, net of
    accumulated amortization of $1,000 and $39,000 as of
    September 30, 2006 and December 31, 2005, respectively


61,000



658,000Loan fees, net of accumulated
    amortization of $27,000 and $53,000 as of September 30,
    2006 and December 31, 2005, respectively


328,000



730,000Other assets


735,000



851,000Total assets

$
66,240,000


$
79,880,000Mortgage loans payable

$
47,000,000


$
67,077,000Security deposits, prepaid rent
    and other liabilities


646,000



2,242,000Total liabilities

$
47,646,000


$
69,319,000Minority interests

$
7,618,000


$
1,613,000   16.
    Per Unit
    Data  Earnings Per Share.
 19




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Income (loss) from continuing
    operations

$
(2,177,000
)

$
1,592,000


$
(4,146,000
)

$
727,000Income from discontinued operations


166,000



224,000



5,288,000



3,963,000Net income (loss)

$
(2,011,000
)

$
1,816,000


$
1,142,000


$
4,690,000Net income (loss) per unit:Continuing operations 
    basic and diluted

$
(218.36
)

$
159.20


$
(415.56
)

$
72.70Discontinued
    operations  basic and diluted


16.65



22.40



530.02



396.30Total net income (loss) per
    unit  basic and diluted

$
(201.71
)

$
181.60


$
114.46


$
469.00Weighted average number of units
    outstanding  basic and diluted


9,970



10,000



9,977



10,000   17.
    Business
    Combinations  Business
    Combinations
     20




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)  (Continued)
  18.
    Subsequent
    Events   21




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis Financial Condition and Results of
    Operations    Form 10-Q.
  Forward-Looking
    Statements
    Overview
    and Background
       22




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##### Table of Contents



Business
    Strategy
    2006
    Acquisition of Consolidated Property
  901
    Civic Center Drive Building  Santa Ana,
    California
    2006
    Acquisition of Unconsolidated Property
  Chase
    Tower  Austin Texas, California
   23




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##### Table of Contents



2006
    Dispositions of Consolidated Properties
    Oakey
    Building  Las Vegas, Nevada
    3500
    Maple  Dallas, Texas (partial sales)
    Critical
    Accounting Policies
  Form 10-K,
  Interim
    Financial Data
  Form 10-K,
  Recently
    Issued Accounting Pronouncements
  Accounting for
    Uncertainty in Income Taxes
 24




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##### Table of Contents



Fair Value
    Measurement
  Considering the Effects of Prior Year
    Misstatements When Quantifying Current Year Misstatements
  Factors
    Which May Influence Results of Operations
  Rental
    Income
    Scheduled
    Lease Expirations
    Sarbanes-Oxley
    Act
   25




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##### Table of Contents



Expenses
    Results
    of Operations
    Comparison
    of the Three and Nine Months Ended September 30, 2006 and
    2005
  Three Months Ended








Nine Months EndedSeptember 30,





Percent


September 30,





Percent2006


2005


Change


Change


2006


2005


Change


ChangeRevenues:Rental income

$
1,172,000


$
492,000


$
680,000



138.2
%

$
3,381,000


$
1,248,000


$
2,133,000



170.9
%Expenses:Rental expenses


936,000



339,000



597,000



176.1



2,251,000



1,076,000



1,175,000



109.2General and administrative


217,000



138,000



79,000



57.2



584,000



405,000



179,000



44.2Depreciation and amortization


962,000



161,000



801,000



497.5



2,195,000



450,000



1,745,000



387.82,115,000



638,000



1,477,000



231.5



5,030,000



1,931,000



3,099,000



160.5Loss before other income (expense)
    and discontinued operations


(943,000
)


(146,000
)


(797,000
)


545.9



(1,649,000
)


(683,000
)


(966,000
)


141.4Other income (expense):Interest expense (including
    amortization of deferred financing costs)


(977,000
)


(130,000
)


(847,000
)


651.5



(2,310,000
)


(574,000
)


(1,736,000
)


302.4Interest and dividend income


65,000



159,000



(94,000
)


(59.1
)


344,000



277,000



67,000



24.2Gain on sale of Marketable
    securities






10,000



(10,000
)


(100.0
)


134,000



94,000



40,000



42.6Equity in earnings (losses) and
    gain on sale of unconsolidated real estate


(350,000
)


1,985,000



(2,335,000
)


(117.6
)


(754,000
)


1,871,000



(2,625,000
)


(140.3
)Other income


16,000







16,000







75,000







75,000



Minority interests


12,000



(286,000
)


298,000



(104.2
)


14,000



(258,000
)


272,000



(105.4
)Income (loss) from continuing
    operations before discontinued operations

$
(2,177,000
)

$
1,592,000


$
(3,769,000
)


(236.7
)

$
(4,146,000
)

$
727,000


$
(4,873,000
)


(670.3
)Discontinued operations:Gain (loss) on sale of real estate


(41,000
)


(4,000
)


(37,000
)


925.0



6,197,000



3,407,000



2,790,000



81.9Income (loss) from discontinued
    operations


207,000



228,000



(21,000
)


(9.2
)


(909,000
)


556,000



(1,465,000
)


(263.5
)166,000



224,000



(58,000
)


(25.9
)


5,288,000



3,963,000



1,325,000



33.4Net income (loss)

$
(2,011,000
)

$
1,816,000


$
(3,827,000
)


(210.7
)%

$
1,142,000


$
4,690,000


$
(3,548,000
)


(75.7
)%    26




---



##### Table of Contents



27




---



##### Table of Contents



Liquidity
    and Capital Resources
  Cash
    Flows
  Comparison
    of the Nine Months Ended September 30, 2006 and
    2005
         28




---



##### Table of Contents



Current
    Sources of Capital and Liquidity
    Factors
    Which May Influence Future Sources of Capital and
    Liquidity
  SEC
    Investigation
  In the matter of Triple Net Properties, LLC.
  Accounting for Contingencies.
  Debt
    Financing
     29




---



##### Table of Contents



Weighted-AverageTotal Debt


Interest RateSeptember 30,


December 31,


September 30,


December 31,2006


2005


2006


2005Mortgage and other debtMortgage

$
84,156,000


$
93,492,000



7.07
%


6.85
%Other debt

$



$
1,385,000







Fixed rate and variable rate
    Mortgage debtFixed rate

$
52,000,000


$
52,000,000



6.18
%


6.18
%Variable rate

$
32,156,000


$
41,492,000



8.51
%


7.70
%         Notional Amount

Index

Rate

Fair Value

Instrument

Maturity$10,550,000

LIBOR

5.40%

$(57,000)

SWAP

05/12/2008       and/or
   30




---



##### Table of Contents



Other
    Liquidity Needs
             31




---



##### Table of Contents



Capital
    Resources
  General
      and/or
    Unconsolidated
    Debt
    32




---



##### Table of Contents



NNN 2003





NNN 2003Mortgage and Other


Value Fund,


Mortgage and Other


Value Fund,Ownership


Debt Balance as of


LLCs portion


Debt Balance as of


LLCs portionProperty

Percentage


September 30, 2006


of Debt


December 31, 2005


of DebtEnterprise Technology Center


8.5
%

$
35,108,000


$
2,984,000


$
35,580,000


$
3,024,000Chase Tower


14.8



55,476,000



8,210,000







Executive Center II
    & III


41.1



15,989,000



6,571,000



15,271,000



6,276,000Total





$
106,573,000


$
17,765,000


$
50,851,000


$
9,300,000       Cunningham
    Lending Group, LLC
    NNN 2003Value Fund,Amount of


LLCs PortionProperty/Issue Date

Loan


of DebtExecutive Center II
    & III:06/08/05

$
1,000,000


$
411,00009/12/05


200,000



82,00010/18/05


240,000



99,00011/14/05


5,000



2,000Total

$
1,445,000


$
594,000   Debt
    Service Requirements
   33




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##### Table of Contents



Contractual
    Obligations
    Payments Due by PeriodLess than








More than1 Year


1-3 Years


4-5 Years


5 Years(2006)


(2007-2008)


(2009-2010)


(After 2010)


TotalPrincipal payments 
    variable rate debt

$



$
32,156,000


$



$



$
32,156,000Principal payments 
    fixed rate debt






5,000,000







47,000,000



52,000,000Interest payments 
    variable rate debt (based on rate in effect at
    September 30, 2006)


684,000



3,601,000











4,285,000Interest payments 
    fixed rate debt


803,000



5,799,000



5,424,000



13,642,000



25,668,000Tenant improvement and lease
    commission obligations


49,000















49,000Total

$
1,536,000


$
46,556,000


$
5,424,000


$
60,642,000


$
114,158,000   Off-Balance
    Sheet Arrangements
    Inflation
    Subsequent
    Events
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
   34




---



##### Table of Contents



2006


2007


2008


2009


2010


Thereafter


TotalFixed rate debt 
    principal payments

$



$
5,000,000


$



$



$



$
47,000,000


$
52,000,000Average interest rate on maturing
    debt






10.00
%














5.77
%


6.18
%Variable rate debt 
    principal payments

$



$
5,500,000


$
26,656,000


$



$



$



$
32,156,000Average interest rate on maturing
    debt (based on rates in effect as of September 30, 2006)






8.33
%


8.54
%














8.51
%     Item 4.
    Controls
    and Procedures  Evaluation of disclosure controls and
    procedures.
  Form 10-Q Rules 13a-14(a) 15d-14(a) Form 10-Q
  Rules 13a-15(e) 15d-15(e)
   35




---



##### Table of Contents



Changes in internal control over financial
    reporting. Rules 13a-15(f) 15d-15(f)
 PART II 
    OTHER INFORMATION Item 1.  Legal
    Proceedings.



The use of the words we, us or
    our refers to NNN 2003 Value Fund, LLC and our
    subsidiaries, except where the context otherwise requires.



SEC
    Investigation



On September 16, 2004, Triple Net Properties, LLC, or our
    Manager, advised us that it learned that the Securities and
    Exchange Commission, or the SEC, is conducting an investigation
    referred to as In the matter of Triple Net Properties,
    LLC.The SEC has requested information from our
    Manager relating to disclosure in public and private securities
    offerings sponsored by our Manager and its affiliates, or the
    Triple Net securities offerings (including our offerings). The
    SEC has requested financial and other information regarding the
    Triple Net securities offerings and the disclosures included in
    the related offering documents.



Our Manager is engaged in preliminary settlement negotiations
    with the SEC staff regarding this matter. Based on these
    negotiations, our Manager believes that the conclusion to this
    matter will not result in a material adverse affect to its
    results of operations, financial condition or ability to conduct
    our business. The settlement negotiations are continuing, and
    any settlement negotiated with the SEC staff must be approved by
    the Commission. Since the matter is not concluded, it remains
    subject to the risk that the SEC may seek additional remedies,
    including substantial fines and injunctive relief against our
    Manager that, if obtained, could materially adversely affect our
    Managers ability to perform its duties to us.
    Additionally, any resolution of this matter that reflects
    negatively on the reputation of our Manager could materially and
    adversely affect the willingness of potential investors to
    invest in future offerings sponsored by our Manager. The matters
    that are the subject of this investigation could also give rise
    to claims against our Manager by investors in its existing real
    estate investment programs. At this time, we cannot assess how
    or when the outcome of the matter will be ultimately determined.
    Therefore, at this time, we have not accrued any loss
    contingencies in accordance with Statement of Financial
    Accounting Standards, or SFAS, No. 5, Accounting
    for Contingencies.



Prior
    Performance Tables



In connection with our offering of the sale of our units from
    July 11, 2003 through October 14, 2004, we disclosed
    the prior performance of all public and non-public investment
    programs sponsored by our Manager. Our Manager subsequently
    determined that there were certain errors in those prior
    performance tables. In particular, the financial information in
    the tables was stated to be presented in accordance with
    accounting principles generally accepted in the United States of
    America, or GAAP. Generally, the tables for the public programs
    were not presented on a GAAP basis and the tables for the
    non-public programs were prepared and presented on a tax or cash
    accounting basis. Moreover, a number of the prior performance
    data figures were themselves erroneous, even as presented on a
    tax or cash basis. In particular, certain programs sponsored by
    our Manager have invested either along side or in other programs
    sponsored by our Manager. The nature and results of these
    investments were not fully and accurately disclosed in the
    tables. In addition, certain calculations of depreciation and
    amortization were not on an income tax basis for a limited
    liability company investment; certain operating expenses were
    not reflected in the operating results; and monthly mortgage and
    principal payments were not reported. In general, the resulting
    effect was an aggregate overstatement of $1,730,000 attributable
    to our Managers private real estate programs; and an
    aggregate understatement of

36




---



##### Table of Contents



No. 000-51295),
  Litigation
   Item 1A.  Risk
    Factors



There were no other material changes from risk factors
    previously disclosed in our 2005 Annual Report on
    Form 10-K,
    as filed with the SEC, except as noted below.



The
    ongoing SEC investigation of Triple Net Properties could
    adversely impact our Managers ability to perform its
    duties to us.



On September 16, 2004, Triple Net Properties, LLC, or our
    Manager, learned that the SEC is conducting an investigation
    referred to as In the matter of Triple Net Properties,
    LLC.The SEC has requested information from our
    Manager relating to disclosure in public and private securities
    offerings sponsored by our Manager and its affiliates, or the
    Triple Net securities offerings. The SEC has requested financial
    and other information regarding the Triple Net securities
    offerings and the disclosures included in the related offering
    documents.



Our Manager is engaged in preliminary settlement negotiations
    with the SEC staff regarding this matter. The settlement
    negotiations are continuing, and any settlement negotiated with
    the SEC staff must be approved by the Commission. Since the
    matter is not concluded, it remains subject to the risk that the
    SEC may seek additional remedies, including substantial fines
    and injunctive relief that, if obtained, could materially
    adversely affect our Managers ability to perform its
    duties to us and conduct our business. Additionally, any
    resolution of this matter that reflects negatively on the
    reputation of our Manager could materially and adversely affect
    the willingness of potential investors to invest in future
    offerings sponsored by our Manager. The matters that are
    the subject of this investigation could also give rise to claims
    against our Manager by investors in its existing programs. At
    this time, our Manager cannot assess the outcome of the
    investigation by the SEC.



Dramatic
    increases in insurance rates could adversely affect our cash
    flow and our ability to make cash distributions to our unit
    holders.



Due to recent natural disasters resulting in massive property
    destruction, prices for insurance coverage have been increasing
    dramatically. We cannot assure that we will be able to renew our
    insurance premiums at our current or reasonable rates or the
    amount of the potential increase of such premiums. As a result,
    our cash flow could be adversely impacted by increased premiums.
    In addition, the sales prices of our properties may be affected
    by these rising costs and adversely affect our ability to make
    cash distributions to our unit holders.

37




---



##### Table of Contents



Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.    Item 3.
    Defaults
    Upon Senior Securities.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Item 5.
    Other
    Information.    Item 6.
    Exhibits.   38




---



##### Table of Contents



SIGNATURES     (Registrant)
  By:
    /s/  Richard
    T. Hutton, Jr.    Chief Executive Officer
  (principal executive officer)
  By:
    /s/  Steven
    S. Fradin     Chief Accounting Officer
  (principal accounting officer)
   39




---



##### Table of Contents



EXHIBIT INDEX
  Regulation S-K,
  Form 10-Q Regulation S-K).
  ExhibitNumber

Description3
.1

Articles of Organization of NNN
    2003 Value Fund, LLC, dated March 19, 2003, (included as
    Exhibit 3.1 to our Form 10 filed on May 2, 2005
    and incorporated herein by reference).10
.1

Operating Agreement of NNN 2003
    Value Fund, LLC, by and between Triple Net Properties, LLC, as
    the Manager, and Anthony W. Thompson, as the Initial Member.
    (included as Exhibit 10.1 to our Form 10 filed on
    May 2, 2005 and incorporated herein by reference).10
.2

Management Agreement between NNN
    2003 Value Fund, LLC and Triple Net Properties Realty, Inc.
    (included as Exhibit 10.2 to our Form 10 filed on
    May 2, 2005 and incorporated herein by reference).10
.3

Real Property Purchase Agreement,
    dated as of, March 27, 2006, by and between Santa Ana Arts
    IV, Inc. and Triple Net Properties, LLC. (included as
    Exhibit 10.1 to our
    Form 8-K
    filed on April 28, 2006 and incorporated herein by
    reference).10
.4

First Amendment to Real Property
    Purchase Agreement, dated as of March 30, 2006, by and
    between Santa Ana Arts IV, Inc. and Triple Net Properties, LLC.
    (included as Exhibit 10.2 to our
    Form 8-K
    filed on April 28, 2006 and incorporated herein by
    reference).10
.5

Assignment of Contract dated
    April 19, 2006 by and between Triple Net Properties, LLC,
    as assignor and NNN 901 Civic, LLC and NNN VF 901 Civic, LLC, as
    assignees (included as Exhibit 10.3 to our
    Form 8-K
    filed on April 28, 2006 and incorporated herein by
    reference).31
.1*

Certification of Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2*

Certification of Chief Accounting
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32
.1*

Certification of Chief Executive
    Officer, pursuant to 18 U.S.C. Section 1350, as
    created by Section 906 of the Sarbanes-Oxley Act of 2002.32
.2*

Certification of Chief Accounting
    Officer, pursuant to 18 U.S.C. Section 1350, as
    created by Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith 40