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|                                  
|----------------------------------
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|WASHINGTON, D.C. 20549            
|                                  
|FORM 10-K                         

|                                                       |    |                                                                                         
|------------------------------------------------------ | -- | ----------------------------------------------------------------------------------------
|(Mark One)                                            
|x                                                      |    | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|                                                       |    |                                                                                         
|                                                       |    | For the fiscal year ended December 31, 2010                                             
|                                                       |    |                                                                                         
|                                                       | or
|                                                       |    |                                                                                         
|o                                                      |    | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                       |    |                                                                                         
|For the transition period from _________ to _________ 
|                                                       |    |                                                                                         
|Commission File No. 000-53203                         
|                                                       |    |                                                                                         
|AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P.          
|(Exact name of registrant as specified in its
charter)

|                                                                  |  |                                     
|----------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                          |  | 20-5685431                          
|(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:
|                                                                 
|Securities registered pursuant
to Section 12(b) of the Act: None 
|                                                                 
|Securities registered pursuant
to Section 12(g) of the Act:      
|                                                                 
|Limited Partnership Interests                                    
|(Title of class)                                                 

|                                                                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                  
|Indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No x                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                  
|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)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
|                                                                                                                                                                                                                                                                                                                                                                                  
|Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be
contained, to the best or registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. x                               
|                                                                                                                                                                                                                                                                                                                                                                                  
|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 Act). Yes o No x                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                     
|State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as
of the last business day of the registrants most recently completed second
fiscal quarter: $49,600,000.





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TABLE OF CONTENTS

|         |  |                                                                                                              |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|ITEM     |  |                                                                                                              |  | PAGE
|PART I  
|1        |  | BUSINESS                                                                                                     |  |      | 2  | 
|1A       |  | RISK FACTORS                                                                                                 |  |      | 15 | 
|1B       |  | UNRESOLVED STAFF COMMENTS                                                                                    |  |      | 15 | 
|2        |  | PROPERTIES                                                                                                   |  |      | 15 | 
|3        |  | LEGAL PROCEEDINGS                                                                                            |  |      | 19 | 
|4        |  | REMOVED AND
RESERVED                                                                                         |  |      | 19 | 
|         |  |                                                                                                              |  |      |    | 
|PART II 
|5        |  | MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES |  |      | 20 | 
|6        |  | SELECTED FINANCIAL DATA                                                                                      |  |      | 21 | 
|7        |  | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  |      | 21 | 
|7A       |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  |      | 30 | 
|8        |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |  |      | 30 | 
|9        |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE                         |  |      | 31 | 
|9A       |  | CONTROLS AND
PROCEDURES                                                                                      |  |      | 31 | 
|9B       |  | OTHER
INFORMATION                                                                                            |  |      | 31 | 
|         |  |                                                                                                              |  |      |    | 
|PART III
|10       |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |  |      | 32 | 
|11       |  | EXECUTIVE COMPENSATION                                                                                       |  |      | 33 | 
|12       |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND
RELATED STOCKHOLDER MATTERS              |  |      | 33 | 
|13       |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE                                    |  |      | 33 | 
|14       |  | PRINCIPAL
ACCOUNTANT FEES AND SERVICES                                                                       |  |      | 37 | 
|         |  |                                                                                                              |  |      |    | 
|PART IV 
|15       |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |  |      | 38 | 
|         |  | SIGNATURES                                                                                                   |  |      | 39 | 

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Table of Contents

CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS

In
this Annual Report on Form 10-K (Annual Report), all references to we,
our, and us refer collectively to AmREIT
Monthly Income & Growth Fund IV, L.P. and its subsidiaries,
including joint ventures.

Certain
statements contained herein constitute forward-looking statements as such term
is defined in Section 27A of the Securities Act of 1933, as amended
(Securities Act), and Section 21E of the Securities Exchange Act of 1934, as
amended (Exchange Act). Such statements
include, in particular, statements
about our plans, strategies and prospects and are subject to certain risks and
uncertainties, as well as known and
unknown risks, which could cause actual results to differ materially from those
projected or anticipated. Therefore, such statements are not intended to
be a guarantee of our performance in future periods. Such forward-looking
statements can generally be identified by our use of forward-looking terminology such as may, will,
would, could, should, expect, intend, plan, anticipate,
estimate, predict, believe, potential, continue or other similar
words. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date this Annual Report is
filed with the Securities and Exchange Commission (SEC). We make no
representation or warranty, express or implied, about the accuracy of any such
forward-looking statements contained in this Annual Report, and we do not
intend to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

For
these statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You are cautioned not to place undue reliance on our forward-looking
statements, which speak only as of the date of this Annual Report or the date
of any document incorporated by reference. All subsequent written and oral
forward-looking statements attributable to us or any person acting on our
behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. We do not undertake any obligation to
release publicly any revisions to our forward-looking statements to reflect
events or circumstances occurring after the date of this Annual Report.

1

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Table of Contents

PART I

ITEM 1. BUSINESS.

Background

We are a
Delaware limited partnership formed on October 10, 2006 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 throughout the Southern and
Southwestern United States. Our investment strategy has been to (1) sell
approximately 40% of our properties when appropriate and re-invest the net
sales proceeds into additional properties and (2) retain the remaining properties
as income-producing assets during our entire operating period. At the end of
our seven-year operating period, which expires on November 15, 2013, we will
begin to sell our properties, wind down our operations and distribute the net
proceeds from liquidation to our Partners, as defined below. The operating period may be extended to
November 15, 2015 with the consent of Limited Partners owning a majority of the
outstanding Units. Our principal
office is located at 8 Greenway Plaza, Suite 1000, Houston, Texas 77046. Our
telephone number is (713) 850-1400.

We
commenced our principal operations on December 8, 2006 when we acquired our
first interest in a property. On January 12, 2007, we accepted subscriptions
for the minimum offering of $1.0 million
pursuant to the terms of our Offering Memorandum dated November 15, 2006 (the
Offering Memorandum) and issued
our initial 40 units of limited partnership interest (the Units). We closed
the Offering of Units on March 31, 2008 when we had received $49.7 million from
the sale of 1,991 Units. We
refer to the holders of our Units as Limited Partners.

On
April 29, 2008 we filed a Form 10-12G with the SEC to register our Units
pursuant to Section 12(g) of the Exchange Act. We are subject to the registration
requirements of Section 12(g) of the Exchange Act because the aggregate value
of our assets exceeds applicable thresholds and the Units are held of record by
500 or more persons. As a result of our obligations to register our securities
with the SEC under the Exchange Act, we are subject to the requirements of the
Exchange Act rules, including the filing of this Annual Report.

Our
general partner is AmREIT Monthly Income & Growth IV Corporation, a Delaware corporation that we refer to as the General
Partner. Our General Partner is a wholly-owned subsidiary of AmREIT,
Inc., an SEC reporting, non-traded Maryland corporation that has elected to be
taxed as a real estate investment trust (AmREIT). AmREIT and its predecessors have sponsored and advised 18 partnerships formed for the purpose of investing
in properties during its 27-year history. Our General Partner has the exclusive
right to manage our business and affairs on a day-to-day basis pursuant to our limited partnership agreement (Partnership
Agreement). The Limited Partners have the right to remove and replace
our General Partner, with or without cause, by a vote of the Limited Partners
owning a majority of the outstanding Units (excluding any Units held by our
General Partner). Our General Partner is responsible for all of our investment decisions,
including decisions relating to the properties to be developed, the method and timing of financing or
refinancing the properties, the selection of tenants, the terms of the leases, the method and timing of the
sale of our properties and the reinvestment of net sales proceeds. Our General Partner utilizes the
services of AmREIT and its affiliates in performing its duties under the
Partnership Agreement. Our General Partner has contributed $1,000 to us for its
general partner interest and has contributed $800,000 to us for 32 Units. We
refer to our General Partner and our Limited Partners collectively as the
Partners.

We issued
Units in the Offering in reliance upon exemptions from the registration
requirements of the Securities
Act and state securities laws. As a result, our Limited Partners may not
transfer the Units except pursuant to an effective registration statement or pursuant to an exemption from registration. The Units are not currently
listed on a securities exchange and there currently is no established
public trading market for the Units. We do not intend to list the Units at this
time and have no plans to list the Units on an exchange in the future.

We directly own one
property and have investments in five additional properties, all of which are located
in Texas, through joint ventures with affiliates and non-affiliates. Five of
the properties are multi-tenant retail properties and the sixth property
consists of vacant land for development. The five existing retail properties
comprise approximately 1,273,000 rentable
square feet. As of December 31, 2010, the five existing retail properties were
77% leased.

2

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The
following is a summary of the six properties in which we owned an interest as
of December 31, 2010:

|                           |  |             |  |                |   |                 |  |           |   |                           |            | 
|-------------------------- |  | ----------- |  | -------------- | - | --------------- |  | --------- | - | ------------------------- | ---------- | 
|Property                   |  | Location    |  | Percent
 Owned |   | Square
 Footage |  | Occupancy |   | Annualized
 Base Rent (1) |           
|Casa Linda Plaza (2)       |  | Dallas      |  | 50             | % | 324,569         |  | 72        | % | $                         | 3,293,000  | 
|Woodlake Square (2) (5)    |  | Houston     |  | 6              |   | 205,522         |  | 62        |   |                           | 1,564,000  | 
|Woodlake Pointe (3)(7)     |  | Houston     |  | 60             |   | 82,120          |  | 100       |   |                           | 216,000    | 
|Cambridge Holcombe (2) (4) |  | Houston     |  | 50             |   |                |  |          |   |                           |           | 
|Shadow Creek Ranch (2) (6) |  | Houston     |  | 10             |   | 624,013         |  | 80        |   |                           | 6,045,000  | 
|Village on the Green       |  | San Antonio |  | 100            |   | 36,306          |  | 92        |   |                           | 662,000    | 
|Total                      |  |             |  |                |   | 1,272,530       |  |           |   | $                         | 11,780,000 | 

|    |                                                                                                                                                                                                                                  | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                 
|(1) | Annualized base rent represents base rents in place on
 leases with rent having commenced as of December 31, 2010 and does not
 reflect straight-line rent or other adjustments under generally accepted
 accounting principles.
|    |                                                                                                                                                                                                                                 
|(2) | Property is
 owned through a joint venture that is not consolidated in our financial
 statements.                                                                                                                               
|    |                                                                                                                                                                                                                                 
|(3) | Property is planned for redevelopment.                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                 
|(4) | Property is
 vacant land and is planned for development.                                                                                                                                                                        
|    |                                                                                                                                                                                                                                 
|(5) | Property is currently under redevelopment.                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                 
|(6) | Square footage for this property includes 27,000 square feet of
 undeveloped pad sites, and therefore, represents proposed leasable square
 footage.                                                                            
|    |                                                                                                                                                                                                                                 
|(7) | As of
 December 31, 2010 this property was occupied by a tenant with a temporary
 lease.                                                                                                                                        

See Item 2. Properties for a more detailed description of our
investments in properties.

Investment Objectives

Our
investment objectives are:

| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to preserve
 and protect our Limited Partners capital contributions;                                                                                        
| |   |                                                                                                                                                              
| |  | to provide
 cash distributions to our Partners through the operation of our properties;
 and                                                                 
| |   |                                                                                                                                                              
| |  | to add value
 to our properties in which we have invested during our operating period and
 to realize appreciation upon the ultimate sale of such properties.

Investment Strategy

We
were formed to acquire, develop and operate a portfolio of commercial real
estate consisting primarily of multi-tenant shopping centers and mixed-use
developments. We will seek to maximize our income and capital growth during our
operating period by (1) selling approximately 40% of our properties when
appropriate and re-investing the net sales proceeds into additional properties
(we refer to this process as Active Management), and (2) owning the remaining
properties as income-producing assets during our entire operating period. Our
operating period will continue until November 15, 2013. The operating period
may be extended to November 15, 2015 only with the consent of the majority of
Units held by our Limited Partners. At the end of our operating period, the
General Partner will begin an orderly liquidation of our properties and will
distribute the net proceeds from liquidation to our Partners. If our General
Partner does not diligently pursue the liquidation of our properties at the end
of our operating period, it will forfeit its $800,000 investment in Units.

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Equity Allocation

As of
December 31, 2010, approximately 55% of our portfolio was
invested in existing commercial shopping centers, primarily multi-tenant
properties and mixed-use properties. Approximately 45% of our portfolio is
invested in the development and redevelopment of commercial shopping centers,
consisting primarily of multi-tenant and mixed-use developments. However, if
our General Partner determines that the risk/return profiles of the development
investment activities or the acquisition of existing retail centers dramatically
improves or declines, our General Partner may reallocate our investment capital
to account for changes in such profiles.

As
we make additional investments, we will seek to avoid tenant concentration in
one industry by pursuing properties with tenants representing a variety of
industries. We will also seek to avoid tenant concentration
by limiting the size and number of our properties held by a single tenant or
brand. We intend to diversify our
tenant base so that no single tenant or brand represents more than 15% of our
overall gross revenues from our portfolio following the investment of
all of the proceeds from the Offering.

Investments
in Properties with Operating Histories

We
have invested approximately 55% of our portfolio in existing shopping centers
leased to high quality tenants, consisting primarily of multi-tenant centers,
mixed-use properties and, on a selective basis, free standing single-tenant
properties. Of the six properties in which we own an interest, Casa Linda,
Shadow Creek Ranch and Village on the Green represent our properties with
operating histories. These investments are primarily shopping centers that are
grocery-anchored, strip center, mixed-use or lifestyle properties whose tenants
consist of national, regional and local retailers. Our grocery-anchored
shopping centers are anchored by an established grocery store operator in the
region. Our other shopping centers are typically leased to national and
regional tenants, as well as a mix of local and value retailers. Our lifestyle
centers are typically anchored by a combination of national and regional
tenants that provide customer traffic and tenant draw for specialty and
restaurant tenants that support the local consumer. We also own shopping
centers that are leased to national drug stores, national restaurant chains,
national value-oriented retail stores and other regional and local retailers.

The
majority of our properties are either leased directly to or guaranteed by the
lessees parent company, not just the operator of the individual location, and
are in areas of substantial retail shopping traffic. Our strategy is to acquire
properties that attract tenants that provide basic staples and convenience
items to local customers. We believe that sales of these items are less
sensitive to business cycle fluctuations than higher priced retail items.

Development
and Redevelopment Properties

We
have invested approximately 45% of our portfolio in development and
redevelopment properties, either directly or indirectly through joint ventures. Of the six properties in which we own an
interest, we have initiated plans to redevelop Woodlake Square and Woodlake
Pointe. Cambridge Holcombe consists of vacant land located in the Texas Medical
Center in Houston, Texas, and we are in the initial stages of planning this
propertys development. The amount of equity committed to development and
redevelopment projects is generally 25% to 100% of the total cost of the
project, with the remaining costs being funded through lines of credit,
construction financing or other property level mortgage financing. Throughout
the development process, we work closely with local development partners.

We are
currently redeveloping Woodlake Square, and we plan to redevelop Woodlake
Pointe. We are also in the initial stages of planning the development of
Cambridge & Holcombe. It is likely that these properties will become
mixed-use developments which may include office, residential, entertainment and
hospitality components. It is possible that our future investments will have
mixed-use components as well. Our General Partner will analyze the market
surrounding each mixed-use development to determine the optimal mix of retail
to non-retail components. We seek to develop properties in locations that
provide limited competition, quality demographics and strong market
fundamentals. We intend to commence the leasing process before construction of
a particular development property.

Our General
Partner may hire a general contractor to provide construction and construction
management services for each of our development and redevelopment projects. The
general contractor will be entitled to fees for providing these services, and
these fees may be paid on a fixed price basis or a cost plus basis. AmREIT
Construction Company, an affiliate of our General Partner, has historically
provided construction and construction management services for many of our
development and redevelopment projects. During 2008, AmREIT Construction
Company ceased providing these services. We
may engage in the future AmREIT Realty Investment Corporation (ARIC), also an
affiliate of our General Partner, for construction
management services. In these cases, such services will be provided on terms
and conditions no less favorable to us than can be obtained from independent
third parties for comparable services in the same location.

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Each of our
development and redevelopment projects has and will have a project manager
assigned to ensure all necessary functions are performed. The project manager
is responsible for coordinating all phases of the project, including the
feasibility study of each project prior to the commencement of development and
much of the pre-development work. Each development will also have a
construction manager who is responsible for coordinating all the outsourced
trades including architectural, engineering, environmental, and construction
contractors. The construction manager will be an employee of ARIC in the event
that ARIC is providing construction management services to a development
project. The project and construction managers will be jointly responsible for
the preparation and adherence to the development budgets. Capital inflows and
outflows are carefully tracked and compared against budgets. Actual costs
versus budget reports will be prepared on a monthly basis for review by various
parties including the development team, management team and lenders. The
project and construction managers will work in unison to ensure each project is
built within budget and on a timely basis.

We may
place our capital at-risk in certain situations to secure land our General
Partner deems suitable for development. We will utilize methods such as
purchase agreements and options to tie-up development properties. Such
commitments may not necessarily result in the eventual acquisition of a land
site, as we may elect to forfeit funds after completing our due diligence.

Location
of Properties

We
seek investments in properties located throughout the United States, with a
primary focus on markets with increasing population growth and urban density.
As a result of our General Partners experience in developing, acquiring and
managing retail real estate in metropolitan Texas markets, each of the six
properties in which we currently own an interest is located in Texas. The
economies of the Texas metropolitan markets where we own properties will have a
significant impact on our cash flow and the value of our properties. Although a
downturn in the economies of these metropolitan areas could adversely affect
our business, general retail and grocery anchored shopping centers that provide
necessity-type items tend to be less sensitive to macroeconomic downturns.

Although
we intend to invest only in properties in the United States, we are not
prohibited from making investments in foreign countries that meet our
investment criteria.

Investment Decisions

Our
General Partner uses commercially reasonable efforts to present to us suitable
investments consistent with our investment objectives and policies. In pursuing
our investment objectives and making investment decisions for us, our General
Partner considers relevant real estate property and financial factors,
including the location of the property, its suitability for any development
contemplated or in progress, its income-producing capacity, the prospects for
long-range appreciation, liquidity and tax considerations. Moreover, to the
extent feasible, our General Partner strives to select a diversified portfolio
of properties in terms of type of property and industry of the tenants,
although the number and mix of properties acquired will largely depend upon
real estate and market conditions and other circumstances existing at the time
properties are acquired.

Prior
to acquiring a property, our General Partner undertakes an extensive site
review. Our General Partner also typically undertakes a long-term viability and
market value analysis, including an inspection of the property and surrounding
area by an acquisition specialist and an assessment of market area
demographics, consumer demand, traffic patterns, surrounding land use,
accessibility, visibility, competition and parking. Our General Partner may
also take additional actions to evaluate the property, including without
limitation, the following:

| |   |                                                    
| | - | ---------------------------------------------------
| |  | obtaining an independent appraisal of the property;

5

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| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | obtaining an
 independent engineering report of the
 propertys mechanical, electrical and structural integrity (sale/leaseback
 properties only);
| |   |                                                                                                                                                   
| |  | conducting an investigation of title;                                                                                                             
| |   |                                                                                                                                                   
| |  | evaluating both the current and potential alternative uses of the
 property; and                                                                  
| |   |                                                                                                                                                   
| |  | obtaining an independent Phase I environmental site
 assessment.                                                                                  

Our
General Partner is not required to obtain an appraisal in connection with an
acquisition, although it is anticipated that if third-party financing is being
provided by a commercial lender, such lender will obtain an independent
appraisal.

Real Estate Fundamentals

Our
General Partner believes that sound real estate fundamentals will allow us to
attract the best tenants and produce the best results for our real estate
portfolio. Our General Partner believes that factors such as corner locations, high automobile traffic counts, high
populations, high household incomes and limited opportunities for
competition produce favorable conditions for the success of the tenant and the
retail property. Each of our current investment properties possesses these
characteristics. Corner locations traditionally offer favorable access because
these locations can access traffic in all
directions. High traffic passing a retail property provides maximum exposure
for retail tenants. A dense population base surrounding a retail
property provides a large consumer base for a tenants business. Areas that
have high household income have more disposable income that is affected less by
economic cycles. Locations that have few
opportunities for new retail properties offer a limited supply of space
and thus have the best likelihood of growing rental rates. Although a shopping
center seldom offers all of these factors,
our General Partner will use these criteria to measure the quality and relative
value of opportunities relative to others in evaluating each proposed
real estate investment.

Our
General Partner also believes that its ability to obtain locations near
national commercial tenants such as
Wal-Mart, Home Depot and Target, which are major traffic generators for other
commercial tenants, should enable us to attract brand name, high quality
tenants.

Tenant Quality and Monitoring

We
seek to attract high quality tenants for our properties. A tenant will be
considered high quality if at the time of leasing, the tenant has a regional
or national presence, operating history of 10 or more years and a net worth in
excess of $50 million. When available, our General Partner will rely on
national credit rating agencies such as Standard & Poors to assist in such
determination. If public data is not available, our General Partner will rely
on its experience, its own credit analysis and resources provided by its
lenders to qualify a prospective tenant.

If
a tenant has a public debt rating, we will seek tenants that have: a debt
rating by Moodys of Baa3 or better or a credit rating by Standard & Poors
of BBB- or better; or a guaranty for its payments under the lease by a
guarantor with a debt rating by Moodys of Baa3 or a credit rating by Standard
& Poors of BBB or better.

Moodys
ratings are opinions of future relative creditworthiness incorporating an
evaluation of franchise value, financial statement analysis and management
quality. The rating given to a debt obligation describes the level of risk
associated with receiving full and timely payment of principal and interest on
that specific debt obligation and how that risk compares with that of all other
debt obligations. The rating therefore measures the ability of a company to
generate cash in the future. Standard & Poors assigns a credit rating both
to companies as a whole and to each issuance or class of a companys debt. A
Standard & Poors credit rating of BBB-, which is the lowest investment grade
rating given by Standard & Poors, is assigned to companies or issuances
that exhibit adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity of the company to meet its financial commitments.

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Net Leases

We
typically enter into net leases with our tenants. Net leases are leases that
typically require tenants to pay all or a majority of the
operating expenses, including real estate taxes, special assessments and sales and use taxes, utilities, insurance and
building repairs related to the property, in addition to the lease payments.
There are various forms of net leases, typically classified as triple net,
double net and bondable. Triple net and
bondable leases typically require the tenant to pay all costs associated with a
property in addition to the base rent
and percentage rent, if any. Double net leases typically hold the landlord responsible
for the roof and structure of the building while the tenant is responsible for
all remaining expenses associated with the
real estate. Since each lease is an individually negotiated contract between two or more parties, each contract will have
different obligations for both the landlord and tenant. Many large national
tenants have standard lease forms that generally do not vary from property to
property, and we will have limited ability to revise the terms of leases
to those tenants.

Our
properties have tenants with varying lease terms. We have acquired interests in
properties under which the lease terms have partially run. We evaluate the
lease term risk based on criteria such as whether the property is
in an attractive location, difficult to replace or has other significant
favorable real estate attributes. The leases
for our properties generally require our tenants to pay a predetermined annual
base rent. Some of these leases contain provisions that increase the
amount of base rent payable at points during the lease term and/or percentage
rent that can be calculated by a number of factors. In addition, these leases
generally require that each tenant pay the cost of the liability insurance
covering the property or provide such coverage.
The third-party liability coverage will insure, among others, us, our General
Partner, and any entity formed by us to hold the property. The leases
for our properties generally require that each tenant obtain, at its own
expense, property insurance naming the above parties as an insured party for
fire and other casualty losses in an amount that generally equals the full
replacement value of such property. Our tenants are generally required to
obtain our General Partners approval of all such insurance.

Ownership Structure

For
our investments where we are the sole owner, we generally acquire, directly or
indirectly, fee simple interests in the property. We may also acquire leasehold
interests in real property subject to long-term ground leases. Our General
Partner and its affiliates may purchase future investments in their own names
or in entities that they control, assume loans in connection with the purchase
of properties and temporarily hold title to properties for the purpose of
facilitating the acquisition of properties by us.

For
our future investments, we may continue to acquire properties through joint
ventures, or we may acquire, directly or indirectly, (1) fee simple interests
in owned real property and (2) leasehold
interests in real property subject to long-term ground leases. We may in the
future acquire individual properties or portfolios of properties. Our
General Partner and its affiliates may purchase properties in their own name or
in entities that they control, assume loans in connection with the purchase of
properties, and temporarily hold title to properties for the purpose of
facilitating the acquisition of properties by us. Our General Partner and its
affiliates may also borrow money or obtain financing and complete construction
of properties.

For
our future investments in development properties, we may enter into
arrangements with the seller or developer, provided that the property is
pre-leased to a high quality tenant. In these cases, we will be obligated to
purchase the property at the completion of construction, provided that the construction
conforms to definitive plans, specifications and costs approved in advance by
our General Partner. We will receive a certificate of an architect, engineer or
other appropriate party, stating that the property complies with all plans and
specifications. If renovation or remodeling is required prior to the purchase
of a property, our General Partner expects to pay a negotiated maximum amount
upon completion.

We
may enter into sale and leaseback transactions, under which we will purchase a
property and lease the property back to the seller.

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Joint Ventures

As
of December 31, 2010, we owned interests in five properties through joint
ventures with affiliates of our General Partner and non-affiliates. The joint
ventures are structured as limited partnerships, in which we own interests.
Each of these limited partnerships owns one of the five underlying properties.
Each general partner is responsible for establishing policies and operating
procedures with respect to the business and affairs of the underlying property.
However, we and each of our joint venture partners must approve all significant
decisions involving the properties, including decisions involving acquisitions
and dispositions of properties, refinancing, operational budgets and
significant capital improvements.

We
may invest in additional properties through
joint ventures with third-party developers and real estate investors, including
our General Partner, its affiliates and entities owned or managed by its
affiliates. Such joint ventures may include investments in limited liability
companies or other co-ownership arrangements whose purpose is the acquisition or improvement of the properties. Our
General Partner and its affiliates may provide services to the joint venture, including, but not limited to, acquisition,
development, management, leasing and/or real estate disposition services.
Our current joint venture investments contain, and we will not enter in future
joint venture investments unless they contain, the following features:

| |   |                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our right
 either to approve significant decisions of the joint venture or to control
 operations of the joint venture, subject to the right of the joint venture
 partner to approve sales or refinancing;                                                                
| |   |                                                                                                                                                                                                                                                                            
| |  | the total
 compensation paid by us and the joint venture to our General Partner and its
 affiliates in connection with a joint venture will not exceed the
 compensation which would be permissible under the Partnership Agreement if we
 owned 100% of the joint venture;
| |   |                                                                                                                                                                                                                                                                            
| |  | no duplication
 of joint venture costs and expenses or of costs and expenses relating to the
 joint venture business, including organization and syndication expenses,
 acquisition and development costs; and                                                             
| |   |                                                                                                                                                                                                                                                                            
| |  | any
 purchase, sale or financing transactions
 between the joint venture partner and our General Partner or its affiliates must be on terms,
 which are commercially reasonable and comparable to those relating to
 transactions between unrelated parties.               

Our
investments in Casa Linda Plaza, Woodlake Square, Woodlake Pointe and Shadow
Creek Ranch were made through joint ventures with
affiliates of our General Partner. For any future investment with our General
Partner, its affiliate, or an entity
owned or managed by an affiliate, our General Partner or the managing member,
largest shareholder, general partner or other controlling or majority owner of
the affiliate or such other entity may contribute capital to the joint
venture on the same terms and conditions as us. Allocable profits in a joint
venture will be calculated based on the sum of net sale proceeds from the sale
of a property (after repayment of debt) plus reserves less capital
contributions of each joint venture partner plus actual origination and
carrying costs of the additional financing incurred
in connection with such property. Distributions will be pro rata to the joint venture
partners based on their aggregate capital contributions.

Our
General Partner or its affiliate may form another partnership or other
investment vehicle with essentially the same investment objectives as us and
such entity may acquire properties through a joint venture. Such other entities
may have as investors controlling persons or other former and current investors
in programs sponsored by affiliates. The terms and conditions upon which
persons become investors in such other entities may differ from our terms and
conditions.

Disposition Policies

Operating
Period Dispositions

During our
operating period, our General Partner intends to hold our properties until such
time as a sale or other disposition appears to be advantageous to
achieve our investment objectives or until it appears that such objectives
will not be met. We have not yet sold any of our investments in properties. Our
General Partner anticipates an average holding period for Actively Managed
properties of 12 to 48 months, recognizing that certain projects may have a
shorter or longer holding period. When
deciding whether to sell properties during our operating period, our General
Partner will consider factors such as potential capital appreciation, cash
flow, the availability of other attractive investment opportunities and federal
income tax considerations.

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Reinvestment
of Net Sales Proceeds

During
our operating period, our General Partner intends to reinvest the net sales
proceeds generated from the sale of our Actively Managed properties. In making
the determination of whether to reinvest the net proceeds from a particular
sale, our General Partner will first determine whether we have adequate cash
flow to support the anticipated monthly distribution to our Limited Partners.
Second, our General Partner will determine if there are sufficient reserves to
pay the special tax distribution to our Limited Partners at the end of the
year.

Liquidation
Period Dispositions

Our
General Partner will in good faith actively market for sale all of our
properties other than those in the development or redevelopment stage and
commence an orderly Partnership liquidation on or before November 15, 2013.
Properties in the development or redevelopment stage at the end of the
operating period will be marketed for sale upon completion. The operating
period may be extended to November 15, 2015 with the consent of Limited
Partners owning a majority of the outstanding Units. If our General
Partner does not take all commercially reasonable efforts to diligently pursue
the portfolio sale and liquidation on our behalf as described above, it shall
forfeit its $800,000 investment in our Units.

Once
our General Partner has marketed for sale all of our properties, it may take
months or years for our General Partner to sell all of our properties and wind
up our operations. In connection with the sale of a property, we may take
purchase money obligations secured by a mortgage on the property as partial
payment, thereby delaying any distribution of sale proceeds to our Limited
Partners over the term to maturity of such obligations. The terms of payment to
be accorded by us will be affected by custom in the area in which the property
is located and the then-prevailing economic conditions.

AmREITs
Purchase Rights

We
have granted AmREIT a limited right of first refusal to purchase our wholly-owned
properties that our General Partner determines are in our best interests to
sell. For properties we own through a joint venture, we will grant AmREIT this
right of first refusal, subject to the approval of our joint venture partners.
If our General Partner determines that it is in our best interests to sell one
of our properties, our General Partner will notify AmREIT of our desire to sell
such property. AmREIT will then have 30 days to determine whether to pay the
market value to acquire the property for itself. To determine the market value
of a property, both AmREIT and we, at our own cost and expense, shall appoint a
real estate appraiser with at least five years full-time commercial appraisal
experience and who is a member of the Appraisal Institute (MAI designation). If
either of us fails to appoint an appraiser, the single appraiser appointed
shall be the sole appraiser and shall determine the market value. Each
appraiser shall conduct an independent appraisal of the property within 30 days
after the two appraisers are appointed. If the appraised values are within five
percent of each other, the market value of the property shall be the mean of
the two appraisals. If the two appraisals are more than five percent apart, a
third appraiser meeting the qualifications stated above and independent from
each party shall be appointed by the existing appraisers. Each of the parties shall bear one-half of
the cost of the third appraiser. Within 30 days after its selection, the
third appraiser shall complete its appraisal of the property. Upon completion
of the third appraisal, if the low appraisal and/or the high appraisal are/is
more than five percent lower and/or higher than the middle appraisal, the low
appraisal and/or the high appraisal shall be disregarded. If only one appraisal
is disregarded, the remaining two appraisals shall be added together and their
total divided by two, with the resulting quotient being the market value. If
both the low appraisal and the high appraisal are disregarded as stated above,
the middle appraisal shall be the market value. AmREIT will have 10 business
days after the final determination of market value to elect to purchase the
property.

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If
AmREIT agrees to pay the market value for a property, as determined above, we
will sell the property to AmREIT. If AmREIT declines to acquire a property or
fails to notify us of its intent to acquire a property within the requisite
time periods, then we will market the property to third parties.

Marketing

Our
General Partner believes that relationships and networking are the two primary
components of marketing properties for sale. Our General Partner will use its
in-house staff along with its relationships with key commercial brokers across
the country to sell our properties.

Leverage

Our
investments in Casa Linda Plaza, Woodlake Square, Woodlake Pointe and Shadow
Creek Ranch were made by our contributing equity to joint ventures. The Casa
Linda Plaza, Woodlake Square and Shadow Creek Ranch joint ventures used
leverage to acquire their properties. Likewise, we acquired Village on the
Green through a combination of equity and the assumption of debt in place at
the time of acquisition. Our investment in Cambridge Holcombe was
made by our contributing equity to a joint venture, which in turn, acquired
Cambridge Holcombe using cash proceeds from our equity contribution and the equity contribution of our joint venture
partner. We later financed a portion of this acquisition through the
placement of debt with a third-party lender. For
our future investments in properties with operating histories, we intend to
continue to leverage our investments in these properties using
traditional, commercial real estate lending sources, as underwritten by our
General Partner and the lender.

We may
finance the acquisition of future properties with new financing or assumption
of existing indebtedness. We
may incur secured or unsecured indebtedness at any time during our term. We may
refinance a property after it has increased
in value or when more favorable terms are available. Refinancing may permit us
to retain such property and at the same time generate distributions to the
Partners, enable us to engage in renovation or remodeling activities, or to
make further acquisitions. We may incur debt for expenditures related to the
properties, including to facilitate the sale or to pay for capital
expenditures. There is no fixed limit on the term of any particular borrowing
or the amount thereof. Generally, we may not incur indebtedness (or any
refinancing thereof) to acquire or improve properties in an amount greater than
75% of our cash and cash equivalents plus the market value of our portfolio
based on a cap rate approach applied to the net operating income of the property,
with a target of 60% of the value of our assets. No assurance can be given as
to the future availability of credit, the amount or terms thereof, or the
restrictions that may be imposed on our future borrowings by lenders. The terms
of our loans may require the properties to be held by special purpose entities
whose controlling interest must be held by a corporation.

We may
borrow money from AmREIT or its affiliates if our General Partner, in the
exercise of its fiduciary duties, determines that the transaction
is on terms that are fair and reasonable
and no less favorable to us than comparable loans between unaffiliated parties.

Other Investments

We
currently own interests in five properties through joint ventures. We may
invest in other entities that own real
estate, including in connection with joint ventures. We make these investments when our General Partner
considers it more efficient to acquire an entity owning such real
property rather than to acquire the properties directly. We have and may
continue to acquire less than all of the ownership interests of such entities
if our General Partner determines that such interests are undervalued and that
a liquidation event in respect of such interests are expected within our operating
period.

To
the extent our General Partner determines it is in our best interest, due to
the state of the real estate market, in order to diversify our investment
portfolio or otherwise, our General Partner may make or invest in mortgage
loans. We currently do not own any interests in mortgage loans. The criteria
for investing in mortgage loans will be substantially the same as those
involved in its investment in properties. Our Partnership Agreement limits our
investment in mortgage loans to no more than 20% of the net proceeds from the
Offering, unless the maximum
allocation is increased by our General Partner with the consent of the Limited
Partners owning a majority of the outstanding Units.

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Our
Partnership Agreement prohibits us from investing in securities of other
issuers, except for permitted temporary investments pending utilization of our
funds to acquire properties and except for investments in joint ventures and
similar co-ownership arrangements, unless otherwise agreed to by Limited
Partners holding a majority of the outstanding Units.

Our General
Partner invests our reserves and other available funds not committed to
investments in properties in United States government securities,
securities issued and fully guaranteed by United States government agencies,
securities issued and fully guaranteed by states or municipalities,
certificates of deposit and time or demand deposits in commercial banks,
bankers acceptances, savings and loan association deposits or deposits in
members of the Federal Home Loan Bank System, or money market instrument funds.

Conflicts of Interest

Our
General Partner is subject to various conflicts of interest arising out of its
relationship with us, the Limited Partners and AmREIT. Our General Partner and
its affiliates have and will continue to try to balance our interests with their duties to other AmREIT-sponsored
programs. However, to the extent that our General Partner or its
affiliates take actions that are more favorable to other entities than to us,
these actions could have a negative impact
on our financial performance and, consequently, on distributions to our
Limited Partners. Some of these conflicts are described below.

Limited
Financial Resources

Our
General Partner has no assets other than its general partner interest in us and
its investment in our Units. In the event we have substantial capital needs,
our General Partner will not have sufficient financial resources to satisfy
these needs. In addition, AmREIT, the parent of our General Partner, has
substantial financial obligations related to its properties and its interest in
other programs and may not be able to provide us financial assistance in the
event we have capital needs.

Interests
in Other Real Estate Programs

AmREIT
sponsors and manages real estate programs and ventures. The existing entities
that our General Partner manages that have similar investment objectives and
that may compete with us are AmREIT Income & Growth Fund, Ltd., AmREIT
Monthly Income & Growth Fund, Ltd., AmREIT Monthly Income and Growth Fund
II, Ltd., AmREIT Monthly Income and Growth Fund III, Ltd. and AmREIT, which we
collectively refer to as the Similar AmREIT Programs. In addition to identifying,
originating and effecting property acquisitions and development projects for
us, our General Partner and its affiliates will continue to acquire and develop
real estate for the account of other affiliated and unaffiliated investors.
Conflicts of interest with our General Partner may arise in its allocating
opportunities between us and other programs, particularly where our General
Partners profit or loss interest in such other investment is different than
our General Partners interest in the Partnership.

Conflicts
of interest may also arise in connection with our General Partners
responsibilities to us and the responsibilities of its affiliates to other
entities. For example, conflicts of interest could arise in managements
allocation of its time and access to resources, such as financing, goods,
material or labor, or in connection with its access to the leasing or resale
markets, particularly during times these resources are scarce or in short
supply. Conflicts could also result in the selection and marketing of projects
if shortages of properties, materials or labor are insufficient causing market
demands to require our General Partners management to allocate project
opportunities between us and its affiliates.

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Because
the management of our General Partner manages other investment funds and
entities with similar investment strategies, including AmREIT, competition for
properties will create a conflict of interest. Management expects to manage
this conflict by providing a pipeline of real estate projects and opportunities
to support all of its activities. All potential development and acquisition
opportunities will initially be presented to AmREIT. If AmREIT elects
not to make the investment, our General Partners management will determine
which of the entities that it advises, including us, would be most appropriate
to make the proposed investment. To determine which entity should make the
investment, management will first evaluate the investment objectives of each
investment fund and determine if the opportunity is suitable for each fund. If
the proposed investment is appropriate for more than one fund, management will
then evaluate the portfolio of each fund, both in terms of geographic diversity
and tenant concentration, to determine if the investment is most suitable to
one fund. If the geographic diversity and tenant concentration analysis is not
determinative, management will allocate the property to the fund with
uncommitted funds available for the longest period of time. Our General
Partners management may also allow multiple investment funds to enter into
joint ventures for the purchase or acquisition of a property.

Competition
for Management Services

Our
General Partners management is engaged in substantial activities apart from
our business, including their duties to similar AmREIT programs. As such, they
will devote only so much of their entire time to our affairs as is reasonably
required in their judgment, and they could have conflicts of interest in
allocating their time between us and other entities. Our General Partner
believes that it has sufficient staff to fully discharge its responsibilities
to us.

Leasing
Agents

Our
General Partner retains the services of affiliated leasing agents to lease the
properties in which we have invested. Because these leasing agents provide
similar services to affiliates of our General Partner, including AmREIT, they
face conflicts of interest if they are seeking to lease our properties and
similar properties of its affiliates at the same time. In such an event, the
affiliated leasing agent will seek to mitigate any potential conflict by
presenting a potential tenant with all of the available properties, so that the
potential tenant can select the property with the size, rent, location and
other characteristics most suitable to its needs.

Properties

We
rely on our General Partner and its affiliates in the selection, management and
sale of the properties and do not have independent representation in this
regard. Conflicts of interest could arise in connection with any interests
affiliates of our General Partner may have in a particular property, including
interests it may have as an affiliate of AmREIT in connection with any sale of
a property to AmREIT, and those of the Limited Partners in operating the
Partnership.

Sale
of Properties

Our
General Partner actively manages our Actively Managed properties during the
operating period. During the operating period, our General Partner will sell
our properties from time to time to third-party real estate investors. Our
General Partner may receive compensation in the form of a brokerage commission
for the work performed in the sale of the properties. Because there is potential
for our General Partner to earn a brokerage commission on each property sale,
there is a conflict of interest in that our General Partner may sell a property
simply to earn a brokerage commission, even if it is not in our best interest
or the best interest of the Limited Partners.

No
Arms-Length Agreements

The
compensation payable to our General Partner and its affiliates has not been
determined by arms-length negotiations. Also, a significant
portion of this compensation is payable irrespective of the quality of the
services provided or our success or profitability. There is no assurance that
the amounts or terms of such compensation will not exceed that which would be
paid to unrelated persons under similar circumstances in arms-length
transactions.

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AmREITs
Interests in Other Programs

AmREIT, our
General Partners parent, engages for the account of others in other business
ventures involving real estate development and investment. Moreover, AmREIT or
its affiliates, including our General Partner, may in the future
serve as management for the general partner of other companies or ventures, and acquire, develop and operate real
estate-related activities in the same areas as ours for their own
account. Neither we nor any Limited Partner will be entitled to any interest in
such other ventures.

Transactions
with Affiliates

We
may, from time to time, sell some of our properties to AmREIT. As a result of
the inherent conflict in such a sale, we will only sell a property to AmREIT if
it agrees to pay the market value or the amount of a bona fide final
third-party offer for that property. See Item 1. Business  Disposition
Policies  AmREITs Purchase Rights for a
more detailed description of AmREITs rights. In addition, we may borrow
money from AmREIT or its affiliates. Although our General Partner will only
approve an affiliated borrowing transaction if, in the exercise of its
fiduciary duties, it determines that the terms are fair and reasonable and no
less favorable to us than comparable loans between unaffiliated third parties,
our General Partner could face conflicts of interest in connection with such a
transaction that may not be resolved in the best interests of our Limited
Partners.

In
the event our General Partner or its affiliates receive compensation from us
for any additional services performed on our behalf, such services will only be
provided on terms and conditions no less favorable to us than can be obtained
from independent third parties for comparable services in the same location.
Such services may include, but are not limited to, leasing coordination fees,
construction and construction management fees, including in connection with
renovation and remodeling, and tax appeal fees. The fees for such services, if
provided by affiliates, will be separately itemized and retained in our
records.

Affiliated
Property Manager and Construction Manager

ARIC performs
property management services for all of the properties in which we have an
interest, other than Cambridge Holcombe, and may provide property management
services for properties in which we acquire an interest in the future. ARIC is a wholly owned subsidiary of AmREIT and
the officers of our General Partner are also officers of ARIC. As a
result, we might not always have the benefit of independent property management
to the same extent as if our General Partner and the property manager were unaffiliated. In addition, given that ARIC
is an affiliate of our General Partner, our agreements with ARIC are not
negotiated at arms-length, as they would between unrelated parties.

AmREIT
Construction Company, an affiliate of our General Partner, has historically
provided construction and construction management services for
certain of our development and redevelopment projects. AmREIT Construction
Company provided construction management services for the redevelopment of our
Casa Linda Plaza property in 2009. AmREIT Construction Company has ceased providing
general contracting services. We may engage ARIC, also an affiliate of our
General Partner, in the future for construction management services. As a
result of us using AmREIT Construction Company for these services, we did not
have the benefit of independent
construction management to the same extent as if AmREIT Construction Company had
been unaffiliated. Because ARIC is an affiliate of our General Partner, we do
not have the benefit of arms-length negotiation of any contracts we enter into
with ARIC that would apply between unrelated parties.

Lack
of Separate Representation

Our
legal counsel acts and may in the future act, as counsel to us, our General
Partner, AmREIT and certain of our respective
affiliates. There is a possibility that in the future, the interests of the
various parties may become adverse, and under the Code of Professional
Responsibility of the legal profession, our counsel may be precluded
from representing any one or all of such parties. In the event that a dispute
were to arise between us, our General Partner, AmREIT or any of our respective
affiliates, separate counsel for such matters will be retained as and when
appropriate.

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Tax
Matters Partner

Our
General Partner serves as our tax matters partner and in the event of an audit
of our federal income tax returns by the Internal Revenue Service (IRS) it is
possible that the interests of our General Partner in such an audit could
become inconsistent with or adverse to the interests of the Limited Partners.
Our expenses in contesting any such audit may reduce the amount of cash
available for distribution. Further, our General Partner, who is primarily
responsible for contesting federal income tax adjustments proposed by the IRS,
may be subject to various conflicts of interest in connection with the
negotiation and settlement of issues raised by the IRS in a federal income tax
audit.

Employees

We
have no employees. Our affairs are managed by our General Partner, and our General
Partner and its affiliates provide services
to us related to acquisitions, property management, accounting, investor relations and other administrative services. We
are dependent upon our General Partner and its affiliates for these
services.

See
Item 13. Certain Relationships and Related
Transactions, and Director Independence for a discussion of our
compensation arrangements.

Insurance

We
believe that the properties in which we own an interest are adequately insured.

Competition

As
we purchase properties for our portfolio, we are in competition with other
potential buyers, including the Similar
AmREIT Programs, for the same properties. As a result, we may either have to
pay more to purchase the property
than we would if there were no other potential acquirers or locate another
property that meets our investment criteria. Although our existing
retail properties have an average occupancy of 77% and we have acquired, and
intend to continue to acquire, properties subject to existing leases, the
leasing of real estate is highly competitive,
and we may experience competition for tenants from owners and managers of
competing projects. As a result, we
may have to provide free rent, incur charges for tenant improvements, or offer other inducements, or we might not be able to
timely lease the space, all of which may have an adverse impact on our
results of operations. At the time we elect to dispose of our properties, we
will also be in competition with sellers of similar properties to locate
suitable purchasers for their properties.

Concentration of Credit Risk

As of
December 31, 2010, we had approximately $400,000 invested in a government
security money market account. Such amounts are readily
convertible into cash for use in our operations.

We
have geographic concentration in our property holdings. In particular, as of
December 31, 2010, all of our properties
were located in Texas. We have tenant concentration in our properties. Rental
income generated from Paesanos
Restaurant represents 11% of our 2010 base rents.

Compliance with
Governmental Regulations

Under
various federal and state environmental laws and regulations, as an owner or
operator of real estate, we may be required to investigate and clean up certain
hazardous or toxic substances, asbestos-containing materials, or petroleum
product releases at our properties. We may also be held liable to a
governmental entity or to third parties for property damage and for
investigation and cleanup costs incurred by those parties in connection with
the contamination. In addition, some environmental laws create a lien on the
contaminated site in favor of the government for damages and costs it incurs in
connection with the contamination. The presence of contamination or the failure
to remediate contaminations at any of our properties may adversely affect our
ability to sell or lease the properties or to borrow using the properties as
collateral. We could also be liable under common law to third parties for damages
and injuries resulting from environmental contamination coming from our
properties.

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All
of our properties are acquired subject to satisfactory Phase I environmental
assessments, which generally involve the inspection of site conditions without
invasive testing such as sampling or analysis of soil, groundwater or other
media or conditions; or satisfactory Phase II environmental assessments, which
generally involve the testing of soil, groundwater or other media and
conditions. Our General Partner may determine that we will acquire a property
in which a Phase I or Phase II environmental assessment indicates that a
problem exists and has not been resolved at the time the property is acquired,
provided that (A) the seller has (1) agreed in writing to indemnify us and/or
(2) established an escrow account with predetermined funds greater than the
estimated costs to remediate the problem; or (B) we have negotiated other
comparable arrangements, including, without limitation, a reduction in the
purchase price. We cannot be sure, however, that any seller will be able to pay
under an indemnity we obtain or that the amount in escrow will be sufficient to
pay all remediation costs. Further, we cannot be sure that all environmental
liabilities have been identified or that no prior owner, operator or current
occupant has created an environmental condition not known to us. Moreover, we
cannot be sure that (1) future laws, ordinances or regulations will not impose
any material environmental liability or (2) the current environmental condition
of our properties will not be affected by tenants and occupants of the
properties, by the condition of land or operations in the vicinity of the
properties (such as the presence of underground storage tanks), or by third
parties unrelated to us.

ITEM 1A. RISK FACTORS.

Not
applicable.

ITEM 1B. UNRESOLVED STAFF
COMMENTS.

None.

ITEM 2. PROPERTIES.

Overview

During
the period from October 10, 2006 (inception) through December 31, 2010, we acquired
interests in six properties. We directly own one property and have investments
in five properties through joint venture arrangements. We have included a
description of the types of real estate in which we have invested and will invest, and a summary of our investment policies
and limitations on investment and the competitive conditions in which we
operate under Item 1. Business above. We believe our properties are suitable
for their intended use and are adequately insured.

As
of December 31, 2010, we owned interests in the following properties, all of
which are located in Texas:

|                            |  |             |  |                 |  |                    |   |                         |            |                                              |     |  
|--------------------------- |  | ----------- |  | --------------- |  | ------------------ | - | ----------------------- | ---------- | -------------------------------------------- | --- | -
|Property                    |  | Location    |  | Square
 Footage |  | Percentage
 Leased |   | Annualized Base Rent(1) |            | Percentage
 of
 Total
 Annualized
 Base Rent |    
|Casa Linda Plaza (2)        |  | Dallas      |  | 324,569         |  | 72                 | % | $                       | 3,293,000  |                                              | 28  | %
|Woodlake
 Square (2) (5)    |  | Houston     |  | 205,522         |  | 62                 |   |                         | 1,564,000  |                                              | 13  |  
|Woodlake
 Pointe (3)(7)     |  | Houston     |  | 82,120          |  | 100                |   |                         | 216,000    |                                              | 2   |  
|Cambridge
 Holcombe (2) (4) |  | Houston     |  |                |  |                   |   |                         |           |                                              |    |  
|Shadow Creek
 Ranch (2) (6) |  | Houston     |  | 624,013         |  | 80                 |   |                         | 6,045,000  |                                              | 51  |  
|Village on
 the Green       |  | San Antonio |  | 36,306          |  | 92                 |   |                         | 662,000    |                                              | 6   |  
|Total                       |  |             |  | 1,272,530       |  |                    |   | $                       | 11,780,000 |                                              | 100 | %

|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Annualized
 base rent represents base rents in place on leases with rent having commenced
 as of December 31, 2010 and does not reflect straight-line rent or other
 adjustments under generally accepted accounting principles.

15

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Table of Contents

|    |                                                                                                                                                      | 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(2) | Property is
 owned through a joint venture that is not consolidated in our financial
 statements.                                                   
|    |                                                                                                                                                      | 
|(3) | Property is planned for redevelopment.                                                                                                              
|    |                                                                                                                                                      | 
|(4) | Property is
 vacant land and is planned for development.                                                                                            
|    |                                                                                                                                                      | 
|(5) | Property is currently under redevelopment.                                                                                                          
|    |                                                                                                                                                      | 
|(6) | Square footage for this property includes 27,000 square feet of
 undeveloped pad sites, and therefore, represents proposed leasable square
 footage.
|    |                                                                                                                                                      | 
|(7) | As of
 December 31, 2010 this property was occupied by a tenant with a temporary
 lease.                                                            

Description of Our Real Estate Investments

Casa
Linda Plaza

On
December 8, 2006, through a joint venture arrangement with an affiliate of our
General Partner, AmREIT Monthly Income & Growth Fund III, Ltd., we acquired
a 50% interest in the Casa Linda Plaza property, a 324,569 square foot retail
shopping center located in Dallas, Texas. Our joint venture partner owns the
remaining 50% interest in the joint venture. The property was purchased from an
unaffiliated third-party. We used proceeds from the Offering and obtained a
7-year mortgage loan with a maturity of January 2014 to fund the acquisition of
the Casa Linda Plaza property. The loan was in the amount of $38.0 million,
bears an annual interest rate of 5.48% and is interest-only until maturity.

The
property was 72% leased at December 31, 2010. Albertsons is the largest tenant occupying 59,561 square feet with a
lease scheduled to expire in July 2016. Additional tenants are Petco,
Starbucks, Wachovia, Chilis, Blockbuster, T-Mobile, and Compass Bank. The
property was originally built between 1946 and 1949. During 2008 and 2009, the
Casa Linda Plaza property underwent a substantial renovation that has allowed
the property to maintain its historical character and prominence in the
community, while updating the propertys features. The renovation was completed
in April 2009 at a cost of $7.1 million.

Woodlake
Square

On
August 31, 2007, through a joint venture arrangement with affiliates of our
General Partner, AmREIT Monthly Income & Growth Fund III, Ltd. (MIG
III)
and ARIC, we acquired a 40% interest in the Woodlake Square property, a 205,522
square foot retail shopping center located in Houston, Texas. The property was
purchased from an unaffiliated third party. We used proceeds from the Offering
for our contributed equity and the joint venture obtained a 3-year mortgage
loan from Frost Bank to fund the acquisition of the Woodlake Square property.

In June
2008, we acquired an additional investment interest of 20% in the Woodlake
Square property from an affiliated entity at its net book value. With the additional 20% investment, we owned a 60%
majority interest in this partnership. Our joint venture partners, MIG III and ARIC,
owned the other 40% interest in the joint venture.

In July
2010, we and our affiliated joint venture partners on our Woodlake Square
property, MIG III and ARIC, entered into a joint venture
agreement with a third party on our Woodlake Square property. As part of this transaction, we and our
affiliates sold 90% of our interest in the property and retained a 10%
ownership interest, which carries a promoted interest in cash flows once an
11.65% preferred return threshold is met on the project. Prior to the transaction,
we owned a 60% interest in the property, and we own a 6% interest,
post-transaction. We recorded an impairment
of approximately $618,000 which has been recorded as impairment in our
consolidated statements of operations. The
sale generated cash proceeds of approximately $3.4 million (our share was
approximately $2.0 million), and we, our affiliated partners, and our third
party joint venture partner are responsible for funding our pro rata amount of
the redevelopment costs on the project, which are currently estimated to be
approximately $8.0 million. Additionally, as part of the transaction,
the $23.8 million loan on the property, which was due to mature in September
2010, was paid in full at closing. The new entity in which we now own a 6%
interest, VIF II/AmREIT Woodlake L.P., is the borrower on the new $20.9 million
loan, which has a 3-year term with two one-year extension options, provided
certain conditions are met. We, along with our affiliate, MIG III are joint and
several repayment guarantors on the loan. As a result of our reduced ownership
interest and decision-making ability, we no longer have a controlling financial
interest in the property. In accordance with Accounting Standards
Codification (ASC) 810, we deconsolidated this property as of the date of the
transaction and began accounting for the property under the equity method of
accounting.

16

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Table of Contents

Redevelopment
of the property began in July 2010 and the total cost of the project is
estimated to be $8.0 million. The former Randalls building has been demolished
and the pad site was turned over to Randalls on time and within budget. The
redevelopment is on track to be completed in April 2011. The property was 62% leased at December 31,
2010. Randalls, the largest tenant, signed a new lease in January 2010 that
expires in 2035. Additional tenants are Walgreens, Jos. A. Bank Clothiers,
Ragin Cajun, and Woodlake Childrens Center.

Woodlake
Pointe

On
November 21, 2007, through a joint venture arrangement with affiliates of our
General Partner, AmREIT Monthly Income & Growth Fund III, Ltd. and ARIC, we
acquired a 40% interest in AmREIT Westheimer Gessner, LP, which owns the
Woodlake Pointe property, a 82,120 square foot retail shopping center located
in Houston, Texas. The property was purchased from an unaffiliated third party.
We used proceeds from the Offering for our contributed equity and the joint
venture paid cash for the acquisition of the Woodlake Pointe property.

In
May 2008, through the same joint venture arrangement with affiliates of our
General Partner, AmREIT Monthly Income and Growth Fund III, Ltd. and ARIC, we
acquired a 60% interest in a tract of land adjacent to the Woodlake Pointe
property. Our joint venture partners own the other 40% interest in the
property. The acquisition is accounted for as part of AmREIT Westheimer
Gessner, L.P. We used proceeds from the Offering to finance the acquisition.

In June
2008, we acquired an additional investment interest of 20% in the Woodlake
Pointe property from an affiliated entity at its net book value. With the additional 20% investment, we own a 60%
majority interest in this partnership. Our joint venture partners, AmREIT Monthly
Income & Growth Fund III, Ltd. and ARIC, own the other 40% interest in the
joint venture.

We are currently evaluating options to
redevelop this property. Louis Shanks was our sole tenant during the 2010 period. Because this property is under
redevelopment, we recorded rental income as a reduction to the basis of the asset. The Louis Shanks lease represented a
temporary lease that expired in January 2011. We are in the anchor leasing stage of development and currently are under
letter of intent with a large national fitness tenant for a 45,000 square foot building on the unimproved land and are in
discussions with an anchor tenant for the existing building. Phase I of the redevelopment is expected to commence in July
2011.

Cambridge
Holcombe

On December 31, 2007, we acquired a 50% interest
in the Cambridge Holcombe property through a joint venture arrangement with an unaffiliated third party. This vacant land is
located in the Texas Medical Center in Houston, Texas. Our joint venture partner owns the other 50% interest in the joint
venture. The property was purchased from an unaffiliated third party. We used proceeds from the Offering for our contributed
equity and the joint venture paid cash for the acquisition of the Cambridge Holcombe property. We are in the initial stages
of planning this propertys development. Due to the downturn in the real estate market, in particular for raw land,  an
impairment test was performed during 2010. We recorded an impairment of approximately $2.6 million on this investment which
has been recorded as a component of equity in losses from non-consolidated subsidiaries in our consolidated statements of
operations. During 2011, the joint venture defaulted on its loan in the amount of $8.1 million which was due to mature in
June 2011. The lender currently has the right to foreclose on the property. We are currently in discussions with the lender,
and they have indicated preliminarily that they are willing to defer a portion of the interest payments and extend the
agreement through April 2012. However, there is no formal agreement in place with the lender to that effect and no assurance
can be given that such an agreement will ultimately be consummated.

Shadow
Creek Ranch

On February
29, 2008, through a joint venture
arrangement with an unaffiliated third party and ARIC, we acquired a 10%
interest in the Shadow Creek Ranch property, a 624,013 square foot retail
shopping center located in Pearland, Texas. Our joint venture partners own the
other 90% interest in the venture. The
property was purchased from an unaffiliated third party. We used
proceeds from the Offering and obtained a 7-year mortgage loan from Metropolitan Life Insurance Company to
fund the acquisition of the Shadow Creek Ranch property. The loan was in the
amount of $65.0 million and bears an annual interest rate of 5.48% until its
maturity in March 2015.

17

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Table of Contents

The
development of the Shadow Creek Ranch shopping center was completed in the
first quarter of 2008. Approximately 27,000 square feet of land remains to be
developed into pad sites next to the shopping center. The major tenants of the
Shadow Creek Ranch property include H-E-B Grocery as the largest tenant
occupying 150,615 square feet, Academy Sports & Outdoors, Ashley Furniture,
and Hobby Lobby. We acquired this
property with the expectation that it would provide a stable stream of rental
income once it achieved lease-up.

Village
on the Green

On March
25, 2008, through our wholly-owned special purpose entity, AmREIT
VOG, LP, we purchased a 100% interest in the
Village on the Green property, a 36,306 square foot retail shopping
center located in San Antonio, Texas. The property was purchased from an
unaffiliated third party. We used proceeds from the Offering and assumed a
10-year mortgage loan in the amount of $6.2 million that bears an annual
interest rate of 5.52%, with a maturity of April 2017, to fund the acquisition
of the Village on the Green property.

As
of December 31, 2010, major tenants of the Village on the Green property
include Paesanos Restaurant as the largest tenant occupying 8,300 square feet,
Theo & Herb Designer Shoes, Alamo Heights Pediatrics, and Rouse Dental
Office. We acquired this property
with the expectation that it would provide a stable stream of rental income. We
currently do not have plans to renovate or redevelop the Village on the Green
property.

Portfolio Information

The
following table shows our five highest tenant industry concentrations for each
property in which we own an interest as of December 31, 2010:

|                 |  |                           |  |                        |  |                                            |           |  |  |      |   | 
|---------------- |  | ------------------------- |  | ---------------------- |  | ------------------------------------------ | --------- |  |  | ---- | - | 
|Industry         |  | Total
 Number of
 Tenants |  | Annualized
 Base
 Rent |  | Percentage of
 Total
 Annualized Base Rent |          
|Specialty Retail |  | 27                        |  |                        |  | $                                          | 3,034,000 |  |  | 25.8 | % | 
|Dining           |  | 31                        |  |                        |  |                                            | 2,459,000 |  |  | 20.9 | % | 
|Grocery          |  | 6                         |  |                        |  |                                            | 1,703,000 |  |  | 14.5 | % | 
|Health & Beauty  |  | 23                        |  |                        |  |                                            | 1,068,000 |  |  | 9.1  | % | 
|Banking          |  | 9                         |  |                        |  |                                            | 841,000   |  |  | 7.1  | % | 

The
following table shows our tenants which occupy 10% or more of the rentable
square feet for each property in which we own an interest and the lease
expirations of such tenants as of December 31, 2010, assuming no exercise of
renewal option or termination rights.

|                          |  |          |                   |                        |         |                                                           |  |                            |   |  |      |  | 
|------------------------- |  | -------- | ----------------- | ---------------------- | ------- | --------------------------------------------------------- |  | -------------------------- | - |  | ---- |  | 
|Property                  |  | Industry |                   | Rentable
 Square
 Feet |         | Percentage
 of
 Total Rentable
 Square Feet for
 Property |  | Year of
 Lease
 Expiration |  
|Casa Linda Plaza          |  |          |                   |                        |         |                                                           |  |                            |   |  |      |  | 
|Albertsons               |  |          | Grocery           |                        | 59,561  |                                                           |  | 18                         | % |  | 2016 |  | 
|Woodlake Square           |  |          |                   |                        |         |                                                           |  |                            |   |  |      |  | 
|Randalls Food & Drug     |  |          | Grocery           |                        | 56,430  |                                                           |  | 27                         |   |  | 2035 |  | 
|Woodlake Pointe           |  |          |                   |                        |         |                                                           |  |                            |   |  |      |  | 
|Louis Shanks of Texas (1) |  |          | Furniture
 Retail |                        | 82,120  |                                                           |  | 100                        |   |  | 2011 |  | 
|Shadow Creek Ranch        |  |          |                   |                        |         |                                                           |  |                            |   |  |      |  | 
|H-E-B Grocery             |  |          | Grocery           |                        | 150,615 |                                                           |  | 24                         |   |  | 2027 |  | 
|Academy Sports & Outdoors |  |          | Sporting
 Goods   |                        | 85,584  |                                                           |  | 14                         |   |  | 2022 |  | 
|Village on the Green      |  |          |                   |                        |         |                                                           |  |                            |   |  |      |  | 
|Paesanos Restaurant      |  |          | Dining            |                        | 8,300   |                                                           |  | 23                         |   |  | 2014 |  | 
|Alamo Heights Pediatrics  |  |          | Healthcare        |                        | 3,900   |                                                           |  | 11                         |   |  | 2015 |  | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(1) | This
 property is under development, and this lease represents a temporary lease
 that expired in January 2011. Because this property is under redevelopment,
 we recorded rental income as a reduction to the basis of the asset. We are in
 the anchor leasing stage of development and currently are under letter of
 intent with a large national fitness tenant for a 45,000 square foot building
 on the unimproved land and are in discussions with an anchor tenants for the
 existing building and pads. Phase I of the redevelopment is expected to
 commence in the middle of 2011.

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Table of Contents

The
following table shows lease expirations for our two consolidated properties as
of December 31, 2010, during each of the next ten years and thereafter,
assuming no exercise of renewal options or termination rights.

|                          |  |                         |    |                       |  |                       |  |                                            |         |  |  |     |  
|------------------------- |  | ----------------------- | -- | --------------------- |  | --------------------- |  | ------------------------------------------ | ------- |  |  | --- | -
|Year of
 Lease Expiration |  | Total Number
 of Leases |    | Rentable
 Square Feet |  | Annualized
 Base Rent |  | Percentage of
 Total Annualized
 Base Rent |        
|2011 (1)                  |  |                         | 7  |                       |  | 91,418                |  | $                                          | 378,000 |  |  | 43  | %
|2012                      |  |                         | 3  |                       |  | 4,223                 |  |                                            | 84,000  |  |  | 9   |  
|2013                      |  |                         | 1  |                       |  | 1,355                 |  |                                            | 24,000  |  |  | 3   |  
|2014                      |  |                         | 2  |                       |  | 9,538                 |  |                                            | 226,000 |  |  | 26  |  
|2015                      |  |                         | 4  |                       |  | 9,044                 |  |                                            | 166,000 |  |  | 19  |  
|2016                      |  |                         |   |                       |  |                      |  |                                            |        |  |  |    |  
|2017                      |  |                         |   |                       |  |                      |  |                                            |        |  |  |    |  
|2018                      |  |                         |   |                       |  |                      |  |                                            |        |  |  |    |  
|2019                      |  |                         |   |                       |  |                      |  |                                            |        |  |  |    |  
|2020                      |  |                         |   |                       |  |                      |  |                                            |        |  |  |    |  
|Thereafter                |  |                         |   |                       |  |                      |  |                                            |        |  |  |    |  
|Totals                    |  |                         | 17 |                       |  | 115,578               |  | $                                          | 878,000 |  |  | 100 | %

| |     |                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------
| | (1) | Includes the expiration of a short term
 lease with Louis Shanks of Texas for 82,120 square feet at Woodlake Pointe.

The following table shows lease expirations for our four non-consolidated
properties as of December 31, 2010, during each of the next ten years and
thereafter, assuming no exercise of renewal options or termination rights.

|                          |  |                         |     |                       |  |                       |  |                                            |            |  |  |     |  
|------------------------- |  | ----------------------- | --- | --------------------- |  | --------------------- |  | ------------------------------------------ | ---------- |  |  | --- | -
|Year of
 Lease Expiration |  | Total Number
 of Leases |     | Rentable
 Square Feet |  | Annualized
 Base Rent |  | Percentage of
 Total Annualized
 Base Rent |           
|2011                      |  |                         | 19  |                       |  | 45,704                |  | $                                          | 786,000    |  |  | 7   | %
|2012                      |  |                         | 21  |                       |  | 57,332                |  |                                            | 1,053,000  |  |  | 10  |  
|2013                      |  |                         | 23  |                       |  | 104,595               |  |                                            | 1,324,000  |  |  | 12  |  
|2014                      |  |                         | 11  |                       |  | 28,281                |  |                                            | 662,000    |  |  | 6   |  
|2015                      |  |                         | 20  |                       |  | 61,517                |  |                                            | 1,170,000  |  |  | 11  |  
|2016                      |  |                         | 7   |                       |  | 76,235                |  |                                            | 550,000    |  |  | 5   |  
|2017                      |  |                         |    |                       |  |                      |  |                                            |           |  |  | 0   |  
|2018                      |  |                         | 8   |                       |  | 25,449                |  |                                            | 667,000    |  |  | 6   |  
|2019                      |  |                         | 6   |                       |  | 44,844                |  |                                            | 677,000    |  |  | 6   |  
|2020                      |  |                         | 2   |                       |  | 8,710                 |  |                                            | 247,000    |  |  | 2   |  
|Thereafter                |  |                         | 16  |                       |  | 409,407               |  |                                            | 3,765,000  |  |  | 35  |  
|Totals                    |  |                         | 133 |                       |  | 862,074               |  | $                                          | 10,901,000 |  |  | 100 | %

As
of December 31, 2010, we have invested substantially all of the net proceeds of
the Offering in real properties. We have approximately $1.3 million in cash and
cash equivalents to be used for capital expenditures on existing properties or
for working capital. As of December 31, 2010, we have not disposed of any
property.

ITEM 3. LEGAL PROCEEDINGS.

In the
ordinary course of business, we may become subject to litigation or claims.
Neither we nor our properties
are the subject of any non-routine pending legal proceeding, nor are we aware
of any proceeding that a governmental authority is contemplating against
us.

ITEM 4. REMOVED AND RESERVED.

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Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market
Information and Holders

On November
15, 2006, we commenced the Offering. We closed the offering on March 31, 2008 and, as of that date, we had raised aggregate gross proceeds of
approximately $49.7 million through the sale of 1,991 Units to 764 Limited
Partners. As of March 31, 2011, we have 1,988 Units outstanding, held by 766
Limited Partners.

There is no
established public trading market for our Units. As of December 31, 2010 none
of the Units were subject to any outstanding options or warrants, and we had
not issued any securities convertible into our Units. The Units, which are
restricted securities as defined
in Rule 144 promulgated by the SEC under the Securities Act, must be held
indefinitely unless they are subsequently registered under the Securities Act
and any applicable state securities laws or unless, upon the advice of counsel satisfactory to us, the Units
are sold in a transaction that is exempt from the registration requirements of such laws. As of
December 31, 2010, no Units were eligible for sale under Rule 144 or that we have agreed to register under
the Securities Act for sale by Limited Partners and there were no Units
that are being, or have been publicly proposed to be, publicly offered by us.
No Units have been sold since we closed the Offering on March 31, 2008.

Distributions

The
following table shows the distributions to our Limited Partners our General
Partner has declared (including the total amount paid and the
amount paid on a per Unit basis) from the last two fiscal years ended December
31, 2009 and December 31, 2010:

|                |  |                                      |         |                        |  |       | 
|--------------- |  | ------------------------------------ | ------- | ---------------------- |  | ----- | 
|Period Paid (1) |  | Total
 Amount of
 Distributions Paid |         | Distribution
 Per Unit | 
|January 2009    |  |                                      | 124,436 |                        |  | 62.50 | 
|February
 2009  |  |                                      | 124,436 |                        |  | 62.50 | 
|March 2009      |  |                                      | 124,436 |                        |  | 62.50 | 
|April 2009      |  |                                      | 124,436 |                        |  | 62.50 | 
|May 2009        |  |                                      | 124,268 |                        |  | 62.50 | 
|June 2009       |  |                                      | 124,268 |                        |  | 62.50 | 
|July 2009       |  |                                      | 124,185 |                        |  | 62.50 | 
|August 2009     |  |                                      |        |                        |  |      | 
|September
 2009 |  |                                      |        |                        |  |      | 
|October 2009    |  |                                      |        |                        |  |      | 
|November
 2009  |  |                                      |        |                        |  |      | 
|December
 2009  |  |                                      |        |                        |  |      | 
|January 2010    |  |                                      |        |                        |  |      | 
|February
 2010  |  |                                      |        |                        |  |      | 
|March 2010      |  |                                      |        |                        |  |      | 
|April 2010      |  |                                      |        |                        |  |      | 
|May 2010        |  |                                      |        |                        |  |      | 
|June 2010       |  |                                      |        |                        |  |      | 
|July 2010       |  |                                      |        |                        |  |      | 
|August 2010     |  |                                      |        |                        |  |      | 
|September
 2010 |  |                                      |        |                        |  |      | 
|October 2010    |  |                                      |        |                        |  |      | 
|November
 2010  |  |                                      |        |                        |  |      | 
|December
 2010  |  |                                      |        |                        |  |      | 
|                |  |                                      |         |                        |  |       | 
|Total           |  | $                                    | 870,465 |                        |  |       | 

| |     |                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Distributions
 were paid 15 days in arrears. Distributions above, paid between January 2008
 and July 2009 were declared between December 2007 and June 2009.

20

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Table of Contents

We declared
monthly distributions to our Limited Partners at a rate of 7.5% per annum from
January 2007 through November 2008. Beginning in December 2008
through June 2009, we declared a distribution of 3.0% per annum on invested
capital. We suspended all distribution payments in July 2009, and we do not
plan to resume the payment of distributions until improvements in the real
estate and liquidity markets warrant such payment. All distributions to date have been a return of capital. One
of our primary business goals is to pay regular (monthly) distributions to our Limited Partners. The source of our
distributions has been cash flows from operating activities as well as from our
capital-raising activities. The
funds we receive from operations that are available for distribution may be
affected by a number of factors, including the following:

| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | our
 operating and interest expenses;                                                              
| |   |                                                                                                    
| |  | the ability
 of tenants to meet their obligations under the leases associated with our
 properties;
| |   |                                                                                                    
| |  | our ability
 to keep the properties in which we have investments leased;                           
| |   |                                                                                                    
| |  | our ability
 to maintain or increase rental rates when renewing or replacing current
 leases;      
| |   |                                                                                                    
| |  | capital
 expenditures and reserves for such expenditures;                                          
| |   |                                                                                                    
| |  | the issuance
 of additional shares; and                                                            
| |   |                                                                                                    
| |  | financings
 and refinancings.                                                                      

We
qualified as a partnership for federal income tax purposes commencing with our
taxable year ended December 31, 2006. For income tax purposes,
distributions to our Limited Partners are characterized as ordinary income,
capital gains, or as a return of a Limited Partners invested capital.

Since
our inception, we have redeemed three Units. As of June 30, 2009, we suspended
all future redemptions of Units.

ITEM 6. SELECTED FINANCIAL DATA.

Not
applicable.

ITEM 7. 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. See also
Cautionary Note Regarding Forward Looking Statements preceding Item
1. Business.

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Overview

We are a
Delaware limited partnership formed on October 10, 2006 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 throughout the Southern and
Southwestern 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 & Growth IV Corporation,
our General Partner, pursuant
to our Partnership Agreement. Our General Partner is a wholly-owned subsidiary
of AmREIT, Inc., an SEC reporting, non-traded Maryland corporation that
has elected to be taxed as a real estate investment trust (AmREIT). Our General Partner has contributed $1,000 to us
for its general partner interest and has contributed $800,000 to us in exchange for Units. The remaining Units
are held by other Limited Partners. We qualify as a partnership for federal
income tax purposes.

We
derive a substantial portion of our revenue from rental income from our
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
years ended December 31, 2010 and 2009. As of December 31, 2010, our properties
had an average occupancy of 77%, and the average debt leverage ratio of the
properties in which we have an investment was approximately 60%, with 85% of
such debt carrying a fixed rate of interest.

We
commenced our principal operations on December 8, 2006 when we acquired our
first interest in a property. On January 12, 2007, we accepted subscriptions
for the minimum offering of $1.0 million
(the Offering) pursuant to the terms of our Offering Memorandum dated
November 15, 2006 (the Offering Memorandum)
and issued the initial 40 limited partnership units (the Units). We closed
the offering on March 31, 2008 when we had received $49.7 million from the sale of 1,991 Units.

As
of December 31, 2010, we directly owned one property comprising 36,000 square
feet of gross leasable area and owned joint venture interests in five
additional properties comprising 1,237,000 square feet of gross leasable area.
As of December 31, 2010, we invested substantially all of the net proceeds of
the Offering in real properties. We have approximately $1.3 million in cash and
cash equivalents that may be used for capital expenditures on existing
properties or for working capital. All of our properties are located in highly
populated, suburban communities in Texas.

Our
Units were sold pursuant to exemptions from registration under the Securities
Act of 1933, as amended (the 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 if
they are transferred 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.

Selecting
properties with high quality tenants and mitigating risk through diversifying
our tenant base is at the forefront of our acquisition and leasing strategy. We
believe our strategy of purchasing premier retail properties in high-traffic,
highly-populated areas will produce stable earnings and growth opportunities in
future years.

Given
the current economic environment we decided to cease distributions beginning
July 1, 2009. We will continue to monitor the real estate market to determine
if it is in our Partners best interest to reinstate dividends at any point in
the future. We believe the real estate market will rebound prior to our
expected liquidation commencement date in November 2013; however, we will seek
to postpone liquidation if we feel it is not in the best interests of the
Partners at that time.

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Summary of Critical Accounting Policies

Our results
of operations and financial condition, as reflected in the accompanying
consolidated financial
statements and related footnotes, are subject to managements evaluation and
interpretation of business
conditions, retailer performance, changing capital market conditions and other
factors, which could affect the
ongoing viability of our tenants. Management believes the most critical
accounting policies in this regard
are revenue recognition, regular evaluation of whether the value of a real
estate asset has been impaired, accounting for the investment in real estate
assets, accounting for the investment in non-consolidated entities, allowance
for uncollectible accounts, accounting for real estate acquisitions, and
accounting for derivative financial instruments. We evaluate our assumptions and estimates on an on-going basis.
We base our estimates on historical experience as well as various other
assumptions that we believe to be reasonable under the circumstances. Actual
results could vary from those estimates, perhaps in material adverse ways, and
those estimates could be different under different assumptions or conditions.

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. 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 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). We defer the recognition of contingent or percentage rental
income until the specific targets as defined in lease agreements that
trigger the contingent or percentage rental income are achieved. Cost
recoveries from tenants are included in rental income in the period the related
costs are incurred.

Valuation
of Real Estate Assets

We
continually monitor events and changes in circumstances that could indicate
that the carrying amounts of our real estate assets, including accrued rental
income, may not be recoverable through operations. When indicators of potential
impairment are present that indicate that the carrying amounts of real estate
and related intangible assets may not be recoverable, we assess the
recoverability of the assets by determining whether the carrying value of the
assets will be recovered through the undiscounted future operating cash flows
expected from the use of the assets and their eventual disposition. If
impairment is indicated, a loss will be recorded for the amount by which the
carrying value of the asset exceeds its estimated 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.

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Investment
in Real Estate Assets

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.

We
are required to make subjective assessments as to the useful lives of our
depreciable assets. We consider the period of future benefit of the asset to
determine the appropriate useful lives. These assessments, which are based on
estimates, have a direct impact on net income. Depreciation is computed using
the straight-line method over an estimated useful life of up to 36 years for
buildings, up to 11 years for site improvements and over the life of the lease
for tenant improvements and intangible lease costs.

Investment
in Non-consolidated Entities

As of
December 31, 2010, we had ownership interests in five real estate properties
through ownership interests in joint ventures. Although we exercise significant
influence over the activities of these properties, we do not have a controlling
financial interest in four of the five joint ventures. Accordingly, our joint
venture interests in these four properties are reported under the equity method
of accounting pursuant to U.S. generally accepted accounting principles. Our
joint ventures recognize revenues from rents and tenant reimbursements in the
same manner as discussed in the Revenue Recognition section above and account
for real estate acquisitions in accordance with ASC 805, Business Combinations,
as discussed in the Real Estate Acquisitions section below.

We
review our investments in non-consolidated entities for other-than-temporary
impairment. Accordingly, we review the investments held by the underlying
investee entities 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 investment, with the carrying value of the individual investment. 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
investment. We have not incurred any impairment losses since our inception on
the investments in our non-consolidated entities. However, as discussed
in Note 4, our joint venture that holds the Cambridge Holcombe property recorded an impairment during the
year ended December 31, 2010. Our portion of such impairment was approximately
$2.6 million and was recorded in equity in losses from non-consolidated subsidiaries.
No impairment charges were recognized during the years ended December 31, 2009, and 2008.

Valuation
of Receivables

We
determine an appropriate allowance for the uncollectible portion of tenant
receivables and accounts receivable based upon an analysis of balances
outstanding, historical payment history, tenant credit worthiness, additional
guarantees and other economic trends. Balances outstanding include base rents,
tenant reimbursements and receivables attributed to the accrual of straight
line rents. Additionally, we consider estimates of the expected recovery of
pre-petition and post-petition claims with respect to tenants in bankruptcy in
our assessment of the likelihood of collecting the related receivables.

Real
Estate Acquisitions

We
account for real estate acquisitions pursuant to Accounting Standards
Codification (ASC) 805, Business
Combinations. We expense
acquisition costs associated with operating properties as incurred. We capitalize costs associated with pending
acquisitions of raw land as incurred. Such costs are expensed if and when such
land acquisition becomes no longer probable. Accordingly, we
allocate the purchase price of the acquired 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 relationships, if any.

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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
market leases and in-place lease value are recorded as acquired lease
intangibles and are amortized as an adjustment to rental revenue or
amortization expense, as appropriate, over the remaining terms of the
underlying leases. Below market lease amortization includes fixed-rate renewal
periods. Any premiums or discounts on acquired out-of-market debt are amortized
to interest expense over the remaining term of such debt.

Derivative
Financial Instruments

We
account for our derivative financial instruments pursuant to ASC 815, Derivatives
and Hedging. ASC 815 requires that all derivative instruments,
whether designated in hedging relationships or not, be recorded on the balance
sheet at their fair value. Gains or losses resulting from changes in the values
of those derivatives are accounted for depending on the use of the derivative
and whether it qualifies for hedge accounting. Our use of derivative financial
instruments to date has been limited to the use of interest rate swaps to
mitigate our interest rate risk on variable-rate debt. We have designated these
interest rate swaps as cash flow hedges for financial reporting purposes.

ASC
815 requires that changes in fair value of derivatives that qualify as cash
flow hedges be recognized in other comprehensive income (OCI) while the
ineffective portion of the derivatives change in fair value be recognized in
the statement of operations as interest expense. Upon the settlement of a
hedge, gains and losses associated with the transaction are recorded in OCI and
amortized over the underlying term of the hedge transaction. We assess, both at
inception of the hedge and on an ongoing basis, whether the derivatives that
are used in hedging transactions are highly effective in offsetting changes in
the cash flows of the hedged items. In assessing the hedge, we use standard
market conventions and techniques such as discounted cash flow analysis, option
pricing models and termination costs at each balance sheet date. All methods of
assessing fair value result in a general approximation of value, and such value
may never actually be realized.

Recently Issued Accounting Pronouncements

In
June 2009, the Financial Accounting Standards Board (the FASB) amended the
consolidation guidance applicable to variable interest entities in ASC 810, Consolidation.
The amendments will 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 in
Statement of Financial Accounting Standards (SFAS) No.166. We adopted the
provisions of ASC 810 on January 1, 2010. The adoption of SFAS 167 did not have
an effect on our results of operations or financial position.

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Factors Which May Influence Results of
Operations

Rental
Income

The
amount of rental income generated by our properties depends principally on our
ability to maintain the occupancy rates of currently leased space and to lease
currently available space and space available from unscheduled lease
terminations at levels not less than the existing rental rates. Negative trends
in one or more of these factors could adversely affect our rental income in
future periods.

Scheduled
Lease Expirations

During
2011, 79.1% of the total square footage of our consolidated properties is
scheduled to expire (89.8% of which is related to the expiration of a short
term lease with Louis Shanks of Texas for 82,120 square feet at Woodlake
Pointe), and 5.3% of the total square footage of our non-consolidated
properties is scheduled to expire. Our leasing strategy for 2011 focuses on
negotiating renewals for leases scheduled to expire during the year and
identifying new tenants or existing tenants seeking additional space to occupy
the square footage for which we are unable to negotiate such renewals.

Results of Operations

We
commenced our principal operations on December 8, 2006 when we acquired our
first interest in a property. On January 12, 2007 we accepted subscriptions for
the minimum offering of $1.0 million pursuant to the terms of our Offering
Memorandum and issued the initial 40 Units to investors. During 2007, we made
investments in three joint ventures through which we obtained an ownership
interest in three properties. During 2008, we acquired a direct interest in one
property on March 25, 2008, made an investment in a joint venture through which
we obtained an ownership interest in one property and made additional
investments in two joint ventures through which we obtained additional
ownership interests in two properties. As of
December 31, 2010, our investments included a wholly-owned property comprised
of approximately 36,000 square feet of gross leasable area, the property in
which we owned controlling interest comprised of approximately 82,000 square
feet of gross leasable area and four properties in which we owned investment
interests through joint ventures comprised of approximately 1,154,000 square
feet of gross leasable area.

Comparison of the
year ended December 31, 2010 to the year ended December 31, 2009

Revenue.Revenue decreased
approximately $2.4 million for the year ended December 31, 2010 as compared to
the same period in 2009 ($2.5 million in 2010 versus $4.9 million in 2009). The
decrease is primarily due to the deconsolidation of Woodlake Square in July
2010. The decrease is also due to a reduction in rental income from Woodlake
Pointe due to reduced occupancy rates and reduced recoverable property
expenses.

Property
Expense.Property
expense decreased $680,000 for the year ended December 31, 2010 as compared to
the same period in 2009 ($987,000 in 2010 versus $1.7 million in 2009). The
decrease was primarily due to the deconsolidation of Woodlake Square in July
2010. The decrease was also due to a
decrease in property tax expense on Woodlake Pointe. We began capitalizing
property taxes on Woodlake Pointe during 2010 as it is planned for a major
redevelopment.

Property
Management Fees  Related Party.Property management fees  related party
decreased $108,000 for the year ended December 31, 2010 as compared to the same
period in 2009 ($90,000 in 2010 versus $198,000 in 2009). Property
management fees are calculated based on tenant billings, which have decreased due to reduced occupancy
rates at Woodlake Square and Woodlake Pointe. The decrease was also due
to the deconsolidation of Woodlake Square in July 2010.

Legal
and Professional Fees.Legal and professional fees
decreased approximately $37,000 for
the year ended December 31, 2010 as compared to the same period in 2009
($223,000 in 2010 versus $260,000 in 2009). The decrease in costs was
primarily attributable a decrease in audit-related fees.

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Depreciation
and Amortization Expense.Depreciation and
amortization expense increased approximately $4.7 million for the year ended December 31, 2010 as
compared to the same period in 2009 ($7.6 million in 2010 versus $2.9 million in 2009). This increase was due to
the redevelopment of the Woodlake Square property. We reassessed and shortened
the estimated useful lives of various buildings consistent with our plan to
demolish such buildings as part of the redevelopment. The redevelopment
commenced in July 2010 and is on schedule to be completed in April 2011. We
deconsolidated this property in July 2010 and, as such, depreciation and amortization
of this entity are no longer reported in our consolidated operations.

Impairment.
As discussed further in Note 11 to the accompanying consolidated financial
statements, we incurred a $618,000 impairment on our investment in the Woodlake
Square property in July 2010.

Interest
Expense.Interest expense decreased approximately
$914,000 for the year ended December
31, 2010 as compared to the same period in 2009 ($854,000 in 2010 versus $1.8
million in 2009). The decrease was primarily due to the deconsolidation
of Woodlake Square in July 2010 offset by $260,000 in accumulated other
comprehensive gain that was reclassified to and reduced interest expense during
2010 due to the termination of the interest rate swap on Woodlake Square.

Equity
in Losses From Non-Consolidated Entities.Loss from
non-consolidated entities increased approximately $2.4 million for the year ended December 31, 2010 as
compared to the same period in 2009 ($3.6 million in 2010 versus $1.2 million
in 2009). These amounts represent our ownership portion of our joint
ventures net income or loss for the period. The increased loss is attributable
to our portion of the impairment  loss that was recognized on our Cambridge Holcombe property, partially
offset by a decreased net loss on our Shadow Creek Ranch and Casa Linda
properties due to increased occupancy.

Net
Loss Attributable to Non-controlling Interests. Net
loss attributable to non-controlling interests increased approximately $2.5
million for the year ended December
31, 2010 as compared to the same period in 2009 ($3.1 million in 2010 versus
$590,000 in 2009). This increase was primarily due to the additional
loss on our Woodlake Square property due to the accelerated depreciation and
amortization recorded as a result of the redevelopment that commenced in July
2010. This increase was also due to recording the non-controlling interests
share of the impairment recognized on our investment in the Woodlake Square
property in connection with the July 2010 transaction with a third-party joint
venture partner. The increased net loss on Woodlake Square was partially offset
by the reclassification of the deferred gain in accumulated other comprehensive
income into earnings due to the termination of our hedge.

Comparison of the year
ended December 31, 2009 to the year ended December 31, 2008

Revenue.Revenue decreased
approximately $300,000 for the year ended December 31, 2009 as compared to the
same period in 2008 ($4.9 million in 2009 versus $5.2 million in 2008).
The decrease was primarily due to decreased revenue from Woodlake Square due to
tenant move outs related to lease expirations and reduced recoverable property
expenses. As we are in the early stages of redeveloping this property, we have
not aggressively pursued lease renewals related to lease expirations.

General
and Administrative.General and administrative expenses decreased approximately $30,000 for
the year ended December 31, 2009 as compared to the same period in 2008
($79,000 in 2009 versus $109,000 in 2008). This decrease was primarily due to a decrease in marketing costs and
Directors and Officers insurance costs over the prior year.

General
and Administrative  Related Party.General and administrative  related party
expenses paid to our affiliate increased approximately $205,000 for the year
ended December 31, 2009 as compared to the same period in 2008 ($337,000 in
2009 versus $132,000 in 2008). This increase was due to an increase in the
compensation pool and to an increase in the allocation of those costs during
the period to better reflect the level of effort expended by our affiliates
financial personnel in providing accounting and financial reporting services to
us.

Legal
and Professional Fees.Legal and professional fees
decreased approximately $197,000 for
the year ended December 31, 2009 as compared to the same period in 2008
($260,000 in 2009 versus $457,000 in 2008). The decrease in costs was
primarily attributable a decrease in due diligence costs incurred related to
potential transactions that ultimately were not closed.

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Depreciation
and Amortization Expense.Depreciation and
amortization expense decreased approximately $400,000 for the year ended December 31, 2009 as compared to the same period in
2008 ($3.0 million in 2009 versus $3.4 million in 2008). This decrease
was due to a decrease in intangible lease cost amortization on Woodlake Square
due to these costs becoming fully amortized during the year. This decrease was
partially offset by an increase in depreciation and amortization expense on
Village on the Green since the property was acquired in March 2008.

Loss
on Derivative. Loss on derivative of approximately
$415,000 during the year ended December 31, 2008 represents the net change in
fair value of our interest rate swap on the variable-rate loan secured by
Woodlake Square. The interest rate swap was designated as a hedge on October 1,
2008. Therefore, changes in fair value prior to that date were recorded to
income. The net change in fair value subsequent to October 1, 2008 is reported
through accumulated other comprehensive income.

Interest
and Other Income. Interest and other income decreased
approximately $247,000 for the year
ended December 31, 2009 as compared to the same period in 2008 ($16,000 in 2009
versus $263,000 in 2008). This decrease was primarily due to a lower
balance of investable funds as these funds were withdrawn and invested in
Shadow Creek Ranch, Woodlake Square, Woodlake Pointe, Village on the Green, and
Casa Linda. We invest our excess cash in short-term investments until properties suitable
for acquisition can be identified and acquired.

Interest
Expense.Interest expense increased approximately
$88,000 for the year ended December
31, 2009 as compared to the same period in 2008 ($1.8 million in 2009 versus
$1.7 million in 2008). The increase in interest expense is related to
the notes payable on Village on the Green, which we acquired in March 2008.

Equity
in Losses From Non-Consolidated Entities.Loss from
non-consolidated entities increased approximately $400,000 for the year ended December 31, 2009 as
compared to the same period in 2008 ($1.2 million in 2009 versus $795,000 in
2008). These amounts represent our ownership portion of our joint
ventures net income or loss for the period. The increased loss is primarily
attributable to Shadow Creek Ranch, which was acquired in February 2008, and
Casa Linda, for which the redevelopment was completed in early 2009.

Net
Loss Attributable to Non-controlling Interests. Net
loss attributable to non-controlling interests decreased approximately $500,000
for the year ended December 31, 2009
as compared to the same period in 2008 ($590,000 in 2009 versus $1.1 million in
2008). This was due to a decrease in net loss on Woodlake Square during
the year ended December 31, 2009.

Liquidity and Capital Resources

We
expect to meet our liquidity requirements through cash on-hand, net cash
provided by distributions from joint ventures, 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 expect that our
primary uses of capital will be for investment in real estate properties and
related improvements, the payment of operating expenses, including interest
expense on any outstanding indebtedness, and the payment of distributions to
our partners. As we sell properties during our operating period, we plan to
strategically reinvest the proceeds from such sales rather than distributing
the proceeds to our partners.

The
United States has undergone and may continue to experience economic weakness
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 various ways
in which they may affect our tenants and our
business in general. 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 November 15, 2013. However,
if the economy remains in a protracted recession, we may seek to postpone
liquidation if we believe such liquidation is not in the best interests of the
Partners at that time.

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Projected
cash sources (including cash on hand) and uses for the Partnership indicate
periods of cash shortfalls during the year ended December 31, 2011. 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) deferral of fees paid to our General
Partner and its affiliates, (3) potential joint venture equity
investments in existing non-consolidated entities, (4) financings of unencumbered properties and (5) sales of certain of
our investments in non-consolidated entities. 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 the disposition of those properties.

At December
31, 2010 and December 31, 2009, our cash and cash equivalents totaled
approximately $1.3 million and approximately $469,000,
respectively. Cash flows provided by (used in) operating activities, investing
activities and financing activities for the years ended December 31, 2010, 2009
and 2008 are as follows (in thousands):

|                     |  |      |   |        |   |      |  |   |        |   |  |  |   |         |   | 
|-------------------- |  | ---- | - | ------ | - | ---- |  | - | ------ | - |  |  | - | ------- | - | 
|                     |  | 2010 |   | 2009   |   | 2008 | 
|Operating activities |  |      | $ | (1,506 | ) |      |  | $ | 1,337  |   |  |  | $ | (2,638  | ) | 
|Investing activities |  |      | $ | 2,343  |   |      |  | $ | (691   | ) |  |  | $ | (16,528 | ) | 
|Financing activities |  |      | $ | 3      |   |      |  | $ | (1,188 | ) |  |  | $ | 293     |   | 

Operating
Activities

During the
year ended December 31, 2010, net cash flows used in operating activities
increased $2.8 million ($1.5 million of cash used in operating
activities during the 2010 period versus $1.3 million of cash provided by
operating activities during the same period in 2009). This decrease in cash is
primarily due to the timing of our property tax payments. We paid our 2009
property taxes during the first quarter of 2010 but paid no property taxes
during the same period in 2009 as we paid our 2008 property taxes during
December 2008. In addition, we had a decrease in cash associated with accounts
receivable  related party due to the funding of costs associated with the
redevelopment of Woodlake Square. These outflows were partially offset by an
increase in cash related to timing of payments made to our related parties.

Investing
Activities

During
the year ended December 31, 2010, we received net proceeds of $3.4 million
related to the sale of 90% of our interest in the Woodlake Square property.
During the year ended December 31, 2009, cash outflows associated with notes
receivable  related party increased by $763,000 due to funding the Casa Linda
redevelopment, which took place during the 2009 period. Cash flows associated
with reimbursement of earnest money deposits decreased by $1.2 million due to
earnest money deposits that we received during the 2009 period. We had no such
inflows during the 2010 period. We also invested $1.3 million in our
non-consolidated entities during the 2010 period; whereas we only invested
$878,000 during 2009 period.

Financing
Activities

We
paid distributions of $880,000 during the year ended December 31, 2009; whereas
we did not pay any distributions during the same period in 2010. During the
year ended December 31, 2010, we received net proceeds from notes
payable - related party of $600,000, compared to $35,000 in the same period in
2009. We also paid more distributions to non-controlling interests in the 2010
period ($764,000 in 2010 versus $230,000 in 2009) as a result of the proceeds
received from the sale of 90% of our and our affiliates interest in the
Woodlake Square property.

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Contractual
Obligations

As
of December 31, 2010, we had the following contractual debt obligations (see
also Note 6 of the Consolidated Financial Statements for further discussion
regarding the specific terms of our debt) (in thousands):

|                  |  |      |     |      |   |      |  |      |     |      |   |            |  |       |     |  |   |       |  |   |       | 
|----------------- |  | ---- | --- | ---- | - | ---- |  | ---- | --- | ---- | - | ---------- |  | ----- | --- |  | - | ----- |  | - | ----- | 
|                  |  | 2011 |     | 2012 |   | 2013 |  | 2014 |     | 2015 |   | Thereafter |  | Total |    
|Secured debt      |  | $    | 86  |      | $ | 90   |  | $    | 96  |      | $ | 102        |  | $     | 107 |  | $ | 5,586 |  | $ | 6,067 | 
|Interest (1)      |  |      | 337 |      |   | 333  |  |      | 327 |      |   | 321        |  |       | 316 |  |   | 412   |  |   | 2,046 | 
|Total obligations |  | $    | 423 |      | $ | 423  |  | $    | 423 |      | $ | 423        |  | $     | 423 |  | $ | 5,998 |  | $ | 8,113 | 

| |     |                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Interest
 expense includes our interest obligations as of December 31, 2010 and does
 not assume the refinancing of any maturing debt.

Until we
acquire properties, we invest all excess cash in short-term investments. This
investment strategy allows us to offset a portion of the interest costs from
our fixed-rate mortgage loans and provides
us with the liquidity to acquire properties at such time as those suitable for
acquisition are located.

We believe
that inflation has a minimal effect on our income from operations. We expect
that increases in store sales
volumes due to inflation, as well as increases in the consumer price index, may
contribute to capital appreciation of
our properties. These factors, however, also may have an adverse impact
on the operating margins of the tenants of the properties.

Indemnification of General Partner

Our
Limited Partners, within the limits of their respective capital contributions
and to the extent of their allocable portion of Partnership assets, agree to
indemnify and hold our General Partner harmless from and against actual and
reasonable third-party claims or lawsuits arising out of our activities and
operations, except those instances in which our General Partner failed to
adhere to its fiduciary obligations to us, or acted with gross negligence or
willful or wanton misconduct. Amounts paid to indemnify our General Partner may
be recouped to the extent such payments relate to a third-party claim or
lawsuit arising out of a breach by our General Partner of its fiduciary
obligations to us.

Conflicts of Interest

Our General
Partner is a subsidiary of AmREIT, Inc., an SEC reporting,
non-traded Maryland corporation that has elected to be taxed as a real estate
investment trust. Affiliates of AmREIT act as sponsor, general partner or advisor
to various private real estate programs. As such, there are conflicts of interest where AmREIT or its
affiliates, while serving in the capacity as sponsor, general partner or advisor for another AmREIT-sponsored
program, may be in competition with us in connection with property acquisitions, property dispositions
and property management. The compensation arrangements between affiliates of AmREIT and these other AmREIT real
estate programs could influence our General Partners management of us.
See Item 1. Business  Conflicts of Interest.

Off Balance Sheet Arrangements

We
had no off balance sheet arrangements as of December 31, 2010.

ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not
applicable.

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.

See
the Index to Financial Statements beginning on page F-1.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). 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 December 31, 2010. Based on
that evaluation, our General Partners CEO and CFO concluded, that as of
December 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 with SEC disclosure
obligations.

Managements Report on Internal Control over
Financial Reporting

Our
General Partner and its affiliates maintain a system of internal control over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act, which is a process designed under the supervision of the AmREIT principal
executive officer and principal financial officer and effected by AmREITs
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles.

Our
internal control over financial reporting includes those policies and procedures
that:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pertain to
 the maintenance of records that in reasonable detail accurately and fairly
 reflect the transactions and dispositions of our assets;                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Provide
 reasonable assurance that transactions are recorded as necessary to permit
 preparation of financial statements in accordance with generally accepted
 accounting principles, and that receipts and expenditures of AmREIT Monthly
 Income and Growth Fund IV, LP and its subsidiaries are being made only in
 accordance with authorizations of management and directors of our General
 Partner; and
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Provide
 reasonable assurance regarding prevention or timely detection of unauthorized
 acquisition, use or disposition of our assets that could have a material
 effect on the financial statements.                                                                                                                                                                                                          

Our
General Partner is responsible for establishing and maintaining adequate
internal control over financial reporting, and, with the participation of
AmREITs CEO and CFO, conducted an evaluation of the effectiveness of AmREITs
internal control over financial reporting as of December 31, 2010 based on the
framework in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that evaluation,
we believe that our internal control over financial reporting is effective as
of December 31, 2010.

Changes in Internal Controls

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

ITEM 9B. OTHER
INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.

We have no
directors or executive officers. We are managed by our General Partner, AmREIT
Monthly Income & Growth IV Corporation. Our General Partner does not have any employees
and relies upon the personnel of AmREIT and its affiliates to perform services
for us. Our Partnership Agreement provides that we will continue until
December 31, 2026, unless sooner terminated.

The
following table sets forth certain information regarding the officers and
director of our General Partner, all of whom are officers of AmREIT and
expected to make a significant contribution to us.

|                    |  |     |  |                                                                                            
|------------------- |  | --- |  | -------------------------------------------------------------------------------------------
|Name                |  | Age |  | Position                                                                                   
|H. Kerr
 Taylor     |  | 60  |  | Chairman,
 President and Chief Executive Officer                                           
|Chad C.
 Braun      |  | 38  |  | Vice
 President, Chief Financial Officer, Chief Operating Officer, Treasurer and
 Secretary
|Brett P.
 Treadwell |  | 41  |  | Managing
 Vice President  Finance                                                         

H. Kerr Taylorserves as our General
Partners President, Chief Executive Officer and Director, and has served in
this capacity since the formation of the Partnership. He is the founder of
AmREIT and serves as its Chairman of the Board, Chief Executive Officer and
President. For over 27 years he has guided the growth of AmREIT and its
predecessors. His primary responsibilities include overseeing strategic
initiatives as well as building, mentoring and leading AmREITs team of professionals.
Mr. Taylor has over 31 years of experience within the real estate industry, and
has participated in over 300 transactions involving brokerage, development and
management of premier real estate projects. He attended Trinity University,
graduating with a Bachelor of Arts degree and then attended Southern Methodist
University where he received his Masters Degree in Business Administration. Mr.
Taylor also attended law school at South Texas College of Law where he received
his Doctor of Jurisprudence. Mr. Taylor is chairman of the board of Pathways
for Little Feet and serves as a board member of Life House, Inc., Uptown
District and as an Elder of First Presbyterian Church. Mr. Taylor is a lifetime
member of the International Council of Shopping Centers and Urban Land
Institute and is a member of the Texas Bar Association.

Mr.
Taylor was selected and is qualified to serve as the sole director or our
General Partner because of his intimate knowledge of AmREIT and its affiliated
companies and his extensive experience within the real estate industry.

Chad C. Braunserves as our General
Partners Executive Vice President, Chief Financial Officer, Chief Operating
Officer, Treasurer and Secretary, and has served in this capacity since the
formation of the Partnership. He also serves in this same position for AmREIT.
Mr. Braun is responsible for corporate finance, equity capital
markets, debt structuring and placement, investor relations, accounting,
SEC reporting, and he oversees investment sponsorship and product creation. Mr.
Braun has over 16 years of accounting, financial and real estate experience,
and prior to joining AmREIT in 1999, he served as a manager in the real estate
advisory services group at Ernst & Young LLP. He has provided extensive
consulting and audit services, including financial statement audits, portfolio
acquisition and disposition, portfolio management, merger integration and
process improvement, financial analysis and capital markets and restructuring
transactions, to a number of real estate investment trusts and private real
estate companies. Mr. Braun graduated from Hardin Simmons University with a
Bachelor of Business Administration degree in accounting and finance and
subsequently earned the CPA designation and his Series 63, 7, 24 and 27
securities licenses. He is a member of the National Association of Real Estate
Investment Trusts and the Texas Society of Certified Public Accountants.

Brett P. Treadwellserves as our General
Partners Managing Vice President  Finance and has served in this capacity
since the formation of the Partnership. He also serves in this position for
AmREIT. Within AmREIT he is responsible for
its financial reporting function as well as for assisting in the establishment and execution of AmREITs strategic
financial initiatives. Mr. Treadwells responsibilities
also include overall risk management and treasury management functions and SEC reporting as well as periodic internal reporting to
management. Mr. Treadwell has over 19 years of accounting, financial and
SEC reporting experience. Prior to joining AmREIT in August 2004, he served as a senior manager with PricewaterhouseCoopers
LLP and was previously with Arthur Andersen LLP. Mr. Treadwell received a Bachelor of Business Administration
degree from Baylor University and is a Certified Public Accountant.

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Section 16(a)
Beneficial Ownership Reporting Compliance

Based
on a review of Forms 3, 4 and 5 furnished to us under Rule 16a-3(e) of the
Exchange Act during the fiscal year ended December 31, 2010, we know of no
reporting person who has failed to file on a timely basis, as disclosed in the
above forms, any report required by Section 16(a) of the Exchange Act during
the fiscal year ended December 31, 2010.

Code of Ethics

We
are managed by our General Partner, and we have no officers or employees to
whom a Code of Ethics would apply.

ITEM 11. EXECUTIVE COMPENSATION.

We are
managed by our General Partner, and we have no directors,
executive officers or employees to whom we pay compensation.

See
Item 13. Certain Relationships and Related
Transactions, and Director Independence below for the fees and expenses we pay
to our General Partner and its affiliates.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS.

Securities Authorized for Issuance Under
Equity Compensation Plans

We
do not have any compensation plans under which we are authorized to issue
equity securities.

Security Ownership of Certain Beneficial
Owners and Management

We know of
no person (including a group as that term is used in Section 13(d)(3) of the
Exchange Act) who is the beneficial owner of more than five
percent of our Units.

We have no
officers or directors. Our General Partner owns our sole general partner
interest. No person who is an
officer of our General Partner as of the date of this filing owns any direct interest in the
Partnership. AmREIT, the sole shareholder of our General Partner, has
assigned the economic interest in 28.5% of our General Partner to certain of its management team. The address of the
officers of our General Partner is 8 Greenway Plaza, Suite 1000,
Houston, Texas 77046.

As
of March 31, 2011, there were 1,988 Units issued and outstanding owned by 766
investors.

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Compensation Arrangements

Our
General Partner and its affiliates received the payments and fees from us
described below. These payments and fees
were not negotiated and may be higher than payments and fees that would have
resulted from an arms length transaction with an unrelated entity. In addition
to the fees paid by us as described below, the non-consolidated entities in
which we have an investment paid a total of $978,000 and $743,000 in property management,
construction management and leasing fees to one of our affiliated entities for
the fiscal year ended December 31, 2010 and 2009, respectively. Our Casa Linda
Plaza property paid a total of $6.2 million in construction costs to one of our
affiliated entities who acted as a general contractor on the redevelopment
during 2008 and 2009.

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|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|---------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- |  | -------------------------
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | For the
 fiscal year ended
 December 31,
|Type and
 Recipient                                  |  | Determination
 of Amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 2010                                     |  | 2009                     
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|                                                     |  | Organization and Offering Stage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|Dealer Manager Fees - AmREIT Securities Company      |  | Up to 3.25%
 of the price of Units placed to AmREIT Securities Company, of which up to
 0.75% may be reallowed to registered broker-dealers that are members of the
 Financial Industry Regulatory Authority, Inc. and selected by the Offerings
 dealer manager to participate in the Offering.                                                                                                                                                                                                                                                                                                                                 |  | No amounts have been paid                |  | No amounts have been paid
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|Organization and Offering Expenses - General Partner |  | Reimbursement
 of our organization and offering expenses, including legal and accounting
 fees, printing costs, filing fees and distribution costs. However, this
 amount is limited to 1.0% of the gross offering proceeds from the Offering.                                                                                                                                                                                                                                                                                                                                                                                    |  | No amounts have been paid                |  | No amounts have been paid
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|                                                     |  | Operating Stage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|Asset Management Fee - General Partner               |  | A fee equal
 to 1.0% of net invested capital under management for accounting related services,
 investor relations, facilitating the deployment of capital, and other
 services provided by our General Partner to us.                                                                                                                                                                                                                                                                                                                                                                                                            |  | $ 430,407                                |  | $ 430,407                
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|Acquisition Fees - General Partner                   |  | A fee not to
 exceed, for any single acquisition, 3% of the contract purchase price up to
 $20 million, and 2% of the contract purchase price in excess of $20 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | No amounts have been paid                |  | No amounts have been paid
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                          |  |                          
|Development and Redevelopment Fees - General Partner |  | Development
 and redevelopment fees on properties we acquire an interest in and for which
 we intend to develop, redevelop or substantially renovate. These fees will be
 based on the total project costs, including the cost of acquiring the
 property, and will be paid as project costs are incurred. These fees shall
 not exceed, for any single property, 6% of the project cost up to $10
 million, 5% of the project cost between $10 million and $20 million, and 4%
 of the project cost in excess of $20 million. We will not pay both
 acquisition fees and development or redevelopment fees on the same property. |  | No amounts have been paid                |  | No amounts have been paid

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|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- |  | -------------------------
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | For the
 fiscal year ended
 December 31,
|Type and
 Recipient                                                      |  | Determination
 of Amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | 2010                                     |  | 2009                     
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|Property Management and Leasing Fees - Affiliates of the General Partner |  | Property
 management fees not to exceed 4% of the gross revenues (including, without
 limitation, base rent, percentage rent and expense reimbursement)
 received from multi-tenant or multi-pad properties, for providing management,
 operating, maintenance and other services required to maintain a property.
 Leasing fees not to exceed 4% of base rent on a lease renewal and not to
 exceed 6% of base rent on an initial lease; provided, however, on leases of
 over 10,000 square feet, leasing commissions may be paid on the basis of
 square footage, not to exceed $6.00 per square foot. |  | $ 157,436                                |  | $ 252,612                
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|Reimbursement of Operating Expenses -
 General Partner                   |  | We reimburse
 the actual expenses incurred by our General Partner for performing
 acquisition, development, management and administrative functions for us,
 including construction and construction management fees for development and
 redevelopment projects.                                                                                                                                                                                                                                                                                                                                         |  | $ 319,909                                |  | $ 336,698                
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|Distributions During Operating Stage -
 General Partner                  |  | Our General
 Partner is entitled to distributions during our operating period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | No amounts have been paid                |  | $ 8,793                  
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|Real Estate Brokerage Commissions - General
 Partner (1)                 |  | A fee not to
 exceed 6% of the sales price on co-brokered transactions and not to exceed 4%
 of the sales price on individually brokered transactions. Additionally, our
 General Partner and its affiliates will not be paid real estate brokerage
 commissions on the sale of a property if the property being sold has not
 generated an annual return of at least 8.5% per annum on the equity
 contributed to such property.                                                                                                                                                                         |  | No amounts have been paid                |  | No amounts have been paid
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|                                                                         |  | Liquidating Stage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                          |  |                          
|                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                          |  |                          
|Distributions of Net Cash Flow - General
 Partner                        |  | Our General
 Partner is entitled to distributions after our operating period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | No amounts have been paid                |  | No amounts have been paid

|    |                                                                                                                                                                      | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(1) | The real estate brokerage commissions payable during the liquidation
 period will also be payable for Actively Managed properties sold during the
 operation period.

Joint Ventures with Affiliates

As of
December 31, 2010, we had entered into four joint ventures with our affiliates.

In December
2006, we acquired a 50% interest in AmREIT Casa Linda, LP, which owns Casa
Linda Plaza, a multi-tenant
retail property located in Dallas, Texas. The remaining 50% is owned by AmREIT
Monthly Income & Growth Fund III, Ltd.,
our affiliate.

In
August 2007, we acquired a 40% interest in AmREIT Woodlake, LP, which owns
Woodlake Square, a multi-tenant retail property located in
Houston, Texas. In June 2008, we acquired an additional 20% investment interest
in AmREIT Woodlake, LP from an
affiliated entity at its net book value. Our affiliates, AmREIT Monthly Income
& Growth Fund III, Ltd. and AmREIT Realty Investment Corporation, both own
a 40% interest in AmREIT Woodlake, LP. We have consolidated AmREIT Woodlake, LP into our results of
operations effective January 1, 2008 as a result of the additional 20% interest
that we acquired in June 2008.

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In July
2010, we and our affiliated joint venture partners on our Woodlake Square
property, MIG III and ARIC, entered into a joint venture
agreement with a third party on our Woodlake Square property. As part of this transaction, we and our
affiliates sold 90% of our interest in the property and retained a 10% ownership
interest, which carries a promoted interest in cash flows once an 11.65%
preferred return threshold is met on the project. Prior to the transaction, we
owned a 60% interest in the property, and we own a 6% interest,
post-transaction. We recorded an impairment
of approximately $618,000 which has been recorded as impairment in our
consolidated statements of operations. The
sale generated cash proceeds of approximately $3.4 million (our share was
approximately $2.0 million), and we, our affiliated partners, and our third
party joint venture partner are responsible for funding our pro rata amount of
the redevelopment costs on the project, which are currently estimated to be
approximately $8.0 million. Additionally, as part of the transaction,
the $23.8 million loan on the property, which was due to mature in September
2010, was paid in full at closing. The new entity in which we now own a 6%
interest, VIF II/AmREIT Woodlake L.P., is the borrower on the new $20.9 million
loan, which has a 3-year term with two one-year extension options, provided
certain conditions are met. We, along with our affiliate, MIG III are joint and
several repayment guarantors on the loan. As a result of our reduced ownership
interest and decision-making ability, we no longer have a controlling financial
interest in the property. In accordance with ASC 810, we deconsolidated this
property as of the date of the transaction and began accounting for the
property under the equity method of accounting.

In November
2007, we acquired a 40% interest in AmREIT Westheimer Gessner, LP, which owns
Woodlake Pointe, a
multi-tenant retail property located in Houston, Texas. In May 2008, we
acquired a 60% interest in an additional tract of land adjacent to Woodlake
Pointe property. The acquisition is accounted for as part of AmREIT Westheimer
Gessner, LP. In June 2008, we acquired an
additional 20% investment interest in AmREIT Westheimer Gessner, LP from an
affiliated entity at its net book value. Our affiliates, AmREIT Monthly Income
& Growth Fund III, Ltd. and AmREIT Realty Investment Corporation, both own
a 40% interest in AmREIT Westheimer Gessner,
LP. We have consolidated AmREIT
Westheimer Gessner, LP into our results of operations effective January
1, 2008 as a result of the additional 20% interest that we acquired in June
2008.

In February
2008, we acquired a 10% interest in Shadow Creek Holding Company LLC, which
owns Shadow Creek Ranch, a multi-tenant retail property located in Pearland,
Texas, for approximately $4.8 million. The remaining 90% is owned by an
unaffiliated third party and AmREIT.

Directors

We
have no directors and are managed by our General Partner. H. Kerr Taylor is the
sole director of our General Partner.

AmREIT Realty Investment Corporation

AmREIT
Realty Investment Corporation (ARIC) is a fully integrated real estate
development and operating business which is wholly owned by AmREIT, the parent
of our General Partner. ARIC employs a full complement of brokers and real
estate professionals who provide development, acquisition, brokerage, leasing,
construction management, asset and property management services to AmREIT
affiliated entities and to third parties. ARIC serves as one of our property
managers, and is responsible for managing and leasing some of our properties.
We pay ARIC property management and leasing fees as described above. ARIC
hires, directs and establishes policies for employees who will have direct
responsibility for the operations of each property it manages, which may include
but is not limited to on-site managers and building and maintenance personnel.
Certain employees of the property manager may be employed on a part-time basis
and may also be employed by our General Partner or its affiliates. ARIC also
directs the purchase of equipment and supplies and supervises all maintenance
activity. The management fees paid to ARIC includes, without additional expense
to us, all of its general overhead costs.

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AmREIT Construction Company

We have
historically engaged AmREIT Construction Company, an affiliate of our General
Partner, to provide construction and construction management
services for our development and redevelopment projects. During 2008, AmREIT
Construction Company ceased providing these services and completed all of its
work in progress in 2009. We may engage in the future ARIC, also an affiliate
of our General Partner, for construction management services. In these cases,
such services are provided on terms and conditions no less favorable to us than
can be obtained from independent third parties for comparable services in the
same location.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

KPMG LLP,
independent registered public accounting firm and certified public accountants
(KPMG), served as our independent accountants for the fiscal year ended
December 31, 2010. The following is an explanation of the fees billed to us by
KPMG for professional services rendered for the fiscal years ended December 31,
2010 and December 31, 2009.

Audit Fees

The
aggregate fees billed to us for professional services related to the audit of
our annual financial statements, review of financial statements included in our
Forms 10-Q, or other services normally provided by KPMG in connection with
statutory and regulatory filings or engagements for the fiscal years ended
December 31, 2010 and December 31, 2009 totaled $130,500 and $170,000,
respectively. Included in these fees are $0 and $41,000 related to the audit of
a significant subsidiary for the years ended December 31, 2010 and 2009,
respectively. Also included in these fees are $17,000 and $19,000 related to
the audit of our internal controls for the years ended December 31, 2010 and
2009, respectively.

Audit-Related Fees, Tax Fees and All Other Fees

The
services that have been performed by KPMG have been limited to audit services.
Accordingly, we have paid no audit-related fees, tax fees or other fees to KPMG
for the fiscal years ended December 31, 2010 and 2009.

Audit Committees Pre-Approval Policies and
Procedures

The
Company does not have an independent audit committee. Our General Partner must
approve any services to be performed by our independent auditors.

37

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Table of Contents

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

|   |                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | Financial Statements. The list of our
 financial statements filed as part of this Annual Report on Form 10-K is set
 forth on page F-1.                 
|   |                                                                                                                                                         
|2. | Financial Statement Schedules.The list of our financial statement
 schedules filed as part of this Annual Report on Form 10-K is set forth on
 page F-1.
|   |                                                                                                                                                         
|3. | Exhibits.                                                                                                                                               

It
is inappropriate for readers to assume the accuracy of, or rely upon any
covenants, representations or warranties that may be contained in agreements or
other documents filed as Exhibits to, or incorporated by reference in, this
report. Any such covenants, representations or warranties may have been qualified
or superseded by disclosures contained in separate schedules or exhibits not
filed with or incorporated by reference in this report, may reflect the
parties negotiated risk allocation in the particular transaction, may be
qualified by materiality standards that differ from those applicable for
securities law purposes, and may not be true as of the date of this report or
any other date and may be subject to waivers by any or all of the parties.
Where exhibits and schedules to agreements filed or incorporated by reference
as Exhibits hereto are not included in these exhibits, such exhibits and
schedules to agreements are not included or incorporated by reference herein.

The
following exhibits are filed as part of or incorporated by reference in this
Annual Report:

|            |  |                                                                                                                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                    
|3.1         |  | Certificate of Limited Partnership of AmREIT Monthly Income &
 Growth Fund IV, L.P., dated October 10, 2006 (incorporated
 herein by reference from Exhibit 3.1 to the Partnerships Registration Statement
 on Form 10 dated April 29, 2008).                 
|            |  |                                                                                                                                                                                                                                                                
|3.2         |  | Agreement of Limited Partnership of AmREIT Monthly & Income
 Growth Fund IV, L.P., dated October 10, 2006 (incorporated
 herein by reference from Exhibit 3.2 to the Partnerships Registration
 Statement on Form 10 dated April 29, 2008).                   
|            |  |                                                                                                                                                                                                                                                                
|3.2.1       |  | Amendment No. 1 to Agreement of Limited Partnership of AmREIT Monthly
 Income & Growth Fund IV, L.P., dated December 7, 2006 (incorporated
 herein by reference from Exhibit 3.3 to the Partnerships Registration
 Statement on Form 10 dated April 29, 2008).
|            |  |                                                                                                                                                                                                                                                                
|10.1        |  | Promissory Note, dated December 8, 2006, between AmREIT Casa Linda,
 LP and Morgan Stanley Mortgage Capital, Inc. (incorporated
 herein by reference from Exhibit 10.1 to the Partnerships Registration
 Statement on Form 10 dated April 29, 2008)           
|            |  |                                                                                                                                                                                                                                                                
|31.1        |  | Certification
 of the Chief Executive Officer of the Partnerships General Partner pursuant
 to Exchange Act Rule 13a-14(a) (filed herewith).                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                
|31.2        |  | Certification
 of the Chief Financial Officer of the Partnerships General Partner pursuant
 to Exchange Act Rule 13a-14(a) (filed herewith).                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                
|32.1        |  | Certification
 of the Chief Executive Officer of the Partnerships General Partner pursuant
 to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
 Act of 2002 (furnished herewith).                                            
|            |  |                                                                                                                                                                                                                                                                
|32.2        |  | Certification
 of the Chief Financial Officer of the Partnerships General Partner pursuant
 to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002 (furnished herewith).                                            

38

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Table of Contents

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) 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 IV, L.P.
|                      |                                              
|                      | By:                                           | AmREIT
 Monthly Income & Growth IV 
 Corporation, its General Partner                                
|Date: March
 31, 2011 |                                               |                                                                                                      
|                      |                                               |                                                                                                      
|                      | 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, Chief Operating Officer, Treasurer
 and Secretary

39

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV,
L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

|                                                                                                                 |  |     
|---------------------------------------------------------------------------------------------------------------- |  | ----
|FINANCIAL STATEMENTS:                                                                                            |  | Page
|Report of
 Independent Registered Public Accounting Firm                                                         |  | F-2 
|Consolidated
 Balance Sheets as of December 31, 2010 and December 31, 2009                                       |  | F-3 
|Consolidated
 Statements of Operations for the years ended December 31, 2010, 2009 and 2008                      |  | F-4 
|Consolidated
 Statements of Partners Capital for the years ended December 31, 2010, 2009
 and 2008              |  | F-5 
|Consolidated
 Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008                      |  | F-6 
|Notes to
 Consolidated Financial Statements                                                                      |  | F-7 
|FINANCIAL STATEMENT SCHEDULES:                                                                                   |  |     
|Schedule III 
 Consolidated Real Estate Owned and Accumulated Depreciation for the year ended December 31, 2010 |  | S-1 

All other financial statement schedules are omitted as the required
information is either inapplicable or is included in the financial statements
or related notes.

F-1

---



Table of Contents

Report of
Independent Registered Public Accounting Firm

The Partners of AmREIT Monthly Income & Growth Fund
IV, L.P.:

We have
audited the accompanying consolidated balance sheet of AmREIT Monthly Income
& Growth Fund IV, L.P. and
subsidiaries (the Partnership) as of December 31, 2010 and 2009, and the
related consolidated statements of operations, partners capital and
cash flows for each of the years in the three-year period ended December 31, 2010. In connection with our audit of the consolidated
financial statements, we have also audited the related financial statement
schedule. These consolidated financial statements and the financial statement
schedule are the responsibility of the Partnerships management. Our
responsibility is to express an
opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
Partnerships internal control over financial reporting. As such, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present
fairly, in all material respects,
the financial position of AmREIT Monthly Income & Growth Fund IV, L.P. and
subsidiaries as of December 31, 2010
and 2009, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2010 in conformity with U.S.
generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ KPMG LLP

Houston, Texas March 31, 2011

F-2

---



Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)

|                                                                                       |  |                    |        |                    |   |        |  
|-------------------------------------------------------------------------------------- |  | ------------------ | ------ | ------------------ | - | ------ | -
|                                                                                       |  | December 31,
 2010 |        | December 31,
 2009 |  
|ASSETS                                                                                 |  |                    |        |                    |   |        |  
|Real estate investments at cost:                                                       |  |                    |        |                    |   |        |  
|Land                                                                                   |  | $                  | 12,381 |                    | $ | 31,168 |  
|Buildings                                                                              |  |                    | 12,891 |                    |   | 31,060 |  
|Tenant improvements                                                                    |  |                    | 332    |                    |   | 1,270  |  
|                                                                                       |  |                    | 25,604 |                    |   | 63,498 |  
|Less accumulated depreciation and
 amortization                                        |  |                    | (1,446 | )                  |   | (3,419 | )
|                                                                                       |  |                    | 24,158 |                    |   | 60,079 |  
|                                                                                       |  |                    |        |                    |   |        |  
|Investment in non-consolidated entities                                                |  |                    | 9,961  |                    |   | 12,042 |  
|Acquired lease intangibles, net                                                        |  |                    | 80     |                    |   | 1,547  |  
|Net real estate investments                                                            |  |                    | 34,199 |                    |   | 73,668 |  
|                                                                                       |  |                    |        |                    |   |        |  
|Cash and cash equivalents                                                              |  |                    | 1,309  |                    |   | 469    |  
|Tenant receivables, net                                                                |  |                    | 251    |                    |   | 283    |  
|Accounts receivable                                                                    |  |                    | 16     |                    |   |       |  
|Accounts receivable - related party                                                    |  |                    | 112    |                    |   | 9      |  
|Notes receivable                                                                       |  |                    | 2      |                    |   |       |  
|Notes receivable - related party                                                       |  |                    |       |                    |   | 162    |  
|Deferred costs, net                                                                    |  |                    | 66     |                    |   | 139    |  
|Other assets                                                                           |  |                    | 199    |                    |   | 163    |  
|TOTAL ASSETS                                                                           |  | $                  | 36,154 |                    | $ | 74,893 |  
|                                                                                       |  |                    |        |                    |   |        |  
|LIABILITIES AND CAPITAL                                                                |  |                    |        |                    |   |        |  
|Liabilities:                                                                           |  |                    |        |                    |   |        |  
|Notes payable                                                                          |  | $                  | 6,067  |                    | $ | 29,949 |  
|Notes payable - related party                                                          |  |                    | 1,291  |                    |   | 230    |  
|Accounts payable and other liabilities                                                 |  |                    | 576    |                    |   | 1,328  |  
|Accounts payable - related party                                                       |  |                    | 247    |                    |   | 4      |  
|Derivative liability                                                                   |  |                    |       |                    |   | 678    |  
|Asset retirement obligations                                                           |  |                    |       |                    |   | 530    |  
|Acquired below-market lease intangibles,
 net                                          |  |                    | 18     |                    |   | 1,563  |  
|Security deposits                                                                      |  |                    | 72     |                    |   | 110    |  
|TOTAL LIABILITIES                                                                      |  |                    | 8,271  |                    |   | 34,392 |  
|                                                                                       |  |                    |        |                    |   |        |  
|Capital:                                                                               |  |                    |        |                    |   |        |  
|Partners capital:                                                                     |  |                    |        |                    |   |        |  
|General partner                                                                        |  |                    |       |                    |   |       |  
|Limited partners, 1,988 units outstanding
 at December 31, 2010 and 2009, respectively |  |                    | 21,004 |                    |   | 30,293 |  
|Accumulated other comprehensive loss                                                   |  |                    |       |                    |   | (263   | )
|TOTAL PARTNERS CAPITAL                                                                |  |                    | 21,004 |                    |   | 30,030 |  
|                                                                                       |  |                    |        |                    |   |        |  
|Non-controlling interests                                                              |  |                    | 6,879  |                    |   | 10,471 |  
|TOTAL CAPITAL                                                                          |  |                    | 27,883 |                    |   | 40,501 |  
|                                                                                       |  |                    |        |                    |   |        |  
|TOTAL
 LIABILITIES AND CAPITAL                                                         |  | $                  | 36,154 |                    | $ | 74,893 |  

See Notes to Consolidated
Financial Statements.

F-3

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2010, 2009 and 2008
(in thousands, except for per unit data)

|                                                    |  |      |           |      |   |           |   |   |           |  
|--------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | - | - | --------- | -
|                                                    |  | 2010 |           | 2009 |   | 2008      |  
|Revenues:                                           |  |      |           |      |   |           |   |   |           |  
|Rental income from operating leases                 |  | $    | 2,496     |      | $ | 4,917     |   | $ | 5,178     |  
|Total revenues                                      |  |      | 2,496     |      |   | 4,917     |   |   | 5,178     |  
|                                                    |  |      |           |      |   |           |   |   |           |  
|Expenses:                                           |  |      |           |      |   |           |   |   |           |  
|General and administrative                          |  |      | 85        |      |   | 79        |   |   | 109       |  
|General and administrative - related party          |  |      | 320       |      |   | 337       |   |   | 132       |  
|Asset management fees - related party               |  |      | 430       |      |   | 430       |   |   | 428       |  
|Property expense                                    |  |      | 987       |      |   | 1,667     |   |   | 1,700     |  
|Property management fees - related party            |  |      | 90        |      |   | 198       |   |   | 186       |  
|Legal and professional                              |  |      | 223       |      |   | 260       |   |   | 457       |  
|Depreciation and amortization                       |  |      | 7,652     |      |   | 2,944     |   |   | 3,351     |  
|Total operating expenses                            |  |      | 9,787     |      |   | 5,915     |   |   | 6,363     |  
|                                                    |  |      |           |      |   |           |   |   |           |  
|Operating
 loss                                     |  |      | (7,291    | )    |   | (998      | ) |   | (1,185    | )
|                                                    |  |      |           |      |   |           |   |   |           |  
|Other income
 (expense):                            |  |      |           |      |   |           |   |   |           |  
|Impairment                                          |  |      | (618      | )    |   |          |   |   |          |  
|Loss on derivative                                  |  |      |          |      |   |          |   |   | (415      | )
|Interest and other income                           |  |      | 4         |      |   | 22        |   |   | 263       |  
|Interest expense                                    |  |      | (854      | )    |   | (1,768    | ) |   | (1,680    | )
|Equity in losses from non-consolidated
 entities    |  |      | (3,591    | )    |   | (1,222    | ) |   | (795      | )
|Margin tax expense                                  |  |      | (16       | )    |   | (20       | ) |   | (38       | )
|Total other income (expense)                        |  |      | (5,075    | )    |   | (2,988    | ) |   | (2,665    | )
|                                                    |  |      |           |      |   |           |   |   |           |  
|Net loss,
 including non-controlling interests      |  |      | (12,366   | )    |   | (3,986    | ) |   | (3,850    | )
|                                                    |  |      |           |      |   |           |   |   |           |  
|Net loss attributable to non-controlling
 interests |  |      | 3,077     |      |   | 590       |   |   | 1,072     |  
|                                                    |  |      |           |      |   |           |   |   |           |  
|Net loss
 attributable to partners                  |  | $    | (9,289    | )    | $ | (3,396    | ) | $ | (2,778    | )
|                                                    |  |      |           |      |   |           |   |   |           |  
|Weighted
 average units outstanding                 |  |      | 1,988     |      |   | 1,988     |   |   | 1,970     |  
|Net loss per
 unit                                  |  | $    | (4,672.54 | )    | $ | (1,708.25 | ) | $ | (1,410.15 | )

See Notes to Consolidated Financial Statements.

F-4

---



Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAPITAL
For the years ended December 31, 2010, 2009, 2008
(in thousands)
(unaudited)

|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|----------------------------------------------- |  | ----------------- | --- | ---------------- | - | ------------------------------------------ | - | ------------------------- | ---- | ----- | - | ------ | - | - | ------- | -
|                                                |  | Partners Capital |     |                  |   |                                            |  
|                                                |  | General Partner   |     | Limited Partners |   | Accumulated OtherComprehensive Gain (Loss) |   | Non-Controlling Interests |      | Total |  
|Balance at December 31, 2007                    |  | $                 |    |                  | $ | 36,800                                     |   | $                         |     |       | $ |       |   | $ | 36,800  |  
|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|Contributions, net of offering costs            |  |                   |    |                  |   | 4,299                                      |   |                           |     |       |   |       |   |   | 4,299   |  
|Contributions from non-controlling
 interests   |  |                   |    |                  |   |                                           |   |                           |     |       |   | 12,643 |   |   | 12,643  |  
|Net loss (1)                                    |  |                   | 37  |                  |   | (2,815                                     | ) |                           |     |       |   | (1,072 | ) |   | (3,850  | )
|Distributions                                   |  |                   | (37 | )                |   | (3,653                                     | ) |                           |     |       |   |       |   |   | (3,690  | )
|Distributions to non-controlling interests      |  |                   |    |                  |   |                                           |   |                           |     |       |   | (280   | ) |   | (280    | )
|Increase in fair value of derivative
 liability |  |                   |    |                  |   |                                           |   |                           | (842 | )     |   |       |   |   | (842    | )
|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|Balance at December 31, 2008                    |  | $                 |    |                  | $ | 34,631                                     |   | $                         | (842 | )     | $ | 11,291 |   | $ | 45,080  |  
|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|Redemptions                                     |  |                   |    |                  |   | (62                                        | ) |                           |     |       |   |       |   |   | (62     | )
|Net loss (1)                                    |  |                   | 9   |                  |   | (3,405                                     | ) |                           |     |       |   | (590   | ) |   | (3,986  | )
|Distributions                                   |  |                   | (9  | )                |   | (871                                       | ) |                           |     |       |   |       |   |   | (880    | )
|Distributions to non-controlling interests      |  |                   |    |                  |   |                                           |   |                           |     |       |   | (230   | ) |   | (230    | )
|Decrease in fair value of derivative
 liability |  |                   |    |                  |   |                                           |   |                           | 579  |       |   |       |   |   | 579     |  
|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|Balance at December 31, 2009                    |  | $                 |    |                  | $ | 30,293                                     |   | $                         | (263 | )     | $ | 10,471 |   | $ | 40,501  |  
|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|Net loss (1)                                    |  |                   |    |                  |   | (9,289                                     | ) |                           |     |       |   | (3,077 | ) |   | (12,366 | )
|Contributions from non-controlling
 interests   |  |                   |    |                  |   |                                           |   |                           |     |       |   | 249    |   |   | 249     |  
|Distributions to non-controlling interests      |  |                   |    |                  |   |                                           |   |                           |     |       |   | (764   | ) |   | (764    | )
|Decrease in fair value of derivative
 liability |  |                   |    |                  |   |                                           |   |                           | 523  |       |   |       |   |   | 523     |  
|Reclassification of gain into income            |  |                   |    |                  |   |                                           |   |                           | (260 | )     |   |       |   |   | (260    | )
|                                                |  |                   |     |                  |   |                                            |   |                           |      |       |   |        |   |   |         |  
|Balance at December 31, 2010                    |  | $                 |    |                  | $ | 21,004                                     |   | $                         |     |       | $ | 6,879  |   | $ | 27,883  |  

|    |                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The
 allocation of net loss includes a curative allocation to increase the General
 Partners capital account by $93, $43 and $65 for the 2010, 2009 and 2008
 periods. The cumulative curative allocation since inception of the
 Partnership is $226. 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.

F-5

---



Table of Contents

|                                                              
|--------------------------------------------------------------
|AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND
 SUBSIDIARIES
|CONSOLIDATED STATEMENTS OF
 CASH FLOWS                        
|For the years ended December 31, 2010, 2009, 2008             
|(in thousands)                                                

|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|---------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------ | - | - | ------- | -
|                                                                                                           |  | 2010 |         | 2009 |   | 2008   |  
|Cash flows from operating activities:                                                                      |  |      |         |      |   |        |   |   |         |  
|Net loss, including non-controlling
 interests                                                             |  | $    | (12,366 | )    | $ | (3,986 | ) | $ | (3,850  | )
|Adjustments to reconcile net loss to net
 cash (used in) provided by operating activities:                 |  |      |         |      |   |        |   |   |         |  
|Impairment                                                                                                 |  |      | 618     |      |   |       |   |   |         |  
|Bad debt expense                                                                                           |  |      | 89      |      |   | 124    |   |   |        |  
|Loss from non-consolidated entities                                                                        |  |      | 3,591   |      |   | 1,222  |   |   | 795     |  
|Depreciation and amortization                                                                              |  |      | 7,652   |      |   | 2,944  |   |   | 3,351   |  
|Amortization of above- and below-market
 leases, net                                                       |  |      | (217    | )    |   | (406   | ) |   | (438    | )
|Amortization of loan acquisition costs                                                                     |  |      | 48      |      |   | 93     |   |   | 92      |  
|Realized gain on derivative                                                                                |  |      | (260    | )    |   |       |   |   |         |  
|Loss on derivative                                                                                         |  |      |        |      |   |       |   |   | 415     |  
|(Increase) decrease in tenant receivables                                                                  |  |      | (258    | )    |   | (103   | ) |   | 30      |  
|Increase in accounts receivable                                                                            |  |      | (16     | )    |   |       |   |   |         |  
|(Increase) decrease in accounts receivable
 - related party                                                |  |      | (139    | )    |   | 444    |   |   | (410    | )
|Increase in deferred costs                                                                                 |  |      | (87     | )    |   | (56    | ) |   | (13     | )
|(Increase) decrease in other assets                                                                        |  |      | (98     | )    |   | 303    |   |   | 8       |  
|(Decrease) increase in accounts payable and
 other liabilities                                             |  |      | (784    | )    |   | 878    |   |   | (805    | )
|Increase (decrease) in accounts payable -
 related party                                                   |  |      | 704     |      |   | (103   | ) |   | (1,686  | )
|Decrease in asset retirement obligations                                                                   |  |      |        |      |   | (5     | ) |   | (165    | )
|Increase (decrease) in security deposits                                                                   |  |      | 17      |      |   | (12    | ) |   | 38      |  
|Net cash (used in) provided by operating activities                                                        |  |      | (1,506  | )    |   | 1,337  |   |   | (2,638  | )
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Cash flows from investing activities:                                                                      |  |      |         |      |   |        |   |   |         |  
|Improvements to real estate                                                                                |  |      | (344    | )    |   | (476   | ) |   | (316    | )
|Acquisition of investment properties                                                                       |  |      |        |      |   |       |   |   | (10,452 | )
|Payments received on notes receivable                                                                      |  |      | 8       |      |   |       |   |   |        |  
|Increase in notes receivable - related
 party                                                              |  |      |        |      |   | (763   | ) |   |        |  
|Payments received on notes receivable -
 related party                                                     |  |      | 82      |      |   | 181    |   |   |        |  
|Investment in non-consolidated entities                                                                    |  |      | (1,266  | )    |   | (878   | ) |   | (5,385  | )
|Distributions from non-consolidated
 entities                                                              |  |      | 280     |      |   |       |   |   |        |  
|Net proceeds from sale of interest in an
 investment property                                              |  |      | 3,448   |      |   |       |   |   |        |  
|Net proceeds applied to land basis                                                                         |  |      | 135     |      |   |       |   |   |        |  
|Reimbursement of earnest money deposits                                                                    |  |      |        |      |   | 1,245  |   |   | (375    | )
|Net cash provided (used in) by investing
 activities                                                       |  |      | 2,343   |      |   | (691   | ) |   | (16,528 | )
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Cash flows from financing activities:                                                                      |  |      |         |      |   |        |   |   |         |  
|Payments on notes payable                                                                                  |  |      | (82     | )    |   | (51    | ) |   |        |  
|Proceeds from notes payable - related party                                                                |  |      | 800     |      |   | 35     |   |   |        |  
|Payments on notes payable - related party                                                                  |  |      | (200    | )    |   |       |   |   |        |  
|Contributions                                                                                              |  |      |        |      |   |       |   |   | 4,899   |  
|Limited optional redemptions                                                                               |  |      |        |      |   | (62    | ) |   |        |  
|Issuance costs                                                                                             |  |      |        |      |   |       |   |   | (600    | )
|Loan acquisition costs                                                                                     |  |      |        |      |   |       |   |   | (36     | )
|Distributions                                                                                              |  |      |        |      |   | (880   | ) |   | (3,690  | )
|Contributions from non-controlling
 interests                                                              |  |      | 249     |      |   |       |   |   |        |  
|Distributions to non-controlling interests                                                                 |  |      | (764    | )    |   | (230   | ) |   | (280    | )
|Net cash provided by (used in) financing
 activities                                                       |  |      | 3       |      |   | (1,188 | ) |   | 293     |  
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Net increase (decrease) in cash and cash
 equivalents                                                      |  |      | 840     |      |   | (542   | ) |   | (18,873 | )
|Cash and cash equivalents, beginning of
 period                                                            |  |      | 469     |      |   | 1,011  |   |   | 19,349  |  
|Cash and cash equivalents, beginning of
 period for previously non-consolidated entities                   |  |      |        |      |   |       |   |   | 535     |  
|Cash and cash equivalents, beginning of
 period, adjusted for entities consolidated during the 2008 period |  |      | 469     |      |   | 1,011  |   |   | 19,884  |  
|Cash and cash equivalents, end of period                                                                   |  | $    | 1,309   |      | $ | 469    |   | $ | 1,011   |  
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Supplemental schedule of cash flow
 information:                                                           |  |      |         |      |   |        |   |   |         |  
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Cash paid during the period for:                                                                           |  |      |         |      |   |        |   |   |         |  
|Interest                                                                                                   |  | $    | 997     |      | $ | 1,777  |   | $ | 1,594   |  
|Taxes                                                                                                      |  | $    | 40      |      | $ | 26     |   | $ | 10      |  
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Supplemental schedule of noncash investing
 and financing activities:                                      |  |      |         |      |   |        |   |   |         |  
|                                                                                                           |  |      |         |      |   |        |   |   |         |  
|Net proceeds from sale of interest in an
 investment property                                              |  |      |         |      |   |        |   |   |         |  
|Land                                                                                                       |  | $    | 18,549  |      | $ |       |   | $ |        |  
|Building and tenant improvements, net of
 accumulated depreciation                                         |  |      | 9,467   |      |   |       |   |   |        |  
|Receivables                                                                                                |  |      | 218     |      |   |       |   |   |        |  
|Acquired lease intangibles, net                                                                            |  |      | 1,087   |      |   |       |   |   |        |  
|Deferred costs and other assets                                                                            |  |      | 144     |      |   |       |   |   |        |  
|Notes Payable                                                                                              |  |      | (23,800 | )    |   |       |   |   |        |  
|Acquired below-market lease intangibles and
 other liabilities                                             |  |      | (1,782  | )    |   |       |   |   |        |  
|Retained investment in non-consolidated
 entity                                                            |  |      | (435    | )    |   |       |   |   |        |  
|                                                                                                           |  | $    | 3,448   |      | $ |       |   | $ |        |  

|                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|During 2010,
 we wrote-off our asset retirement obligation related to Woodlake Square as
 the environmental exposure no longer exists on the property. This caused a
 decrease in land of $400,000 and a decrease in buildings of $130,000.
|                                                                                                                                                                                                                                           
|During 2010,
 notes receivable - related party of $80,000 from Casa Linda was converted to
 equity, causing an increase in our investment in non-consolidated entities.                                                                    
|                                                                                                                                                                                                                                           
|During 2010,
 we capitalized $297,000 of accrued property taxes into the basis of our land
 at Woodlake Pointe. We are in the intital stages of planning a major
 redevelopment at the Woodlake Pointe shopping center.                    
|                                                                                                                                                                                                                                           
|During 2010,
 $461,000 in accounts payable - related party was reclassified to notes
 payable - related party.                                                                                                                             

See Notes to Consolidated
Financial Statements.

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV,
L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2010, 2009 and 2008

1. DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

AmREIT
Monthly Income & Growth Fund IV, L.P., a Delaware limited partnership
(hereinafter referred to as the Partnership, MIG IV, we, us or our),
was formed on October 10, 2006 to acquire, develop and operate, directly or
indirectly, 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 IV Corporation, a Delaware
corporation (the General Partner), which is a subsidiary of AmREIT, Inc., an
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 December 8, 2006 when we acquired our
first interest in a property. On January 12, 2007, we raised the minimum
offering of $1.0 million (the Offering) pursuant to the terms of our Offering
Memorandum dated November 15, 2006 (the Offering Memorandum) and issued the
initial 40 limited partnership units (the Units). We closed the offering on
March 31, 2008 when we had received $49.7 million from the sale of 1,991 Units.
As of December 31, 2010, our investments included a wholly-owned property
comprising approximately 36,000 square feet of gross leasable area, a property
in which we own a controlling interest comprising approximately 82,000 square
feet of gross leasable area and four properties in which we own a
non-controlling interest through joint ventures comprising approximately 1.2
million square feet of gross leasable area.

Our
Units were sold pursuant to exemptions from registration under the Securities
Act of 1933, as amended (the 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 they
are transferred pursuant to an exemption under the Securities Act and
applicable state securities laws. We do not anticipate that any established
public trading 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 various ways in
which they may affect our tenants and our business in general. 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 cash resources to be
insufficient to meet our obligations over the next 12 months. 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 November 15, 2013. However, if the economy
remains in a protracted recession, we may seek to postpone liquidation if we
believe such liquidation is not in the best interests of the Partners at that
time.

Projected cash sources (including cash on
hand) and uses for the Partnership indicate periods of cash shortfalls during the year ended December 31, 2011. 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) deferral of fees paid to our General Partner
and its affiliates, (3) potential joint venture equity investments in existing non-consolidated entities, (4) financing of an
unencumbered property and (5) sales of certain of our investments in non-consolidated entities. 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 the
disposition of those properties.

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Table of Contents

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
in which 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 ASC 810, Consolidation).
As of December 31, 2010, we do not have any interests in variable interest
entities. All significant inter-company accounts and transactions have been
eliminated in consolidation.

As
discussed further in Notes 4 and 11, we and our affiliated partners sold a 90%
interest in the Woodlake Square property to a third-party institutional partner
in July 2010. As a result of this transaction, we retained a net 6%
non-controlling financial interest in the Woodlake Square property, but such
interest provides us with the ability to exercise significant influence.
Accordingly, we deconsolidated this property as of the date of the transaction
and began accounting for the net 6% retained interest in the property on the
equity method of accounting. As such, the conditions for discontinued
operations presentation were not met as we will continue to have cash flows
from our retained interest and will continue to be involved with the operations
of the entity through our position of significant influence. As a result, the
operations associated with this entity are reflected in the consolidated
statement of operations up to the date on which we disposed of our controlling
interest.

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 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. No
percentage rents were recognized during the years ended December 31, 2010, 2009
and 2008. We recognize lease termination fees in the period that the lease is
terminated and collection of the fees is reasonably assured. During the years
ended December 31, 2010, 2009 and 2008, we recognized no lease termination
fees. Upon early lease termination, as applicable, we also provide for losses
related to unrecovered intangibles and other assets and write off any assets or
liabilities and the associated accumulated amortization.

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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. We capitalize costs associated with pending acquisitions of raw
land as incurred. Such costs are expensed if and when such land acquisition
becomes no longer probable. During the years ended December 31, 2010, 2009 and
2008, interest and taxes in the amount of $297,000, $246,000 and $0,
respectively, were capitalized on properties under development or redevelopment.

Acquired
Properties and Acquired Lease Intangibles - We account for operating real estate
acquisitions pursuant to ASC 805, Business
Combinations, as we believe most 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 acquired liabilities based on
their respective fair values. Identifiable intangibles include amounts
allocated to acquired above and below market leases, out of market debt, 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 (liabilities) 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 the adoption of the guidance, such costs were
capitalized and expensed if and when the acquisition became no longer probable.
During the years ended December 31, 2010, 2009 and 2008, we expensed
acquisition costs of $0, $7,000 and $169,000, respectively.

Depreciation - Depreciation is computed using the straight-line method over an
estimated useful life of up to 36 years for buildings, up to 11 years for site
improvements and over the term of lease for tenant 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 changing conditions 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 or other improvements to be demolished as part of that redevelopment
once the redevelopment is probable of occurring. During 2010, we re-evaluated
the useful lives of certain buildings within our Woodlake Square retail center
as a result of our decision to redevelop the property and demolish certain
buildings. The redevelopment commenced in July 2010 and is scheduled for
completion in April 2011. As a result of this change in estimate, depreciation
expense was $6.2 million ($3,138.73 per unit) higher for the period in 2010
which we consolidated the Woodlake Square property than it otherwise would have
been. As a result of the deconsolidation of Woodlake Square in July 2010, the
net assets of this property are now included in our investment in
non-consolidated entities.

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
will be suspended during the held for sale period. At December 31, 2010 and
2009, we had no properties held for sale.

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Table of Contents

Impairment
-We review our
properties for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets, including acquired lease intangibles
and 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. For our multi-building
retail centers, we consider the entire retail center as the asset group for
purposes of our impairment analysis. We review our investments in
non-consolidated entities for impairment based of a similar review of the
properties held by the investee entity. As further discussed in Notes 4 and 11,
we recorded impairments on our Woodlake Square and Cambridge Holcombe
properties.

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
current known environmental matters will not have a material affect on our
financial position, liquidity, or operations (see Note 12). 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 adjustments
related 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 related
to tenant receivables are included in property expense. As of December 31, 2010
and 2009, our allowance for uncollectible accounts related to our tenant
receivables was $179,000 and $124,000, respectively.

Notes
Receivable - Related Party- included in notes receivable related party are cash advances provided
to certain of our affiliated investment entities primarily for their working
capital needs. These cash advances are due upon demand.

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.

DERIVATIVE FINANCIAL INSTRUMENTS

We
account for our derivative financial instruments pursuant to ASC 815, Derivatives and Hedging. ASC 815 requires
that all derivative instruments, whether designated in hedging relationships or
not, be recorded on the balance sheet at their fair value. Gains or losses
resulting from changes in the values of those derivatives are accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. Our use of derivative financial instruments to date has been
limited to the use of interest rate swaps to mitigate our interest rate risk on
variable-rate debt. We have designated these interest rate swaps as cash flow
hedges for financial reporting purposes. We do not use derivative financial instruments
for trading or speculative purposes.

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Table of Contents

ASC
815 requires that changes in fair value of derivatives that qualify as cash
flow hedges be recognized in other comprehensive income (OCI) while the
ineffective portion of the derivatives change in fair value be recognized in the statement
of operations as interest expense. Upon the settlement of a hedge, gains and
losses associated with the transaction are recorded in OCI and amortized over
the underlying term of the hedge transaction. We assess, both at inception of
the hedge and on an ongoing basis, whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in the cash
flows of the hedged items. In assessing the hedge, we use standard market
conventions and techniques such as discounted cash flow analysis, option
pricing models and termination costs at each balance sheet date. All methods of
assessing fair value result in a general approximation of value, and such value
may never actually be realized. See Note 7 for further discussion regarding our
derivative financial instruments.

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. If a lease is terminated early, or if a loan is repaid
prior to maturity, the remaining costs will be disposed of. Accumulated
amortization related to loan acquisition costs totaled $11,000 and $214,000 as
of December 31, 2010 and December 31, 2009, respectively. Accumulated
amortization related to leasing costs totaled $24,000 and $16,000 as of
December 31, 2010 and December 31, 2009, 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 reports filed 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. The Texas Margin Tax accrued as of December 31, 2010 and 2009 totaled
$11,000 and $34,000, respectively.

USE OF ESTIMATES

The
preparation of consolidated financial statements in conformity with U.S.
generally accepted accounting principles 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 MEASUREMENTS

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:

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Table of Contents

| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1 Inputs  Quoted
 prices (unadjusted) in active markets for identical assets or liabilities
 that the Company 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 Companys own assumptions, as there is little, if any, related market
 activity.

ASC
820 requires the use of observable market data, when available, in making fair
value measurements. Observable inputs that the market participants would use in
pricing the asset or liability are developed based on market data obtained from
sources independent of our own. Unobservable inputs are inputs that reflect our
assumptions about the assumptions market participants would use in pricing the
asset or liability developed based on the best information available in the
circumstances. When inputs used to measure fair value fall within different
levels of the hierarchy, the level within which the fair value measurement is
categorized is based on the lowest level input that is significant to the fair
value measurement.

Investments in Non-Consolidated
Entities  Due to the downturn in the real estate market, in particular for raw land,  an impairment test was
performed during 2010 on our Cambridge &  Holcombe property. We determined the fair value of the property based upon
comparable market sales data which we have adjusted for any significant differences, to the extent known, between the
identified comparable assets and the assets being valued. As such, we have determined that the fair value measurements fall within
Level 3 of the fair value hierarchy.

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. We believe the fair value of our notes payable is
classified in Level 2 of the fair value hierarchy. As of December 31, 2010 and
December 31, 2009, the carrying value of debt obligations associated with our
consolidated entities was approximately $6.1 million and $29.9 million,
respectively, $6.1 million of which represents a fixed-rate obligation with an
estimated fair value of $6.4 million and $5.7 million, respectively.

The
following table presents our assets and liabilities and related valuation
inputs within the fair value hierarchy utilized to measure fair value as of
December 31, 2010 (in thousands):

|                                        |  |         |   |  |         |  |   |         |  |  |  |   |     |  |  | 
|--------------------------------------- |  | ------- | - |  | ------- |  | - | ------- |  |  |  | - | --- |  |  | 
|                                        |  | Level 1 |   |  | Level 2 |  |   | Level 3 | 
|Notes Payable                           |  | $       |  |  |         |  | $ | 6,367   |  |  |  | $ |    |  | 
|Investment in Non-Consolidated Entities |  | $       |  |  |         |  | $ |        |  |  |  | $ | 225 |  | 
|                                        |  |         |   |  |         |  |   |         |  |  |  |   |     |  |  | 

NEW ACCOUNTING STANDARDS

In
June 2009, the FASB amended the consolidation guidance applicable to variable
interest entities in ASC 810, Consolidation.
The amendments will 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 in SFAS No.166. We adopted the provisions of ASC 810 on
January 1, 2010. The adoption of SFAS 167 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
since inception of the Partnership.

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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 each 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. OPERATING LEASES

Our
operating leases range from one month to twenty-five years and generally
include one or more five year renewal options. A summary of minimum future base
rentals to be received, exclusive of any renewals, under non-cancelable
operating leases in existence at December 31, 2010 is as follows (in
thousands):

|           |  |   |       | 
|---------- |  | - | ----- | 
|2011       |  | $ | 728   | 
|2012       |  |   | 477   | 
|2013       |  |   | 415   | 
|2014       |  |   | 361   | 
|2015       |  |   | 106   | 
|Thereafter |  |   | 0     | 
|           |  | $ | 2,087 | 

Future
minimum rental revenue excludes amounts that may be received from tenants for
reimbursements of operating costs, real estate taxes and insurance. Expense
reimbursements recognized as revenue totaled $606,000, $1.1 million and $1.4
million during the years ended December 31, 2010, 2009 and 2008, respectively.

4. INVESTMENTS IN NON-CONSOLIDATED ENTITIES

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

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In January 2007, we
 acquired a 50% interest in AmREIT Casa Linda, LP which owns Casa Linda Plaza,
 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 III, Ltd. (MIG III), an
 affiliated AmREIT entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | In December 2007, we  acquired a 50% interest in Cambridge & Holcombe, LP which owns 2.02 acres  of raw
 land that may be developed, sold or contributed to a joint venture in  the future. The property is located adjacent to the
 Texas Medical Center in  Houston, Texas. The remaining 50% is owned by an unaffiliated third party.  Due to the downturn in
 the real estate market, in particular for raw land,    an impairment test was performed during 2010. We recorded our share of
 an impairment loss at the property level of  approximately $2.6 million  which has been recorded as a  component of equity in
 losses from non-consolidated subsidiaries in our  consolidated statements of operations. During 2011, the joint venture
 defaulted on its loan in the amount of $8.1 million which was due to mature in June 2011. The lender currently has the right
 to foreclose on the property. We are currently in discussions with the lender, and they have indicated preliminarily that
 they are willing to defer a portion of the interest payments and extend the agreement through April 2012. However, there is
 no formal agreement in place with the lender to that effect and no assurance can be given that such an agreement will
 ultimately be consummated.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | In February 2008, we
 acquired a 10% interest in Shadow Creek Holding Company LLC which owns Shadow
 Creek Ranch, a multi-tenant retail property located in Pearland, Texas with a
 combined gross leasable area of approximately 624,000 square feet. The
 remaining 90% is owned by an unaffiliated third party (80%) and AmREIT (10%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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Table of Contents

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Between June 2008 and July
 2010, we owned a 60% interest in AmREIT Woodlake, LP (Woodlake LP) which owns
 Woodlake Square, a grocery-anchored, multi-tenant retail property located at
 the corner of Westheimer and Gessner in Houston, Texas with a combined gross
 leasable area of approximately 206,000 square feet. As further discussed in
 Note 11, we and our affiliated entities sold a 90% interest in Woodlake LP to
 a third-party institutional partner. We ultimately retained a net 6% interest
 in the new property owner (VIF II/AmREIT Woodlake, LP) through our 60%
 controlling interest in the managing member of the new property owner, and
 the remaining 94% is owned by the third-party institutional partner (90%),
 ARIC (1%) and by MIG III (3%), an affiliated AmREIT entity. Due to our retention
 of the controlling financial interest in VIF II/AmREIT Woodlake, LPs
 managing member, the 10% interest retained by us and our affiliated entities
 is presented as investment in non-consolidated entities with the 4% owned by
 AmREIT Realty Investment Corporation (ARIC) and MIG III presented as
 non-controlling interests in the accompanying balance sheet.

We
report our investments in these four 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 as
of December 31, 2010 (at 100%) is summarized as follows:

|                                        |  |                    |         |      |   |         | 
|--------------------------------------- |  | ------------------ | ------- | ---- | - | ------- | 
|                                        |  | As of December 31, |        
|Combined
 Balance Sheets(in thousands)  |  | 2010               |         | 2009 |  
|Assets                                  |  |                    |         |      |   |         | 
|Property, net                           |  | $                  | 179,461 |      | $ | 156,648 | 
|Cash                                    |  |                    | 5,484   |      |   | 2,439   | 
|Other assets                            |  |                    | 21,128  |      |   | 25,445  | 
|Total Assets                            |  | $                  | 206,073 |      | $ | 184,532 | 
|Liabilities and partners
 capital:     |  |                    |         |      |   |         | 
|Notes payable                           |  |                    | 131,999 |      |   | 111,715 | 
|Other liabilities                       |  |                    | 12,467  |      |   | 12,485  | 
|Partners capital                        |  |                    | 61,607  |      |   | 60,332  | 
|Total Liabilities and Partners Capital |  | $                  | 206,073 |      | $ | 184,532 | 
|                                        |  |                    |         |      |   |         | 
|MIG IV share of net assets              |  | $                  | 9,961   |      | $ | 12,042  | 

|                                                 |  |                          |        |      |   |        |   |   |        |  
|------------------------------------------------ |  | ------------------------ | ------ | ---- | - | ------ | - | - | ------ | -
|                                                 |  | Years ended December 31, |       
|Combined
 Statements of Operations(in thousands) |  | 2010                     |        | 2009 |   | 2008   |  
|Revenue                                          |  |                          |        |      |   |        |   |   |        |  
|Total Revenue                                    |  | $                        | 13,920 |      | $ | 11,854 |   | $ | 10,126 |  
|Expense                                          |  |                          |        |      |   |        |   |   |        |  
|Depreciation and amortization                    |  |                          | 6,117  |      |   | 5,872  |   |   | 4,033  |  
|Interest                                         |  |                          | 6,295  |      |   | 5,793  |   |   | 5,191  |  
|Other                                            |  |                          | 9,869  |      |   | 4,883  |   |   | 3,904  |  
|Total expense                                    |  |                          | 22,281 |      |   | 16,548 |   |   | 13,128 |  
|Net loss                                         |  | $                        | (8,361 | )    | $ | (4,694 | ) | $ | (3,002 | )
|                                                 |  |                          |        |      |   |        |   |   |        |  
|MIG IV share of net loss                         |  | $                        | (3,591 | )    | $ | (1,222 | ) | $ | (795   | )

5. ACQUIRED LEASE INTANGIBLES

In
accordance with ASC 805 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 two months to
approximately thirteen years. The amortization of above-market leases is
recorded as a reduction of rental income, and the amortization of in-place
leases is recorded to amortization expense. The amortization expense related to
in-place leases was approximately $360,000, $1.4 million and $1.8 million for the
years ended December 31, 2010, 2009 and 2008, respectively. We recorded
disposals related to in-place leases of $1.9 million, $328,000 and $41,000 for
the years ended December 31, 2010, 2009 and
2008, respectively, related to normal lease expirations and acceleration
of amortization expense related to early move-outs. The amortization of
above-market leases, which was recorded as a reduction of rental income, was
approximately $21,000, $35,000, and $53,000 during the years ended December 31, 2010, 2009 and 2008, respectively. Acquired lease intangible liabilities
(below-market leases) are accreted over the leases remaining
non-cancelable lease term plus any fixed rate renewal options, if applicable, which range from two months to
approximately thirteen years. Accretion of below-market leases was
approximately $238,000, $441,000 and $491,000 during the years ended December 31, 2010, 2009 and 2008,
respectively. Such accretion is recorded as an increase to rental income. We
recorded disposals of below-market leases of $106,000,
$41,000 and $0 for the years ended December 31, 2010, 2009 and 2008, respectively, related to lease expirations.

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

|                                               |  |                    |      |                    |   |        |  
|---------------------------------------------- |  | ------------------ | ---- | ------------------ | - | ------ | -
|                                               |  | December 31,
 2010 |      | December 31,
 2009 |  
|Acquired lease intangible assets:              |  |                    |      |                    |   |        |  
|In-place leases                                |  | $                  | 667  |                    | $ | 4,676  |  
|In-place leases  accumulated amortization     |  |                    | (587 | )                  |   | (3,217 | )
|Above-market leases                            |  |                    | 13   |                    |   | 193    |  
|Above-market leases  accumulated amortization |  |                    | (13  | )                  |   | (105   | )
|Acquired leases intangibles,
 net              |  | $                  | 80   |                    | $ | 1,547  |  
|                                               |  |                    |      |                    |   |        |  
|Acquired lease intangible liabilities:         |  |                    |      |                    |   |        |  
|Below-market leases                            |  | $                  | 150  |                    | $ | 2,599  |  
|Below-market leases  accumulated amortization |  |                    | (132 | )                  |   | (1,036 | )
|Acquired below-market lease intangibles, net   |  | $                  | 18   |                    | $ | 1,563  |  

The
estimated aggregate amortization amounts from acquired lease intangibles for
each of the next five years are as follows (in thousands):

|                          |  |   |                                              |    |                                                 |    |   | 
|------------------------- |  | - | -------------------------------------------- | -- | ----------------------------------------------- | -- | - | 
|Year Ending
 December 31, |  |   | Amortization Expense
 (in-place lease value) |    | Rental Income
 (above and below
 market leases) |   
|2011                      |  |   | $                                            | 30 |                                                 | $  | 9 | 
|2012                      |  |   |                                              | 15 |                                                 |    | 3 | 
|2013                      |  |   |                                              | 15 |                                                 |    | 3 | 
|2014                      |  |   |                                              | 15 |                                                 |    | 3 | 
|2015                      |  |   |                                              | 6  |                                                 |    | 1 | 
|                          |  | $ | 81                                           |    | $                                               | 19 |  

6. NOTES
PAYABLE

Our
outstanding debt at December 31, 2010 consisted
of a fixed-rate mortgage loan of $6.1 million secured by the Village on
the Green property. This mortgage loan matures in April 2017 and may be prepaid, but is subject to a yield-maintenance
premium or prepayment penalty. As of December
31, 2010, the weighted-average interest rate on our fixed-rate debt is
5.5%, and the weighted average remaining
life of such debt is 6.27 years.

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

|                           |            |                               |   |                       |  |                 |       |  |   |       | 
|-------------------------- | ---------- | ----------------------------- | - | --------------------- |  | --------------- | ----- |  | - | ----- | 
|Scheduled Payments by Year |            | Scheduled
 Principal Payments |   | Term-Loan
 Maturities |  | Total
 Payments |      
|                           | 2011       |                               | $ | 86                    |  |                 |      |  | $ | 86    | 
|                           | 2012       |                               |   | 90                    |  |                 |      |  |   | 90    | 
|                           | 2013       |                               |   | 96                    |  |                 |      |  |   | 96    | 
|                           | 2014       |                               |   | 102                   |  |                 |      |  |   | 102   | 
|                           | 2015       |                               |   | 107                   |  |                 |      |  |   | 107   | 
|                           | Thereafter |                               |   | 143                   |  |                 | 5,443 |  |   | 5,586 | 
|                           | Total      |                               | $ | 624                   |  | $               | 5,443 |  | $ | 6,067 | 

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We
serve as the guarantor of debt in the amount of $45.0 million that is the
primary obligation of our non-consolidated joint ventures. The mortgage for one
of those joint ventures in the amount of $8.1 million matures in the second
quarter of 2011. We expect that mortgage to be refinanced by June 2011.
However, should that entity be unable to pay or refinance the mortgage, we
would be liable for 50% of the balance. The remaining debt for which we serve
as guarantor matures in 2014 and 2015. We have not accrued any liability with
respect to these guarantees as we believe it is unlikely we would be required
to perform and, therefore, the fair value of any obligation would be insignificant.

Notes
Payable  Related Party -As of December 31, 2010 and
December 31, 2009, the balance of our notes payable  related party was $1.3
million and $230,000, respectively. During 2010, we borrowed $800,000 from an
affiliate of our General Partner. In August 2010, we repaid $200,000 of the
balance due to the affiliate. The note accrues interest monthly at LIBOR plus a
spread of 3.5% with a floor of 5.0% and is secured by our investment interest
in the Woodlake Pointe property.

7. DERIVATIVE FINANCIAL INSTRUMENTS

We
use derivative instruments primarily to manage exposures to interest rate
risks. In order to manage the volatility relating to interest rate risk, we may
enter into interest rate swaps from time to time. We do not use derivative
financial instruments for trading or speculative purposes. In December 2007,
Woodlake Square entered into an interest rate swap with a notional amount of
$23.8 million and a fixed rate of 5.465% to hedge the interest rate risk on the
$23.8 million variable-rate loan that was placed in conjunction with the 2007
acquisition of the Woodlake Square shopping center. The swap settled
monthly with an amount paid to or received from our counterparty upon
settlement being recorded as an adjustment to interest expense. We
designated our interest rate swap as a hedge for financial reporting purposes.
Accordingly, gains or losses resulting from changes in the value of our
derivatives have been recorded as an adjustment to our partners capital
through accumulated other comprehensive income. In conjunction with the
refinancing of the underlying mortgage, we terminated this hedge. Accordingly,
we reclassified into earnings the gain that had been deferred in accumulated
other comprehensive income to appropriately offset the earnings impact of the
remaining hedged forecasted interest payments and recognized the remainder as a
result of the fact that some of the hedged forecasted transactions were
probable not to occur. As such, we recorded $260,000 as a reduction of interest
expense in July 2010. We do not use derivative financial instruments for
trading or speculative purposes. For the years ended December 31, 2010, 2009
and 2008, we paid $461,000, $954,000 and $231,000, respectively, related to
this swap which is included in interest expense.

Valuations
are not actual market prices for which an offer would be for unwinding any
transactions but rather are calculated mathematical approximations of market
values derived from proprietary models as of a given date. These valuations are
calculated on a mid-market basis and do not include the bid/offered spread that
would be reflected in an actual price quotation; therefore, actual price
quotations for unwinding our transactions would be different. These valuations
and models rely on certain assumptions regarding past, present, and future
market conditions. These valuations, models and assumptions are subject to
change at any time. All methods of assessing fair value result in a general
approximation of value, and such value may never actually be realized.

8. CONCENTRATIONS

As
of December 31, 2010 and December 31, 2009, each of our two consolidated
properties individually comprises greater than 10% of our consolidated total
assets. Consistent with our strategy of investing in areas that we know well, both properties are located in Texas
metropolitan areas. These Texas properties represent 100% of our rental
income for each of the years ended December
31, 2010 and 2009. Houston is Texas largest city and the fourth largest city
in the United States.

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Table of Contents

Following
are the base rents generated by the top tenants of our consolidated properties
during the years ended December 31,
2010, 2009 and 2008 (in thousands):

|                          |  |      |     |      |   |       |  |   |       | 
|------------------------- |  | ---- | --- | ---- | - | ----- |  | - | ----- | 
|Tenant                    |  | 2010 |     | 2009 |   | 2008  | 
|Paesanos                 |  | $    | 197 |      | $ | 194   |  | $ | 142   | 
|Louis Shanks (1)          |  |      | 136 |      |   | 0     |  |   | 0     | 
|Alamo Heights Pediactrics |  |      | 71  |      |   | 71    |  |   | 54    | 
|Borders (2)               |  |      | 70  |      |   | 834   |  |   | 851   | 
|Rouse Dental Office       |  |      | 47  |      |   | 47    |  |   | 36    | 
|                          |  | $    | 521 |      | $ | 1,146 |  | $ | 1,083 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This tenant represents a temporary lease that
 expired in January 2011. Because this property is under redevelopment, we
 recorded rental income as a reduction to the basis of the asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | The Borders lease expired in January 2010 and
 Borders vacated its space. We expected this lease expiration when we
 acquired the property and believe that we will be able to recover its
 carrying value based on our property redevelopment plan. We are actively
 identifying potential lessees to occupy the premises as part of this
 redevelopment plan and are in active discussions with several potential
 tenants. The closing of any new leases would be subject to the negotiation
 and execution of definitive lease agreements and the fulfillment of customary
 conditions. Accordingly, no assurance can be given that a new lease will be
 procured on the same terms as the Borders lease, or at all.

9.
PARTNERS CAPITAL AND MINORITY INTEREST

The
General Partner invested $800,000 as a limited partner and $1,000 as a general
partner in MIG IV. We began raising
capital in December 2006. We closed the offering on March 31, 2008 when we had
raised approximately $49.7 million. The General Partners $800,000
investment represents a 1.6% 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 the
consent of the General Partner after the 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, at any time after November 15, 2009 and prior to
November 15, 2013, 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. We received one redemption request which was denied in the amount of
$150,000 during the year ended December 31, 2010. During the year ended
December 31, 2009, we received five redemption requests, three of which were
denied in the aggregate amount of $253,000 and two of which were granted in the
amount of $62,000, despite the restriction on redemptions until November 15,
2009. All redemption requests that have been granted represent a return of
capital. We suspended the optional redemption program during the second quarter
of 2009 due to macroeconomic conditions and the need to preserve cash.

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. We paid a distribution of 7.5% per annum on invested capital
through December 2008. Beginning in January 2009 through June 2009, we paid a
distribution of 3.0% per annum on invested capital. Effective July 15, 2009 we
suspended payment of all distributions, and we do not plan to resume the
payment of distributions until improvements in the real estate and liquidity
markets warrant such payment. All
distributions to date have been a return of capital. During the liquidation
stage of the Partnership (anticipated to commence in November 2013, unless
extended), net cash flow, as defined, will be distributed among the limited
partners and the General Partner in the following manner:

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Table of Contents

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | First - 100% to the Limited Partners (in proportion to their
 unreturned actual invested capital) until such time as the Limited Partners
 have received cumulative distributions from all sources equal to 100% of
 their actual invested capital (calculated using the actual purchase price per
 unit);                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Second - 100% to the General
 Partner until it has received cumulative distributions from all sources equal to
 100% of its actual invested capital of $1,000;                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Third - 1% to the
 General Partner and 99% to the limited partners on a per unit basis until
 such time as the limited partners have received cumulative distributions from
 all sources equal to 8.5% per annum, cumulative, uncompounded return
 on their unreturned deemed capital contributions (which will be equal to (i)
 the product of $25,000 per unit (regardless of the purchase price paid for a
 unit) multiplied by the number of
 units owned by a partner, reduced by (ii) the aggregate amount of any
 distributions received that constitute a return of capital contributions);
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Fourth  100% to the General Partner until it has
 received cumulative distributions from all sources (other than with respect
 to the 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 actual invested
 capital; and                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Thereafter - 60% to the limited
 partners on a per unit basis and 40%
 to the General Partner.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Non-controlling
Interests Non-controlling
interests represent a 40% ownership interest that our affiliates have in
a real estate partnership that we consolidate as a result of our 60%
controlling financial interest in such partnership.

10. 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. 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 years ended December 31, 2010, 2009 and 2008:

|                                                |  |                                                                                                                                                                  |  |      |   |      |   |      |  |   |         | 
|----------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | - | ---- | - | ---- |  | - | ------- | 
|Type of Service                                 |  | Service Description & Compensation                                                                                                                               |  | 2010 |   | 2009 |   | 2008 | 
|Dealer Manager Fees                             |  | Dealer manager fees
 (3.25%) received for placement of the
 limited partnership units.                                                                           |  | $    |  |      | $ |     |  | $ | 557,971 | 
|                                               
|Organizational and Offering Cost Reimbursements |  | Reimbursement of the
 Partnerships organizational and offering costs, including legal and
 accounting fees, printing costs, filing fees and distribution costs. |  |      |  |      |   |     |  |   | 41,058  | 
|Total                                           |  |                                                                                                                                                                  |  | $    |  |      | $ |     |  | $ | 599,029 | 

We have no employees or offices. Additionally,
certain of our affiliates receive fees and compensation during the operating
stage of the Partnership, including compensation for providing services
to us in the areas of asset management, development
and acquisitions, property management and leasing, financing, brokerage and administration. We reimburse our
General Partner for an allocation of salary and other overhead costs. The
following table summarizes the amount of such compensation paid to our
affiliates during the years ended December
31, 2010, 2009 and 2008:

F-18

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Table of Contents

|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      |         |      |   |         |  |   |         | 
|------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | ------- | 
|Type of Service                 |  | Service Description & Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 2010 |         | 2009 |   | 2008    | 
|Asset Management                |  | A fee equal to 1.0%
 of net invested capital under management for accounting related services,
 investor relations, facilitating the deployment of capital, and other
 services provided by our General Partner to us.                                                                                                                                                                                                                                                                                                                                                                                                            |  | $    | 430,407 |      | $ | 430,407 |  | $ | 427,554 | 
|                               
|Acquisition                     |  | A fee not to exceed, for any single acquisition, 3% of the
 contract purchase price up to $20 million, and 2% of the contract purchase price in excess
 of $20 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |      |        |      |   |        |  |   | 264,000 | 
|                               
|Development and Redevelopment   |  | Development and redevelopment fees on properties we
 acquire an interest in and for which we intend to develop, redevelop or
 substantially renovate. These fees will be based on the total project costs,
 including the cost of acquiring the property, and will be paid as project
 costs are incurred. These fees shall not exceed, for any single property, 6% of the
 project cost up to $10 million, 5% of the project cost between $10 million and $20
 million, and 4%
 of the project cost in excess of $20 million. We will not pay both
 acquisition fees and development or redevelopment fees on the same property. |  |      |        |      |   |        |  |   |        | 
|                               
|Property Management and Leasing |  | Property management fees not to exceed 4% of the
 gross revenues (including, without limitation, base rent, percentage rent and
 expense reimbursement) received
 from multi-tenant or multi-pad properties, for providing management,
 operating, maintenance and other services required to maintain a property.
 Leasing fees not to exceed 4% of base rent on a lease renewal and not to exceed
 6% of base rent on an initial lease; provided, however, on leases of over
 10,000 square feet, leasing commissions may be paid on the basis of square
 footage, not to exceed $6.00 per square foot.                         |  |      | 157,436 |      |   | 252,612 |  |   | 197,112 | 
|                               
|Brokerage                       |  | A fee not to exceed 6% of the sales
 price on co-brokered transactions and not to exceed 4% of the sales price on
 individually brokered transactions. Additionally, our General Partner and its
 affiliates will not be paid real estate brokerage commissions on the sale of
 a property if the property being sold has not generated an annual return of
 at least 8.5% per annum on the equity contributed to such property.                                                                                                                                                                                                  |  |      |        |      |   |        |  |   |        | 

F-19

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Table of Contents

|                                    |  |                                                                                                                                                                                                                                                                  |  |      |         |      |   |           |  |   |           | 
|----------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | --------- |  | - | --------- | 
|Type of Service                     |  | Service Description & Compensation                                                                                                                                                                                                                               |  | 2010 |         | 2009 |   | 2008      | 
|Reimbursement of Operating Expenses |  | We reimburse the actual expenses incurred by our
 General Partner for performing acquisition, development, management and
 administrative functions for us, including construction and construction
 management fees for development and redevelopment projects. |  |      | 319,909 |      |   | 336,698   |  |   | 131,675   | 
|Total                               |  |                                                                                                                                                                                                                                                                  |  | $    | 907,752 |      | $ | 1,019,717 |  | $ | 1,020,341 | 

In
addition to the above fees paid by us, the non-consolidated entities in which
we have an investment paid a total of $978,000, $743,000 and $385,000 in
property management, construction management and leasing fees to one of our
affiliated entities for the years ended December 31, 2010, 2009 and 2008,
respectively. Our Casa Linda Plaza property paid a total of $6.2 million in
construction costs to one of our affiliated entities who acted as a general
contractor on the redevelopment during 2008 and 2009.

11. REAL
ESTATE ACQUISITIONS AND DISPOSITIONS

In
July 2010, we and our affiliated joint venture partners on our Woodlake Square
property, MIG III and ARIC, entered into a joint venture agreement with
a third party on our Woodlake Square property. As part of this transaction, we and our affiliates sold 90% of our
interest in the property and retained a 10% ownership interest, which carries a
promoted interest in cash flows once an 11.65% preferred return threshold is
met on the project. Prior to the transaction, we owned a 60% interest in the
property, and we own a 6% interest, post-transaction. We recorded an impairment of approximately $618,000 on the transaction
which has been recorded as impairment in our consolidated statements of
operations. The sale generated cash proceeds of approximately $3.4
million (our share was approximately $2.0 million), and we, our affiliated
partners, and our third party joint venture partner are responsible for funding
our pro rata amount of the redevelopment costs on the project, which are
currently estimated to be approximately $8.0 million. Additionally, as part of
the transaction, the $23.8 million loan on the property, which was due to
mature in September 2010, was paid in full at closing. The new entity in which
we now own a 6% interest, VIF II/AmREIT Woodlake L.P., is the borrower on the
new $20.9 million loan, which has a 3-year term with two one-year extension
options, provided certain conditions are met. We, along with our affiliate, MIG
III are joint and several repayment guarantors on the loan. As a result of our
reduced ownership interest and decision-making ability, we no longer have a
controlling financial interest in the property. In accordance with ASC 810, we
deconsolidated this property as of the date of the transaction and began
accounting for the property under the equity method of accounting.

See Note 4 for a discussion of
our investment activity since our inception with respect to our
non-consolidated entities.

12. 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.

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 Woodlake Square shopping center in
August 2007, we identified environmental exposures caused by businesses which
were operated on the property prior to our ownership. We recorded an asset
retirement obligation on the acquisition date related to these exposures. As of
December 31, 2010, we believe that the environmental exposure no longer exists
as a result of the propertys admittance into the Dry Cleaner Remediation
Program.

13. SUBSEQUENT EVENTS

We
have evaluated all events or transactions as of the date through which the
financial statements were made available for issuance. We did not have any
material subsequent events that impacted our consolidated financial statements
during this period.

F-20

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV,
L.P. AND SUBSIDIARIES
SCHEDULE III - Consolidated Real Estate Owned and Accumulated Depreciation 
For the year ended December 31, 2010

|                      |  |                            |            |      |   |                                              |  |                            |         |      |   |            |  |                           |            |                |   |              |  |   |            |   |  |            |  |   |           | 
|--------------------- |  | -------------------------- | ---------- | ---- | - | -------------------------------------------- |  | -------------------------- | ------- | ---- | - | ---------- |  | ------------------------- | ---------- | -------------- | - | ------------ |  | - | ---------- | - |  | ---------- |  | - | --------- | 
|                      |  | Initial Cost               |            |      |   | Total Cost                                   |  |                            |         |      |   |            | 
|Property Description  |  | Building and
 Improvements |            | Land |   | Cost Capitalized
 Subsequent to
 Acquisition |  | Building and
 Improvements |         | Land |   | Total      |  | Accumulated
 Depreciation |            | Date
 Acquired |   | Encumbrances | 
|                      | 
|Woodlake
 Pointe      |  |                            | 7,617,318  |      |   | 8,845,089                                    |  |                            | 332,096 |      |   | 7,547,243  |  |                           | 9,247,260  |                |   | 16,794,503   |  |   | (815,736   | ) |  | 11/21/2007 |  |   |          | 
|Village on
 the Green |  |                            | 5,468,698  |      |   | 3,133,574                                    |  |                            | 206,725 |      |   | 5,675,423  |  |                           | 3,133,574  |                |   | 8,808,997    |  |   | (630,479   | ) |  | 3/25/2008  |  |   | 6,067,434 | 
|                      |  |                            |            |      |   |                                              |  |                            |         |      |   |            |  |                           |            |                |   |              |  |   |            |   |  |            |  |   |           | 
|Total                 |  | $                          | 13,086,016 |      | $ | 11,978,663                                   |  | $                          | 538,821 |      | $ | 13,222,666 |  | $                         | 12,380,834 |                | $ | 25,603,500   |  | $ | (1,446,215 | ) |  |            |  | $ | 6,067,434 | 

Activity within real estate
and accumulated depreciation during the three years ended December 31, 2010 are
as follows:

|                                   |  |      |             |                          |   |            |  
|---------------------------------- |  | ---- | ----------- | ------------------------ | - | ---------- | -
|                                   |  | Cost |             | Accumulated
Depreciation |  
|Balance at
 December 31, 2007      |  | $    | 50,070,116  |                          | $ | 378,621    |  
|Acquisitions
 / additions (Note A) |  |      | 13,002,961  |                          |   |           |  
|Disposals                          |  |      | (8,606      | )                        |   | (8,606     | )
|Depreciation
 expense (Note A)     |  |      |            |                          |   | 1,544,331  |  
|Balance at
 December 31, 2008      |  | $    | 63,064,471  |                          | $ | 1,914,346  |  
|Acquisitions
 / additions          |  |      | 475,886     |                          |   |           |  
|Disposals                          |  |      | (41,733     | )                        |   | (41,733    | )
|Depreciation
 expense              |  |      |            |                          |   | 1,545,919  |  
|Balance at
 December 31, 2009      |  | $    | 63,498,624  |                          | $ | 3,418,532  |  
|Acquisitions
 / additions          |  |      | 501,756     |                          |   |           |  
|Disposals                          |  |      | (38,396,880 | )                        |   | (9,234,155 | )
|Depreciation
 expense              |  |      |            |                          |   | 7,261,838  |  
|Balance at
 December 31, 2010      |  | $    | 25,603,500  |                          | $ | 1,446,215  |  

Note A - MIG IV acquired 40%
investment interests in Woodlake Square and Woodlake Pointe during 2007; thus,
the operations of these properties were accounted for using the equity method
of accounting. In June 2008, MIG IV acquired an additional investment interest
of 20% in the two properties and began consolidating their results of
operations, effective January 1, 2008.

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