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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 1934 
|  
|   |  | For the quarterly period ended June 30, 2005                                                
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission file number 0-51295





NNN 2003 Value Fund, LLC


(Exact name of registrant as specified in its charter)


|                                                                                                         |  |                                                                       
|-------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------
|Delaware                                                                                                 |  | 20-0122092                                                            
|(State or other jurisdiction of
    incorporation or organization)                                       |  | (I.R.S. Employer
    Identification No.)                              
|                                                                                                        
|1551 N. Tustin Avenue, Suite 200
    Santa Ana, California 92705(Address of principal executive offices) |  | (714) 667-8252(Registrants telephone number,
    including area code)

N/A


(Former name)


þ o


o þ












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EXPLANATORY NOTE








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NNN 2003 VALUE FUND, LLC


(A Delaware Corporation)


TABLE OF CONTENTS


|                                   |  |                                                                                                                                                               |    |  |    | 
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I  FINANCIAL
    INFORMATION
|Item 1.                            |  | Financial Statements (unaudited)                                                                                                                              |    |  | 3  | 
|                                   |  | Condensed Consolidated Balance Sheets as of
    June 30, 2005 and December 31, 2004 (as restated)
    (unaudited)                                             |    |  | 4  | 
|                                   |  | Condensed Consolidated Statements of
    Operations and Comprehensive Income (Loss) For the Three and Six
    Months Ended June 30, 2005 and 2004 (unaudited) |    |  | 5  | 
|                                   |  | Condensed Consolidated Statement of
    Members Equity For the Six Months Ended June 30, 2005
    (unaudited)                                                |    |  | 6  | 
|                                   |  | Condensed Consolidated Statements of Cash
    Flows For the Six Months Ended June 30, 2005 and 2004
    (unaudited)                                           |    |  | 7  | 
|                                   |  | Notes to Condensed Consolidated Financial
    Statements (unaudited)                                                                                          |    |  | 8  | 
|Item 2.                            |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                                                     |    |  | 26 | 
|Item 3.                            |  | Qualitative and Quantitative Disclosures
    About Market Risk                                                                                                |    |  | 39 | 
|Item 4.                            |  | Controls and Procedures                                                                                                                                       |    |  | 39 | 
|                                  
|PART II  OTHER
    INFORMATION   
|Item 1.                            |  | Legal Proceedings                                                                                                                                             |    |  | 41 | 
|Item 2.                            |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                                                               |    |  | 42 | 
|Item 3.                            |  | Defaults Upon Senior Securities                                                                                                                               |    |  | 42 | 
|Item 4.                            |  | Submission of Matters to a Vote of Security
    Holders                                                                                                       |    |  | 42 | 
|Item 5.                            |  | Other Information                                                                                                                                             |    |  | 42 | 
|Item 6.                            |  | Exhibits                                                                                                                                                      |    |  | 42 | 
|Signatures                         |  |                                                                                                                                                               | 43 | 
|EXHIBIT 31.1                      
|EXHIBIT 31.2                      
|EXHIBIT 32.1                      
|EXHIBIT 32.2                      



2



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PART I  FINANCIAL INFORMATION







|        |                     
|------- | --------------------
|Item 1. | Financial Statements



3



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NNN 2003 VALUE FUND, LLC





CONDENSED CONSOLIDATED BALANCE SHEETS


June 30, 2005 and December 31, 2004 (Unaudited)


|                                                           |                                           |          |            |              |               |   |            |            | 
|---------------------------------------------------------- | ----------------------------------------- | -------- | ---------- | ------------ | ------------- | - | ---------- | ---------- | 
|                                                           |                                           |          |            | December 31, |              
|                                                           |                                           |          |            | 2004         |              
|                                                           |                                           | June 30, |            |              | (As Restated, |  
|                                                           |                                           | 2005     |            |              | See Note 15)  |  
|                                                           |                                           |          |            |              |               |  
|ASSETS                                                    
|Real estate investments:                                   |                                           |          |            |              |               |   |            |           
|                                                           | Operating properties, net                 |          | $          | 12,760,000   |               |   | $          | 6,525,000  | 
|                                                           | Properties held for sale, net             |          |            | 11,115,000   |               |   |            | 30,209,000 | 
|                                                           | Investments in unconsolidated real estate |          |            | 11,295,000   |               |   |            | 11,482,000 | 
|                                                           |                                           |          |            |              |               |  
|                                                           |                                           |          | 35,170,000 |              |               |   | 48,216,000 |           
|Cash and cash equivalents                                  |                                           |          | 9,061,000  |              |               |   | 9,896,000  |           
|Investment in marketable securities                        |                                           |          | 1,058,000  |              |               |   |           |           
|Accounts receivable, net                                   |                                           |          | 437,000    |              |               |   | 498,000    |           
|Accounts receivable from related parties                   |                                           |          | 200,000    |              |               |   | 180,000    |           
|Restricted cash                                            |                                           |          | 111,000    |              |               |   | 325,000    |           
|Identified intangible assets, net                          |                                           |          | 3,021,000  |              |               |   | 1,523,000  |           
|Other assets, net                                          |                                           |          | 255,000    |              |               |   | 149,000    |           
|Other assets  properties held for sale                    |                                           |          | 1,635,000  |              |               |   | 6,547,000  |           
|Notes receivable                                           |                                           |          | 2,300,000  |              |               |   |           |           
|                                                           |                                           |          |            |              |               |  
|Total assets                                               |                                           | $        | 53,248,000 |              |               | $ | 67,334,000 |           
|                                                           |                                           |          |            |              |               |  
|                                                          
|LIABILITIES, MINORITY INTERESTS AND MEMBERS EQUITY       
|Mortgage loans payable                                     |                                           | $        | 5,500,000  |              |               | $ | 4,500,000  |           
|Mortgage loans payable secured by properties held for sale |                                           |          | 4,000,000  |              |               |   | 19,125,000 |           
|Accounts payable and accrued liabilities                   |                                           |          | 1,615,000  |              |               |   | 1,711,000  |           
|Accounts payable due to related parties                    |                                           |          | 2,000      |              |               |   | 233,000    |           
|Other liabilities  properties held for sale               |                                           |          | 47,000     |              |               |   | 591,000    |           
|Security deposits and prepaid rent                         |                                           |          | 152,000    |              |               |   | 104,000    |           
|                                                           |                                           |          |            |              |               |  
|                                                           |                                           |          | 11,316,000 |              |               |   | 26,264,000 |           
|Minority interests                                         |                                           |          | 2,223,000  |              |               |   | 2,397,000  |           
|Minority interests  properties held for sale              |                                           |          | 1,491,000  |              |               |   | 1,571,000  |           
|                                                           |                                           |          |            |              |               |  
|                                                           |                                           |          | 3,714,000  |              |               |   | 3,968,000  |           
|Commitments and contingencies (Note 12):                   |                                           |          |            |              |               |   |            |           
|Members equity                                            |                                           |          | 38,228,000 |              |               |   | 37,102,000 |           
|Accumulated other comprehensive loss                       |                                           |          | (10,000    | )            |               |   |           |           
|                                                           |                                           |          |            |              |               |  
|Total members equity                                      |                                           |          | 38,218,000 |              |               |   | 37,102,000 |           
|                                                           |                                           |          |            |              |               |  
|Total liabilities and members equity                      |                                           | $        | 53,248,000 |              |               | $ | 67,334,000 |           
|                                                           |                                           |          |            |              |               |  

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NNN 2003 VALUE FUND, LLC





CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


AND COMPREHENSIVE INCOME (LOSS)


For the Three and Six Months Ended June 30, 2005 and
2004 (Unaudited)


|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |            |  
|-------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------ | --------- | --------- | ---------------- | - | -------- | -------- | - | - | --------- | --------- | - | - | ---------- | ---------- | -
|                                                                     |                                                                           | Three Months Ended |           |           | Six Months Ended |  
|                                                                     |                                                                           | June 30,           |           |           | June 30,         |  
|                                                                     |                                                                           |                    |           |           |                  |  
|                                                                     |                                                                           | 2005               |           |           | 2004             |   |          | 2005     |   |   | 2004      |          
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Revenues:                                                            |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |           
|                                                                     | Rental income                                                             |                    | $         | 393,000   |                  |   | $        | 157,000  |   |   | $         | 756,000   |   |   | $          | 285,000    |  
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Expenses:                                                            |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |           
|                                                                     | Rental expenses                                                           |                    |           | 415,000   |                  |   |          | 270,000  |   |   |           | 737,000   |   |   |            | 528,000    |  
|                                                                     | General and administrative                                                |                    |           | 210,000   |                  |   |          | 116,000  |   |   |           | 267,000   |   |   |            | 197,000    |  
|                                                                     | Depreciation and amortization                                             |                    |           | 153,000   |                  |   |          | 94,000   |   |   |           | 289,000   |   |   |            | 165,000    |  
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|                                                                     |                                                                           |                    | 778,000   |           |                  |   | 480,000  |          |   |   | 1,293,000 |           |   |   | 890,000    |           
|Loss before other income (expense) and discontinued
    operations   |                                                                           |                    | (385,000  | )         |                  |   | (323,000 | )        |   |   | (537,000  | )         |   |   | (605,000   | )         
|Other income (expense):                                              |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |           
|                                                                     | Interest expense (including amortization of deferred financing
    costs) |                    |           | (224,000  | )                |   |          | (140,000 | ) |   |           | (444,000  | ) |   |            | (277,000   | )
|                                                                     | Interest and dividend income                                              |                    |           | 87,000    |                  |   |          |         |   |   |           | 118,000   |   |   |            |           |  
|                                                                     | Gain on sale of marketable securities                                     |                    |           | 84,000    |                  |   |          |         |   |   |           | 84,000    |   |   |            |           |  
|                                                                     | Equity in loss of unconsolidated real estate                              |                    |           | (273,000  | )                |   |          | (163,000 | ) |   |           | (114,000  | ) |   |            | (331,000   | )
|                                                                     | Minority interests                                                        |                    |           | 76,000    |                  |   |          | 37,000   |   |   |           | 28,000    |   |   |            | 77,000     |  
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Loss from continuing operations                                      |                                                                           |                    | (635,000  | )         |                  |   | (589,000 | )        |   |   | (865,000  | )         |   |   | (1,136,000 | )         
|Discontinued operations:                                             |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |           
|                                                                     | Gain on sale on real estate                                               |                    |           | 3,022,000 |                  |   |          |         |   |   |           | 3,411,000 |   |   |            |           |  
|                                                                     | Income (loss) from discontinued operations                                |                    |           | 117,000   |                  |   |          | (10,000  | ) |   |           | 328,000   |   |   |            | (10,000    | )
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|                                                                     |                                                                           |                    | 3,139,000 |           |                  |   | (10,000  | )        |   |   | 3,739,000 |           |   |   | (10,000    | )         
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Net income (loss)                                                    |                                                                           | $                  | 2,504,000 |           |                  | $ | (599,000 | )        |   | $ | 2,874,000 |           |   | $ | (1,146,000 | )         
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Comprehensive income (loss):                                         |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |           
|                                                                     | Net income (loss)                                                         |                    | $         | 2,504,000 |                  |   | $        | (599,000 | ) |   | $         | 2,874,000 |   |   | $          | (1,146,000 | )
|                                                                     | Unrealized loss on marketable securities                                  |                    |           | (10,000   | )                |   |          |         |   |   |           | (10,000   | ) |   |            |           |  
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Comprehensive income (loss)                                          |                                                                           | $                  | 2,494,000 |           |                  | $ | (599,000 | )        |   | $ | 2,864,000 |           |   | $ | (1,146,000 | )         
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Net income (loss) per unit:                                          |                                                                           |                    |           |           |                  |   |          |          |   |   |           |           |   |   |            |           
|                                                                     | Continuing operations  basic and diluted                                 |                    | $         | (63.50    | )                |   | $        | (136.06  | ) |   | $         | (86.50    | ) |   | $          | (335.20    | )
|                                                                     | Discontinued operations  basic and diluted                               |                    |           | 313.90    |                  |   |          | (2.31    | ) |   |           | 373.90    |   |   |            | (2.95      | )
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Net income (loss) per unit  basic and diluted                       |                                                                           | $                  | 250.40    |           |                  | $ | (138.37  | )        |   | $ | 287.40    |           |   | $ | (338.15    | )         
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          
|Weighted average number of units outstanding  basic
    and diluted |                                                                           |                    | 10,000    |           |                  |   | 4,329    |          |   |   | 10,000    |           |   |   | 3,389      |           
|                                                                     |                                                                           |                    |           |           |                  |   |          |          |   |   |           |          

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NNN 2003 VALUE FUND, LLC





CONDENSED CONSOLIDATED STATEMENT OF MEMBERS EQUITY


For the Six Months Ended June 30, 2005 (Unaudited)


|                                         |  |           |        |  |       |   |            |  
|---------------------------------------- |  | --------- | ------ |  | ----- | - | ---------- | -
|                                         |  | Number of |        |  |      
|                                         |  | Units     |        |  | Total |  
|                                         |  |           |        |  |       |  
|BALANCE  December 31, 2004              |  |           | 10,000 |  |       | $ | 37,102,000 |  
|Distributions                            |  |           |       |  |       |   | (1,748,000 | )
|Net income                               |  |           |       |  |       |   | 2,874,000  |  
|Unrealized loss on marketable securities |  |           |       |  |       |   | (10,000    | )
|                                         |  |           |        |  |       |  
|Comprehensive income                     |  |           |       |  |       |   | 2,864,000  |  
|                                         |  |           |        |  |       |  
|BALANCE  June 30, 2005                  |  |           | 10,000 |  |       | $ | 38,218,000 |  
|                                         |  |           |        |  |       |  

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NNN 2003 VALUE FUND, LLC





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


For the Six Months Ended June 30, 2005 and 2004
(Unaudited)


|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |   |            |             |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | --------- | ----------- | ----------- | - | ---------- | ----------- | ----------- | -
|                                                                                                                                                                                                                 |                                                                                                           | Six Months Ended                                    |          
|                                                                                                                                                                                                                 |                                                                                                           | June 30,                                            |          
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |          
|                                                                                                                                                                                                                 |                                                                                                           | 2005                                                |           |             | 2004        |  
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                             |                                                                                                           |                                                     |           |             |             |   |            |            
|Net income (loss)                                                                                                                                                                                                |                                                                                                           | $                                                   | 2,874,000 |             |             | $ | (1,146,000 | )          
|Adjustments to reconcile net income (loss) to net cash provided
    by operating activities                                                                                                                      |                                                                                                           |                                                     |           |             |             |   |            |            
|                                                                                                                                                                                                                 | Gain on sale of real estate                                                                               |                                                     |           | (3,411,000  | )           |   |            |            |            
|                                                                                                                                                                                                                 | Gain on sale of marketable securities                                                                     |                                                     |           | (84,000     | )           |   |            |            |            
|                                                                                                                                                                                                                 | Depreciation and amortization (including deferred financing
    costs and above market leases)            |                                                     |           | 1,546,000   |             |   |            | 456,000     |            
|                                                                                                                                                                                                                 | Distributions received in excess of equity in loss on
    unconsolidated real estate                      |                                                     |           | 724,000     |             |   |            | 713,000     |            
|                                                                                                                                                                                                                 | Minority interests                                                                                        |                                                     |           | 15,000      |             |   |            | (80,000     | )          
|                                                                                                                                                                                                                 | Provision for doubtful accounts                                                                           |                                                     |           | 16,000      |             |   |            |            |            
|Change in operating assets and liabilities:                                                                                                                                                                      |                                                                                                           |                                                     |           |             |             |   |            |            
|                                                                                                                                                                                                                 | Accounts receivable, including receivables from related parties                                           |                                                     |           | 137,000     |             |   |            | (962,000    | )          
|                                                                                                                                                                                                                 | Other assets                                                                                              |                                                     |           | (480,000    | )           |   |            | 105,000     |            
|                                                                                                                                                                                                                 | Accounts payable and accrued liabilities, including payables to
    related parties                       |                                                     |           | (808,000    | )           |   |            | 2,056,000   |            
|                                                                                                                                                                                                                 | Prepaid rent                                                                                              |                                                     |           | (465,000    | )           |   |            | 17,000      |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 |                                                                                                           | Net cash provided by operating activities           |           |             | 64,000      |   |            |             | 1,159,000   |  
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                                                                             |                                                                                                           |                                                     |           |             |             |   |            |            
|                                                                                                                                                                                                                 | Acquisition of real estate operating properties                                                           |                                                     |           | (8,028,000  | )           |   |            | (8,279,000  | )          
|                                                                                                                                                                                                                 | Acquisition of investments in unconsolidated real estate                                                  |                                                     |           | (650,000    | )           |   |            | (10,355,000 | )          
|                                                                                                                                                                                                                 | Proceeds from sale of real estate operating properties                                                    |                                                     |           | 25,341,000  |             |   |            |            |            
|                                                                                                                                                                                                                 | Capital expenditures                                                                                      |                                                     |           | (442,000    | )           |   |            | (152,000    | )          
|                                                                                                                                                                                                                 | Purchase of marketable securities                                                                         |                                                     |           | (5,440,000  | )           |   |            |            |            
|                                                                                                                                                                                                                 | Proceeds from sale of marketable securities                                                               |                                                     |           | 4,456,000   |             |   |            |            |            
|                                                                                                                                                                                                                 | Restricted cash                                                                                           |                                                     |           | 182,000     |             |   |            | 204,000     |            
|                                                                                                                                                                                                                 | Real estate deposits                                                                                      |                                                     |           |            |             |   |            | (125,000    | )          
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 |                                                                                                           | Net cash provided by (used in) investing activities |           |             | 15,419,000  |   |            |             | (18,707,000 | )
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                             |                                                                                                           |                                                     |           |             |             |   |            |            
|                                                                                                                                                                                                                 | Borrowings on mortgages payable and other debt                                                            |                                                     |           | 5,564,000   |             |   |            | 4,000,000   |            
|                                                                                                                                                                                                                 | Principal repayments on mortgages payable and other debt                                                  |                                                     |           | (19,689,000 | )           |   |            |            |            
|                                                                                                                                                                                                                 | Minority interests contributions                                                                          |                                                     |           |            |             |   |            | 2,150,000   |            
|                                                                                                                                                                                                                 | Minority interests distributions                                                                          |                                                     |           | (269,000    | )           |   |            | (86,000     | )          
|                                                                                                                                                                                                                 | Payment of deferred financing costs                                                                       |                                                     |           | (176,000    | )           |   |            |            |            
|                                                                                                                                                                                                                 | Distributions                                                                                             |                                                     |           | (1,748,000  | )           |   |            | (499,000    | )          
|                                                                                                                                                                                                                 | Issuance of member units, net of offering costs                                                           |                                                     |           |            |             |   |            | 15,357,000  |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 |                                                                                                           | Net cash (used in) provided by financing activities |           |             | (16,318,000 | ) |            |             | 20,922,000  |  
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                                                                                                                             |                                                                                                           |                                                     | (835,000  | )           |             |   | 3,374,000  |            
|CASH AND CASH EQUIVALENTS  beginning of period                                                                                                                                                                  |                                                                                                           |                                                     | 9,896,000 |             |             |   | 2,625,000  |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|CASH AND CASH EQUIVALENTS  end of period                                                                                                                                                                        |                                                                                                           | $                                                   | 9,061,000 |             |             | $ | 5,999,000  |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |   |            |            
|Cash paid during the period for:                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |   |            |            
|                                                                                                                                                                                                                 | Interest                                                                                                  |                                                     | $         | 747,000     |             |   | $          | 347,000     |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|NONCASH INVESTING ACTIVITIES                                                                                                                                                                                     |                                                                                                           |                                                     |           |             |             |   |            |            
|Accrual for tenant improvements and capital expenditures                                                                                                                                                         |                                                                                                           | $                                                   | 471,000   |             |             | $ |           |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|The 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 investment operating properties                                                    |                                                     | $         | (13,399,000 | )           |   | $          | 6,156,000   |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 | Increase (decrease) in intangible assets less intangible
    liabilities of acquisitions and dispositions |                                                     | $         | (2,475,000  | )           |   | $          | 2,093,000   |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 | Restricted cash                                                                                           |                                                     | $         | (32,000     | )           |   | $          |            |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 | Other assets                                                                                              |                                                     | $         | (317,000    | )           |   | $          | 30,000      |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 | Accrued expenses and security deposits                                                                    |                                                     | $         | 21,000      |             |   | $          |            |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 | Minority interests contributions                                                                          |                                                     | $         |            |             |   | $          | 1,775,000   |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  
|                                                                                                                                                                                                                 | Notes receivable                                                                                          |                                                     | $         | 2,300,000   |             |   | $          |            |            
|                                                                                                                                                                                                                 |                                                                                                           |                                                     |           |             |             |  

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





| |                      
| | ---------------------
| | Basis of Presentation

Consolidation of Variable Interest
Entities




| |                       
| | ----------------------
| | Interim Financial Data



8



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                
| | ---------------
| | Restricted Cash





| |                                     
| | ------------------------------------
| | Allowance for Uncollectible Accounts





| |                                    
| | -----------------------------------
| | Investment in Marketable Securities





| |                          
| | -------------------------
| | Purchase Price Allocation

Business Combinations


9



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |                   
| | ------------------
| | Minority Interests





| |                     
| | --------------------
| | Operating Properties







| |                         
| | ------------------------
| | Properties Held for Sale

Accounting for Impairment
or Disposal of Long-Lived Assets


10



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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                                   
|
| |  | 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.



| |                                 
| | --------------------------------
| | Derivative Financial Instruments





| |                    
| | -------------------
| | Revenue Recognition

Accounting for
Leases




| |                             
| | ----------------------------
| | Concentration of Credit Risk





11



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |  |              |           |               |             |  |      |          |  |                    |       |  |            |  |  |  |          | 
|------------------------------ |  | ------------ | --------- | ------------- | ----------- |  | ---- | -------- |  | ------------------ | ----- |  | ---------- |  |  |  | -------- | 
|                               |  |              |           | Percentage of |             |  |      |          |  |                    | Lease | 
|                               |  | 2005 Annual  |           |               | 2005 Annual |  |      |          |  | Square             |       |  | Expiration | 
|Tenant                         |  | Base Rent(*) |           |               | Base Rent   |  |      | Property |  | Footage            |       |  | Date       | 
|                               |  |              |           |               |             |  |      |          |  |                    |       |  |            | 
|Administaff Services, LP       |  | $            | 1,012,000 |               |             |  | 35.8 | %        |  | Interwood          |       |  | 52,000     |  |  |  | 09/30/14 | 
|Westwood College of Technology |  | $            | 763,000   |               |             |  | 27.0 | %        |  | Executive Center I |       |  | 44,000     |  |  |  | 01/31/13 | 
|Lipar Group Development        |  | $            | 325,000   |               |             |  | 11.5 | %        |  | Southwood Tower    |       |  | 20,000     |  |  |  | 02/28/08 | 






|  |                                                                                                    
|- | ---------------------------------------------------------------------------------------------------
|* | Annualized rental income based on contractual base rent from
    leases in effect at June 30, 2005.



|                               |  |             |           |               |             |  |      |          |  |                    |       |  |            |  |  |  |          | 
|------------------------------ |  | ----------- | --------- | ------------- | ----------- |  | ---- | -------- |  | ------------------ | ----- |  | ---------- |  |  |  | -------- | 
|                               |  |             |           | Percentage of |             |  |      |          |  |                    | Lease | 
|                               |  | 2004 Annual |           |               | 2004 Annual |  |      |          |  | Square             |       |  | Expiration | 
|Tenant                         |  | Base Rent*  |           |               | Base Rent   |  |      | Property |  | Footage            |       |  | Date       | 
|                               |  |             |           |               |             |  |      |          |  |                    |       |  |            | 
|Internal Revenue Service (GSA) |  | $           | 2,913,000 |               |             |  | 79.7 | %        |  | Oakey Building     |       |  | 84,000     |  |  |  | 05/31/05 | 
|Westwood College of Technology |  | $           | 539,000   |               |             |  | 14.8 | %        |  | Executive Center I |       |  | 33,000     |  |  |  | 01/31/13 | 






|  |                                                                                                    
|- | ---------------------------------------------------------------------------------------------------
|* | Annualized rental income based on contractual base rent from
    leases in effect at June 30, 2004.





| |             
| | ------------
| | Income Taxes





| |                            
| | ---------------------------
| | Comprehensive Income (Loss)

Reporting Comprehensive Income
(Loss).




| |              
| | -------------
| | Per Unit Data

Earnings Per Share.


12



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |        |   |   |            |         |  
|-------------------------------------------------------------------- | ------------------------------------------- | ------------------ | --------- | ------ | ---------------- | - | -------- | ------- | - | - | --------- | ------ | - | - | ---------- | ------- | -
|                                                                     |                                             | Three Months Ended |           |        | Six Months Ended |  
|                                                                     |                                             | June 30,           |           |        | June 30,         |  
|                                                                     |                                             |                    |           |        |                  |  
|                                                                     |                                             | 2005               |           |        | 2004             |   |          | 2005    |   |   | 2004      |       
|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |       
|Loss from continuing operations                                      |                                             | $                  | (635,000  | )      |                  | $ | (589,000 | )       |   | $ | (865,000  | )      |   | $ | (1,136,000 | )      
|Income (loss) from discontinued operations                           |                                             |                    | 3,139,000 |        |                  |   | (10,000  | )       |   |   | 3,739,000 |        |   |   | (10,000    | )      
|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |       
|Net income (loss)                                                    |                                             | $                  | 2,504,000 |        |                  | $ | (599,000 | )       |   | $ | 2,874,000 |        |   | $ | (1,146,000 | )      
|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |       
|Net income (loss) per unit:                                          |                                             |                    |           |        |                  |   |          |         |   |   |           |        |   |   |            |        
|                                                                     | Continuing operations  basic and diluted   |                    | $         | (63.50 | )                |   | $        | (136.06 | ) |   | $         | (86.50 | ) |   | $          | (335.20 | )
|                                                                     | Discontinued operations  basic and diluted |                    |           | 313.90 |                  |   |          | (2.31   | ) |   |           | 373.90 |   |   |            | (2.95   | )
|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |       
|Net income (loss) per unit  basic and diluted                       |                                             | $                  | 250.40    |        |                  | $ | (138.37  | )       |   | $ | 287.40    |        |   | $ | (338.15    | )      
|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |       
|Weighted average number of units outstanding  basic
    and diluted |                                             |                    | 10,000    |        |                  |   | 4,329    |         |   |   | 10,000    |        |   |   | 3,389      |        
|                                                                     |                                             |                    |           |        |                  |   |          |         |   |   |           |       



| |                 
| | ----------------
| | Use of Estimates





| |         
| | --------
| | Segments





| |                                          
| | -----------------------------------------
| | Recently Issued Accounting Pronouncements

Accounting Changes and Error Corrections  A
Replacement of APB Opinion No. 20 and
SFAS No. 3.


Determining Whether a General Partner, or
the General Partners as a Group, Controls a Limited Partnership
or Similar Entity When the Limited Partners Have Certain Rights


13



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                  
| | -----------------
| | Reclassifications





|   |                        
|-- | -----------------------
|3. | Real Estate Investments



| |                        
| | -----------------------
| | Consolidated Properties



|                                  |  |          |            |   |              |   |           |  
|--------------------------------- |  | -------- | ---------- | - | ------------ | - | --------- | -
|                                  |  | June 30, |            |   | December 31, |  
|                                  |  | 2005     |            |   | 2004         |  
|                                  |  |          |            |   |              |  
|Buildings and tenant improvements |  | $        | 10,196,000 |   |              | $ | 4,517,000 |  
|Land                              |  |          | 2,922,000  |   |              |   | 2,190,000 |  
|                                  |  |          |            |   |              |  
|                                  |  |          | 13,118,000 |   |              |   | 6,707,000 |  
|Less: accumulated depreciation    |  |          | (358,000   | ) |              |   | (182,000  | )
|                                  |  |          |            |   |              |  
|                                  |  | $        | 12,760,000 |   |              | $ | 6,525,000 |  
|                                  |  |          |            |   |              |  





| |                                          
| | -----------------------------------------
| | 2005 Acquisition of Consolidated Property



| |                           
| | --------------------------
| | Interwood  Houston, Texas





| |                                             
| | --------------------------------------------
| | 2005 Dispositions of Consolidated Properties



| |                                  
| | ---------------------------------
| | Financial Plaza  Omaha, Nebraska



14



---



##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                   
| | ----------------------------------
| | Satellite Place  Atlanta, Georgia





| |                                          
| | -----------------------------------------
| | Investments in Unconsolidated Real Estate



|                             |  |          |                   |            |       |  |          |      |  |              |            |  |  |   |            | 
|---------------------------- |  | -------- | ----------------- | ---------- | ----- |  | -------- | ---- |  | ------------ | ---------- |  |  | - | ---------- | 
|                             |  |          |                   | Percentage |       |  | June 30, |      |  | December 31, |           
|Description                  |  | Location |                   |            | Owned |  |          | 2005 |  |              | 2004       | 
|                             |  |          |                   |            |       |  |          |      |  |              |            | 
|801 K Street                 |  |          | Sacramento, CA    |            |       |  | 18.3     | %    |  | $            | 5,008,000  |  |  | $ | 5,103,000  | 
|Emerald Plaza                |  |          | San Diego, CA     |            |       |  | 4.6      | %    |  |              | 1,393,000  |  |  |   | 1,529,000  | 
|Enterprise Technology Center |  |          | Scotts Valley, CA |            |       |  | 8.5      | %    |  |              | 2,669,000  |  |  |   | 2,808,000  | 
|Executive Center II & III    |  |          | Dallas, TX        |            |       |  | 38.1     | %    |  |              | 2,225,000  |  |  |   | 2,042,000  | 
|                             |  |          |                   |            |       |  |          |      |  |              |            | 
|Total                        |  |          |                   |            |       |  |          |      |  | $            | 11,295,000 |  |  | $ | 11,482,000 | 
|                             |  |          |                   |            |       |  |          |      |  |              |            | 



|                               |  |          |             |  |              |   |             | 
|------------------------------ |  | -------- | ----------- |  | ------------ | - | ----------- | 
|                               |  | June 30, |             |  | December 31, |  
|                               |  | 2005     |             |  | 2004         |  
|                               |  |          |             |  |              |  
|Balance Sheet Data:            |  |          |             |  |              |   |             | 
|Assets (primarily real estate) |  | $        | 257,446,000 |  |              | $ | 260,296,000 | 
|                               |  |          |             |  |              |  
|Mortgage loans payable         |  | $        | 160,356,000 |  |              | $ | 160,771,000 | 
|Other liabilities              |  |          | 11,607,000  |  |              |   | 10,603,000  | 
|Equity                         |  |          | 85,483,000  |  |              |   | 88,922,000  | 
|                               |  |          |             |  |              |  
|Total liabilities and equity   |  | $        | 257,446,000 |  |              | $ | 260,296,000 | 
|                               |  |          |             |  |              |  
|Our share of equity            |  | $        | 11,295,000  |  |              | $ | 11,482,000  | 
|                               |  |          |             |  |              |  

|                          |  |                    |           |   |                  |   |           |      |  |   |            |   |  |   |           |  
|------------------------- |  | ------------------ | --------- | - | ---------------- | - | --------- | ---- |  | - | ---------- | - |  | - | --------- | -
|                          |  | Three Months Ended |           |   | Six Months Ended |  
|                          |  | June 30,           |           |   | June 30,         |  
|                          |  |                    |           |   |                  |  
|                          |  | 2005               |           |   | 2004             |   |           | 2005 |  |   | 2004       |  
|                          |  |                    |           |   |                  |   |           |      |  |   |            |  
|Revenues                  |  | $                  | 8,161,000 |   |                  | $ | 5,334,000 |      |  | $ | 16,382,000 |   |  | $ | 6,604,000 |  
|Rental and other expenses |  |                    | 8,634,000 |   |                  |   | 3,915,000 |      |  |   | 17,469,000 |   |  |   | 5,524,000 |  
|                          |  |                    |           |   |                  |   |           |      |  |   |            |  
|Net income (loss)         |  | $                  | (473,000  | ) |                  | $ | 1,419,000 |      |  | $ | (1,087,000 | ) |  | $ | 1,080,000 |  
|                          |  |                    |           |   |                  |   |           |      |  |   |            |  
|Our equity in loss        |  | $                  | (273,000  | ) |                  | $ | (163,000  | )    |  | $ | (114,000   | ) |  | $ | (331,000  | )
|                          |  |                    |           |   |                  |   |           |      |  |   |            |  

15



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                             
|-- | ----------------------------
|4. | Marketable Equity Securities



|              |                   |            |   |                  |       |  |   |           |  |  |            |        |  |  |   |           | 
|------------- | ----------------- | ---------- | - | ---------------- | ----- |  | - | --------- |  |  | ---------- | ------ |  |  | - | --------- | 
|              |                   |            |   | Gross Unrealized |       |  |  
|              |                   | Historical |   |                  |       |  |   | Estimated | 
|              |                   | Cost       |   |                  | Gains |  |   | Losses    |  |  | Fair Value |       
|              |                   |            |   |                  |       |  |   |           |  |  |            |       
|June 30, 2005 |                   |            |   |                  |       |  |   |           |  |  |            |        |  |  |   |          
|              | Equity securities |            | $ | 1,068,000        |       |  | $ | 6,000     |  |  | $          | 16,000 |  |  | $ | 1,058,000 | 
|              |                   |            |   |                  |       |  |   |           |  |  |            |       





|   |                             
|-- | ----------------------------
|5. | Identified Intangible Assets



|                                                                                                                                                                                                                                     |  |          |           |  |              |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | --------- |  | ------------ | - | --------- | 
|                                                                                                                                                                                                                                     |  | June 30, |           |  | December 31, |  
|                                                                                                                                                                                                                                     |  | 2005     |           |  | 2004         |  
|                                                                                                                                                                                                                                     |  |          |           |  |              |  
|In-place leases, above market leases and tenant relationships,
    net of accumulated amortization of $376,000 and $176,000 at
    June 30, 2005 and December 31, 2004, respectively
    (with a weighted average life of 88 months) |  | $        | 3,021,000 |  |              | $ | 1,523,000 | 
|                                                                                                                                                                                                                                     |  |          |           |  |              |  





|   |             
|-- | ------------
|6. | Other Assets



|                                                                                                                                                |                    |          |        |         |              |   |        |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | -------- | ------ | ------- | ------------ | - | ------ | ------- | 
|                                                                                                                                                |                    | June 30, |        |         | December 31, |  
|                                                                                                                                                |                    | 2005     |        |         | 2004         |  
|                                                                                                                                                |                    |          |        |         |              |  
|Deferred rent receivable                                                                                                                        |                    | $        | 73,000 |         |              | $ | 38,000 |        
|Deferred financing costs, net of accumulated amortization of
    $203,000 and $109,000 at June 30, 2005 and
    December 31, 2004, respectively |                    |          | 99,000 |         |              |   | 34,000 |        
|Lease commissions, net of accumulated amortization of $3,000 and
    $0 at June 30, 2005 and December 31, 2004                                  |                    |          | 74,000 |         |              |   | 77,000 |        
|Prepaid expenses, deposits and other                                                                                                            |                    |          | 9,000  |         |              |   |       |        
|                                                                                                                                                |                    |          |        |         |              |  
|                                                                                                                                                | Total other assets |          | $      | 255,000 |              |   | $      | 149,000 | 
|                                                                                                                                                |                    |          |        |         |              |  



|   |                 
|-- | ----------------
|7. | Notes Receivable



16



---



##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                       
|-- | ----------------------
|8. | Mortgage Loans Payable















|   |                   
|-- | ------------------
|9. | Minority Interests



|                                  |  |          |          |          |                |  |      |  
|--------------------------------- |  | -------- | -------- | -------- | -------------- |  | ---- | -
|                                  |  |          |          | Minority |               
|                                  |  | Date     |          |          | Interests      | 
|Entity                            |  | Acquired |          |          | (Unaffiliated) | 
|                                  |  |          |          |          |                | 
|NNN Executive Center II & III, LP |  |          | 08/01/03 |          |                |  | 23.2 | %
|NNN Oakey Building 2003, LLC      |  |          | 04/02/04 |          |                |  | 14.8 | %
|NNN 801 K Street, LLC             |  |          | 03/31/04 |          |                |  | 15.0 | %
|NNN Enterprise Way, LLC           |  |          | 05/07/04 |          |                |  | 26.7 | %



|    |                
|--- | ---------------
|10. | Members Equity





17



---



##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|    |                           
|--- | --------------------------
|11. | Related Party Transactions



| |                  
| | -----------------
| | Offering Expenses





| |                        
| | -----------------------
| | Real Estate Commissions



18



---



##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Real Estate Disposition Fee





| |                         
| | ------------------------
| | Property Management Fees





| |                  
| | -----------------
| | Lease Commissions





| |                  
| | -----------------
| | Construction Fees





| |          
| | ---------
| | Loan Fees





| |                 
| | ----------------
| | Acquisition Fees





| |                                          
| | -----------------------------------------
| | Related Party Accounts Receivable/Payable



19



---



##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                           
| | ------------------------------------------
| | Unconsolidated Debt Due to Related Parties





| |                              
| | -----------------------------
| | Cunningham Lending Group, LLC



|                           |          |           |   |             |               |  |   |               |         |  |  |    |  | 
|-------------------------- | -------- | --------- | - | ----------- | ------------- |  | - | ------------- | ------- |  |  | -- |  | 
|                           |          |           |   | NNN 2003    |               |  |  
|                           |          |           |   | Value Fund, |               |  |  
|                           |          | Amount of |   |             | LLCs Portion |  |   | Interest Rate |        
|Property/Issue Date        |          | Loan      |   |             | of Debt       |  |   | (per Annum)   |        
|                           |          |           |   |             |               |  |   |               |        
|Emerald Plaza:             |          |           |   |             |               |  |   |               |         |  |  |   
|                           | 02/07/05 |           | $ | 232,000     |               |  | $ | 11,000        |         |  |  | 8% | 
|                           | 03/04/05 |           |   | 232,000     |               |  |   | 11,000        |         |  |  | 8% | 
|                           | 04/06/05 |           |   | 279,000     |               |  |   | 13,000        |         |  |  | 8% | 
|801 K Street:              |          |           |   |             |               |  |   |               |         |  |  |   
|                           | 04/11/05 |           |   | 317,000     |               |  |   | 58,000        |         |  |  | 8% | 
|Executive Center II & III: |          |           |   |             |               |  |   |               |         |  |  |   
|                           | 06/09/05 |           |   | 1,000,000   |               |  |   | 381,000       |         |  |  | 8% | 
|                           |          |           |   |             |               |  |   |               |        
|                           |          | Total     |   | $           | 2,060,000     |  |   | $             | 474,000 |  |  |    |  | 
|                           |          |           |   |             |               |  |   |               |        



|    |                              
|--- | -----------------------------
|12. | Commitments and Contingencies



| |                  
| | -----------------
| | SEC Investigation

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


Accounting for Contingencies.




| |                         
| | ------------------------
| | Prior Performance Tables



20



---



##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |           
| | ----------
| | Litigation





| |                      
| | ---------------------
| | Environmental Matters





| |      
| | -----
| | Other





| |                    
| | -------------------
| | Unconsolidated Debt



|                             |  |            |       |               |               |          |             |               |  |               |                   |  |             |               |             |  |  |   |            | 
|---------------------------- |  | ---------- | ----- | ------------- | ------------- | -------- | ----------- | ------------- |  | ------------- | ----------------- |  | ----------- | ------------- | ----------- |  |  | - | ---------- | 
|                             |  |            |       |               |               | NNN 2003 |             |               |  |               | NNN 2003          | 
|                             |  |            |       | Mortgage Debt |               |          | Value Fund, |               |  | Mortgage Debt |                   |  | Value Fund, |              
|                             |  | Ownership  |       |               | Balance as of |          |             | LLCs Portion |  |               | Balance as of     |  |             | LLCs Portion |            
|Property                     |  | Percentage |       |               | June 30, 2005 |          |             | of Debt       |  |               | December 31, 2004 |  |             | of Debt       |            
|                             |  |            |       |               |               |          |             |               |  |               |                   |  |             |               |            
|801 K Street                 |  |            | 18.3% |               |               | $        | 41,350,000  |               |  | $             | 7,557,000         |  |             | $             | 41,350,000  |  |  | $ | 7,557,000  | 
|Emerald Plaza                |  |            | 4.6%  |               |               |          | 68,500,000  |               |  |               | 3,117,000         |  |             |               | 68,500,000  |  |  |   | 3,117,000  | 
|Enterprise Technology Center |  |            | 8.5%  |               |               |          | 35,880,000  |               |  |               | 3,051,000         |  |             |               | 36,177,000  |  |  |   | 3,076,000  | 
|Executive Center II & III    |  |            | 38.1% |               |               |          | 14,626,000  |               |  |               | 5,571,000         |  |             |               | 14,744,000  |  |  |   | 5,616,000  | 
|                             |  |            |       |               |               |          |             |               |  |               |                   |  |             |               |            
|                             |  |            |       |               |               | $        | 160,356,000 |               |  | $             | 19,296,000        |  |             | $             | 160,771,000 |  |  | $ | 19,366,000 | 
|                             |  |            |       |               |               |          |             |               |  |               |                   |  |             |               |            

21



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|    |                                                       
|--- | ------------------------------------------------------
|13. | Discontinued Operations  Properties Held for
    Sale





| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | Oakey Building, which was acquired on April 2, 2004, was
    listed for sale on June 8, 2005;    
|
| |  | Southwood Tower, which was acquired on October 27, 2004,
    was listed for sale on June 1, 2005;
|
| |  | Financial Plaza, which was acquired on October 29, 2004,
    was sold on April 13, 2005; and     
|
| |  | Satellite Place, which was acquired on November 29, 2004,
    was sold on February 24, 2005.     



22



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NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                               |  |                    |           |   |                  |   |          |      |  |   |            |   |  |   |          |  
|------------------------------------------------------------------------------ |  | ------------------ | --------- | - | ---------------- | - | -------- | ---- |  | - | ---------- | - |  | - | -------- | -
|                                                                               |  | Three Months Ended |           |   | Six Months Ended |  
|                                                                               |  | June 30,           |           |   | June 30,         |  
|                                                                               |  |                    |           |   |                  |  
|                                                                               |  | 2005               |           |   | 2004             |   |          | 2005 |  |   | 2004       |  
|                                                                               |  |                    |           |   |                  |   |          |      |  |   |            |  
|Rental income                                                                  |  | $                  | 894,000   |   |                  | $ | 522,000  |      |  | $ | 2,422,000  |   |  | $ | 522,000  |  
|Rental expenses                                                                |  |                    | (384,000  | ) |                  |   | (181,000 | )    |  |   | (1,039,000 | ) |  |   | (181,000 | )
|Depreciation and amortization                                                  |  |                    | (265,000  | ) |                  |   | (233,000 | )    |  |   | (701,000   | ) |  |   | (233,000 | )
|                                                                               |  |                    |           |   |                  |   |          |      |  |   |            |  
|Income before other expense                                                    |  |                    | 245,000   |   |                  |   | 108,000  |      |  |   | 682,000    |   |  |   | 108,000  |  
|Interest expense                                                               |  |                    | (86,000   | ) |                  |   | (121,000 | )    |  |   | (312,000   | ) |  |   | (121,000 | )
|Minority interests                                                             |  |                    | (42,000   | ) |                  |   | 3,000    |      |  |   | (42,000    | ) |  |   | 3,000    |  
|                                                                               |  |                    |           |   |                  |   |          |      |  |   |            |  
|Income (loss) from discontinued operations 
    properties held for sale, net |  |                    | 117,000   |   |                  |   | (10,000  | )    |  |   | 328,000    |   |  |   | (10,000  | )
|Gain on sale of real estate                                                    |  |                    | 3,022,000 |   |                  |   |         |      |  |   | 3,411,000  |   |  |   |         |  
|                                                                               |  |                    |           |   |                  |   |          |      |  |   |            |  
|Discontinued operations                                                        |  | $                  | 3,139,000 |   |                  | $ | (10,000  | )    |  | $ | 3,739,000  |   |  | $ | (10,000  | )
|                                                                               |  |                    |           |   |                  |   |          |      |  |   |            |  



|                                                                                                                                            |  |          |            |  |              |   |            | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ---------- |  | ------------ | - | ---------- | 
|                                                                                                                                            |  | June 30, |            |  | December 31, |  
|                                                                                                                                            |  | 2005     |            |  | 2004         |  
|                                                                                                                                            |  |          |            |  |              |  
|Operating properties, net of accumulated amortization of
    $277,000 and $214,000 at June 30, 2005 and
    December 31, 2004, respectively |  | $        | 11,115,000 |  |              | $ | 30,209,000 | 
|Intangible assets, net of accumulated amortization of $209,000
    and $1,564,000 at June 30, 2005 and December 31, 2004,
    respectively  |  | $        | 845,000    |  |              | $ | 5,944,000  | 
|Total assets                                                                                                                                |  | $        | 14,952,000 |  |              | $ | 41,206,000 | 
|Mortgage loans payable                                                                                                                      |  | $        | 4,000,000  |  |              | $ | 19,125,000 | 
|Total liabilities                                                                                                                           |  | $        | 5,859,000  |  |              | $ | 20,505,000 | 
|Total equity                                                                                                                                |  | $        | 9,093,000  |  |              | $ | 20,701,000 | 



|    |                      
|--- | ---------------------
|14. | Business Combinations





23



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##### Table of Contents



NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|    |            
|--- | -----------
|15. | Restatement





|                                         |  |                         |            |  |             |   |            | 
|---------------------------------------- |  | ----------------------- | ---------- |  | ----------- | - | ---------- | 
|                                         |  | As of December 31, 2004 |           
|                                         |  |                         |           
|                                         |  | As previously reported  |            |  | As restated |  
|                                         |  |                         |            |  |             |  
|Cash and cash equivalents                |  | $                       | 12,033,000 |  |             | $ | 9,896,000  | 
|Total assets                             |  | $                       | 69,471,000 |  |             | $ | 67,334,000 | 
|                                        
|Accounts payable and accrued liabilities |  | $                       | 3,848,000  |  |             | $ | 1,711,000  | 
|Total liabilities                        |  | $                       | 28,401,000 |  |             | $ | 26,264,000 | 
|                                        
|Total liabilities and members equity    |  | $                       | 69,471,000 |  |             | $ | 67,334,000 | 

24



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NNN 2003 VALUE FUND, LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|16. | Subsequent Events













25



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Forward-Looking Statements




Overview and Background






Business Strategy




26



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##### Table of Contents





Critical Accounting Policies






| |                             
| | ----------------------------
| | Unaudited Interim Statements





| |                         
| | ------------------------
| | Properties Held for Sale

Accounting for the Impairment or
Disposal of Long Lived Assets






| |                                                            
| | -----------------------------------------------------------
| | Revenue Recognition and Allowance for Doubtful
    Accounts



27



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##### Table of Contents







| |           
| | ----------
| | Impairment





| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | a significant negative industry or economic trend;                                                  
|
| |  | a significant underperformance relative to historical or
    projected future operating results; and
|
| |  | a significant change in the manner in which the asset is used.                                      







| |                          
| | -------------------------
| | Purchase Price Allocation

Business
Combinations






Factors Which May Influence Results of Operations




| |              
| | -------------
| | Rental Income



28



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##### Table of Contents







| |                            
| | ---------------------------
| | Scheduled Lease Expirations







| |                   
| | ------------------
| | Sarbanes-Oxley Act







| |         
| | --------
| | Expenses



2005 Acquisitions




Interwood  Houston, Texas




29



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##### Table of Contents





2005 Dispositions






| |                                  
| | ---------------------------------
| | Financial Plaza  Omaha, Nebraska





| |                                   
| | ----------------------------------
| | Satellite Place  Atlanta, Georgia



Results of Operations




30



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##### Table of Contents





| |                                                                        
| | -----------------------------------------------------------------------
| | Comparison of the Three and Six Months Ended June 30,
    2005 and 2004

|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |          |          |   |           |          |         |   |            |        |        |  
|------------------------------------------------------------------ | ------------------------------------------------------------- | -------------------------------------------- | --------- | -------- | -------- | - | -------- | -------- | ---------------- | ------- | --------- | ------- | -------- | ---- | ---------- | -------- | ------ | - | --------- | -------- | -------- | - | ---------- | -------- | -------- | - | --------- | -------- | ------- | - | ---------- | ------ | ------ | -
|                                                                   |                                                               | Three Months Ended                           |           |          |          |   |          |          | Six Months Ended |         |           |         |          |     
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |     
|                                                                   |                                                               | June 30,                                     |           |          | June 30, |   |          |          |                  | Percent |           |         | June 30, |      |            | June 30, |        |   |           |          | Percent  |  
|                                                                   |                                                               | 2005                                         |           |          | 2004     |   |          | Change   |                  |         | Change    |         |          | 2005 |            |          | 2004   |   |           | Change   |          |   | Change     |         
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|Revenues:                                                          |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |          |          |   |           |          |         |   |            |       
|                                                                   | Rental income                                                 |                                              | $         | 393,000  |          |   | $        | 157,000  |                  |         | $         | 236,000 |          |      |            | 150.32   | %      |   | $         | 756,000  |          |   | $          | 285,000  |          |   | $         | 471,000  |         |   |            | 165.26 | %     
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|Expenses:                                                          |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |          |          |   |           |          |         |   |            |       
|                                                                   | Rental expenses                                               |                                              |           | 415,000  |          |   |          | 270,000  |                  |         |           | 145,000 |          |      |            | 53.70    |        |   |           | 737,000  |          |   |            | 528,000  |          |   |           | 209,000  |         |   |            | 39.58  |       
|                                                                   | General and administrative                                    |                                              |           | 210,000  |          |   |          | 116,000  |                  |         |           | 94,000  |          |      |            | 81.03    |        |   |           | 267,000  |          |   |            | 197,000  |          |   |           | 70,000   |         |   |            | 35.53  |       
|                                                                   | Depreciation and amortization                                 |                                              |           | 153,000  |          |   |          | 94,000   |                  |         |           | 59,000  |          |      |            | 62.77    |        |   |           | 289,000  |          |   |            | 165,000  |          |   |           | 124,000  |         |   |            | 75.15  |       
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|                                                                   |                                                               |                                              | 778,000   |          |          |   | 480,000  |          |                  |         | 298,000   |         |          |      | 62.08      |          |        |   | 1,293,000 |          |          |   | 890,000    |          |          |   | 403,000   |          |         |   | 45.28      |       
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|Loss before other income (expense) and discontinued
    operations |                                                               |                                              | (385,000  | )        |          |   | (323,000 | )        |                  |         | (62,000   | )       |          |      | 19.20      |          |        |   | (537,000  | )        |          |   | (605,000   | )        |          |   | 68,000    |          |         |   | (11.24     | )     
|Other (expense) income:                                            |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |          |          |   |           |          |         |   |            |       
|                                                                   | Interest (including amortization of deferred financing costs) |                                              |           | (224,000 | )        |   |          | (140,000 | )                |         |           | (84,000 | )        |      |            | 60.00    |        |   |           | (444,000 | )        |   |            | (277,000 | )        |   |           | (167,000 | )       |   |            | 60.29  |       
|                                                                   |                                                               | Interest and dividend income                 |           |          | 87,000   |   |          |          |                 |         |           |         | 87,000   |      |            |          |       |   |           |          | 118,000  |   |            |          |         |   |           |          | 118,000 |   |            |        |       |  
|                                                                   |                                                               | Gain on sale of marketable securities        |           |          | 84,000   |   |          |          |                 |         |           |         | 84,000   |      |            |          |       |   |           |          | 84,000   |   |            |          |         |   |           |          | 84,000  |   |            |        |       |  
|                                                                   |                                                               | Equity in loss of unconsolidated real estate |           |          | (273,000 | ) |          |          | (163,000         | )       |           |         | (110,000 | )    |            |          | 67.48  |   |           |          | (114,000 | ) |            |          | (331,000 | ) |           |          | 217,000 |   |            |        | (65.56 | )
|                                                                   |                                                               | Minority interests                           |           |          | 76,000   |   |          |          | 37,000           |         |           |         | 39,000   |      |            |          | 105.41 |   |           |          | 28,000   |   |            |          | 77,000   |   |           |          | (49,000 | ) |            |        | (63.64 | )
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|Loss from continuing operations                                    |                                                               |                                              | (635,000  | )        |          |   | (589,000 | )        |                  |         | (46,000   | )       |          |      | 7.81       |          |        |   | (865,000  | )        |          |   | (1,136,000 | )        |          |   | 271,000   |          |         |   | (23.86     | )     
|Discontinued operations:                                           |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |          |          |   |           |          |         |   |            |       
|Gain on sale of real estate                                        |                                                               |                                              | 3,022,000 |          |          |   |         |          |                  |         | 3,022,000 |         |          |      |           |          |        |   | 3,411,000 |          |          |   |           |          |          |   | 3,411,000 |          |         |   |           |       
|Income (loss) from discontinued operations                         |                                                               |                                              | 117,000   |          |          |   | (10,000  | )        |                  |         | 127,000   |         |          |      | (1,270.00  | )        |        |   | 328,000   |          |          |   | (10,000    | )        |          |   | 338,000   |          |         |   | (3,380.00  | )     
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|                                                                   |                                                               |                                              | 3,139,000 |          |          |   | (10,000  | )        |                  |         | 3,149,000 |         |          |      | (31,490.00 | )        |        |   | 3,739,000 |          |          |   | (10,000    | )        |          |   | 3,749,000 |          |         |   | (37,490.00 | )     
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         
|Net income (loss)                                                  |                                                               | $                                            | 2,504,000 |          |          | $ | (599,000 | )        |                  | $       | 3,103,000 |         |          |      | (518.03    | )%       |        | $ | 2,874,000 |          |          | $ | (1,146,000 | )        |          | $ | 4,020,000 |          |         |   | (350.79    | )%    
|                                                                   |                                                               |                                              |           |          |          |   |          |          |                  |         |           |         |          |      |            |          |        |   |           |          |          |   |            |         











31



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Liquidity and Capital Resources




| |           
| | ----------
| | Cash Flows



| |                                        
| | ---------------------------------------
| | Six Months Ended June 30, 2005 and 2004







32



---



##### Table of Contents









| |                  
| | -----------------
| | Capital Resources



| |        
| | -------
| | General















Other Liquidity Needs




33



---



##### Table of Contents



















| |                                
| | -------------------------------
| | Sale of Unregistered Securities



34



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##### Table of Contents





| |          
| | ---------
| | Financing









| |                    
| | -------------------
| | Unconsolidated Debt



|                             |  |            |      |               |               |          |             |               |  |               |                   |  |             |               |             |  |  |   |            | 
|---------------------------- |  | ---------- | ---- | ------------- | ------------- | -------- | ----------- | ------------- |  | ------------- | ----------------- |  | ----------- | ------------- | ----------- |  |  | - | ---------- | 
|                             |  |            |      |               |               | NNN 2003 |             |               |  |               | NNN 2003          | 
|                             |  |            |      | Mortgage Debt |               |          | Value Fund, |               |  | Mortgage Debt |                   |  | Value Fund, |              
|                             |  | Ownership  |      |               | Balance as of |          |             | LLCs Portion |  |               | Balance as of     |  |             | LLCs Portion |            
|Property                     |  | Percentage |      |               | June 30, 2005 |          |             | of Debt       |  |               | December 31, 2004 |  |             | of Debt       |            
|                             |  |            |      |               |               |          |             |               |  |               |                   |  |             |               |            
|801 K Street                 |  |            | 18.3 | %             |               | $        | 41,350,000  |               |  | $             | 7,557,000         |  |             | $             | 41,350,000  |  |  | $ | 7,557,000  | 
|Emerald Plaza                |  |            | 4.6  | %             |               |          | 68,500,000  |               |  |               | 3,117,000         |  |             |               | 68,500,000  |  |  |   | 3,117,000  | 
|Enterprise Technology Center |  |            | 8.5  | %             |               |          | 35,880,000  |               |  |               | 3,051,000         |  |             |               | 36,177,000  |  |  |   | 3,076,000  | 
|Executive Center II & III    |  |            | 38.1 | %             |               |          | 14,626,000  |               |  |               | 5,571,000         |  |             |               | 14,744,000  |  |  |   | 5,616,000  | 
|                             |  |            |      |               |               |          |             |               |  |               |                   |  |             |               |            
|                             |  |            |      |               |               | $        | 160,356,000 |               |  | $             | 19,296,000        |  |             | $             | 160,771,000 |  |  | $ | 19,366,000 | 
|                             |  |            |      |               |               |          |             |               |  |               |                   |  |             |               |            





35



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| |          
| | ---------
| | Insurance



| |                                                                     
| | --------------------------------------------------------------------
| | Property Damage, Business Interruption, Earthquake and
    Terrorism



|                                          |  |                                                                                                                                
|----------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Type of Insurance Coverage                |  | Loss Exposure/Deductible                                                                                                       
|                                          |  |                                                                                                                                
|Property damage and business interruption |  | $200 million annual aggregate loss limit, subject to a
    $10,000 per occurrence deductible                                   
|Earthquake (all states)                   |  | $10 million annual aggregate loss sublimit subject to a 5%
    ($100,000 minimum) per occurrence deductible                    
|Earthquake (California properties only)   |  | $90 million in excess of $10 million annual aggregate
    loss limit                                                           
|Flood  named storm                       |  | $10 million annual aggregate loss sublimit subject to a 5%
    ($100,000 minimum) per occurrence deductible                    
|Flood  100 year flood zone               |  | $10 million annual aggregate loss sublimit subject to a 5%
    ($1,000,000 minimum) per occurrence deductible                  
|Flood  all other                         |  | $10 million annual aggregate loss sublimit subject to a 5%
    ($25,000 minimum/$100,000 maximum) per occurrence deductible    
|Acts of terrorism                         |  | $100 million aggregate loss limit subject to a
    $10,000 per occurrence deductible                                           
|General liability                         |  | $2 million annual aggregate limit of liability and a
    $1 million each occurrence limit of liability, including
    terrorism
|Umbrella (excess liability)               |  | $100 million annual aggregate limit of liability, including
    terrorism                                                      

Debt Service Requirements




36



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##### Table of Contents





Contractual Obligations




|                                                                      |  |           |           |  |             |   |           |             |           |              |   |       |  |   |   |  |  |   |            | 
|--------------------------------------------------------------------- |  | --------- | --------- |  | ----------- | - | --------- | ----------- | --------- | ------------ | - | ----- |  | - | - |  |  | - | ---------- | 
|                                                                      |  | Less Than |           |  |             |   |           |             | More Than |              |  
|                                                                      |  | 1 Year    |           |  | 1-3 Years   |   |           | 4-5 Years   |           | 5 Years      |   |      
|                                                                      |  | (2005)    |           |  | (2006-2007) |   |           | (2008-2009) |           | (After 2009) |   | Total | 
|                                                                      |  |           |           |  |             |   |           |             |           |              |   |       | 
|Principal payments  fixed rate debt                                  |  | $         | 4,000,000 |  |             | $ |          |             |           | $            |  |       |  | $ |  |  |  | $ | 4,000,000  | 
|Interest payments  fixed rate debt                                   |  |           | 107,000   |  |             |   |          |             |           |              |  |       |  |   |  |  |  |   | 107,000    | 
|Principal payments  variable rate debt                               |  |           |          |  |             |   | 5,500,000 |             |           |              |  |       |  |   |  |  |  |   | 5,500,000  | 
|Interest payments  variable rate debt (rate as of
    June 30, 2005) |  |           | 171,000   |  |             |   | 400,000   |             |           |              |  |       |  |   |  |  |  |   | 571,000    | 
|                                                                      |  |           |           |  |             |   |           |             |           |              |   |       |  |   |  
|Total                                                                 |  | $         | 4,278,000 |  |             | $ | 5,900,000 |             |           | $            |  |       |  | $ |  |  |  | $ | 10,178,000 | 
|                                                                      |  |           |           |  |             |   |           |             |           |              |   |       |  |   |  



| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements





| |                  
| | -----------------
| | SEC Investigation

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


Accounting for Contingencies.




| |                         
| | ------------------------
| | Prior Performance Tables



37



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##### Table of Contents





Inflation




Subsequent Events














38



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##### Table of Contents










|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures About Market
    Risk





|                                        |  |      |           |   |      |   |      |  |  |      |           |      |  |            |   |       |  |   |   |  |  |   |   |  |  |   |           |  
|--------------------------------------- |  | ---- | --------- | - | ---- | - | ---- |  |  | ---- | --------- | ---- |  | ---------- | - | ----- |  | - | - |  |  | - | - |  |  | - | --------- | -
|                                        |  | 2005 |           |   | 2006 |   | 2007 |  |  | 2008 |           | 2009 |  | Thereafter |   | Total | 
|                                        |  |      |           |   |      |   |      |  |  |      |           |      |  |            |   |       | 
|Fixed rate debt  principal payments    |  | $    | 4,000,000 |   |      | $ |     |  |  | $    |          |      |  | $          |  |       |  | $ |  |  |  | $ |  |  |  | $ | 4,000,000 |  
|Average interest rate on maturing debt  |  |      | 8.00      | % |      |   |     |  |  |      |          |      |  |            |  |       |  |   |  |  |  |   |  |  |  |   | 8.00      | %
|Variable rate debt  principal payments |  | $    |          |   |      | $ |     |  |  | $    | 5,500,000 |      |  | $          |  |       |  | $ |  |  |  | $ |  |  |  | $ | 5,500,000 |  
|Average interest rate on maturing debt  |  |      |          |   |      |   |     |  |  |      | 6.11      | %    |  |            |  |       |  |   |  |  |  |   |  |  |  |   | 6.11      | %








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

Evaluation of disclosure controls and
procedures.




39



---



##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our need to formalize and follow policies and procedures for
    estimating and recording certain fees and charges;                                                                                                                                                                             
|
| |  | implementation of management information systems;                                                                                                                                                                                                                                               
|
| |  | our need to formalize and follow policies and procedures for the
    accounting for our real estate properties (including the
    appropriateness of useful lives of intangible assets and the
    recoverability of certain intangible assets that relate to
    existing and vacated tenants);
|
| |  | the need to develop a fixed asset software system to track
    additions and dispositions of fixed assets;                                                                                                                                                                                      
|
| |  | the need to perform and review reconciliations of all
    significant accounts in a timely manner;                                                                                                                                                                                              
|
| |  | the need for formal policies and procedures for estimating and
    recording management fees and common area maintenance charges;                                                                                                                                                               
|
| |  | the need to identify and record all accounts payable and accrued
    expenses in a timely manner; and                                                                                                                                                                                           
|
| |  | the need to develop policies regarding formalized management
    information systems.                                                                                                                                                                                                           





40



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##### Table of Contents









Changes in internal control over financial
reporting.





PART II  OTHER INFORMATION







|        |                   
|------- | ------------------
|Item 1. | Legal Proceedings.

SEC Investigation


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


Accounting for contingencies


41



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##### Table of Contents



Prior Performance Tables




Litigation









|        |                                                                 
|------- | ----------------------------------------------------------------
|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.



42



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##### Table of Contents






SIGNATURES






| |                         
| | ------------------------
| | NNN 2003 Value Fund, LLC
| | (Registrant)            



| |     |                    
| | --- | -------------------
| | By: | /s/ Kelly J. Caskey

| |                                            
| | -------------------------------------------
| |                                            
| | Kelly J. Caskey                            
| | Chief Financial Officer                    
|
| | By: Triple Net Properties, LLC, its Manager



| |     |                        
| | --- | -----------------------
| | By: | /s/ Anthony W. Thompson

| |                        
| | -----------------------
| |                        
| | Anthony W. Thompson    
| | Chief Executive Officer



43



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##### Table of Contents






EXHIBIT INDEX






|        |    |             |  |                                                                                                                                                                    
|------- | -- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1(1)       |  | Articles of Organization of NNN 2003 Value Fund, LLC, dated
    June 19, 2003.                                                                                     
|       
|        | 10 | .1(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.
|       
|        | 10 | .2(1)       |  | Management Agreement between NNN 2003 Value Fund, LLC and Triple
    Net Properties Realty, Inc.                                                                   
|       
|        | 31 | .1          |  | Certification of Chief Executive Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                           
|       
|        | 31 | .2          |  | Certification of Chief 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 Chief Financial Officer, pursuant to
    18 U.S.C. Section 1350, as created by Section 906
    of the Sarbanes-Oxley Act of 2002.                 






|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from the Registrants
    Form 10, as filed with the Securities and Exchange
    Commission on May 2, 2005.