##### 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 June 30, 2008oro

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934   
  0-51295
  NNN 2003 Value Fund, LLC
  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
   N/A
      þ 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
   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
    June 30, 2008 (Unaudited) and December 31, 2007
    (Unaudited)


2Condensed Consolidated Statements of Operations
    and Comprehensive (Loss) Income for the Three and Six Months
    Ended June 30, 2008 and 2007 (Unaudited)


3Condensed Consolidated Statement of Unit
    Holders Equity for the Six Months Ended June 30, 2008
    (Unaudited)


4Condensed Consolidated Statements of Cash Flows
    for the Six Months Ended June 30, 2008 and 2007
    (Unaudited)


5Notes to Condensed Consolidated Financial
    Statements (Unaudited)


6Item 2.


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


25Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


41Item 4.


Controls and Procedures


42Item 4T.


Controls and Procedures


42PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


43Item 1A.


Risk Factors


43Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


44Item 3.


Defaults Upon Senior Securities


44Item 4.


Submission of Matters to a Vote of Security
    Holders


45Item 5.


Other Information


45Item 6.


Exhibits


45Signatures


46EXHIBIT 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 June 30, 2008 and December 31, 2007
 (Unaudited)
  June 30,


December 31,2008


2007ASSETSReal estate investments:Operating properties, net

$
73,528,000


$
74,597,000Investments in unconsolidated real estate


5,110,000



5,740,00078,638,000



80,337,000Cash and cash equivalents


3,129,000



8,208,000Investment in marketable equity securities


946,000



1,054,000Accounts receivable, net


917,000



434,000Accounts receivable from related parties


608,000



594,000Restricted cash


4,032,000



3,985,000Identified intangible assets, net


7,685,000



8,848,000Other assets, net


4,466,000



5,221,000Total assets

$
100,421,000


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

$
70,812,000


$
71,682,000Accounts payable and accrued liabilities


2,721,000



4,009,000Accounts payable due to related parties


278,000



240,000Identified intangible liabilities, net


161,000



195,000Security deposits, prepaid rent and other liabilities


972,000



1,008,000Total liabilities


74,944,000



77,134,000Commitments and contingencies (Note 13)Minority interests


647,000



682,000Unit holders equity


24,791,000



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


39,000



(646,000)Total unit holders equity


24,830,000



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

$
100,421,000


$
108,681,000    2




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##### Table of Contents



NNN 2003
    VALUE FUND, LLCCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    AND COMPREHENSIVE (LOSS) INCOME
    For the Three and Six Months Ended June 30, 2008 and
    2007
    (Unaudited)
 Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007Revenue:Rental income

$
3,028,000


$
1,600,000


$
5,960,000


$
2,916,000Expense:Rental expense


1,607,000



980,000



3,282,000



1,844,000General and administrative


478,000



233,000



930,000



732,000Depreciation and amortization


1,214,000



853,000



2,576,000



1,442,000Total expense


3,299,000



2,066,000



6,788,000



4,018,000Loss before other income (expense) and discontinued operations


(271,000)



(466,000)



(828,000)



(1,102,000)Other income (expense):Interest expense (including amortization of deferred financing
    costs)


(1,470,000)



(1,103,000)



(2,924,000)



(1,781,000)Interest and dividend income


70,000



180,000



183,000



277,000Gain on sale of marketable securities






296,000







296,000Other-than-temporary impairment of marketable equity securities


(110,000)







(793,000)



Equity in losses of unconsolidated real estate


(643,000)



(280,000)



(631,000)



(570,000)Other (expense) income


(24,000)



51,000



(14,000)



83,000Loss before minority interests


(2,448,000)



(1,322,000)



(5,007,000)



(2,797,000)Minority interests


24,000



8,000



33,000



88,000Loss from continuing operations


(2,424,000)



(1,314,000)



(4,974,000)



(2,709,000)Discontinued operations:Gain on sale of real estate including minority interests related
    to sale of real estate














3,134,000Loss from discontinued operations






(592,000)







(1,065,000)Total (loss) income from discontinued operations






(592,000)







2,069,000Net loss

$
(2,424,000)


$
(1,906,000)


$
(4,974,000)


$
(640,000)Comprehensive income:Net (loss) income

$
(2,424,000)


$
(1,906,000)


$
(4,974,000)


$
(640,000)Recognition of previously unrealized loss on marketable equity
    securities










646,000



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


33,000



(79,000)



39,000



(122,000)Comprehensive loss

$
(2,391,000)


$
(1,985,000)


$
(4,289,000)


$
(762,000)Net (loss) income per unit:Continuing operations  basic and diluted

$
(243.13)


$
(131.80)


$
(498.90)


$
(271.72)Discontinued operations  basic and diluted

$



$
(59.38)


$



$
207.52Total net (loss) income per unit  basic and diluted

$
(243.13)


$
(191.18)


$
(498.90)


$
64.20Weighted average number of units outstanding  basic
    and diluted


9,970



9,970



9,970



9,970    3




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##### Table of Contents



NNN 2003
    VALUE FUND, LLCCONDENSED CONSOLIDATED STATEMENT OF UNIT
    HOLDERS EQUITY
    For the Six Months Ended June 30, 2008
    (Unaudited)
  Numberof Units


TotalBALANCE  December 31, 2007


9,970


$
30,865,000Distributions






(1,746,000)Net loss






(4,974,000)Change in unrealized losses on marketable equity securities






685,000BALANCE  June 30, 2008


9,970


$
24,830,000    4




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##### Table of Contents



NNN 2003
    VALUE FUND, LLCCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Six Months Ended June 30, 2008 and 2007
    (Unaudited)
 Six Months EndedJune 30,2008


2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(4,974,000)


$
(640,000)Adjustments to reconcile net (loss) income to net cash used in
    operating activities:Gain on sale of real estate






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






(296,000)Other-than-temporary impairment of marketable equity securities


793,000



Depreciation and amortization (including deferred financing
    costs, deferred rentand above market leases)


2,315,000



1,683,000Equity in losses of unconsolidated real estate


631,000



570,000Minority interests


(33,000)



(88,000)Allowance for doubtful accounts


354,000



41,000Change in operating assets and liabilities:Accounts receivable


(837,000)



187,000Accounts receivable from related parties


(14,000)



5,000Other assets


945,000



31,000Accounts payable and accrued liabilities


(1,033,000)



(1,454,000)Security deposits, prepaid rent and other liabilities


(36,000)



(102,000)Net cash used in operating activities


(1,889,000)



(3,197,000)CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of real estate properties






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






11,491,000Distributions received from unconsolidated real estate






75,000Capital expenditures


(496,000)



(265,000)Purchase of marketable equity securities






(5,761,000)Proceeds from sale of marketable equity securities






3,543,000Restricted cash


(47,000)



(3,143,000)Net cash used in investing activities


(543,000)



(17,922,000)CASH FLOWS FROM FINANCING ACTIVITIESBorrowings on mortgage loans payable and other debt


598,000



34,728,000Borrowings from related parties






1,250,000Principal repayments on mortgage loans payable and other debt


(1,468,000)



(5,500,000)Principal repayments on related party borrowings






(1,250,000)Minority interests distributions


(2,000)



(34,000)Payment of deferred financing costs


(29,000)



(715,000)Distributions


(1,746,000)



(2,345,000)Net cash (used in) provided by financing activities


(2,647,000)



26,134,000NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(5,079,000)



5,015,000CASH AND CASH EQUIVALENTS - beginning of period


8,208,000



644,000CASH AND CASH EQUIVALENTS - end of period

$
3,129,000


$
5,659,000SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest

$
2,726,000


$
2,243,000Income taxes

$
55,000


$
10,000NONCASH INVESTING AND FINANCING ACTIVITIES:Accrual for tenant improvements and capital expenditures

$
56,000


$
490,000The following represents certain assets acquired and liabilities
    assumed in connection with our acquisitions and dispositions of
    operating propertiesIncrease in investment operating properties:Security deposits and prepaid rent

$



$
8,000Other assets

$



$
403,000Accrued expenses

$



$
39,000    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  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   6




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  Interim
    Financial Data
  Form 10-K,
  Principles
    of Consolidation
  Consolidation of Variable Interest Entities,
  Investment
    in Marketable Equity Securities
    Income
    Taxes
   7




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  Segment
    Disclosure
  Disclosures about Segments of an Enterprise and
    Related Information
  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,
 8




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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
 9




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  3.
    Investments
    in Real Estate  Operating
    Properties
    June 30, 2008


December 31, 2007Buildings and tenant improvements

$
64,943,000


$
64,710,000Land


12,627,000



12,627,00077,570,000



77,337,000Less: accumulated depreciation


(4,042,000
)


(2,740,000
)$
73,528,000


$
74,597,000     Acquisitions
    and Dispositions
    Acquisitions
    During the Six Months Ended June 30, 2008
    Dispositions
    During the Six Months Ended June 30, 2008
    Acquisitions
    During the Six Months Ended June 30, 2007
  Consolidated
    Properties
     10




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  Dispositions
    During the Six Months Ended June 30, 2007
  Consolidated
    Properties
          Investments
    in Unconsolidated Real Estate
    OwnershipDescription

Location

Percentage

June 30, 2008


December 31, 2007Enterprise Technology Center

Scotts Valley, CA


8.5%


$
2,189,000


$
2,232,000Chase Tower

Austin, TX


14.8%



1,177,000



1,328,000Executive Center II & III

Dallas, TX


41.1%



1,744,000



2,180,000$
5,110,000


$
5,740,000     June 30, 2008


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

$
164,533,000


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

$
116,823,000


$
114,244,000Other liabilities


16,009,000



17,040,000Equity


31,701,000



34,150,000Total liabilities and equity

$
164,533,000


$
165,434,000Our share of equity

$
5,110,000


$
5,740,000   11




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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 30,2008


2007


2008


2007Revenues

$
5,607,000


$
6,124,000


$
11,970,000


$
12,233,000Rental and other expenses


8,126,000



7,642,000



14,433,000



15,414,000Net loss

$
(2,519,000
)

$
(1,518,000
)

$
(2,463,000
)

$
(3,181,000
)Our equity in losses of unconsolidated real estate

$
(643,000
)

$
(280,000
)

$
(631,000
)

$
(570,000
)   4.
    Marketable
    Equity Securities    Historical


Gross Unrealized


Gross Realized


EstimatedCost


Gains


Losses


Gains


Losses


Fair Market ValueJune 30, 2008Marketable equity securities

$
1,700,000


$
39,000


$



$



$
(793,000
)

$
946,000     5.
    Identified
    Intangible Assets   June 30, 2008


December 31, 2007In-place leases, above market leases and tenant relationships,
    net of accumulated amortization of $3,456,000 and $2,450,000 as
    of June 30, 2008 and December 31, 2007, respectively
    (with a weighted average life of 44 months, 52 months,
    and 90 months for in-place leases, above market leases, and
    tenant relationships, respectively, as of June 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)

$
7,685,000


$
8,848,000    12




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##### Table of Contents



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


December 31, 2007Deferred rent receivable

$
1,712,000


$
1,274,000Deferred financing costs, net of accumulated amortization of
    $814,000 and $542,000 as of June 30, 2008 and
    December 31, 2007, respectively


749,000



980,000Lease commissions, net of accumulated amortization of $298,000
    and $186,000 as of June 30, 2008 and December 31,
    2007, respectively


1,295,000



1,362,000Lease inducements, net of accumulated amortization of $469,000
    and $321,000 as of June 30, 2008 and December 31,
    2007, respectively


653,000



1,605,000Prepaid expenses, deposits and other


57,000



$
4,466,000


$
5,221,000   7.
    Mortgage
    Loans Payable and Other Debt      Total Mortgage


Weighted AverageLoans Payable


Interest RateJune 30, 2008


December 31, 2007


June 30, 2008


December 31, 2007Mortgage loans payable

$
70,812,000


$
71,682,000



6.51%



7.19%Fixed rate and variable rate:Fixed rate

$
26,000,000


$
26,000,000



6.73%



6.73%Variable rate

$
44,812,000


$
45,682,000



6.38%



7.45%     Executive
    Center Loan Extension
     13




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
    901 Civic
    Loan Modification
    Senior
    Loan
      Mezzanine
    Loan
   14




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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
    8.
    Derivative
    Financial Instruments  Derivative Instruments and Hedging Activities,
 15




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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$9,837,000


LIBOR



3.33%


$
(44,000
)


Swap



05/12/2009     Notional Amount

Index


Rate


Fair Value


Instrument


Maturity$10,550,000


LIBOR



5.40%


$
(33,000
)


Swap



05/12/2008     9.
    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%     10.
    Unit
    Holders Equity       16




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
    per-unit
  11.
    Related
    Party Transactions  The
    Management Agreement
      Property
    Management Fees
    Real
    Estate Acquisition Fees
    Real
    Estate Disposition Fees
   17




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  Lease
    Commissions
    Accounting
    Fees
    Construction
    Fees
    Loan
    Fees
    Acquisition
    Fees
    Related
    Party Accounts Receivable/Payable
   18




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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
    NNN 2003 ValueOwnership

Amount of


Fund, LLCsProperty/Issue Date

Percentage

Loan


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


41.1%


$
1,000,000


$
411,00009/12/05


41.1%



200,000



82,00010/18/05


41.1%



240,000



99,00011/14/05


41.1%



5,000



2,000Total





$
1,445,000


$
594,000   12.
    Fair
    Value Measurement  SFAS No. 157-2,
    OtherObservable


Observable


UnobservableInputs


Inputs


InputsAssets

Level 1


Level 2


Level 3


TotalAvailable-for-sale marketable equity securities

$
946,000


$



$



$
946,000Total assets at fair value

$
946,000


$



$



$
946,000LiabilitiesInterest rate swaps

$



$
44,000


$



$
44,000Total liabilities at fair value

$



$
44,000


$



$
44,000      19




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  13.
    Commitments
    and Contingencies  Rental
    Income
      Prior
    Performance Tables
    Litigation
    Environmental Matters
   20




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##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
    Unconsolidated Debt
     As of June 30, 2008


As of December 31, 2007Mortgage





MortgageLoans Payable


NNN 2003


Loans Payable


NNN 2003and


Value


and


ValueOwnership


Other Debt


Fund, LLCs


Other Debt


Fund, LLCsProperty

Percentage


Balance


Portion of Debt


Balance


Portion of DebtEnterprise Technology Center


8.5%


$
33,910,000


$
2,882,000


$
34,263,000


$
2,912,000Chase Tower


14.8%



66,624,000



9,860,000



63,633,000



9,418,000Executive Center II & III


41.1%



16,289,000



6,695,000



16,348,000



6,719,000Total





$
116,823,000


$
19,437,000


$
114,244,000


$
19,049,000     14.
    Concentration
    of Credit Risk     21




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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

$
1,101,000



11.7%


Four Resource Square


59,000



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

$
1,234,000



13.1%


901 Civic Center


49,000



05/03/12       Percentage of







Lease2007 Annual


2007 Annual




Square


ExpirationTenant

Base Rent*


Base Rent


Property

Footage


DateGSA  FBI

$
1,067,000



16.5%


901 Civic Center


49,000



03/14/08
    and  
    05/03/08Westwood College of Technology

$
763,000



11.8%


Executive Center I


44,000



01/31/13McKesson Information Solutions, Inc.

$
757,000



11.7%


Four Resource Square


41,000



10/31/08     15.
    Discontinued
    Operations  Properties Held for Sale    Property

Date Purchased


Date Designated for Sale


Date SoldWoodside


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  22




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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 30,2008


2007


2008


2007Rental income

$



$
334,000


$



$
997,000Rental expense






(209,000
)






(618,000
)Depreciation and amortization






(256,000
)






(507,000
)Loss before other expense






(131,000
)






(128,000
)Interest expense (including amortization of deferred financing
    costs)






(461,000
)






(937,000
)Loss from discontinued operations






(592,000
)






(1,065,000
)Gain on sale of real estate including minority interest on sale
    of real estate














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

$



$
(592,000
)

$



$
2,069,000     16.
    Per Unit
    Data  Earnings Per Share.
    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007Loss from continuing operations

$
(2,424,000
)

$
(1,314,000
)

$
(4,974,000
)

$
(2,709,000
)(Loss) income from discontinued operations






(592,000
)






2,069,000Net loss

$
(2,424,000
)

$
(1,906,000
)

$
(4,974,000
)

$
(640,000
)Net loss per unit:Continuing operations - basic and diluted

$
(243.13
)

$
(131.80
)

$
(498.90
)

$
(271.72
)Discontinued operations - basic and diluted






(59.38
)






207.52Total net loss per unit - basic and diluted

$
(243.13
)

$
(191.18
)

$
(498.90
)

$
(64.20
)Weighted average number of units outstanding - basic and
    diluted


9,970



9,970



9,970



9,970   17.
    Business
    Combinations   23




---



##### Table of Contents



NNN 2003
    VALUE FUND, LLC
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)Continued
  Business Combinations,
  Four Resource SquareLand

$
1,668,000Building and improvements


19,357,000In place leases


1,034,000Tenant relationships


1,592,000Net assets acquired

$
23,651,000Below market leases


(145,000
)Net liabilities incurred

$
(145,000
)      24




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis 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 Six Months Ended June 30, 2008
    Dispositions
    During the Six Months Ended June 30, 2008
    Acquisitions
    During the Six Months Ended June 30, 2007
  Consolidated
    Properties
     26




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##### Table of Contents



Dispositions
    During the Six Months Ended June 30, 2007
  Consolidated
    Properties
          Critical
    Accounting Policies
  Form 10-K,
  Interim Financial Data
  Form 10-K,
  Principles
    of Consolidation
  Consolidation of
    Variable Interest Entities,
 27




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##### Table of Contents



Investment
    in Marketable Equity Securities
    Income
    Taxes
    Segment
    Disclosure
  Disclosures about Segments of an Enterprise and
    Related Information
  Factors
    Which May Influence Results of Operations
  Form 10-K
  Rental
    Income
     28




---



##### Table of Contents



Scheduled
    Lease Expirations
    Sarbanes-Oxley
    Act
      Results
    of Operations
   29




---



##### Table of Contents



Comparison
    of the Three and Six Months Ended June 30, 2008 and
    2007
  Three Months Ended








Six Months EndedJune 30,


Change


June 30,


Change2008


2007


$


%


2008


2007


$


%Revenues:Rental income

$
3,028,000


$
1,600,000


$
1,428,000



89.3%


$
5,960,000


$
2,916,000


$
3,044,000



104.4%Expenses:Rental expense


1,607,000



980,000



627,000



64.0%



3,282,000



1,844,000



1,438,000



78.0%General and administrative


478,000



233,000



245,000



105.2%



930,000



732,000



198,000



27.0%Depreciation and amortization


1,214,000



853,000



361,000



42.3%



2,576,000



1,442,000



1,134,000



78.6%3,299,000



2,066,000



1,233,000



59.7%



6,788,000



4,018,000



2,770,000



68.9%
)Loss before other (expense) income and discontinued operations


(271,000
)


(466,000
)


195,000



41.8%



(828,000
)


(1,102,000
)


274,000



24.9%Other (expense) income:Interest expense (including amortization of deferred financing
    costs


(1,470,000
)


(1,103,000
)


(367,000
)


(33.3%
)


(2,924,000



(1,781,000
)


(1,143,000
)


(64.2%
)Interest and dividend income


70,000



180,000



(110,000
)


(61.1%
)


183,000



277,000



(94,000
)


(33.9%
)Gain on sale of marketable securities






296,000



(296,000
)


(100.0%
)






296,000



(296,000
)


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


(110,000
)






(110,000
)






(793,000
)






(793,000
)


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


(643,000
)


(280,000
)


(363,000
)


(129.6%
)


(631,000
)


(570,000
)


(61,000
)


(10.7%
)Other (expense) income


(24,000
)


51,000



(75,000
)


(147.1%
)


(14,000
)


83,000



(97,000
)


(116.9%
)Minority interests


24,000



8,000



16,000



200.0%



33,000



88,000



(55,000
)


(62.5%
)Loss from continuing operation before discontinued operations


(2,424,000
)


(1,314,000
)


(1,110,000
)


(84.5%
)


(4,974,000
)


(2,709,000
)


(2,265,000
)


(83.6%
)Discontinued operations:Gain on sale of real estate






















3,134,000



(3,134,000
)


(100.0%
)Loss from discontinued operations






(592,000
)


592,000



100.0%







(1,065,000
)


1,065,000



100.0%Total (loss) income from discontinued operations






(592,000
)


592,000



100.0%







2,069,000



(2,069,000
)


(100.0%
)Net loss

$
(2,424,000
)

$
(1,906,000
)

$
(518,000
)


(27.2%
)

$
(4,974,000
)

$
(640,000
)

$
(4,334,000
)


(677.2%
)   Rental
    Income
     30




---



##### Table of Contents



Rental
    Expense
      General
    and Administrative Expense
      Depreciation
    and Amortization Expense
      Interest
    Expense
      Interest
    and Dividend Income
   31




---



##### Table of Contents



Gain on
    Sale of Marketable Equity Securities
    Other-than-temporary
    Impairment of Marketable Equity Securities
    Equity in
    Losses of Unconsolidated Real Estate
      Minority
    Interests
      Gain on
    Sale of Real Estate including Minority Interests Related to Sale
    of Real Estate
   32




---



##### Table of Contents



Loss from
    Discontinued Operations
    Net
    Loss
    Liquidity
    and Capital Resources
  Current
    Sources of Capital and Liquidity
    Factors
    Which May Influence Future Sources of Capital and
    Liquidity
  Investment
    in Marketable Equity Securities
    Debt
    Financing
     33




---



##### Table of Contents



Total Mortgage


Weighted AverageLoans Payable


Interest RateJune 30, 2008


December 31, 2007


June 30, 2008


December 31, 2007Mortgage loans payable

$
70,812,000


$
71,682,000



6.51%



7.19%Fixed rate and variable rate:Fixed rate

$
26,000,000


$
26,000,000



6.73%



6.73%Variable rate

$
44,812,000


$
45,682,000



6.38%



7.45%     30-day
    Notional Amount

Index

Rate

Fair Value

Instrument

Maturity$
9,837,000


LIBOR


3.33
%

$
(44,000
)


Swap



05/12/2009   Executive
    Center Loan Extension
      901 Civic
    Loan Modification
   34




---



##### Table of Contents



Senior Loan
      Mezzanine
    Loan
     35




---



##### Table of Contents



Interest
    Rate Swap
    Other
    Liquidity Needs
  and/or
        Cash
    Flows
   36




---



##### Table of Contents



Capital
    Resources
  General
       37




---



##### Table of Contents



and/or
    Unconsolidated
    Debt
    As of June 30, 2008


As of December 31, 2007Mortgage





MortgageLoans Payable





Loansand


NNN 2003 Value


Payable and


NNN 2003 ValueOwnership


Other Debt


Fund, LLCs


Other Debt


Fund, LLCsProperty

Percentage


Balance


Portion of Debt


Balance


Portion of DebtEnterprise Technology Center


8.5%


$
33,910,000


$
2,882,000


$
34,263,000


$
2,912,000Chase Tower


14.8%



66,624,000



9,860,000



63,633,000



9,418,000Executive Center II & III


41.1%



16,289,000



6,695,000



16,348,000



6,719,000Total





$
116,823,000


$
19,437,000


$
114,244,000


$
19,049,000     Unconsolidated
    Debt Due to Related Parties
    NNN 2003 ValueOwnership


Amount of


Fund, LLCsProperty/Issue Date

Percentage


Loan


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


41.1%


$
1,000,000


$
411,00009/12/05


41.1%



200,000



82,00010/18/05


41.1%



240,000



99,00011/14/05


41.1%



5,000



2,000Total





$
1,445,000


$
594,000   Debt
    Service Requirements
   38




---



##### Table of Contents



Contractual
    Obligations
    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

$



$
44,812,000


$



$



$
44,812,000Principal payments  fixed rate debt


5,000,000



21,000,000











26,000,000Interest payments  variable rate debt (based on rate
    in effect at June 30, 2008)


1,430,000



2,171,000











3,601,000Interest payments  fixed rate debt


750,000



2,291,000











3,041,000Tenant improvement and lease commission obligations


2,008,000















2,008,000Total

$
9,188,000


$
70,274,000


$



$



$
79,462,000   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,
 39




---



##### Table of Contents



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,
  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,
 40




---



##### Table of Contents



SFAS 142-3 SFAS 142-3 SFAS 142-3 SFAS 142-3
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.          Expected Maturity Date2008


2009


2010


2011


2012


Thereafter


TotalFixed rate debt - principal payments

$
5,000,000


$



$
21,000,000


$



$



$



$
26,000,000Weighted average interest rate on maturing debt


10.00
%



%


5.95
%



%



%



%


6.73
%Variable rate debt - principal payments

$



$
22,914,000


$
21,898,000


$



$



$



$
44,812,000Weighted average interest rate on maturing debt (based on rates
    in effect as of June 30, 2008)



%


5.57
%


7.24
%



%



%



%


6.38
%  41




---



##### Table of Contents



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.
 42




---



##### 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.  SEC
    Investigation
  In the matter of Triple Net Properties, LLC.
    Litigation
    Item 1A.    Risk
    Factors.  If we are unable to pay the outstanding balance and all
    accrued interest on our mortgage loan at the Executive Center
    property on October 1, 2008, the lender may declare us in
    default of the loan and exercise its remedies under the loan
    agreement, including a foreclosure on the Executive Center
    property, which could have a material adverse affect on our
    operating activities and cash flow.
     43




---



##### 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 may also be 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 may 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.    Form 10-K,
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.    Item 3.
    Defaults
    Upon Senior Securities.   44




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Item 5.
    Other
    Information.    Item 6.
    Exhibits.   45




---



##### Table of Contents



SIGNATURES    alue und
  (Registrant)
  August 14, 2008

/s/ Kent W. PetersDate

Kent W. PetersChief Executive Officer
    (principal executive officer)August 14, 2008

/s/ Francene
    LaPointDate

Francene LaPointChief Financial OfficerGrubb & Ellis Realty Investors, LLC,
    the Manager of NNN 2003 Value Fund, LLC(principal financial officer)  46




---



##### 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).10
.6

Modification of Loan Documents dated June 24, 2008,
    effective as of May 12, 2008, by and among NNN VF 901
    Civic, LLC, NNN 901 Civic, LLC, NNN 2003 Value Fund, LLC and
    LaSalle Bank National Association (Senior Loan Modification)
    (included as Exhibit 10.1 to our
    Form 8-K
    filed on June 30, 2008 and incorporated herein by
    reference).10
.7

Amended and Restated Guaranty of Payment dated June 24,
    2008 executed by NNN 2003 Value Fund, LLC to and for the benefit
    of LaSalle Bank National Association (Senior Guaranty) (included
    as Exhibit 10.2 to our
    Form 8-K
    filed on June 30, 2008 and incorporated herein by
    reference).10
.8

Modification of Loan Documents dated June 24, 2008,
    effective as of May 12, 2008, by and among NNN VF 901
    Civic, LLC, NNN 901 Civic, LLC, NNN 2003 Value Fund, LLC and
    LaSalle Bank National Association (Mezzanine Loan Modification)
    (included as Exhibit 10.3 to our
    Form 8-K
    filed on June 30, 2008 and incorporated herein by
    reference).10
.9

Amended and Restated Guaranty of Payment dated June 24,
    2008 executed by NNN 2003 Value Fund, LLC to and for the benefit
    of LaSalle Bank National Association (Mezzanine Guaranty)
    (included as Exhibit 10.4 to our
    Form 8-K
    filed on June 30, 2008 and incorporated herein by
    reference).10
.10

ISDA Interest Rate Swap Confirmation Letter Agreement by and
    between NNN VF 901 Civic, NNN 901 Civic, LLC and LaSalle Bank
    National Association (included as Exhibit 10.5 to our
    Form 8-K
    filed on June 30, 2008 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.    47