Table of Contents





|                                                                                              |  | 
|--------------------------------------------------------------------------------------------- |  | 
|UNITED STATES                                                                                
|SECURITIES AND EXCHANGE COMMISSION                                                           
|WASHINGTON, DC 20549                                                                         
|                                                                                             
|                                                                                             
|                                                                                             
|Form 10-Q                                                                                    
|                                                                                             
|                                                                                             
|                                                                                             
|(Mark One)                                                                                   
|x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934   
|                                                                                             
|For the quarterly period ended March 31, 2010                                                
|                                                                                             
|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: 000-52619                                                            
|                                                                                             
|                                                                                             
|                                                                                             
|AmREIT MONTHLY INCOME & GROWTH FUND III, LTD.(Name of Registrant as specified in its charter)

|                                                                |  |                                      
|--------------------------------------------------------------- |  | -------------------------------------
|Texas                                                           |  | 20-2964630                           
|(State
 or other jurisdiction of incorporation or organization) |  | (I.R.S.
 Employer Identification No.)
|                                                                |  |                                      
|8 Greenway Plaza, Suite 1000                                    |  |                                      
|Houston, TX                                                     |  | 77046                                
|(address
 of principle executive offices)                       |  | (Zip
 Code)                          

|                                                                                               |  | 
|---------------------------------------------------------------------------------------------- |  | 
|(713) 850-1400Registrants telephone number, including
 area code                             
|                                                                                              
|Not ApplicableFormer name, former address and former
 fiscal year, if changed from last report
|                                                                                               |  | 
|                                                                                              

Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x No o

Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes oNoo

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):

|                          |                                              |                         |                            
|------------------------- | -------------------------------------------- | ----------------------- | ---------------------------
|Large accelerated filer o | Accelerated filer o                          | Non-accelerated filer o | Smaller reporting company x
|                          | (Do
 not check if smaller reporting company)

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YesoNox





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|                               |          |                                                                                       |    |      | 
|------------------------------ | -------- | ------------------------------------------------------------------------------------- | -- | ---- | 
|TABLE OF CONTENTS             
|                               |          |                                                                                       |    | PAGE
|PART I - FINANCIAL INFORMATION |          |                                                                                       |   
|                               | ITEM 1.  | FINANCIAL
STATEMENTS                                                                  |    | 1    | 
|                               | ITEM 2.  | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS |    | 16   | 
|                               | ITEM 3.  | QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |    | 19   | 
|                               | ITEM 4T. | CONTROLS AND
PROCEDURES                                                               |    | 19   | 
|PART II - OTHER INFORMATION    |          |                                                                                       |   
|                               | ITEM 6.  | EXHIBITS                                                                              |    | 20   | 
|SIGNATURES                     |          |                                                                                       | 21 |     
|EXHIBIT INDEX                  |          |                                                                                       | 22 |     

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Table of Contents

PART I  FINANCIAL INFORMATION

|        |                      
|------- | ---------------------
|ITEM 1. | FINANCIAL STATEMENTS.

AmREIT MONTHLY INCOME & GROWTH FUND III, LTD. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS(in
thousands, except for unit data)

|                                                                                  |  |                 |        |                    |   |        |  
|--------------------------------------------------------------------------------- |  | --------------- | ------ | ------------------ | - | ------ | -
|                                                                                  |  | March 31,
 2010 |        | December 31,
 2009 |  
|                                                                                  |  |                 |        |                    |   |       
|                                                                                  |  | (unaudited)     |        |                    |   |       
|ASSETS                                                                            |  |                 |        |                    |   |        |  
|Real estate investments at
 cost:                                                 |  |                 |        |                    |   |        |  
|Land                                                                              |  | $               | 18,446 |                    | $ | 18,446 |  
|Buildings                                                                         |  |                 | 47,295 |                    |   | 47,295 |  
|Tenant improvements                                                               |  |                 | 1,059  |                    |   | 983    |  
|                                                                                  |  |                 | 66,800 |                    |   | 66,724 |  
|Less accumulated depreciation and amortization                                    |  |                 | (7,143 | )                  |   | (6,691 | )
|                                                                                  |  |                 | 59,657 |                    |   | 60,033 |  
|                                                                                  |  |                 |        |                    |   |        |  
|Investment in non-consolidated entities                                           |  |                 | 24,881 |                    |   | 26,212 |  
|Acquired lease intangibles, net                                                   |  |                 | 1,671  |                    |   | 1,804  |  
|Net real estate investments                                                       |  |                 | 86,209 |                    |   | 88,049 |  
|                                                                                  |  |                 |        |                    |   |        |  
|Cash and cash equivalents                                                         |  |                 | 2,404  |                    |   | 3,297  |  
|Tenant receivables, net                                                           |  |                 | 351    |                    |   | 367    |  
|Accounts receivable                                                               |  |                 | 6      |                    |   | 6      |  
|Accounts receivable -
 related party                                              |  |                 | 130    |                    |   | 132    |  
|Deferred costs, net                                                               |  |                 | 527    |                    |   | 522    |  
|Other assets                                                                      |  |                 | 401    |                    |   | 700    |  
|TOTAL ASSETS                                                                      |  | $               | 90,028 |                    | $ | 93,073 |  
|                                                                                  |  |                 |        |                    |   |        |  
|LIABILITIES
 AND CAPITAL                                                          |  |                 |        |                    |   |        |  
|Liabilities:                                                                      |  |                 |        |                    |   |        |  
|Notes payable                                                                     |  | $               | 50,494 |                    | $ | 50,537 |  
|Notes payable - related party                                                     |  |                 | 2,429  |                    |   | 2,907  |  
|Accounts payable and other liabilities                                            |  |                 | 851    |                    |   | 1,292  |  
|Accounts payable - related party                                                  |  |                 | 43     |                    |   | 10     |  
|Acquired below-market lease intangibles, net                                      |  |                 | 281    |                    |   | 324    |  
|Security deposits                                                                 |  |                 | 126    |                    |   | 125    |  
|TOTAL LIABILITIES                                                                 |  |                 | 54,224 |                    |   | 55,195 |  
|                                                                                  |  |                 |        |                    |   |        |  
|Capital:                                                                          |  |                 |        |                    |   |        |  
|Partners capital:                                                                |  |                 |        |                    |   |        |  
|General partner                                                                   |  |                 |       |                    |   |       |  
|Limited partners, 2,833 units outstanding at March 31, 2010 and December 31, 2009 |  |                 | 34,508 |                    |   | 36,638 |  
|Accumulated other comprehensive loss                                              |  |                 | (15    | )                  |   | (79    | )
|TOTAL PARTNERS CAPITAL                                                           |  |                 | 34,493 |                    |   | 36,559 |  
|                                                                                  |  |                 |        |                    |   |        |  
|Non-controlling interest                                                          |  |                 | 1,311  |                    |   | 1,319  |  
|TOTAL CAPITAL                                                                     |  |                 | 35,804 |                    |   | 37,878 |  
|                                                                                  |  |                 |        |                    |   |        |  
|TOTAL LIABILITIES AND
 CAPITAL                                                    |  | $               | 90,028 |                    | $ | 93,073 |  

See Notes to Consolidated Financial
Statements.

1

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND III,
LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except for per unit data)(unaudited)

|                                                  |  |                              |         |      |   |         |  
|------------------------------------------------- |  | ---------------------------- | ------- | ---- | - | ------- | -
|                                                  |  | Three months ended March 31, |        
|                                                  |  | 2010                         |         | 2009 |  
|                                                 
|Revenues:                                         |  |                              |         |      |   |         |  
|Rental income from operating leases               |  | $                            | 1,686   |      | $ | 1,826   |  
|Total revenues                                    |  |                              | 1,686   |      |   | 1,826   |  
|                                                  |  |                              |         |      |   |         |  
|Expenses:                                         |  |                              |         |      |   |         |  
|General and administrative                        |  |                              | 12      |      |   | 17      |  
|General and administrative - related party        |  |                              | 93      |      |   | 98      |  
|Asset management fees - related party             |  |                              | 154     |      |   | 154     |  
|Property expense                                  |  |                              | 367     |      |   | 502     |  
|Property management fees - related party          |  |                              | 62      |      |   | 91      |  
|Legal and professional                            |  |                              | 52      |      |   | 45      |  
|Depreciation and amortization                     |  |                              | 587     |      |   | 736     |  
|Total operating expenses                          |  |                              | 1,327   |      |   | 1,643   |  
|                                                  |  |                              |         |      |   |         |  
|Operating income                                  |  |                              | 359     |      |   | 183     |  
|                                                  |  |                              |         |      |   |         |  
|Other income (expense):                           |  |                              |         |      |   |         |  
|Interest and other income                         |  |                              |        |      |   | 14      |  
|Interest expense                                  |  |                              | (810    | )    |   | (771    | )
|Equity in losses from non-consolidated entities   |  |                              | (1,676  | )    |   | (299    | )
|Margin tax expense                                |  |                              | (11     | )    |   | (12     | )
|Total other income (expense)                      |  |                              | (2,497  | )    |   | (1,068  | )
|                                                  |  |                              |         |      |   |         |  
|Net loss, including
 non-controlling interest     |  |                              | (2,138  | )    |   | (885    | )
|                                                  |  |                              |         |      |   |         |  
|Net loss attributable to non-controlling interest |  |                              | 8       |      |   | 31      |  
|Net loss attributable to
 partners                |  | $                            | (2,130  | )    | $ | (854    | )
|                                                  |  |                              |         |      |   |         |  
|Weighted average units
 outstanding               |  |                              | 2,833   |      |   | 2,833   |  
|Net loss per unit                                 |  | $                            | (751.85 | )    | $ | (301.45 | )

See Notes to Consolidated
Financial Statements.

2

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND III,
LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL
For the three months ended March 31, 2010(in thousands)(unaudited)

|                                     |  |                    |   |                   |   |                                                |   |                           |     |       |   |       |   |   |        |  
|------------------------------------ |  | ------------------ | - | ----------------- | - | ---------------------------------------------- | - | ------------------------- | --- | ----- | - | ----- | - | - | ------ | -
|                                     |  | Partners
 Capital |   |                   |   |                                                |   |                           |    
|                                     |  | General
 Partner   |   | Limited
 Partners |   | Accumulated
 other
 comprehensive gain
 (loss) |   | Non-controlling
 interest |     | Total |  
|                                     |  |                    |   |                   |   |                                                |   |                           |     |       |   |       |   |   |        |  
|Balance at December 31, 2009         |  | $                  |  |                   | $ | 36,638                                         |   | $                         | (79 | )     | $ | 1,319 |   | $ | 37,878 |  
|                                     |  |                    |   |                   |   |                                                |   |                           |     |       |   |       |   |   |        |  
|Net loss (1)                         |  |                    |  |                   |   | (2,130                                         | ) |                           |    |       |   | (8    | ) |   | (2,138 | )
|Increase in fair value of derivative |  |                    |  |                   |   |                                               |   |                           | 64  |       |   |      |   |   | 64     |  
|                                     |  |                    |   |                   |   |                                                |   |                           |     |       |   |       |   |   |        |  
|Balance at March 31, 2010            |  | $                  |  |                   | $ | 34,508                                         |   | $                         | (15 | )     | $ | 1,311 |   | $ | 35,804 |  

| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The allocation of net loss
 includes a curative allocation to increase the General Partner capital
 account by $21 for the three months ended March 31, 2010. The cumulative
 curative allocation since inception of the Partnership is $280. The
 Partnership Agreement provides that no Partner shall be required to fund a
 deficit balance in their capital account.

See Notes to Consolidated
Financial Statements.

3

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND III, LTD. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)

|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ---- | - | ----- | -
|                                                                                                                                                                                      |  | Three months ended March 31, |       
|                                                                                                                                                                                      |  | 2010                         |        | 2009 |  
|Cash flows from operating activities:                                                                                                                                                 |  |                              |        |      |   |       |  
|Net loss, including non-controlling
 interest                                                                                                                                         |  | $                            | (2,138 | )    | $ | (885  | )
|Adjustments to reconcile net loss to net
 cash provided by operating activities:                                                                                                      |  |                              |        |      |   |       |  
|Equity in losses from non-consolidated
 entities                                                                                                                                      |  |                              | 1,676  |      |   | 299   |  
|Depreciation and amortization                                                                                                                                                         |  |                              | 587    |      |   | 736   |  
|Amortization of above and below-market
 leases, net                                                                                                                                   |  |                              | (31    | )    |   | (42   | )
|Amortization of loan acquisition costs                                                                                                                                                |  |                              | 19     |      |   | 19    |  
|Bad debt expense                                                                                                                                                                      |  |                              | 17     |      |   | 87    |  
|Decrease (increase) in tenant receivables                                                                                                                                             |  |                              | (1     | )    |   | 187   |  
|Increase in accounts receivable                                                                                                                                                       |  |                              |       |      |   | (1    | )
|Decrease in accounts receivable - related
 party                                                                                                                                      |  |                              | 2      |      |   | 902   |  
|Increase in deferred costs                                                                                                                                                            |  |                              | (38    | )    |   | (2    | )
|Decrease in other assets                                                                                                                                                              |  |                              | 299    |      |   | 74    |  
|Decrease in accounts payable and other
 liabilities                                                                                                                                   |  |                              | (441   | )    |   | (269  | )
|Increase in accounts payable - related
 party                                                                                                                                         |  |                              | 155    |      |   | 3     |  
|Increase (decrease) in security deposits                                                                                                                                              |  |                              | 1      |      |   | (10   | )
|Net cash provided by operating activities                                                                                                                                             |  |                              | 107    |      |   | 1,098 |  
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|Cash flows from investing activities:                                                                                                                                                 |  |                              |        |      |   |       |  
|Improvements to real estate                                                                                                                                                           |  |                              | (76    | )    |   | (2    | )
|Investments in non-consolidated entities                                                                                                                                              |  |                              | (281   | )    |   | (313  | )
|Distributions from non-consolidated
 entities                                                                                                                                         |  |                              |       |      |   | 69    |  
|Net cash used in investing activities                                                                                                                                                 |  |                              | (357   | )    |   | (246  | )
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|Cash flows from financing activities:                                                                                                                                                 |  |                              |        |      |   |       |  
|Payments on notes payable                                                                                                                                                             |  |                              | (43    | )    |   | (41   | )
|Proceeds from notes payable - related party                                                                                                                                           |  |                              | 400    |      |   |      |  
|Payments on notes payable - related party                                                                                                                                             |  |                              | (1,000 | )    |   |      |  
|Optional redemptions                                                                                                                                                                  |  |                              |       |      |   | (28   | )
|Distributions                                                                                                                                                                         |  |                              |       |      |   | (537  | )
|Distributions to non-controlling interest                                                                                                                                             |  |                              |       |      |   | (155  | )
|Net cash used in financing activities                                                                                                                                                 |  |                              | (643   | )    |   | (761  | )
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|Net increase (decrease) in cash and cash
 equivalents                                                                                                                                 |  |                              | (893   | )    |   | 91    |  
|Cash and cash equivalents, beginning of
 period                                                                                                                                       |  |                              | 3,297  |      |   | 918   |  
|Cash and cash equivalents, end of period                                                                                                                                              |  | $                            | 2,404  |      | $ | 1,009 |  
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|Supplemental schedule of cash flow
 information:                                                                                                                                      |  |                              |        |      |   |       |  
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|Cash paid during the period for interest                                                                                                                                              |  | $                            | 683    |      | $ | 752   |  
|Cash paid during the period for taxes                                                                                                                                                 |  | $                            |       |      | $ |      |  
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|Supplemental schedule of noncash investing
 and financing activities:                                                                                                                 |  |                              |        |      |   |       |  
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|During the three months ended March 31, 2010, $40,000 in accrued
 interest on notes payable - related party was added to the note balances.                                          
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|During the three months ended March 31, 2010, $82,000 in accounts
 payable - related party was reclassified to notes payable - related party.                                        
|                                                                                                                                                                                      |  |                              |        |      |   |       |  
|During the three months ended March 31, 2009, $75,000 of accounts
 receivable from one of our non-consolidated entities was reclassified to
 investment in non-consolidated entities.

See Notes to Consolidated
Financial Statements.

4

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND III, LTD. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010(unaudited)

|   |                                                  
|-- | -------------------------------------------------
|1. | DESCRIPTION
 OF BUSINESS AND NATURE OF OPERATIONS

AmREIT Monthly Income &
Growth Fund III, Ltd., a Texas limited partnership (hereinafter referred to as the
Partnership, MIG III, we, us or our), was formed on April 19, 2005 to
acquire, develop and operate, directly or indirectly through joint venture
arrangements, a portfolio of commercial real estate consisting primarily of
multi-tenant shopping centers and mixed-use developments. The general partner
of the Partnership is AmREIT Monthly Income & Growth III Corporation, a
Texas corporation (the General Partner), which is a subsidiary of AmREIT,
Inc., a Securities and Exchange Commission (SEC) reporting, non-traded
Maryland corporation that has elected to be taxed as a real estate investment
trust (AmREIT). The General Partner maintains its principal place of business
in Houston, Texas.

We commenced our principal
operations on June 30, 2005, when we accepted subscriptions for the minimum
offering of $2.0 million pursuant to the terms of our Offering Memorandum dated
April 19, 2005 (the Offering Memorandum) and issued the initial 80 limited
partnership units (the Units). As of October 31, 2006, we had received $71.1
million for the sale of 2,844 Units and closed the offering. As of March 31,
2010, our investments include three wholly-owned properties comprising
approximately 225,000 square feet of gross leasable area, one property in which
we own a controlling interest comprising approximately 102,000 square feet of
gross leasable area and seven properties in which we own a non-controlling
interest through joint ventures comprising approximately 1,142,000 square feet
of gross leasable area.

Our Units were sold pursuant
to exemptions from registration under the Securities Act of 1933, as amended
(Securities Act), and are not currently listed on a national exchange. These
Units will be transferable only if we register them under applicable securities
laws (such registration is not expected) or pursuant to an exemption under the
Securities Act and applicable state securities laws. We do not anticipate that
any public market for the Units will develop.

The United States has
undergone and may continue to experience a prolonged recession that has been
marked by pervasive and fundamental disruptions in the financial markets.
Continued concerns regarding the uncertainty of whether the U.S. economy will
be adversely affected by inflation, deflation or stagflation and the systemic
impact of increased unemployment, volatile energy costs, geopolitical issues,
the availability and cost of credit, the U.S. mortgage market and a severely
distressed real estate market have contributed to increased market volatility
and weakened business and consumer confidence. The United States may not
experience a sustained recovery and could suffer pronounced instability and
decreased economic activity for an extended period of time. Our operations are
sensitive to changes in overall economic conditions that impact our tenants,
including, among other things, increased bad debts due to such recessionary
pressures. A general reduction in the level of tenant leasing or shifts in
tenant leasing practices could adversely affect our revenues, profitability and
results of operations. It is difficult to determine the breadth and duration of
the financial market problems and the many ways in which they may affect our
tenants and our business in general. While we expect to generate sufficient
cash flows from operations in 2010 to meet our contractual obligations, a
significant additional deterioration in the U.S. economy or the bankruptcy or
insolvency of one or more of our significant tenants could cause our 2010 cash
resources to be insufficient to meet our obligations.

Effective July 15, 2009, we
suspended all distributions in an effort to conserve cash and to protect
partners invested capital. As we have several projects that are mid-stream in
redevelopment, we are conserving cash from operations to improve our ability to
fund capital improvements, tenant improvements and leasing commissions, and to
meet our obligations, including debt service. We expect that the economy and
real estate market will recover prior to our anticipated liquidation
commencement date of October 31, 2012. However, if the economy remains in a
protracted recession, we will seek to postpone liquidation if we believe such
liquidation is not in the best interests of the Partners at that time.

5

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Table of Contents

Projected cash sources and
uses for the Partnerships 2010 fiscal year indicate certain periods of cash
shortfalls within the twelve month period; however, we believe that we will be
able to generate sufficient liquidity to satisfy any cash shortfalls through
(1) managing the timing of forecasted capital expenditures related to the
lease-up of properties, (2) potential joint venture equity investments in
existing non-consolidated entities (3) financings of unencumbered properties
and (4) sales of certain of our investments in non-consolidated entities.
However, no assurance can be given that we will be able to generate such
liquidity. In the event that we are unable to generate sufficient liquidity, we
may be forced to sell one or more properties at a time when it is disadvantageous
to do so, potentially resulting in losses on disposition of those properties.

|   |                                            
|-- | -------------------------------------------
|2. | SUMMARY
 OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

Our financial records are
maintained on the accrual basis of accounting whereby revenues are recognized
when earned and expenses are recorded when incurred. The consolidated financial
statements include our accounts as well as the accounts of any wholly- or
majority-owned subsidiaries in which we have a controlling financial interest.
Investments in joint ventures and partnerships where we have the ability to
exercise significant influence but do not exercise financial and operating
control are accounted for using the equity method (see Note 3). The significant
accounting policies of our non-consolidated entities are consistent with those
of our subsidiaries in which we have a controlling financial interest. As
applicable, we consolidate certain joint ventures and partnerships in which we
own less than a 100% equity interest if the entity is a variable interest
entity and we are the primary beneficiary (as defined in Accounting Standards
Codification (ASC) 810, Consolidation.
All significant inter-company accounts and transactions have been eliminated in
consolidation.

The consolidated financial
statements included in this Quarterly Report on Form 10-Q (Report) are
unaudited; however, amounts presented in the consolidated balance sheet as of
December 31, 2009 are derived from our audited financial statements as of that
date. In our opinion, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted of normal
recurring items.

REVENUE RECOGNITION

We lease space to tenants
under agreements with varying terms. All of the leases are accounted for as
operating leases, and, although certain leases of the properties provide for
tenant occupancy during periods for which no rent is due and/or increases or
decreases in the minimum lease payments over the terms of the leases, revenue
is recognized on a straight-line basis over the terms of the individual leases.
In most cases, revenue recognition under a lease begins when the lessee takes
possession of or controls the physical use of the leased asset. Generally,
possession or control occurs on the lease commencement date. We have determined
that we are the owner of any tenant improvements that we fund pursuant to the
lease terms. In cases where significant tenant improvements are made prior to
lease commencement, the leased asset is considered to be the finished space,
and revenue recognition therefore begins when the improvements are
substantially complete.

Accrued rents are included
in tenant receivables. Revenue from tenant reimbursements of taxes, maintenance
expenses and insurance is recognized in the period the related expense is
recorded. Additionally, certain of the lease agreements contain provisions that
grant additional rents based on tenants sales volumes (contingent or
percentage rent). Percentage rents are recognized when the tenants achieve the
specified targets as defined in their lease agreements. During the three months
ended March 31, 2010 and 2009, there were no percentage rents recognized. We
recognize lease termination fees in the period that the lease is terminated and
collection of the fees is reasonably assured. Upon early lease termination, we
provide for losses related to unrecovered intangibles and other assets. During
the three months ended March 31, 2010 and 2009, we recognized no lease
termination fees.

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REAL ESTATE INVESTMENTS

Development Properties-Land, buildings and improvements are recorded
at cost. Expenditures related to the development of real estate are carried at
cost which includes capitalized carrying charges, acquisition costs and development costs. Carrying
charges, primarily interest, real estate taxes and loan acquisition costs, and
direct and indirect development costs related to buildings under construction,
are capitalized as part of construction in progress. The capitalization of such
costs ceases at the earlier of one year from the date of completion of major
construction or when the property, or any completed portion, becomes available
for occupancy.

Acquired Properties and Acquired Lease Intangibles - We account for acquisitions of operating
properties pursuant to ASC 805, Business
Combinations, as we believe our operating real estate meets the
definition of a business pursuant to this guidance. Accordingly, we allocate
the purchase price of the acquired operating properties to land, building and
improvements, identifiable intangible assets and to the acquired liabilities
based on their respective fair values. Identifiable intangibles include amounts
allocated to acquired above and below-market leases, the value of in-place
leases and customer relationship value, if any. We determine fair value based
on estimated cash flow projections that utilize appropriate discount and
capitalization rates and available market information. Estimates of future cash
flows are based on a number of factors including the historical operating
results, known trends and specific market and economic conditions that may
affect the property. Factors considered by management in our analysis of
determining the as-if-vacant property value include an estimate of carrying
costs during the expected lease-up periods considering market conditions and
costs to execute similar leases. In estimating carrying costs, management
includes real estate taxes, insurance and estimates of lost rentals at market
rates during the expected lease-up periods, tenant demand and other economic
conditions. Management also estimates costs to execute similar leases including
leasing commissions, tenant improvements, legal and other related expenses.
Intangibles related to above and below-market leases and in-place lease value
are recorded as acquired lease intangibles and are amortized as an adjustment
to rental income or amortization expense, as appropriate, over the remaining
terms of the underlying leases. Below market leases include fixed-rate renewal
periods. Premiums or discounts on acquired above and below-market debt are
amortized to interest expense over the remaining term of such debt.

We expense acquisition costs
associated with operating properties as incurred in accordance with ASC 805.
Prior to adoption of ASC 805, such costs were capitalized and expensed if and
when the acquisition became no longer probable. We did not expense any
acquisition costs or capitalize any interest or taxes during the three months
ended March 31, 2010 and 2009.

Depreciation-Depreciation
is computed using the straight-line method over an estimated useful life of up
to 39 years for buildings and site improvements and over the term of lease for
tenant-specific improvements. We re-evaluate the useful lives of our buildings
and improvements as warranted by changing conditions at our properties. As part
of this re-evaluation, we may also consider whether such changes indicate a
potential impairment, and we perform an impairment analysis as necessary, at
the property level. In the case of a property redevelopment, we reassess the
useful lives of specific buildings and other improvements to be demolished as
part of that redevelopment once the redevelopment is probable to occur.

Properties Held for Sale-Properties will be classified as held for
sale if we have decided to market the property for immediate sale in its
present condition with the belief that the sale will be completed within one
year. Properties held for sale will be carried at the lower of cost or fair
value less cost to sell. Depreciation and amortization are suspended during the
held for sale period. As of March 31, 2010 and December 31, 2009, we had no
properties held for sale.

Impairment - We review our properties for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets, including
accrued rental income, may not be recoverable through operations. We determine
whether an impairment in value occurred by comparing the estimated future cash
flows (undiscounted and without interest charges), including the residual value
of the property, with the carrying value of the individual property. If
impairment is indicated, a loss will be recorded for the amount by which the
carrying value of the asset exceeds its fair value. Both the estimated
undiscounted cash flow analysis and fair value determination are based upon
various factors which require complex and subjective judgments to be made by
management. Such assumptions include projecting lease-up periods, holding
periods, cap rates, rental rates, operating expenses, lease terms, tenant
creditworthiness, tenant improvement allowances, terminal sales value and
certain macroeconomic factors among other assumptions to be made for each
property. We have not incurred any impairment losses since our inception.

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ENVIRONMENTAL EXPOSURES

We are subject to numerous
environmental laws and regulations as they apply to real estate including those
addressing chemicals used by the dry cleaning industry, the existence of asbestos
in older shopping centers, and underground petroleum storage tanks. We believe
that the tenants occupying our properties who currently operate dry cleaning
plants or gas stations do so in accordance with current laws and regulations.
We believe that the ultimate disposition of currently known environmental
matters will not have a material affect on our financial position, liquidity,
or operations (see Note 10). However, we can give no assurance that existing
environmental studies with respect to the shopping centers have revealed all
potential environmental liabilities; that any previous owner, occupant or
tenant did not create any material environmental condition not known to it;
that the current environmental condition of the shopping centers will not be
affected by tenants and occupants, by the condition of nearby properties, or by
unrelated third parties; or that changes in applicable environmental laws and
regulations or their interpretation will not result in additional environmental
liability to the Partnership.

RECEIVABLES AND ALLOWANCE FOR UNCOLLECTIBLE
ACCOUNTS

Tenant Receivables-Included in tenant receivables are base
rents, tenant reimbursements and receivables attributable to recording rents on
a straight-line basis. An allowance for the uncollectible portion of accrued
rents and accounts receivable is determined based upon customer
credit-worthiness (including expected recovery of our claim with respect to any
tenants in bankruptcy), historical bad debt levels and current economic trends.
Bad debt expenses and any related recoveries are included in property expense.
As of March 31, 2010 and December 31, 2009, our allowance for uncollectible
accounts related to our tenant receivables was $262,000 and $255,000,
respectively.

Accounts Receivable - Related Party - Included in accounts receivable - related
party are short-term cash advances provided to certain of our affiliated
investment entities primarily for their working capital needs. These cash
advances are due upon demand.

DEFERRED COSTS

Deferred costs include
deferred leasing costs and loan acquisition costs, net of amortization. Loan
acquisition costs are incurred in obtaining financing and are amortized to
interest expense over the term of the debt agreements using a method that approximates
the effective interest method. Deferred leasing costs consist of external
commissions associated with leasing our properties and are amortized to
depreciation and amortization expense on a straight-line basis over the lease
term. Accumulated amortization related to loan acquisition costs as of March
31, 2010 and December 31, 2009 totaled $291,000 and $272,000, respectively.
Accumulated amortization related to leasing costs as of March 31, 2010 and
December 31, 2009 totaled $115,000 and $101,000, respectively.

INCOME TAXES

Federal-No
provision for U.S. federal income taxes is included in the accompanying
consolidated financial statements. As a partnership, we are not subject to
federal income tax, and the federal tax effect of our activities is passed
through to our partners.

State-In
May 2006, the State of Texas adopted House Bill 3, which modified the states
franchise tax structure, replacing the previous tax based on capital or earned
surplus with one based on margin (often referred to as the Texas Margin Tax)
effective with franchise tax returns filed for tax years beginning on or after
January 1, 2007. The Texas Margin Tax is computed by applying the applicable
tax rate (1% for the Partnership) to the profit margin, which, generally, will
be determined for us as total revenue less a 30% standard deduction. Although
House Bill 3 states that the Texas Margin Tax is not an income tax, the
Partnership believes that ASC 740,Income
Taxes, applies to the
Texas Margin Tax. For the three months ended March 31, 2010 and 2009, we
recorded tax provisions of approximately $11,000 and $12,000, respectively, for
the Texas Margin Tax.

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USE OF ESTIMATES

The preparation of
consolidated financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

We account for assets and
liabilities measured at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.
ASC 820 emphasizes that fair value is a market-based measurement, not an
entity-specific measurement. Therefore, a fair value measurement should be
determined based on the assumptions that market participants would use in
pricing the asset or liability. As a basis for considering market participant
assumptions in fair value measurements, ASC 820 establishes a fair value
hierarchy that distinguishes between market participant assumptions based on
market data obtained from sources independent of the reporting entity (observable
inputs that are classified within Levels 1 and 2 of the hierarchy) and the
reporting entitys own assumptions about market participant assumptions
(unobservable inputs classified within Level 3 of the hierarchy). The three
levels of inputs used to measure fair value are as follows:

| |   |                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1 Inputs  Quoted
 prices (unadjusted) in active markets for identical assets or liabilities
 that the Partnership has the ability to access.                                     
| |   |                                                                                                                                                                                         
| |  | Level 2 Inputs  Inputs
 other than quoted prices included in Level 1 that are observable for the
 asset or liability, either directly or indirectly.                                   
| |   |                                                                                                                                                                                         
| |  | Level 3 Inputs 
 Unobservable inputs for the asset or liability, which are typically based on
 the Partnerships own assumptions, as there is little, if any, related market
 activity.

Derivative Financial Instruments  We record our portion of the change in
fair value of an interest rate swap entered into by one of our non-consolidated
joint venture entities (see Note 3). In determining the fair value of its derivative
instrument, our joint venture considers whether credit valuation adjustments
are necessary to appropriately reflect both its own nonperformance risk and the
respective counterpartys nonperformance risk in the fair value measurements.
Although we have determined that the majority of the inputs used to value the
derivatives fall within Level 2 of the fair value hierarchy, the credit
valuation assumptions associated with its derivatives utilize Level 3 inputs
such as estimates of current credit spreads to evaluate the likelihood of
default by our joint venture and its counterparties. However, as of March 31,
2010, we have assessed the significance of the impact of the credit valuation
adjustments on the overall valuation of the derivative positions and have
determined that the credit valuation adjustments are not significant to the
overall valuation of our joint ventures derivatives. As a result, we have
determined that our portion of the derivative valuation in its entirety is
classified in Level 2 of the fair value hierarchy.

The following table presents
our accumulated other comprehensive gain (loss) and related valuation inputs
within the fair value hierarchy utilized to measure fair value as of March 31,
2010 (in thousands):

|                                             |  |         |   |         |   |         |   |   |   | 
|-------------------------------------------- |  | ------- | - | ------- | - | ------- | - | - | - | 
|                                             |  | Level 1 |   | Level 2 |   | Level 3 |  
|                                             |  |         |   |         |   |         |  
|Accumulated other
 comprehensive gain (loss) |  | $       |  |         | $ | (15     | ) | $ |  | 

Notes Payable  In determining the fair value of our debt instruments, we determine
the appropriate Treasury Bill Rate based on the remaining time to maturity for
each of the debt instruments. We then add the appropriate yield spread to the
Treasury Bill Rate. The yield spread is a risk premium estimated by investors
to account for credit risk involved in debt financing. The spread is typically
estimated based on the property type and loan-to-value ratio of the debt
instrument. The result is an estimate of the market interest rate a typical
investor would expect to receive given the underlying subject asset (property
type) and remaining time to maturity. Based on these estimates, the fair value
of notes payable was $48.7 million and $48.8 million at March 31, 2010 and
December 31, 2009, respectively.

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NEW ACCOUNTING STANDARDS

In June 2009, the FASB
amended the consolidation guidance applicable to variable interest entities in
ASC 810 - Consolidation. The
amendments significantly affect the overall consolidation analysis under FASB
Interpretation No. 46(R), Consolidation of
Variable Interest Entitiesan interpretation of ARB No. 51, and
changes the way entities account for securitizations and variable interest
entities as a result of the elimination of the Qualified Special Purpose Entity
(QSPE) concept. We adopted the provisions of ASC 810 on January 1, 2010. Such
adoption did not have an effect on our results of operations or financial
position.

CASH AND CASH EQUIVALENTS

We consider all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds.

INTEREST

Interest is charged to
interest expense as it accrues. No interest has been capitalized on any
consolidated properties since inception of the Partnership.

SEGMENT REPORTING

ASC 280, Segment Reporting establishes standards
for reporting financial and descriptive information about an enterprises
reportable segments. We determined that we have one reportable segment with
activities related to investing in real estate. Our investments in real estate
generate rental revenue and other income through the leasing of multi-tenant
retail properties, which comprised 100% of our total consolidated revenues for
all periods presented. We evaluate operating performance on an individual
property level. However, as all of our properties have similar economic
characteristics, tenants and products and services, our properties have been
aggregated into one reportable segment.

RECLASSIFICATIONS

Certain prior period amounts
in the consolidated financial statements have been reclassified to conform to
the presentation used in the current period consolidated financial statements.

|   |                                          
|-- | -----------------------------------------
|3. | INVESTMENTS
 IN NON-CONSOLIDATED ENTITIES

Since inception, we have
made the following investments in five entities through which we own an interest
in seven properties:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In March 2006, we acquired
 a 50% interest in 5433 Westheimer, LP which owns an office building with a
 gross leasable area of approximately 134,000 square feet and a 152-room hotel
 in Houston, Texas. In November 2008, we acquired an additional 7.5% interest
 in 5433 Westheimer, LP from our third party, joint-venture partner for
 $800,000. The remaining 42.5% is owned by that same party. The property is
 not consolidated into our financial statements as it does not meet all conditions
 for consolidation outlined in ASC 810, Consolidation.
 Construction of the hotel was completed in August 2009, and we are currently
 evaluating opportunities to further develop the property.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | In December 2006, we
 acquired a 20% interest in PTC/BSQ Holding Company LLC which owns three
 multi-tenant retail properties located in Plano, Texas with a combined gross
 leasable area of approximately 396,000 square feet. The remaining 80% is
 owned by an unaffiliated third party.                                                                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | In December 2006, we
 acquired a 50% interest in AmREIT Casa Linda, LP which owns a multi-tenant
 retail property located in Dallas, Texas with a combined gross leasable area
 of approximately 325,000
 square feet. The remaining 50% is owned by AmREIT Monthly Income & Growth
 Fund IV, L.P. (MIG IV), an affiliate of our General Partner.                                                                                                                                                                                                                                                                                                                                                       

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In August 2007, we
 acquired a 30% interest in AmREIT Woodlake Square, LP which owns a
 multi-tenant retail property located in Houston, Texas with a combined gross
 leasable area of approximately 206,000 square feet. The remaining 70% is
 owned by affiliated AmREIT entities, MIG IV and AmREIT Realty Investment
 Corporation (ARIC). We have plans to redevelop this property beginning in
 June 2010. We and our joint venture partners are actively seeking joint
 venture capital, which will allow us to commence the redevelopment. We
 believe we will have this capital in place by June 2010. In the event that we
 are unable to obtain this capital, we may be required to defer the redevelopment
 of the center until such time as the capital becomes available.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | In November 2007, we
 acquired a 30% interest in AmREIT Westheimer Gessner, LP which owns Woodlake
 Pointe, a multi-tenant retail property located in Houston, Texas with a
 combined gross leasable area of approximately 82,000 square feet. The
 remaining 70% is owned by affiliated AmREIT entities, MIG IV and ARIC. In May
 2008, AmREIT Westheimer Gessner, LP acquired an additional tract of land
 adjacent to Woodlake Pointe for $1.3 million.                                                                                                                                                                                                                                                                                                                              

We report our investments in
these entities using the equity method of accounting due to our ability to
exercise significant influence over them. Combined condensed financial
information for our non-consolidated entities is summarized as of and for the three
months ended March 31, 2010 and 2009, as follows (in thousands):

|                               |  |                              |        |      |   |        |  
|------------------------------ |  | ---------------------------- | ------ | ---- | - | ------ | -
|                               |  | Three months ended March 31, |       
|                               |  | 2010                         |        | 2009 |  
|Revenue                        |  | $                            | 5,504  |      | $ | 4,623  |  
|Depreciation and
 amortization |  |                              | (6,255 | )    |   | (2,309 | )
|Interest expense               |  |                              | (1,665 | )    |   | (1,457 | )
|Net loss                       |  |                              | (5,075 | )    |   | (891   | )

DERIVATIVE FINANCIAL INSTRUMENTS

In December 2007, one of our
non-consolidated investment entities entered into an interest rate swap with a
notional amount of $23.8 million and a fixed rate of 5.465% in order to manage
the volatility inherent in its variable-rate mortgage. On October 1, 2008, that
interest rate swap was designated as a hedge for financial reporting purposes.
In accordance with ASC 820, Fair Value
Measurements and Disclosures, changes in fair value of derivatives that
qualify as cash flow hedges are recognized in other comprehensive income. Prior
to October 1, 2008, such changes in fair value were recorded as a loss from
derivative on the propertys statement of operations. For the three months
ended March 31, 2010 and 2009, our portion of the increase in fair value
totaled $64,000 and $25,000, respectively and is included in accumulated other
comprehensive gain (loss) on our consolidated statements of capital. We do not
use derivative financial instruments for trading or speculative purposes.

|   |                            
|-- | ---------------------------
|4. | ACQUIRED
 LEASE INTANGIBLES

In accordance with ASC 805, Business Combinations, we have identified
and recorded the value of acquired lease intangibles at the property
acquisition date. Such intangibles include the value of acquired in-place
leases and above and below-market leases. Acquired lease intangible assets
(in-place leases and above-market leases) are amortized over the leases
remaining terms, which range from 1 year to 14 years. Acquired lease intangible
liabilities (below-market leases) are accreted over the leases remaining
non-cancelable lease term, plus any fixed-rate renewal options, if any, which
range from 1 year to 14 years. The amortization of above (and below) market
leases is recorded as a reduction of (increase in) rental income, and the
amortization of in-place leases is included in depreciation and amortization
expense. The amortization expense related to in-place leases was approximately
$121,000 and $187,000 for the three months ended March 31, 2010 and 2009,
respectively. The amortization of above-market leases, which was recorded as a
reduction of rental income, was approximately $12,000 and $15,000 during the
three months ended March 31, 2010 and 2009,
respectively. Accretion of below-market leases was approximately $43,000 and
$57,000 during the three months ended March 31, 2010 and 2009, respectively.

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Acquired
in-place and above and below-market lease amounts and their respective
accumulated amortization are as follows (in thousands):

|                                                |  |                |        |                   |   |        |  
|----------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------ | -
|                                                |  | March 31, 2010 |        | December 31, 2009 |  
|Acquired lease intangible
 assets:              |  |                |        |                   |  
|In-place leases                                 |  | $              | 4,462  |                   | $ | 4,462  |  
|In-place leases -
 accumulated amortization     |  |                | (2,859 | )                 |   | (2,738 | )
|Above-market leases                             |  |                | 269    |                   |   | 269    |  
|Above-market leases -
 accumulated amortization |  |                | (201   | )                 |   | (189   | )
|Acquired lease intangibles, net                 |  | $              | 1,671  |                   | $ | 1,804  |  
|                                                |  |                |        |                   |   |        |  
|Acquired lease intangible
 liabilities:         |  |                |        |                   |   |        |  
|Below-market leases                             |  | $              | 1,127  |                   | $ | 1,127  |  
|Below-market leases -
 accumulated amortization |  |                | (846   | )                 |   | (803   | )
|Acquired below-market lease intangibles, net    |  | $              | 281    |                   | $ | 324    |  

|   |              
|-- | -------------
|5. | NOTES PAYABLE

Our
outstanding debt consisted entirely of fixed-rate mortgage loans of approximately
$50.5 million at March 31, 2010 and December 31, 2009. Our mortgage loans are
secured by our real estate properties and may be prepaid, but such payments
could be subject to a yield-maintenance premium or prepayment penalty. Our
mortgage loans are due in monthly installments of interest and principal and
mature over various terms ranging from September 2011 through January 2036.

As of March
31, 2010, the weighted-average interest rate on our fixed-rate debt is 5.9%,
and the weighted average remaining life of such debt is 9.8 years.

As of March
31, 2010, scheduled principal repayments on notes payable were as follows (in
thousands):

|                            |  |   |                                |  |                     |        |               |   |        |  | 
|--------------------------- |  | - | ------------------------------ |  | ------------------- | ------ | ------------- | - | ------ |  | 
|Scheduled
 Payments by Year |  |   | Scheduled
 Principal
 Payments |  | Term-LoanMaturities |        | TotalPayments |  
|2010                        |  | $ | 122                            |  | $                   |       |               | $ | 122    | 
|2011                        |  |   | 175                            |  |                     | 24,615 |               |   | 24,790 | 
|2012                        |  |   | 183                            |  |                     |       |               |   | 183    | 
|2013                        |  |   | 196                            |  |                     |       |               |   | 196    | 
|2014                        |  |   | 207                            |  |                     |       |               |   | 207    | 
|Thereafter                  |  |   | 92                             |  |                     | 24,904 |               |   | 24,996 | 
|Total                       |  | $ | 975                            |  | $                   | 49,519 |               | $ | 50,494 | 

We serve as
guarantor on debt in the amount of $44.0 million that is the primary obligation
of our non-consolidated joint ventures. The mortgage for one of those joint
ventures in the amount of $23.8 million matures in the fourth quarter of 2010.
We expect that mortgage to be refinanced by September 2010. However, should
that entity be unable to pay or refinance the mortgage, we and our affiliate,
MIG IV, would be liable for 25% of the balance. The remaining debt for which we
serve as guarantor matures in 2014.

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Notes Payable  Related Party
-In September 2009, we borrowed $2.5 million from affiliates of our
General Partner. In January of 2010, we repaid $1 million to ARIC and borrowed
$400,000 from AmREIT. Of the balance as of March
31, 2010, $1.5 million accrues interest monthly at LIBOR plus a spread of 4.0%
with a floor of 7.0%, and the remaining amount accrues interest monthly at
LIBOR plus a spread of 3.875% with a floor of 5.375%. The notes are secured by
our investment interests in the Woodlake Pointe and Woodlake Square properties.

|   |               
|-- | --------------
|6. | CONCENTRATIONS

As of March
31, 2010 and December 31, 2009, each of our four consolidated properties
individually comprised greater than 10% of our consolidated total assets.
Consistent with our strategy of investing in geographic areas that we know
well, three of our four properties are located in the Houston metropolitan
area. These Houston properties represent 83% of our rental income for the three
months ended March 31, 2010 and 2009. Houston is Texas largest city and the fourth
largest city in the United States.

Following are
the base rents generated by our top five tenants during the three months ended
March 31, 2010 and 2009 (in thousands):

|                        |  |   |                              |  |      |     |  | 
|----------------------- |  | - | ---------------------------- |  | ---- | --- |  | 
|                        |  |   | Three months ended March 30, | 
|Tenant                  |  |   | 2010                         |  | 2009 |    
|H-E-B Grocery           |  | $ | 356                          |  | $    | 356 | 
|Designer Shoe Warehouse |  |   | 138                          |  |      | 138 | 
|Rice Food Markets, Inc. |  |   | 73                           |  |      | 73  | 
|Fidelity Investments    |  |   | 53                           |  |      | 53  | 
|Blockbuster Video       |  |   | 49                           |  |      | 56  | 
|                        |  | $ | 669                          |  | $    | 676 | 

|   |                                               
|-- | ----------------------------------------------
|7. | PARTNERS CAPITAL AND NON-CONTROLLING INTEREST

Our General
Partner invested $800,000 as a limited partner and $1,000 as a general partner.
We began raising capital in June 2005 and raised approximately $71 million at
the time of the offerings closing in October 2006. The General Partners
$800,000 investment represents a 1.1% limited partner interest in the
Partnership.

Limited Optional Redemption Our Units were sold pursuant to exemptions from registration under the
Securities Act and are not currently listed on a national exchange or otherwise
traded in an organized securities market. These Units may be transferred only
with consent of the General Partner after delivery of required documents, and
in any event, only if we register the offer and sale of the Units under
applicable securities laws or if an exemption from such registration is
available. We do not expect to register the offer and sale of Units. Moreover,
we do not anticipate that any public market for the Units will develop. In
order to provide limited partners with the possibility of liquidity, limited
partners who have held their Units for at least three years may receive the
benefit of interim liquidity by presenting all of those Units to the
Partnership for redemption. At that time, we may, at our sole election and
subject to the conditions and limitations described below, redeem the Units
presented for cash to the extent that we have sufficient funds available to us
to fund such redemption. The redemption price to be paid will be 92% of the
limited partners unreturned invested capital. At no time during a 12-month
period, however, may the number of Units redeemed by us exceed 2% of the number
of Units outstanding at the beginning of that 12-month period. During the three
months ended March 31, 2010, we did not receive any redemption requests. During
the three months ended March 31, 2009, we received three redemption requests,
two of which were denied in the aggregate amount of $74,000 and one of which
was granted in the amount of $28,000. All redemption requests that have been
granted were paid with cash flows from operations. We suspended the optional
redemption program during the second quarter of 2009 due to macroeconomic
conditions and the need to preserve cash.

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Distributions
During the operating stage of the Partnership, net cash flow, as defined, will
be distributed 99% to the limited partners and 1% to the General Partner. Our
distributions were paid at a rate of 3.0% per annum on invested capital through
June 30, 2009. We suspended all distribution payments in July 2009 and do not
anticipate reinstating distributions until improvements in the real estate and
liquidity markets warrant such payment. All distributions to date have been a
return of capital, and the source of such distributions has been cash flows
from operations as well as our capital raising activities. During the
liquidation stage of the Partnership (anticipated
to commence in October 2012, unless extended), net cash flow, as defined, will
be distributed among the limited partners and the General Partner in the
following manner:

| |   |                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | First - 99%
 to the limited partners and 1% to the General Partner until such time as the
 limited partners have received cumulative distributions from all sources
 (including monthly cash distributions during the operating stage of the
 Partnership) equal to 100% of their unreturned invested capital plus an
 amount equal to 10% per annum uncompounded on their invested capital;
| |   |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Second -
 100% to the General Partner until it has received cumulative distributions
 from all sources (other than with respect to its limited partner Units it
 purchased) in an amount equal to 40% of the net cash flow paid to date to the
 limited partners in excess of their adjusted capital; and                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Thereafter -
 60% to the limited partners and 40% to the General Partner.                                                                                                                                                                                                                                                                                                                   

Non-controlling Interest
Non-controlling interest represents a 40% ownership interest that one of
our affiliate investment funds has in a real estate partnership that we
consolidate as a result of our 60% controlling financial interest in such
partnership.

|   |                           
|-- | --------------------------
|8. | RELATED PARTY TRANSACTIONS

Certain of our
affiliates received fees and compensation during the organizational stage of
the Partnership, including securities commissions and due diligence
reimbursements, marketing reimbursements and reimbursement of organizational
and offering expenses. These affiliates also receive fees for ongoing property
management and administrative services. In the event that these companies are
unable to provide us with the respective services, we would be required to find
alternative providers of these services. The following table summarizes the
amount of such compensation paid to our affiliates during the three months
ended March 31, 2010 and 2009 (in thousands):

|                                            |  |   |                               |  |      |     |  | 
|------------------------------------------- |  | - | ----------------------------- |  | ---- | --- |  | 
|                                            |  |   | Three
 months ended March 31, | 
|Type of service                             |  |   | 2010                          |  | 2009 |    
|Asset
 management fees                      |  | $ | 154                           |  | $    | 154 | 
|Property
 management fees and leasing costs |  |   | 99                            |  |      | 93  | 
|Administrative
 costs reimbursements        |  |   | 93                            |  |      | 98  | 
|                                            |  | $ | 346                           |  | $    | 345 | 

In addition to
the above fees paid by us, the non-consolidated entities in which we have
investments pay property management and leasing fees to one of our affiliated
entities. During the three months ended March 31, 2010 and 2009, such fees
totaled $164,000 and $240,000, respectively. See also Note 3 regarding
investments in non-consolidated entities.

|   |                                          
|-- | -----------------------------------------
|9. | REAL ESTATE ACQUISITIONS AND DISPOSITIONS

We did not
have any real estate acquisitions or dispositions during the three months ended
March 31, 2010 and 2009.

|    |                              
|--- | -----------------------------
|10. | COMMITMENTS AND CONTINGENCIES

Litigation -
In the ordinary course of business, we may become subject to litigation or
claims. There are no material pending legal proceedings known to be
contemplated against us.

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Environmental matters - In connection with the ownership and operation of real estate, we may be
potentially liable for costs and damages related to environmental matters. We
have not been notified by any governmental authority of any non-compliance,
liability or other claim.

In conjunction
with our acquisition of the Lantern Lane shopping center in September 2006, we
identified an environmental exposure caused by a dry cleaning business that
operated on the property prior to our ownership. Our agreement with the seller
provides that, if the seller cannot provide satisfactory evidence that they
have performed appropriate remediation, we can reduce our note payable to them
by the lesser of the actual costs to remediate or $1.0 million. We believe that
the remediation costs will not exceed $1.0 million based on our environmental
investigation. We have not recorded a separate liability for this exposure as
we believe that we are fully indemnified by the seller pursuant to this
arrangement. To the extent that we are required to fund a portion of the
remediation, such amount will be financed through the reduction of the note
payable to the seller. We believe that this matter will not have an adverse
effect on our consolidated financial position or results of operations, and we
are aware of no other environmental exposures.

|    |                  
|--- | -----------------
|11. | SUBSEQUENT EVENTS

In May 2009,
the FASB issued ASC 855, Subsequent Events,
which we adopted in the second quarter of 2009. We have evaluated all events or
transactions as of the date through which the financial statements were made
available for issuance. During this period, we did not have any material
subsequent events that impacted our consolidated financial statements.

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|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
 RESULTS OF OPERATIONS

The following
discussion and analysis should be read in conjunction with the accompanying
consolidated financial statements and notes thereto.

Certain information
presented in this Report constitutes forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (Exchange Act). Although we believe that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, our actual results could differ materially from those
set forth in the forward-looking statements. Certain factors that might cause
such a difference include the following: changes in general economic
conditions, changes in real estate market conditions, continued availability of
proceeds from our debt or equity capital, our ability to locate suitable
tenants for our properties, the ability of tenants to make payments under their
respective leases, timing of acquisitions, development starts and sales of
properties, the ability to meet development schedules and other risks,
uncertainties and assumptions. Any forward-looking statement speaks only as of
the date on which it was made, and the Partnership undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operation results over
time.

Overview

We are a Texas
limited partnership formed on April 19, 2005 to acquire, develop and operate,
directly or indirectly through joint venture or other arrangements, commercial
retail real estate consisting of single-tenant and multi-tenant properties net
leased to investment grade and other creditworthy tenants throughout the United
States. We focus on properties characterized by high automobile traffic counts,
high populations, high household incomes and limited opportunities for
competition.

We have no
employees and are managed by AmREIT Monthly & Income III Corporation, our
General Partner, pursuant to our Partnership Agreement. Our General Partner is
a wholly owned subsidiary of AmREIT, an SEC reporting, non-traded Maryland
corporation that has elected to be taxed as a real estate investment trust. We
qualify as a partnership for federal income tax purposes.

As of March
31, 2010, our investments include three wholly-owned properties comprising
approximately 225,000 square feet of gross leasable area, one property in which
we own a controlling interest comprising approximately 102,000 square feet of
gross leasable area and seven properties in which we own a non-controlling
interest through joint ventures comprising approximately 1,142,000 square feet
of gross leasable area. A majority of our properties are located in highly
populated, suburban communities in Texas. We derive a substantial portion of
our revenue from rental income from these properties, primarily from net
leasing arrangements, where most of the operating expenses of the properties
are absorbed by our tenants. As a result, our operating results and cash flows
are primarily influenced by rental income from our properties and interest
expense on our property acquisition indebtedness. Rental income accounted for
100% of our total revenue during the three months ended March 31, 2010 and
2009. As of March 31, 2010, our properties had an average occupancy rate of
approximately 74%, and the average debt leverage ratio of the properties in
which we have an investment interest was approximately 59%, with 69% of such
debt carrying a fixed rate of interest.

Summary of Critical Accounting Policies

The
preparation of the consolidated financial statement information contained
herein requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, net sales and expenses, and related
disclosure of contingent assets and liabilities. Management bases its estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

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An accounting
policy is deemed to be critical if it requires an accounting estimate to be
made based on assumptions about matters that are highly uncertain at the time
the estimate is made, and if different estimates that reasonably could have
been used, or changes in the accounting estimates that are reasonably likely to
occur periodically, could materially impact the financial statements.
Information with respect to the Partnerships critical accounting policies that
the Partnership believes could have the most significant effect on the
Partnerships reported results and require subjective or complex judgments by
management is contained in Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations of the Partnerships Annual
Report on Form 10-K for the fiscal year ended December 31, 2009.
Management believes that, as of March 31, 2010, there have been no material
changes to this information.

Results of Operations

We commenced
our principal operations on June 30, 2005 when we accepted subscriptions for
the minimum offering of $2.0 million pursuant to the terms of our Offering
Memorandum and issued the initial 80 Units to investors. During 2005, we
acquired a direct interest in a property on September 30, 2005 and acquired an
interest in another property on December 12, 2005 through a consolidated joint
venture. During 2006, we acquired direct interests in two more properties, one
on June 30, 2006 and the other on September 29, 2006. In 2006, we also made
investments in three joint ventures through which we obtained an ownership
interest in five other properties. In 2007, we made investments in two more
joint ventures through which we obtained an ownership interest in two other
properties. During 2008, we made an investment in one additional property
through an existing joint venture and acquired an additional equity interest in
another existing joint venture. As of March 31, 2010, our investments include three
wholly-owned properties comprising approximately 225,000 square feet of gross
leasable area, one property in which we own a controlling interest
comprising approximately 102,000 square feet of gross leasable area and seven
properties in which we own a non-controlling interest through joint ventures
comprising approximately 1,142,000 square feet of gross leasable area.

Our direct
property acquisitions were accounted for as purchases and the results of their
operations are included in our consolidated financial statements from their
respective dates of acquisition. We report our investments in joint ventures
under the equity method of accounting given our ability to exercise significant
influence over them.

Three Months Ended March 31, 2010
versus Three Months Ended March 31, 2009

Revenue.Revenue decreased
approximately $140,000 to $1.7 million during the three months ended March 31,
2010, compared to approximately $1.8 million during the three months ended
March 31, 2009. A decrease in recoverable common area maintenance (CAM)
expenses resulted in a corresponding decrease in CAM recoveries billed to our
tenants.

General and Administrative.General and administrative expenses
decreased approximately $5,000 to approximately $12,000 during the three months
ended March 31, 2010, compared to approximately $17,000 during the three months
ended March 31, 2009. This decrease was primarily due to a reduction in
director and officer insurance premiums and a reduction in postage and other
office related expenses.

Property Expenses.Property
operating expenses decreased approximately $135,000 to approximately $367,000
during the three months ended March 31, 2010 compared to approximately $502,000
during the three months ended March 31, 2009. This decrease was primarily due
to a decrease in property tax expense at Lantern Lane and Olmos Creek as well
as a decrease in bad debt expense at Lantern Lane.

Property Management Fees  Related Party.Property
management fees decreased approximately $29,000 to approximately $62,000 during
the three months ended March 31, 2010 compared to approximately $91,000 during
the three months ended March 31, 2009. Property management fees are calculated
based on tenant billings. This decrease is primarily due to common area
maintenance (CAM) true-up recoveries that were billed to tenants during the
first quarter of 2009 as well as a slight reduction in revenues during the
first quarter of 2010.

Legal and Professional Fees.Legal
and professional fees increased approximately $7,000 to approximately $52,000
during the three months ended March 31, 2010 compared to approximately $45,000
during the three months ended March 31, 2009. This increase was due to an
increase in audit costs related to internal controls testing which is required
for SEC resgistrants of our size beginning with our fiscal year ended December
31, 2010.

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Depreciation and Amortization Expense.Depreciation
and amortization expense decreased approximately $149,000 to approximately
$587,000 during the three months ended March 31, 2010 compared to approximately
$736,000 during the three months ended March 31, 2009. This decrease was
primarily due to a decrease in depreciation of tenant improvements and
amortization of in-place leases as a substantial portion of those costs became
fully amortized in the latter part of 2009 or were written off due to tenant
vacancies.

Interest and Other Income.
Interest and other income recorded during the three months ended March 31,
2009, represents interest on the outstanding balance on a note receivable from
our joint venture partner on our investment in 5433 Westheimer L.P. That note
was paid in full during the fourth quarter of 2009, and we had no other notes
receivable outstanding during the three months ended March 31, 2010.

Interest Expense.
Interest expense increased approximately $39,000 to approximately $810,000
during the three months ended March 31, 2010 compared to approximately $771,000
during the three months ended March 31, 2009. This increase resulted from Notes
Payable  Related Party borrowings from affiliates of our General Partner in
September 2009 (see Note 5 to the consolidated financial statements).

Equity in Losses From Non-Consolidated
Entities.Equity in losses from non-consolidated
entities increased approximately $1.4 million to approximately $1.7 million for
the three months ended March 31, 2010, compared to approximately $299,000 for
the three months ended March 31, 2009. These amounts represent our ownership
portion of our joint ventures net income or loss for the period. The increased
loss is due to increased depreciation expense resulting from the impending
redevelopment of the Woodlake Square property. Our joint venture has reassessed
and shortened the estimated useful lives of various buildings consistent with
its current plan to demolish such buildings as part of the redevelopment.

Liquidity and Capital Resources

We expect to meet our
short-term liquidity requirements with cash on hand and through net cash
provided by property operations and financing activities. We expect to meet our
long-term liquidity requirements through proceeds from secured or unsecured
financings from banks and other lenders, the selective and strategic sale of
properties and net cash flows from operations. We have no material refinancing
obligations over the next twelve months. As discussed in Note 5 of the
consolidated financial statements, the mortgage for one of our joint venture
properties is due in September 2010. We expect that mortgage to be refinanced
prior to the maturity date.

As of March
31, 2010 and December 31, 2009, our cash and cash equivalents totaled
approximately $2.4 million and $3.3 million, respectively. Cash flows provided
by (used in) operating activities, investing activities and financing
activities during the three months ended March 31, 2010 and 2009 are as follows
(in thousands):

|                      |  |                               |      |      |   |       |  
|--------------------- |  | ----------------------------- | ---- | ---- | - | ----- | -
|                      |  | Three
 months ended March 31, |     
|                      |  | 2010                          |      | 2009 |  
|                      |  |                               |      |      |  
|Operating
 activities |  | $                             | 107  |      | $ | 1,098 |  
|Investing
 activities |  |                               | (357 | )    |   | (246  | )
|Financing
 activities |  |                               | (643 | )    |   | (761  | )

Net cash flows
provided by operating activities decreased approximately $991,000 to
approximately $107,000 during the three months ended March 31, 2010 compared to
approximately $1.1 million during the three months ended March 31, 2009. This
decrease in cash flows provided by operating activities was primarily due to
the collection of accounts receivable  related party during the first quarter
of 2009 for amounts that had been advanced during 2008.

Net cash flows
used in investing activities increased approximately $111,000 to approximately
$357,000 during the three months ended March 31, 2010 compared to approximately
$246,000 during the three months ended March 31, 2009. This increase is
primarily due to an increase in cash paid for improvements to real estate
coupled with a decrease in cash distributions received from our
non-consolidated investment properties, both of which were offset by a decrease
in cash contributions to our non-consolidated investment properties.

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Net cash flows
used in financing activities decreased approximately $118,000 to approximately
$643,000 for the three months ended March 31, 2010 compared to approximately
$761,000 for the three months ended March 31, 2009. This decrease was primarily
due to our decision to suspend all distribution and redemption payments
beginning July 2009, which resulted in cash savings of approximately $720,000.
Such savings were offset by net repayments on notes payable  related party of
$600,000.

The United States has undergone and may continue to experience a
prolonged recession that has been marked by pervasive and fundamental
disruptions in the financial markets. Continued concerns regarding the
uncertainty of whether the U.S. economy will be adversely affected by
inflation, deflation or stagflation and the systemic impact of increased unemployment,
volatile energy costs, geopolitical issues, the availability and cost of
credit, the U.S. mortgage market and a severely distressed real estate market
have contributed to increased market volatility and weakened business and
consumer confidence. The United States may not experience a sustained recovery
and could suffer pronounced instability and decreased economic activity for an
extended period of time. Our operations are sensitive to changes in overall
economic conditions that impact our tenants, including, among other things,
increased bad debts due to such recessionary pressures. A general reduction in
the level of tenant leasing or shifts in tenant leasing practices could
adversely affect our revenues, profitability and results of operations. It is
difficult to determine the breadth and duration of the financial market
problems and the many ways in which they may affect our tenants and our
business in general. While we expect to generate sufficient cash flows from
operations in 2010 to meet our contractual obligations, a significant
additional deterioration in the U.S. economy or the bankruptcy or insolvency of
one or more of our significant tenants could cause our 2010 cash resources to
be insufficient to meet our obligations.

Effective July 15, 2009, we suspended all distributions in an effort to
conserve cash and to protect investors invested capital. As we have several
projects that are mid-stream in redevelopment, we are conserving cash from
operations to improve our ability to fund capital improvements, tenant
improvements and leasing commissions, and to meet our obligations, including
debt service. We expect that the economy and real estate market will recover
prior to our anticipated liquidation commencement date of October 31, 2012.
However, if the economy remains in a protracted recession, we will seek to
postpone liquidation if we believe such liquidation is not in the best interest
of the Partners at that time.

Projected cash
sources and uses for the Partnerships 2010 fiscal year indicate certain
periods of cash shortfalls within the twelve month period; however, we believe
that we will be able to generate sufficient liquidity to satisfy any cash
shortfalls through (1) managing the timing of forecasted capital expenditures
related to the lease-up of properties, (2) potential joint venture equity
investments in existing non-consolidated entities (3) financings of
unencumbered properties and (4) sales of certain of our investments in
non-consolidated entities. However, no assurance can be given that we will be
able to generate such liquidity. In the event that we are unable to generate
sufficient liquidity, we may be forced to sell one or more properties at a time
when it is disadvantageous to do so, potentially resulting in losses on disposition
of those properties.

|       |                                                           
|------ | ----------------------------------------------------------
|ITEM3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

|        |                        
|------- | -----------------------
|ITEM4T. | CONTROLS AND PROCEDURES

Evaluation of
Disclosure Controls and Procedures.

Under the
supervision and with the participation of our General Partners Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), our General Partners
management has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e)
of the Exchange Act) as of March 31, 2010. Based on that evaluation, our
General Partners CEO and CFO concluded that, as of March 31, 2010, our
disclosure controls and procedures were effective in causing material
information relating to us to be recorded, processed, summarized, and reported
by management on a timely basis and to ensure the quality and timeliness of our
public disclosures in accordance with SEC disclosure obligations.

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Changes in Internal
Controls

There has been
no change to our internal control over financial reporting during the quarter
ended March 31, 2010 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

PART II  OTHER
INFORMATION

|        |         
|------- | --------
|ITEM 6. | EXHIBITS

The exhibits
listed on the accompanying Exhibit Index are filed, furnished, or incorporated
by reference (as stated therein) as part of this Report.

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SIGNATURES

Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                    |                                                |                                                                        | 
|------------------- | ---------------------------------------------- | ---------------------------------------------------------------------- | 
|                    | AmREIT
 Monthly Income & Growth Fund III, Ltd.
|                    |                                                |                                                                        | 
|                    | By:                                            | AmREIT
 Monthly Income & Growth III 
 Corporation, its General Partner | 
|                    |                                                |                                                                        | 
|Date: May 14,
 2010 |                                                |                                                                        | 
|                    |                                                |                                                                        | 
|                    | By:                                            | /s/ H. Kerr
 Taylor                                                    | 
|                    |                                                | H. Kerr
 Taylor                                                        | 
|                    |                                                | President,
 Chief Executive Officer, and Director                     
|                    |                                                |                                                                        | 
|                    | By:                                            | /s/ Chad C.
 Braun                                                     | 
|                    |                                                | Chad C.
 Braun                                                         | 
|                    |                                                | Executive
 Vice President, Chief Financial Officer,                   
|                    |                                                | Treasurer
 and Secretary                                               | 

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EXHIBIT INDEX

|             |                                                                                                                                                                                                                                                 
|------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 3.1  | Certificate
 of Limited Partnership of AmREIT Monthly Income & Growth Fund III, Ltd.,
 dated April 19, 2005 (incorporated herein by reference from Exhibit 3.1 to
 the Partnerships Registration Statement on Form 10-SB dated April 30, 2007).
|             |                                                                                                                                                                                                                                                 
|Exhibit 3.2  | Agreement of
 Limited Partnership of AmREIT Monthly & Income Growth Fund III, Ltd.,
 dated April 19, 2005 (incorporated herein by reference from Exhibit 3.2 to
 the Partnerships Registration Statement on Form 10-SB dated April 30, 2007).  
|             |                                                                                                                                                                                                                                                 
|Exhibit 31.1 | Certification
 pursuant to Rule 13a-14(a) of Chief Executive Officer of our General Partner
 (filed herewith).                                                                                                                                  
|             |                                                                                                                                                                                                                                                 
|Exhibit 31.2 | Certification
 pursuant to Rule 13a-14(a) of Chief Financial Officer of our General Partner
 (filed herewith).                                                                                                                                  
|             |                                                                                                                                                                                                                                                 
|Exhibit 32.1 | Chief
 Executive Officer of our General Partner certification pursuant to 18 U.S.C.
 Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
 2002 (furnished herewith).                                                     
|             |                                                                                                                                                                                                                                                 
|Exhibit 32.2 | Chief
 Financial Officer of our General Partner certification pursuant to 18 U.S.C.
 Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
 2002 (furnished herewith).                                                     

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