##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, 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
    June 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

(714) 667-8252Santa Ana, California 92705(Address of principal
    executive offices)

(Registrants telephone
    number,
    including area code)   N/A
 (Former name)
  þ o
  Rule 12b-2
  Large
    accelerated filer o
    Accelerated
    filer o
    Non-accelerated filer þ  Rule 12b-2 o þ




---



##### 



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


Financial
    Statements


3Condensed
    Consolidated Balance Sheets as of June 30, 2006 (Unaudited)
    and December 31, 2005 (Unaudited)


4Condensed
    Consolidated Statements of Operations and Comprehensive Income
    (Loss) For the Three and Six Months Ended June 30, 2006 and
    2005 (Unaudited)


5Condensed
    Consolidated Statement of Unit Holders Equity For the Six
    Months Ended June 30, 2006 (Unaudited)


6Condensed
    Consolidated Statements of Cash Flows For the Six Months Ended
    June 30, 2006 and 2005 (Unaudited)


7Notes to Condensed
    Consolidated Financial Statements (Unaudited)


8Item 2.


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


23Item 3.


Qualitative and
    Quantitative 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


37Item 3.


Defaults Upon
    Senior Securities


37Item 4.


Submission of
    Matters to a Vote of Security Holders


37Item 5.


Other
    Information


37Item 6.


Exhibits


37Signatures





38EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Form 10-Q Form 10-K,
 3




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
 As of
    June 30, 2006 (Unaudited) and December 31, 2005
    (Unaudited)
  June 30,


December 31,2006


2005ASSETSReal estate investments:Operating properties, net

$
45,915,000


$
32,952,000Land held for development


730,000



730,000Properties held for sale, net


49,689,000



62,019,000Investments in unconsolidated real
    estate


5,636,000



5,631,000101,970,000



101,332,000Cash and cash equivalents


3,876,000



10,760,000Investment in marketable securities






1,860,000Accounts receivable, net


1,368,000



273,000Accounts receivable from related
    parties


661,000



721,000Restricted cash


3,495,000



4,049,000Pre-acquisition cost


18,000



Identified intangible assets, net


5,826,000



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


16,524,000



17,861,000Other assets, net


1,228,000



794,000Notes receivable


2,420,000



2,300,000Total assets

$
137,386,000


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

$
36,993,000


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


47,000,000



67,077,000Accounts payable and accrued
    liabilities


2,748,000



3,833,000Accounts payable due to related
    parties


636,000



330,000Advances from related parties






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


1,374,000



2,242,000Security deposits and prepaid rent


748,000



406,00089,499,000



101,688,000Minority interests


848,000



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


7,746,000



1,613,0008,594,000



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


39,293,000



40,522,000Accumulated other comprehensive
    loss






(1,000
)Total unit holders equity


39,293,000



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

$
137,386,000


$
145,190,000    4




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##### Table of Contents



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


Six Months EndedJune 30,


June 30,2006


2005


2006


2005Revenues:Rental income

$
1,233,000


$
393,000


$
2,209,000


$
756,000Expenses:Rental expenses


734,000



415,000



1,315,000



737,000General and administrative


142,000



210,000



367,000



267,000Depreciation and amortization


766,000



153,000



1,233,000



289,0001,642,000



778,000



2,915,000



1,293,000Loss before other income (expense)
    and discontinued operations


(409,000
)


(385,000
)


(706,000
)


(537,000
)Other income (expense):Interest expense (including
    amortization of deferred financing costs)


(739,000
)


(224,000
)


(1,334,000
)


(444,000
)Interest and dividend income


104,000



87,000



279,000



118,000Gain on sale of marketable
    securities


59,000



84,000



134,000



84,000Equity in losses and gain on sale
    of unconsolidated real estate


(195,000
)


(273,000
)


(404,000
)


(114,000
)Other income (expense)


(8,000
)






58,000



Minority interests


7,000



76,000



2,000



28,000Loss from continuing operations
    before discontinued operations


(1,181,000
)


(635,000
)


(1,971,000
)


(865,000
)Discontinued operations:Gain on sale of real estate


582,000



3,022,000



6,238,000



3,411,000Income (loss) from discontinued
    operations


330,000



117,000



(1,114,000
)


328,000912,000



3,139,000



5,124,000



3,739,000Net income (loss)

$
(269,000
)

$
2,504,000


$
3,153,000


$
2,874,000Comprehensive income (loss):Net income

$
(269,000
)

$
2,504,000


$
3,153,000


$
2,874,000Unrealized (loss) gain on
    marketable securities


(20,000
)


(10,000
)


1,000



(10,000
)Comprehensive income (loss)

$
(289,000
)

$
2,494,000


$
3,154,000


$
2,864,000Net income (loss) per unit:Continuing operations 
    basic and diluted

$
(118.46
)

$
(63.50
)

$
(197.48
)

$
(86.50
)Discontinued
    operations  basic and diluted


91.47



313.90



513.38



373.90Total net income (loss) per
    unit  basic and diluted

$
(26.99
)

$
250.40


$
315.90


$
287.40Weighted average number of units
    outstanding  basic and diluted


9,970



10,000



9,981



10,000    5




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  CONDENSED
    CONSOLIDATED STATEMENT OF UNIT HOLDERS EQUITY
 For the
    Six Months Ended June 30, 2006 (Unaudited)
  Number ofUnits


TotalBALANCE 
    December 31, 2005


10,000


$
40,521,000Units repurchased


(30
)


(134,000
)Distributions






(4,248,000
)Net income






3,153,000Unrealized gain on marketable
    securities






1,000BALANCE 
    June 30, 2006


9,970


$
39,293,000    6




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the
    Six Months Ended June 30, 2006 and 2005
    (Unaudited)
  Six Months EndedJune 30,2006


2005CASH FLOWS FROM OPERATING
    ACTIVITIESNet income

$
3,153,000


$
2,874,000Adjustments to reconcile net income
    to net cash (used in) provided by operating activitiesGain on sale of real estate


(6,238,000
)


(3,411,000
)Gain on sale of marketable
    securities


(134,000
)


(84,000
)Depreciation and amortization
    (including deferred financing costs and above/below market
    leases and deferred rent)


989,000



1,546,000Distributions received in excess of
    equity in earnings (losses) from investments and gain on sale in
    unconsolidated real estate


482,000



724,000Minority interests


1,317,000



15,000Provision for doubtful accounts


22,000



16,000Change in operating assets and
    liabilities:Accounts receivable, including
    receivables from related parties


(962,000
)


137,000Other assets


(353,000
)


(480,000
)Accounts payable and accrued
    liabilities, including payables to related parties


482,000



(808,000
)Security deposits and prepaid rent


289,000



(465,000
)Net cash (used in) provided by
    operating activities


(953,000
)


64,000CASH FLOWS FROM INVESTING
    ACTIVITIESAcquisition of real estate
    operating properties


(14,810,000
)


(8,028,000
)Acquisition of investments in
    unconsolidated real estate


(157,000
)


(650,000
)Proceeds from sale of real estate
    operating properties


22,345,000



25,341,000Capital expenditures


(1,756,000
)


(442,000
)Purchase of marketable securities


(2,441,000
)


(5,440,000
)Proceeds from sale of marketable
    securities


4,436,000



4,456,000Restricted cash


651,000



182,000Net cash provided by investing
    activities


8,268,000



15,419,000CASH FLOWS FROM FINANCING
    ACTIVITIESBorrowings on mortgages payable and
    other debt


10,578,000



5,564,000Principal repayments on mortgages
    payable and other debt


(20,077,000
)


(19,689,000
)Principal repayments on related
    parties borrowings


(2,245,000
)


Payment of deferred financing costs






(176,000
)Minority interests contributions


4,778,000



Minority interests distributions


(2,851,000
)


(269,000
)Distributions


(4,248,000
)


(1,748,000
)Repurchase of member units, net of
    costs


(134,000
)


Net cash used in financing
    activities


(14,199,000
)


(16,318,000
)NET DECREASE IN CASH AND CASH
    EQUIVALENTS


(6,884,000
)


(835,000
)CASH AND CASH
    EQUIVALENTS  beginning of period


10,760,000



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

$
3,876,000


$
9,061,000SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATIONCash paid during the period for:Interest

$
2,928,000


$
747,000Accrual for tenant improvements and
    capital expenditures

$
(1,555,000
)

$
471,000The following represents certain
    assets acquired and liabilities assumed in connection with our
    acquisitions and dispositions of operating properties and
    investments in unconsolidated real estate:Increase (decrease) in intangible
    assets less intangible liabilities of acquisition and disposition

$
1,496,000


$
(2,475,000
)Restricted cash

$
97,000


$
(32,000
)Other assets

$
18,000


$
(317,000
)Accrued expenses and security
    deposits

$



$
21,000Minority interests contributions

$
163,000


$
    7




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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,
  Principles
    of Consolidation
   8




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Consolidation of Variable Interest Entities
  Reclassifications
    Segments
    3.
    Investments
    in Real Estate  Operating
    Properties
    June 30,


December 31,2006


2005Buildings and tenant improvements

$
37,743,000


$
26,289,000Land


9,482,000



7,389,00047,225,000



33,678,000Less: accumulated depreciation


(1,310,000
)


(726,000
)$
45,915,000


$
32,952,000     2006
    Acquisition of Consolidated Property
  901 Civic
    Building  Santa Ana, California
   9




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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)
  tenant-in-common
  Investments
    in Unconsolidated Real Estate
    Percentage


June 30,


December 31,Description

Location

Owned


2006


2005Enterprise Technology Center

Scotts Valley, CA


8.5
%

$
2,573,000


$
2,638,000Executive Center II
    & III

Dallas, TX


41.1



3,063,000



2,993,000Total







$
5,636,000


$
5,631,000     June 30,


December 31,2006


2005Balance Sheet Data:Assets (primarily real estate)

$
87,025,000


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

$
51,328,000


$
50,851,000Other liabilities


6,873,000



6,614,000Equity


28,824,000



29,773,000Total liabilities and equity

$
87,025,000


$
87,238,000Our share of equity

$
5,636,000


$
5,631,000   10




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##### Table of Contents



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


Six Months EndedJune 30,


June 30,2006


2005


2006


2005Revenues

$
3,700,000


$
8,161,000


$
7,100,000


$
16,382,000Rental and other expenses


4,235,000



8,634,000



8,032,000



17,469,000Net loss

$
(535,000
)

$
(473,000
)

$
(932,000
)

$
(1,087,000
)Equity in losses of unconsolidated
    real estate

$
(200,000
)

$
(273,000
)

$
(409,000
)

$
(114,000
)Gain on sale of unconsolidated
    real estate


5,000







5,000



Equity in losses and gain on sale
    of unconsolidated real estate

$
(195,000
)

$
(273,000
)

$
(404,000
)

$
(114,000
)         4.
    Marketable
    Equity Securities   11




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   5.
    Identified
    Intangible Assets    June 30,


December 31,2006


2005In-place leases, above market
    leases and tenant relationships, net of accumulated amortization
    of $1,712,000 and $800,000 as of June 30, 2006 and
    December 31, 2005, respectively (with a weighted average
    life of 35 months, 56 months, and 64 months for
    in-place leases, above market leases, and tenant relationships,
    respectively, as of June 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)

$
5,826,000


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


December 31,2006


2005Deferred rent receivable

$
243,000


$
158,000Deferred financing costs, net of
    accumulated amortization of $197,000 and $92,000 as of
    June 30, 2006 and December 31, 2005, respectively


508,000



331,000Lease commissions, net of
    accumulated amortization of $25,000 and $10,000 as of
    June 30, 2006 and December 31, 2005, respectively


154,000



158,000Prepaid expenses, deposits and
    other


323,000



147,000Total other assets

$
1,228,000


$
794,000   7.
    Notes Receivable    8.
    Mortgage
    Loans Payable and Other Debt   12




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
         Other
    Debt
    9.
    Derivative
    Financial Instruments  Derivative Instruments
    and Hedging Activities.
    Notional Amount

Index

Rate

Fair Value

Instrument

Maturity$
10,550,000



LIBOR



5.40
%

$
12,000



SWAP



05/12/2008    13




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   10.
    Minority
    Interests    Date


MinorityEntity

Acquired


InterestsNNN Enterprise Way, LLC


05/07/04



26.7
%3500 Maple  Other TIC
    members


12/27/05



36.5
%   11.
    Unit
    Holders Equity          12.
    Related
    Party Transactions  The
    Operating Agreement and Management Agreement
   14




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Property
    Management Fees
    Real
    Estate Commissions
    Real
    Estate Disposition Fee
    Lease
    Commissions
    Accounting
    Fees
    Related
    Party Accounts Receivable/Payable
   15




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##### Table of Contents



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


LLCs PortionProperty/Issue Date

Loan


of DebtExecutive Center II
    & III:06/09/05

$
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.
  Accounting for Contingencies.
  Prior
    Performance Tables
   16




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Litigation
    Environmental
    Matters
    Other
   17




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##### Table of Contents



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


June 30, 2006


of Debt


December 31, 2005


of DebtEnterprise Technology Center


8.5
%

$
35,264,000


$
2,997,000


$
35,580,000


$
3,024,000Executive Center II
    & III


41.1



16,064,000



6,602,000



15,271,000



6,276,000$
51,328,000


$
9,599,000


$
50,851,000


$
9,300,000       14.
    Concentration
    of Credit Risk     18




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##### 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

$
1,575,000



13.4
%


3500 Maple



73,000



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





Lease2005 Annual

2005 Annual



Square

ExpirationTenant

Base Rent*

Base Rent

Property

Footage

DateAdministaff Services, LP


1,012,000



35.8
%


Interwood



52,000



9/30/14Westwood College of Technology


763,000



27.0



Executive Center I



44,000



1/31/13Lipar Group Development


325,000



11.5



Southwood Tower



20,000



2/28/08     *
    
    Annualized rental income based on contractual base rent from
    leases in effect as of June 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, 2006Oakey 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  19




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##### Table of Contents



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


Six Months EndedJune 30,


June 30,2006


2005


2006


2005Rental income

$
2,701,000


$
894,000


$
4,809,000


$
2,422,000Rental expenses


(1,422,000
)


(384,000
)


(2,767,000
)


(1,039,000
)Depreciation and amortization


(11,000
)


(265,000
)


(23,000
)


(701,000
)Income before other expense


1,268,000



245,000



2,019,000



682,000Interest expense


(829,000
)


(86,000
)


(1,814,000
)


(312,000
)Minority interests


(109,000
))


(42,000
)


(1,319,000
)


(42,000
)Income (loss) from discontinued
    operations


330,000



117,000



(1,114,000
)


328,000Gain on sale of real estate


582,000



3,022,000



6,238,000



3,411,000Income from discontinued operations

$
912,000


$
3,139,000


$
5,124,000


$
3,739,000     June 30,


December 31,2006


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

$
49,689,000


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


15,489,000



15,622,000Lease commissions, net of
    accumulated amortization of $0 and $39,000 as of June 30,
    2006 and December 31, 2005, respectively






658,000Loan fees, net of accumulated
    amortization of $23,000 and $53,000 as of June 30, 2006 and
    December 31, 2005, respectively


444,000



730,000Other assets


591,000



851,000Total assets

$
66,213,000


$
79,880,000Mortgage loans payable

$
47,000,000


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


1,374,000



2,242,000Total liabilities

$
48,374,000


$
69,319,000Minority interests

$
7,746,000


$
1,613,000   16.
    Per Unit
    Data  Earnings Per Share.
 20




---



##### Table of Contents



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


Six Months EndedJune 30,


June 30,2006


2005


2006


2005Loss from continuing operations

$
(1,181,000
)

$
(635,000
)

$
(1,971,000
)

$
(865,000
)Income from discontinued operations


912,000



3,139,000



5,124,000



3,739,000Net income (loss)

$
(269,000
)

$
2,504,000


$
3,153,000


$
2,874,000Net income (loss) per
    unit  basic and diluted:Continuing operations 
    basic and diluted

$
(118.46
)

$
(63.50
)

$
(197.48
)

$
(86.50
)Discontinued
    operations  basic and diluted


91.47



313.90



513.38



373.90Total net income (loss) per
    unit  basic and diluted

$
(26.99
)

$
250.40


$
315.90


$
287.40Weighted average number of units
    outstanding  basic and diluted


9,970



10,000



9,981



10,000   17.
    Business
    Combinations  Business Combinations,
     21




---



##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   18.
    Subsequent
    Events       22




---



##### 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
       23




---



##### Table of Contents



Business
    Strategy
    2006
    Acquisition of Consolidated Property
  901
    Civic Building  Santa Ana,
    California
    2006
    Dispositions of Consolidated Properties
    Oakey
    Building  Las Vegas, Nevada
   24




---



##### Table of Contents



3500
    Maple  Dallas, Texas (partial sales)
    Critical
    Accounting Policies
  Form 10-K,
  Interim
    Financial Data
  Form 10-K,
  Factors
    Which May Influence Results of Operations
  Rental
    Income
    Scheduled
    Lease Expirations
    Sarbanes-Oxley
    Act
   25




---



##### Table of Contents



Expenses
    Results
    of Operations
    Comparison
    of the Three and Six Months Ended June 30, 2006 and
    2005
  Three Months Ended








Six Months EndedJune 30,


June 30,





Percent


June 30,


June 30,





Percent2006


2005


Change


Change


2006


2005


Change


ChangeRevenues:Rental income

$
1,233,000


$
393,000


$
840,000



213.7
%

$
2,209,000


$
756,000


$
1,453,000



192.2
%Expenses:Rental expenses


734,000



415,000



319,000



76.9



1,315,000



737,000



578,000



78.4General and administrative


142,000



210,000



(68,000
)


(32.4
)


367,000



267,000



100,000



37.5Depreciation and amortization


766,000



153,000



613,000



400.7



1,233,000



289,000



944,000



326.61,642,000



778,000



864,000



111.1



2,915,000



1,293,000



1,622,000



125.4Loss before other income (expense)
    and discontinued operations


(409,000
)


(385,000
)


(24,000
)


6.2



(706,000
)


(537,000
)


(169,000
)


31.5Other income (expense):Interest expense (including
    amortization of deferred financing costs)


(739,000
)


(224,000
)


(515,000
)


229.9



(1,334,000
)


(444,000
)


(890,000
)


200.5Interest and dividend income


104,000



87,000



17,000



19.5



279,000



118,000



161,000



136.4Gain on sale of marketable
    securities


59,000



84,000



(25,000
)


(29.8
)


134,000



84,000



50,000



59.5Equity in losses and gain on sale
    of unconsolidated real estate


(195,000
)


(273,000
)


78,000



(28.6
)


(404,000
)


(114,000
)


(290,000
)


254.4Other income (expense)


(8,000
)






(8,000
)


100.0



58,000







58,000



100.0Minority interests


7,000



76,000



(69,000
)


(90.8
)


2,000



28,000



(26,000
)


(92.9
)Loss from continuing operations
    before discontinued operations


(1,181,000
)


(635,000
)


(546,000
)


86.0



(1,971,000
)


(865,000
)


(1,106,000
)


127.9Discontinued operations:Gain on sale of real estate


582,000



3,022,000



(2,440,000
)


(80.7
)


6,238,000



3,411,000



2,827,000



82.9Income (loss) from discontinued
    operations


330,000



117,000



213,000



182.1



(1,114,000
)


328,000



(1,442,000
)


(439.6
)912,000



3,139,000



(2,227,000
)


(70.9
)


5,124,000



3,739,000



1,385,000



37.0Net income (loss)

$
(269,000
)

$
2,504,000


$
(2,773,000
)


(110.7
)

$
3,153,000


$
2,874,000


$
279,000



9.7  26




---



##### Table of Contents



27




---



##### Table of Contents



















Liquidity
    and Capital Resources




Cash
    Flows




Comparison
    of the Six Months Ended June 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
















|                                               |  |            |            |  |                   |   |            |          |  |  |              |   |  |  |      |  
|---------------------------------------------- |  | ---------- | ---------- |  | ----------------- | - | ---------- | -------- |  |  | ------------ | - |  |  | ---- | -
|                                               |  |            |            |  | Weighted -Average |  
|                                               |  | Total Debt |            |  | Interest Rate     |  
|                                               |  | June 30,   |            |  | December 31,      |   |            | June 30, |  |  | December 31, |  
|                                               |  | 2006       |            |  | 2005              |   |            | 2006     |  |  | 2005         |  
|                                              
|Mortgage and other debt                        |  |            |            |  |                   |   |            |          |  |  |              |   |  |  |      |  
|Mortgage                                       |  | $          | 83,993,000 |  |                   | $ | 93,492,000 |          |  |  | 6.98         | % |  |  | 6.85 | %
|Other debt                                     |  | $          |           |  |                   | $ | 1,385,000  |          |  |  |             |   |  |  |     |  
|Fixed rate and variable rate
    Mortgage debt |  |            |            |  |                   |   |            |          |  |  |              |   |  |  |      |  
|Fixed rate                                     |  | $          | 52,000,000 |  |                   | $ | 52,000,000 |          |  |  | 6.18         | % |  |  | 6.18 | %
|Variable rate                                  |  | $          | 31,993,000 |  |                   | $ | 41,492,000 |          |  |  | 8.28         | % |  |  | 7.70 | %







29



---



##### Table of Contents











|                |            |       |  |      |       |            |  |            |      |          |  |   |        |  |  |  |      |  |  |  |            | 
|--------------- | ---------- | ----- |  | ---- | ----- | ---------- |  | ---------- | ---- | -------- |  | - | ------ |  |  |  | ---- |  |  |  | ---------- | 
|Notional Amount |            | Index |  | Rate |       | Fair Value |  | Instrument |      | Maturity
|               
|$               | 10,550,000 |       |  |      | LIBOR |            |  |            | 5.40 | %        |  | $ | 12,000 |  |  |  | SWAP |  |  |  | 05/12/2008 | 





















Other
    Liquidity Needs










30



---



##### Table of Contents























Capital
    Resources




General






31



---



##### Table of Contents















Unconsolidated
    Debt








|                              |  |            |      |   |                    |   |            |               |  |   |                   |  |  |               |            |  |  |   |           | 
|----------------------------- |  | ---------- | ---- | - | ------------------ | - | ---------- | ------------- |  | - | ----------------- |  |  | ------------- | ---------- |  |  | - | --------- | 
|                              |  |            |      |   |                    |   |            | NNN 2003      |  |   |                   |  |  | NNN 2003      |           
|                              |  |            |      |   | Mortgage and Other |   |            | Value Fund,   |  |   | Mortgage Debt     |  |  | Value Fund,   |           
|                              |  | Ownership  |      |   | Debt Balance as of |   |            | LLCs Portion |  |   | Balance as of     |  |  | LLCs Portion |           
|Property                      |  | Percentage |      |   | June 30, 2006      |   |            | of Debt       |  |   | December 31, 2005 |  |  | of Debt       |           
|                             
|Enterprise Technology Center  |  |            | 8.5  | % |                    | $ | 35,264,000 |               |  | $ | 2,997,000         |  |  | $             | 35,580,000 |  |  | $ | 3,024,000 | 
|Executive Center II
    & III |  |            | 41.1 |   |                    |   | 16,064,000 |               |  |   | 6,602,000         |  |  |               | 15,271,000 |  |  |   | 6,276,000 | 
|                              |  |            |      |   |                    |   |            |               |  |   |                   |  |  |               |            |  |  |   |           | 
|                              |  |            |      |   |                    | $ | 51,328,000 |               |  | $ | 9,599,000         |  |  | $             | 50,851,000 |  |  | $ | 9,300,000 | 
|                              |  |            |      |   |                    |   |            |               |  |   |                   |  |  |               |            |  |  |   |           | 











32



---



##### Table of Contents



Cunningham
    Lending Group, LLC








|                               |  |           |           |  |               |   |         | 
|------------------------------ |  | --------- | --------- |  | ------------- | - | ------- | 
|                               |  |           |           |  | NNN 2003      |  
|                               |  |           |           |  | Value Fund,   |  
|                               |  | Amount of |           |  | LLCs Portion |  
|Property/Issue Date            |  | Loan      |           |  | of Debt       |  
|                              
|Executive Center II
    & III: |  |           |           |  |               |   |         | 
|06/09/05                       |  | $         | 1,000,000 |  |               | $ | 411,000 | 
|09/12/05                       |  |           | 200,000   |  |               |   | 82,000  | 
|10/18/05                       |  |           | 240,000   |  |               |   | 99,000  | 
|11/14/05                       |  |           | 5,000     |  |               |   | 2,000   | 
|                               |  |           |           |  |               |   |         | 
|Total                          |  | $         | 1,445,000 |  |               | $ | 594,000 | 
|                               |  |           |           |  |               |   |         | 





Debt
    Service Requirements








Contractual
    Obligations








|                                                                                          |  |                        |           |  |             |   |            |             |  |   |              |  |  |       |            |  |  |   |             | 
|----------------------------------------------------------------------------------------- |  | ---------------------- | --------- |  | ----------- | - | ---------- | ----------- |  | - | ------------ |  |  | ----- | ---------- |  |  | - | ----------- | 
|                                                                                          |  | Payments Due by Period |          
|                                                                                          |  | Less than              |           |  |             |   |            |             |  |   | More than    |  |  |       |           
|                                                                                          |  | 1 Year                 |           |  | 1-3 Years   |   |            | 4-5 Years   |  |   | 5 Years      |  |  |       |           
|                                                                                          |  | (2006)                 |           |  | (2007-2008) |   |            | (2009-2010) |  |   | (After 2010) |  |  | Total |           
|                                                                                         
|Principal payments
     variable rate debt                                               |  | $                      |          |  |             | $ | 31,993,000 |             |  | $ |             |  |  | $     |           |  |  | $ | 31,993,000  | 
|Principal payments
     fixed rate debt                                                  |  |                        |          |  |             |   | 5,000,000  |             |  |   |             |  |  |       | 47,000,000 |  |  |   | 52,000,000  | 
|Interest payments
     variable rate debt (based on rate in effect at
    June 30, 2006) |  |                        | 1,325,000 |  |             |   | 3,485,000  |             |  |   |             |  |  |       |           |  |  |   | 4,810,000   | 
|Interest payments
     fixed rate debt                                                   |  |                        | 1,606,000 |  |             |   | 5,612,000  |             |  |   | 5,424,000    |  |  |       | 13,642,000 |  |  |   | 26,284,000  | 
|Tenant improvement and lease
    commission obligations                                   |  |                        | 278,000   |  |             |   |           |             |  |   |             |  |  |       |           |  |  |   | 278,000     | 
|                                                                                          |  |                        |           |  |             |   |            |             |  |   |              |  |  |       |            |  |  |   |             | 
|Total                                                                                     |  | $                      | 3,209,000 |  |             | $ | 46,090,000 |             |  | $ | 5,424,000    |  |  | $     | 60,642,000 |  |  | $ | 115,365,000 | 
|                                                                                          |  |                        |           |  |             |   |            |             |  |   |              |  |  |       |            |  |  |   |             | 





Off-Balance
    Sheet Arrangements






33



---



##### Table of Contents







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 |   |   | Total | 
|                                                                                         
|Fixed rate debt 
    principal payments                                                  |  | $    |  |  |      | $ | 5,000,000 |      |  | $ |           |   |  | $    |  |  |            | $ |  |       |  | $ | 47,000,000 |   |  | $ | 52,000,000 |  
|Average interest rate on maturing
    debt                                                |  |      |  |  |      |   | 10.00     | %    |  |   |           |   |  |      |  |  |            |   |  |       |  |   | 5.77       | % |  |   | 6.18       | %
|Variable rate debt 
    principal payments                                               |  | $    |  |  |      | $ | 5,500,000 |      |  | $ | 26,493,000 |   |  | $    |  |  |            | $ |  |       |  | $ |           |   |  | $ | 31,993,000 |  
|Average interest rate on maturing
    debt (based on rates in effect as of June 30, 2006) |  |      |  |  |      |   | 8.11      | %    |  |   | 8.32       | % |  |      |  |  |            |   |  |       |  |   |           |   |  |   | 8.28       | %









|        |                            
|------- | ---------------------------
|Item 4. | Controls
    and Procedures



Evaluation of disclosure controls and
    procedures.




Rules 13a-14(a) 15d-14(a) Form 10-Q




Rules 13a-15(e) 15d-15(e)








Changes in internal control over financial
    reporting. Rules 13a-15(f) 15d-15(f)


35



---



##### Table of Contents







PART II 
    OTHER INFORMATION




Item 1.Legal
    Proceedings.




SEC
    Investigation




In the matter of Triple Net Properties,
    LLC.




Accounting for
    Contingencies




Prior
    Performance Tables












Litigation






36



---



##### Table of Contents







|         |                 
|-------- | ----------------
|Item 1A. | Risk
    Factors



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








Form 10-K,




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.






37



---



##### 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)
   38




---



##### 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 39