##### 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, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES  EXCHANGE ACT OF 1934For the transition period from
    to   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 300,
    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, former address and
    former fiscal year, if changed since last report)
    Yes
    þ
    No
    o
  Rule 12b-2
  Large accelerated filer

o



Accelerated filer

oNon-accelerated filer

þ (Do
    not check if a smaller reporting company)



Smaller reporting company

o   Rule 12b-2
 Yes
    o
    No
    þ




---



##### 





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


Financial Statements


2Unaudited Condensed Consolidated Balance Sheets
    as of September 30, 2008 and December 31, 2007


2Unaudited Condensed Consolidated Statements of
    Operations and Comprehensive Loss for the Three and Nine Months
    Ended September 30, 2008 and 2007


3Unaudited Condensed Consolidated Statement of
    Unit Holders Equity for the Nine Months Ended
    September 30, 2008


4Unaudited Condensed Consolidated Statements of
    Cash Flows for the Nine Months Ended September 30, 2008 and
    2007


5Notes to Unaudited Condensed Consolidated
    Financial Statements


6Item 2.


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


25Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


37Item 4.


Controls and Procedures


38Item 4T.


Controls and Procedures


38PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


39Item 1A.


Risk Factors


39Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


41Item 3.


Defaults Upon Senior Securities


41Item 4.


Submission of Matters to a Vote of Security
    Holders


41Item 5.


Other Information


41Item 6.


Exhibits


41Signatures


42EX-31.1EX-31.2EX-32.1EX-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, 2008 and December 31, 2007
    (Unaudited)  September 30, 2008


December 31, 2007ASSETSReal estate investments:Operating properties, net

$
56,843,000


$
61,335,000Property held for sale, net


13,172,000



13,262,000Investments in unconsolidated real estate


5,074,000



5,740,00075,089,000



80,337,000Cash and cash equivalents


1,470,000



8,208,000Investments in marketable equity securities


893,000



1,054,000Accounts receivable, net


450,000



337,000Accounts receivable from related parties


764,000



691,000Restricted cash


2,435,000



3,985,000Identified intangible assets, net


6,695,000



8,117,000Other assets related to property held for sale


1,197,000



1,049,000Other assets, net


3,981,000



4,903,000Total assets

$
92,974,000


$
108,681,000LIABILITIES, MINORITY INTERESTS AND UNIT HOLDERS
    EQUITYMortgage loans payable

$
59,883,000


$
60,755,000Mortgage loan payable secured by property held for sale


9,241,000



10,927,000Accounts payable and accrued liabilities


2,530,000



4,009,000Accounts payable due to related parties


383,000



240,000Identified intangible liabilities, net


145,000



195,000Other liabilities related to property held for sale, net


60,000



43,000Security deposits, prepaid rent and other liabilities


936,000



965,000Total liabilities


73,178,000



77,134,000Minority interests


640,000



682,000Commitments and contingencies (Note 14)Unit holders equity


19,119,000



31,511,000Accumulated other comprehensive income (loss)


37,000



(646,000
)Total unit holders equity


19,156,000



30,865,000Total liabilities, minority interests and unit holders
    equity

$
92,974,000


$
108,681,000    2




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    AND COMPREHENSIVE LOSS
    For the Three and Nine Months Ended September 30, 2008 and
    2007
    (Unaudited)  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Revenue:Rental revenue

$
2,031,000


$
1,161,000


$
6,948,000


$
3,280,000Expense:Rental expense


1,298,000



673,000



4,072,000



2,037,000General and administrative


94,000



186,000



640,000



864,000Depreciation and amortization


1,083,000



917,000



3,278,000



1,958,000Real estate related impairments


3,200,000







3,200,000



Total expense


5,675,000



1,776,000



11,190,000



4,859,000Loss before other income (expense) and discontinued
    operations


(3,644,000
)


(615,000
)


(4,242,000
)


(1,579,000
)Other income (expense):Interest expense (including amortization of deferred financing
    costs)


(1,226,000
)


(929,000
)


(3,682,000
)


(2,247,000
)Interest and dividend income


49,000



170,000



232,000



447,000(Loss) gain on sale of marketable equity securities






(284,000
)






12,000Other-than-temporary impairment of marketable equity securities


(51,000
)






(844,000
)


Equity in losses of unconsolidated real estate


(146,000
)


(532,000
)


(777,000
)


(1,102,000
)Other (expense) income


(1,000
)


(18,000
)


(15,000
)


65,000Loss before minority interests


(5,019,000
)


(2,208,000
)


(9,328,000
)


(4,404,000
)Minority interests


13,000



34,000



25,000



104,000Loss from continuing operations


(5,006,000
)


(2,174,000
)


(9,303,000
)


(4,300,000
)Discontinued operations:Gain on sale of real estate including minority interests related
    to sale of real estate














3,134,000Income (loss) from discontinued operations


205,000



(680,000
)


(472,000
)


(2,328,000
)Total income (loss) from discontinued operations


205,000



(680,000
)


(472,000
)


806,000Net loss

$
(4,801,000
)

$
(2,854,000
)

$
(9,775,000
)

$
(3,494,000
)Comprehensive loss:Net loss

$
(4,801,000
)

$
(2,854,000
)

$
(9,775,000
)

$
(3,494,000
)Recognition of previously unrealized gain on marketable equity
    securities










646,000



Unrealized gain (loss) on marketable equity securities arising
    during the period


(2,000
)


(140,000
)


37,000



(262,000
)Comprehensive loss

$
(4,803,000
)

$
(2,994,000
)

$
(9,092,000
)

$
(3,756,000
)    3




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
    CONDENSED CONSOLIDATED STATEMENT OF UNIT HOLDERS EQUITY
    For the Nine Months Ended September 30, 2008
    (Unaudited)  Numberof Units


TotalBALANCE  December 31, 2007


9,970


$
30,865,000Distributions






(2,617,000
)Net loss






(9,775,000
)Change in unrealized losses on marketable equity securities






683,000BALANCE  September 30, 2008


9,970


$
19,156,000    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, 2008 and 2007
    (Unaudited)  Nine Months EndedSeptember 30,2008


2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(9,775,000
)

$
(3,494,000
)Adjustments to reconcile net loss to net cash used in operating
    activities:Real estate related impairments


3,200,000



Gain on sale of real estate






(3,134,000
)Gain on sale of marketable equity securities






(12,000
)Other-than-temporary impairment of marketable equity securities


844,000



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


4,129,000



2,728,000Equity in losses of unconsolidated real estate


777,000



1,102,000Minority interests


(40,000
)


(136,000
)Allowance for doubtful accounts


(44,000
)


97,000Change in operating assets and liabilities:Accounts receivable


(69,000
)


285,000Accounts receivable from related parties


(73,000
)


Restricted cash


(563,000
)


(128,000
)Other assets


292,000



(11,000
)Accounts payable and accrued liabilities


(738,000
)


(1,048,000
)Security deposits, prepaid rent and other liabilities


(12,000
)


(141,000
)Net cash used in operating activities


(2,072,000
)


(3,892,000
)CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of real estate properties






(23,862,000
)Proceeds from sale of real estate operating properties






11,491,000Investments in unconsolidated real estate


(111,000
)


Distributions received from unconsolidated real estate






111,000Capital expenditures (including tenant improvements)


(1,372,000
)


(777,000
)Purchase of marketable equity securities






(6,489,000
)Proceeds from sale of marketable equity securities






5,009,000Restricted cash


728,000



(1,932,000
)Proceeds from collection of principal payment of note receivable






2,420,000Net cash used in investing activities


(755,000
)


(14,029,000
)CASH FLOWS FROM FINANCING ACTIVITIESBorrowings on mortgage loans payable and other debt


687,000



36,046,000Borrowings from related parties


111,000



1,250,000Restricted cash


1,385,000



(1,243,000
)Principal repayments on mortgage loans payable and other debt


(3,245,000
)


(6,499,000
)Principal repayments on related party borrowings






(1,250,000
)Minority interests distributions


(2,000
)


(44,000
)Payment of deferred financing costs


(230,000
)


(728,000
)Distributions


(2,617,000
)


(3,217,000
)Net cash (used in) provided by financing activities


(3,911,000
)


24,315,000NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(6,738,000
)


6,394,000CASH AND CASH EQUIVALENTS  beginning of period


8,208,000



644,000CASH AND CASH EQUIVALENTS  end of period

$
1,470,000


$
7,038,000SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for interest

$
3,989,000


$
3,656,000NONCASH INVESTING AND FINANCING ACTIVITIES:Accrual for tenant improvements and capital expenditures

$
714,000


$
694,000The following represents certain assets acquired and liabilities
    assumed in connection with our acquisitions and dispositions of
    operating properties Increase in investment operating properties:Increase in investment operating properties:Security deposits, prepaid rent and accrued expenses

$



$
47,000Other assets

$



$
403,000    5




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC



NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the
    Three and Nine Months Ended September 30, 2008 and
    2007  1.
    Organization
    and Description of Business  The use of the words, we, us, or
    our refers to NNN 2003 Value Fund, LLC and its
    subsidiaries, except where the context otherwise requires.
        2.
    Summary
    of Significant Accounting Policies    Interim
    Financial Data
   6




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Form 10-K,
  Principles
    of Consolidation
  Consolidation of Variable Interest Entities,
  Investment
    in Marketable Equity Securities
      Impairment
    
    a significant negative industry or economic trend; 7




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   
    a significant underperformance relative to historical or
    projected future operating results; and
    a significant change in the manner in which the asset is used.    Operating
    Properties
      Property
    Held for Sale
  Accounting for Impairment
    or Disposal of Long-Lived Assets,
  
    management, having the authority to approve the action, commits
    to a plan to sell the asset;
    the asset is available for immediate sale in its present
    condition subject only to terms that are usual and customary for
    sales of such assets;
    an active program to locate a buyer and other actions required
    to complete the plan to sell the asset have been initiated;
    the sale of the asset is probable and the transfer of the asset
    is expected to qualify for recognition as a completed sale
    within one year;
    the asset is being actively marketed for sale at a price that is
    reasonable in relation to its current fair value; and 8




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   
    given the actions required to complete the plan, it is unlikely
    that significant changes to the plan will be made or that the
    plan will be withdrawn.      Income
    Taxes
    Segment
    Disclosure
  Disclosures about Segments of an
    Enterprise and Related Information
  Reclassifications
   9




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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, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13, SFAS 157-1. SFAS 157-1 Accounting for Leases SFAS No. 157-2, Effective Date of FASB Statement No. 157, SFAS 157-2. SFAS 157-2 SFAS 157-1 SFAS 157-1 SFAS 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Business Combinations, Noncontrolling Interests in
    Consolidated Financial Statements  An Amendment of
    ARB No. 51,
 10




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Disclosures about Derivative Instruments and Hedging
    Activities
  SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, SFAS 142-3. SFAS 142-3 Goodwill and Other Intangible Assets, SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  3.
    Real
    Estate Investments  Operating
    Properties    September 30, 2008


December 31, 2007Buildings and tenant improvements

$
50,785,000


$
52,968,000Land


9,971,000



10,532,00060,756,000



63,500,000Less: accumulated depreciation


(3,913,000
)


(2,165,000
)$
56,843,000


$
61,335,000    11




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Acquisitions
    and Dispositions
    Acquisitions
    During the Nine Months Ended September 30, 2008
    Dispositions
    During the Nine Months Ended September 30, 2008
    Acquisitions
    During the Nine Months Ended September 30, 2007
      Dispositions
    During the Nine Months Ended September 30, 2007
         12




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  4.
    Real
    Estate Investments  Investments in Unconsolidated
    Real Estate    Carrying Value of


Carrying Value ofInvestment at


Investment atOwnership


September 30,


December 31,Description

Location

Percentage


2008


2007Enterprise Technology Center

Scotts Valley, CA


8.5
%

$
2,138,000


$
2,232,000Chase Tower

Austin, TX


14.8
%


1,163,000



1,328,000Executive Center II & III

Dallas, TX


41.1
%


1,773,000



2,180,000$
5,074,000


$
5,740,000     September 30, 2008


December 31, 2007Balance Sheet Data:Assets (primarily real estate)

$
165,400,000


$
165,434,000Mortgage loans payable and other debt

$
117,481,000


$
114,244,000Other liabilities


16,675,000



17,040,000Equity


31,244,000



34,150,000Total liabilities and equity

$
165,400,000


$
165,434,000Our share of equity

$
5,074,000


$
5,740,000   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Revenues

$
5,935,000


$
6,285,000


$
17,905,000


$
18,518,000Rental and other expenses


7,137,000



9,142,000



21,570,000



24,556,000Net loss

$
(1,202,000
)

$
(2,857,000
)

$
(3,665,000
)

$
(6,038,000
)Our equity in losses of unconsolidated real estate

$
(146,000
)

$
(532,000
)

$
(777,000
)

$
(1,102,000
)     OwnershipProperty

Percentage


September 30, 2008


December 31, 2007Enterprise Technology Center


8.5
%

$
33,732,000


$
34,263,000Chase Tower


14.8
%


67,131,000



63,633,000Executive Center II & III


41.1
%


16,618,000



16,348,000Total





$
117,481,000


$
114,244,000    13




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Unconsolidated
    Debt Due to Related Parties
  and/or
  Ownership


Amount ofProperty/Issue Date

Percentage


LoanExecutive Center II & III:06/08/05


41.1
%

$
1,000,00009/12/05


41.1
%


200,00010/18/05


41.1
%


240,00011/14/05


41.1
%


5,000Total





$
1,445,000     5.
    Investments
    in Marketable Equity Securities    Historical


Gross Unrealized


Gross Realized


EstimatedSeptember 30, 2008

Cost


Gains


Losses


Gains


Losses


Fair Market ValueMarketable equity securities

$
1,700,000


$
37,000


$



$



$
(844,000
)

$
893,000   Historical


Gross Unrealized


Gross Realized


EstimatedDecember 31, 2007

Cost


Gains


Losses


Gains


Losses


Fair Market ValueMarketable equity securities

$
1,700,000


$



$
(646,000
)

$



$



$
1,054,000      14




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  6.
    Identified
    Intangible Assets    September 30, 2008


December 31, 2007In-place leases, above market leases and tenant relationships,
    net of accumulated amortization of $3,096,000 and $1,684,000 as
    of September 30, 2008 and December 31, 2007,
    respectively (with a weighted average life of 43 months,
    49 months, and 87 months for in-place leases, above
    market leases, and tenant relationships, respectively, as of
    September 30, 2008 and a weighted-average life of
    45 months, 58 months, and 96 months for in-place
    leases, above market leases, and tenant relationships,
    respectively, as of December 31, 2007)

$
6,695,000


$
8,117,000       7.
    Other
    Assets    September 30, 2008


December 31, 2007Deferred rent receivable

$
1,136,000


$
1,266,000Deferred financing costs, net of accumulated amortization of
    $761,000 and $396,000 as of September 30, 2008 and
    December 31, 2007, respectively


778,000



950,000Lease commissions, net of accumulated amortization of $358,000
    and $186,000 as of September 30, 2008 and December 31,
    2007, respectively


1,026,000



1,081,000Lease inducements, net of accumulated amortization of $94,000
    and $321,000 as of September 30, 2008 and December 31,
    2007, respectively


1,029,000



1,606,000Prepaid expenses, deposits and other


12,000



$
3,981,000


$
4,903,000   8.
    Mortgage
    Loans Payable and Other Debt   15




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##### Table of Contents



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


Weighted AverageLoans Payable


Interest RateSeptember 30, 2008


December 31, 2007


September 30, 2008


December 31, 2007Mortgage loans payable

$
69,124,000


$
71,682,000



7.03
%


7.19
%Fixed rate and variable rate:Fixed rate

$
25,590,000


$
26,000,000



7.04
%


6.73
%Variable rate(1)

$
43,534,000


$
45,682,000



7.02
%


7.45
%     (1)
    
    Includes variable rate mortgage loans payable at one of our
    properties with a fixed rate interest rate swap, thereby
    effectively fixing the interest rate on those mortgage loans
    payable.    Executive
    Center Loan Extension
      901 Civic
    Center Loan Modification
  Senior
    Loan
   16




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Mezzanine
    Loan
     17




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##### Table of Contents



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

Index

Rate

Fair Value

Instrument

Maturity$  9,837,000


LIBOR



3.33%


$
(7,000
)


Swap



05/12/2009     Notional Amount

Index

Rate

Fair Value

Instrument

Maturity$  10,550,000


LIBOR



5.40%


$
(33,000
)


Swap



05/12/2008    18




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  10.
    Minority
    Interests  tenant-in-common,
  Entity

Date Acquired


Minority InterestsNNN Enterprise Way, LLC


05/07/04



26.7
%901 Civic Center


04/24/06



3.1
%     11.
    Unit
    Holders Equity          per-unit
    12.
    Related
    Party Transactions  The
    Management Agreement
   19




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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 Acquisition Fees
    Real
    Estate Disposition Fees
    Lease
    Commissions
    Accounting
    Fees
    Construction
    Fees
   20




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Loan
    Fees
    Related
    Party Notes Receivable/Payable and Related Party Accounts
    Receivable/Payable
          13.
    Fair
    Value Measurement  SFAS No. 157-2,
    OtherObservable


Observable


UnobservableInputs


Inputs


InputsLevel 1


Level 2


Level 3


TotalAssetsAvailable-for-sale marketable equity securities

$
893,000


$



$



$
893,000Total assets at fair value

$
893,000


$



$



$
893,000LiabilitiesInterest rate swap

$



$
7,000


$



$
7,000Total liabilities at fair value

$



$
7,000


$



$
7,000      21




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  14.
    Commitments
    and Contingencies  Prior
    Performance Tables
    Litigation
    Environmental
    Matters
    15.
    Concentration
    of Credit Risk     22




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##### Table of Contents



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








Lease2008 Annual


2008 Annual





Square


ExpirationTenant

Base Rent*


Base Rent


Property


Footage


DateMcKesson Information
    Solutions, Inc.

$
1,134,000



11.4
%


Four Resource Square



59,000



06/30/12General Services Administration (GSA)  Federal Bureau
    of Investigation (FBI)

$
1,234,000



12.4
%


901 Civic Center



49,000



05/03/12     *
    
    Annualized rental revenue based on contractual base rent from
    leases in effect as of September 30, 2008.    Percentage of








Lease2007 Annual


2007 Annual





Square


ExpirationTenant

Base Rent*


Base Rent


Property


Footage


DateMcKesson Information Solutions, Inc.

$
1,101,000



15.1
%


Four Resource Square



59,000



06/30/12GSA  FBI

$
1,067,000



14.6
%


901 Civic Center



49,000



03/14/08PRC, LLC

$
915,000



12.5
%


Tiffany Square



96,000



05/31/13Westwood College of Technology

$
763,000



10.4
%


Executive Center



44,000



01/31/13     *
    
    Annualized rental revenue based on contractual base rent from
    leases in effect as of September 30, 2007.  16.
    Discontinued
    Operations  Properties Held for Sale    Property

Date Purchased


Date Designated for Sale


Date Sold901 Civic Center


April 24, 2006



September 26, 2008



N/AWoodside


September 30, 2005



October 19, 2007



December 13, 2007Daniels Road


October 14, 2005



December 12, 2006



March 30, 2007Interwood


January 26, 2005



December 22, 2006



March 14, 2007  23




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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 30,2008


2007


2008


2007Rental revenue

$
385,000


$
1,008,000


$
1,427,000


$
2,803,000Rental expense


95,000



(597,000
)


(798,000
)


(1,750,000
)Depreciation and amortization


(151,000
)


(671,000
)


(532,000
)


(1,580,000
)Income (loss) before other expense


329,000



(260,000
)


97,000



(527,000
)Interest expense and minority interests (including amortization
    of deferred financing costs)


(124,000
)


(420,000
)


(569,000
)


(1,801,000
)Income (loss) from discontinued operations


205,000



(680,000
)


(472,000
)


(2,328,000
)Gain on sale of real estate including minority interest on sale
    of real estate














3,134,000Total income (loss) from discontinued operations

$
205,000


$
(680,000
)

$
(472,000
)

$
806,000       September 30, 2008


December 31, 2007Operating property, net of accumulated depreciation of $828,000
    and $574,000, as of September 30, 2008 and December 31,
    2007, respectively

$
13,172,000


$
13,262,000Identified intangible assets, net of accumulated amortization of
    $264,000 and $767,000, as of September 30, 2008 and
    December 31, 2007, respectively


509,000



731,000Lease commissions, net of accumulated amortization of $12,000
    and $0, as of September 30, 2008 and December 31,
    2007, respectively


439,000



281,000Loan fees, net of accumulated amortization of $185,000 and
    $146,000, as of September 30, 2008 and December 31,
    2007, respectively


28,000



30,000Other assets


221,000



7,000Total other assets


1,197,000



1,049,000Total Assets

$
14,369,000


$
14,311,000Mortgage loans payable


9,241,000



10,927,000Security deposits, prepaid rent, and other liabilities


60,000



43,000Total Liabilities

$
9,301,000


$
10,970,000Minority interests

$
69,000


$
86,000  24




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The use of the words we, us, or
    our refers to NNN 2003 Value Fund, LLC and its
    subsidiaries, except where the context otherwise requires.
  Form 10-Q.
  Forward-Looking
    Statements
    Overview
    and Background
     25




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##### Table of Contents



Business
    Strategy
    Acquisitions
    and Dispositions
    Acquisitions
    During the Nine Months Ended September 30, 2008
    Dispositions
    During the Nine Months Ended September 30, 2008
    Acquisitions
    During the Nine Months Ended September 30, 2007
     26




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##### Table of Contents



Dispositions
    During the Nine Months Ended September 30, 2007
          Critical
    Accounting Policies
  Form 10-K,
  Factors
    which may Influence Results of Operations
  Form 10-K
  Rental
    Revenue
       27




---



##### Table of Contents



Scheduled
    Lease Expirations
    Sarbanes-Oxley
    Act
      Results
    of Operations
   28




---



##### Table of Contents



Comparison
    of the Three and Nine Months Ended September 30, 2008 and
    2007
  Three Months Ended





Nine Months EndedSeptember 30,


Change


September 30,


Change2008


2007


$


%


2008


2007


$


%Revenues:Rental revenue

$
2,031,000


$
1,161,000


$
870,000



74.9%


$
6,948,000


$
3,280,000


$
3,668,000



111.8%Expenses:Rental expense


1,298,000



673,000



625,000



92.9%



4,072,000



2,037,000



2,035,000



99.9%General and administrative


94,000



186,000



(92,000)



(49.5)%



640,000



864,000



(224,000)



(25.9)%Depreciation and amortization


1,083,000



917,000



166,000



18.1%



3,278,000



1,958,000



1,320,000



67.4%Real estate related impairments


3,200,000







3,200,000



%



3,200,000







3,200,000



%5,675,000



1,776,000



3,899,000



219.5%



11,190,000



4,859,000



6,331,000



130.3%Loss before other income (expense) and discontinued operations


(3,644,000)



(615,000)



(3,029,000)



(492.5)%



(4,242,000)



(1,579,000)



(2,663,000)



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


(1,226,000)



(929,000)



(297,000)



(32.0)%



(3,682,000)



(2,247,000)



(1,435,000)



(63.9)%Interest and dividend income


49,000



170,000



(121,000)



(71.2)%



232,000



447,000



(215,000)



(48.1)%(Loss) gain on sale of marketable securities






(284,000)



284,000



100.0%







12,000



(12,000)



(100.0)%Other-than-temporary impairment of marketable equity securities


(51,000)







(51,000)



%



(844,000)







(844,000)



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


(146,000)



(532,000)



386,000



72.6%



(777,000)



(1,102,000)



325,000



29.5%Other (expense) income


(1,000)



(18,000)



17,000



94.4%



(15,000)



65,000



(80,000)



(123.1)%Minority interests


13,000



34,000



(21,000)



(61.8)%



25,000



104,000



(79,000)



(76.0)%Loss from continuing operation before discontinued operations


(5,006,000)



(2,174,000)



(2,832,000)



(130.3)%



(9,303,000)



(4,300,000)



(5,003,000)



(116.3)%Discontinued operations:Gain on sale of real estate














%







3,134,000



(3,134,000)



(100.0)%Income (loss) from discontinued operations


205,000



(680,000)



885,000



130.1%



(472,000)



(2,328,000)



1,856,000



79.7%Total (loss) income from discontinued operations


205,000



(680,000)



885,000



130.1%



(472,000)



806,000



(1,278,000)



(158.6)%Net loss

$
(4,801,000)


$
(2,854,000)


$
(1,947,000)



(68.2)%


$
(9,775,000)


$
(3,494,000)


$
(6,281,000)



(179.8)%   Rental
    Revenue
      Rental
    Expense
     29




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##### Table of Contents



General
    and Administrative Expense
      Depreciation
    and Amortization Expense
      Real
    Estate Related Impairments
    Interest
    Expense
     30




---



##### Table of Contents



Interest
    and Dividend Income
      (Loss)
    Gain on Sale of Marketable Equity Securities
    Other-than-Temporary
    Impairment of Marketable Equity Securities
    Equity in
    Losses of Unconsolidated Real Estate
      Minority
    Interests
     31




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##### Table of Contents



Gain on
    Sale of Real Estate including Minority Interests Related to Sale
    of Real Estate
    Income
    (Loss) from Discontinued Operations
      Net
    Loss
    Liquidity
    and Capital Resources
  Current
    Sources of Capital and Liquidity
        Sale of
    Real Estate Investments
   32




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##### Table of Contents



Cash
    Flows
          Factors
    which may Influence Future Sources of Capital and
    Liquidity
  Debt
    Financing
     33




---



##### Table of Contents



Total Mortgage


Weighted AverageLoans Payable


Interest RateSeptember 30, 2008


December 31, 2007


September 30, 2008


December 31, 2007Mortgage loans payable

$
69,124,000


$
71,682,000



7.03%



7.19%Fixed rate and variable rate:Variable rate(1)

$
43,534,000


$
45,682,000



7.02%



7.45%Fixed rate

$
25,590,000


$
26,000,000



7.04%



6.73%     (1)
    
    Includes variable rate mortgage loans payable at one of our
    properties with a fixed rate interest rate swap, thereby
    effectively fixing the interest rate on those mortgage loans
    payable.      Payments Due by PeriodLess than








More than1 Year


1-3 Years


4-5 Years


5 Years(2008)


(2009-2010)


(2011-2012)


(After 2012)


TotalPrincipal payments  variable rate debt

$



$
43,534,000


$



$



$
43,534,0000Principal payments  fixed rate debt






25,590,000











25,590,000Interest payments  variable rate debt (based on rate
    in effect at September 30, 2008)


2,293,000



2,211,000











4,504,000Interest payments  fixed rate debt


1,350,000



2,710,000











4,060,000Tenant improvement and lease commission obligations


714,000















714,000Total

$
4,357,000


$
74,045,000


$



$



$
78,402,000   30-day
    Notional Amount

Index


Rate


Fair Value


Instrument


Maturity$       9,837,000


LIBOR



3.33%


$
(7,000
)


Swap



05/12/2009   Investment
    in Marketable Equity Securities
   34




---



##### Table of Contents



Other
    Liquidity Needs
      Capital
    Resources
  General
       35




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Inflation
    Recently
    Issued Accounting Pronouncements
  Fair Value Measurement, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13, SFAS 157-1. SFAS 157-1 Accounting for Leases SFAS No. 157-2, Effective Date of FASB Statement No. 157, SFAS 157-2. SFAS 157-2 SFAS 157-1 SFAS 157-1 SFAS 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Business Combinations, Noncontrolling Interests in
    Consolidated Financial Statements  An Amendment of
    ARB No. 51, SFAS No. 141(R)
 36




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
    Activities
  SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, SFAS 142-3. SFAS 142-3 Goodwill and Other Intangible Assets, SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.     37




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##### Table of Contents



Expected Maturity Date2008


2009


2010


2011


2012


Thereafter


TotalFixed rate debt - principal payments

$



$
4,590,000


$
21,000,000


$



$



$



$
25,590,000Weighted average interest rate on maturing debt


%



12.00%



5.95%



%



%



%



7.04%Variable rate debt - principal payments(1)

$



$
21,636,000


$
21,898,000


$



$



$



$
43,534,000Weighted average interest rate on maturing debt (based on rates
    in effect as of September 30, 2008)


%



6.80%



7.25%



%



%



%



7.02%     (1)
    
    Includes variable rate mortgage
    loans payable at one of our properties with a fixed rate
    interest rate swap, thereby effectively fixing the interest rate
    on those mortgage loans payable.      Item 4.
    Controls
    and Procedures.    Item 4T.
    Controls
    and Procedures.  Evaluation of disclosure controls and
    procedures.
  Rules 13a-15(e) 15d-15(e)
  Changes in internal control over financial
    reporting.
 38




---



##### Table of Contents



PART II 
    OTHER INFORMATION  The use of the words, we, us, or
    our refers to NNN 2003 Value Fund, LLC and its
    subsidiaries, except where the context otherwise requires.
  Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors.  Form 10-K,
    If we
    are unable to pay the outstanding balances and all accrued
    interest on our mortgage loans that mature within the next
    12 months, the respective lenders may declare us in default
    of the loans and exercise their remedies under the loan
    agreements, including foreclosure on the properties, which could
    have a material adverse effect on our operating activities and
    cash flow.
    If we
    do not meet 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 affect on our
    operating activities and cash flow.
   39




---



##### Table of Contents



The
    recent downturn in the credit markets may increase the cost of
    borrowing and may make refinancing difficult to obtain, each of
    which may have a material adverse effect on our results of
    operations and business.
      Our
    results of operations, our ability to pay distributions to our
    unit holders and our ability to dispose of our investments are
    subject to general economic and regulatory factors we cannot
    control or predict.
    
    poor economic times may result in defaults by tenants of our
    properties and borrowers. We have been required to provide rent
    concessions or reduced rental rates to maintain or increase
    occupancy levels;
    job transfers and layoffs may cause vacancies to increase and a
    lack of future population and job growth may make it difficult
    to maintain or increase occupancy levels;
    increases in supply of competing properties or decreases in
    demand for our properties may impact our ability to maintain or
    increase occupancy levels;
    changes in interest rates and availability of debt financing
    could render the sale of properties difficult or unattractive;
    periods of high interest rates will reduce cash flow from
    leveraged properties; and
    increased insurance premiums, real estate taxes or energy or
    other expenses may reduce funds available for distribution or,
    to the extent such increases are passed through to tenants, may
    lead to tenant defaults. Also, any such increased expenses may
    make it difficult to increase rents to tenants on turnover,
    which may limit our ability to increase our returns.  If one
    of our insurance carriers does not remain solvent, we may not be
    able to fully recover on our claims.
    The
    failure of any bank in which we deposit our funds could reduce
    the amount of cash we have available to repay debt obligations
    and fund operations.
   40




---



##### 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.   41




---



##### Table of Contents



SIGNATURES    NNN 2003 Value Fund, LLC(Registrant)November 20, 2008

/s/  Kent W.
    PetersDate

Kent W. PetersChief Executive Officer
    (principal executive officer)November 20, 2008

/s/  Michael J.
    RispoliDate

Michael J. RispoliChief Financial OfficerGrubb & Ellis Realty Investors, LLC,
    the Manager of NNN 2003 Value Fund, LLC(principal financial officer)  42




---



##### Table of Contents



EXHIBIT INDEX
  Regulation S-K,
  Form 10-Q Regulation S-K).
  3
.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

First Amendment to Operating Agreement of NNN 2003 Value Fund,
    LLC, by and between Triple Net Properties, LLC, as the Manager,
    dated January 20, 2005, (included as Exhibit 10.3 to our
    Form 10-K filed on April 2, 2007 and incorporated herein by
    reference).10
.4

First Amendment to Management Agreement between NNN 2003 Value
    Fund, LLC and Triple Net Properties Realty, Inc., dated May 1,
    2005, (included as Exhibit 10.4 to our Form 10-K filed on April
    2, 2007 and incorporated herein by reference).10
.5

Second Amendment to Operating Agreement of NNN 2003 Value Fund,
    LLC, by and between Triple Net Properties, LLC, as the Manager,
    dated February 2, 2007, (included as Exhibit 10.7 to our Form
    10-K filed on April 2, 2007 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 Principal Financial 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 Principal Financial Officer, pursuant to
    18 U.S.C. Section 1350, as created by Section 906 of the
    Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith. 43