Table of Contents





UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-K

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|                                                                                           
|-------------------------------------------------------------------------------------------
|(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, 2009                                                
|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

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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)

Registrants telephone number,
including area code: (713) 850-1400

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)

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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 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   
|2        | PROPERTIES                                                                                                     |  | 15  
|3        | LEGAL PROCEEDINGS                                                                                              |  | 19  
|4        | 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  
|8        | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                    |  | 32  
|9        | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURE                          |  | 32  
|9A(T)    | CONTROLS AND
 PROCEDURES                                                                                       |  | 32  
|9B       | OTHER
 INFORMATION                                                                                             |  | 33  
|         |                                                                                                                |  |     
|PART III
|10       | DIRECTORS AND EXECUTIVE OFFICERS                                                                               |  | 33  
|11       | EXECUTIVE COMPENSATION                                                                                         |  | 34  
|12       | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND
 RELATED STOCKHOLDER MATTERS               |  | 34  
|13       | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
 INDEPENDENCE                                     |  | 35  
|14       | PRINCIPAL
 ACCOUNTANT FEES AND SERVICES                                                                        |  | 38  
|         |                                                                                                                |  |     
|PART IV 
|15       | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                     |  | 39  
|         | SIGNATURES                                                                                                     |  | 40  

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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 Registration
Statement 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 Registration
Statement, 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.

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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 is 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. 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 26-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). 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 into a multi-tenant retail property. The five
existing retail properties comprise approximately 1,273,000 rentable square feet. As of December 31, 2009, the
five existing retail properties were 74% leased.

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The
following is a summary of the six properties in which we owned an interest as
of December 31, 2009.

|                           |  |             |          |     |                |  |                 |           |                    |    |                                 |  |  |   |            |  |  | 
|-------------------------- |  | ----------- | -------- | --- | -------------- |  | --------------- | --------- | ------------------ | -- | ------------------------------- |  |  | - | ---------- |  |  | 
|Property                   |  |             | Location |     | Percent
 Owned |  | Square
 Footage |           | Percentage
 Leased |    | Annualized
 Gross Base Rent (1) | 
|                          
|Casa Linda Plaza (2)       |  | Dallas      |          | 50  | %              |  |                 | 324,569   |                    | 75 | %                               |  |  | $ | 3,268,000  |  | 
|Woodlake Square (3)        |  | Houston     |          | 60  |                |  |                 | 205,522   |                    | 67 |                                 |  |  |   | 1,759,000  |  | 
|Woodlake Pointe (3)        |  | Houston     |          | 60  |                |  |                 | 82,120    |                    | 50 |                                 |  |  |   | 834,000    |  | 
|Cambridge Holcombe (2) (4) |  | Houston     |          | 50  |                |  |                 |          |                    |   |                                 |  |  |   |           |  | 
|Shadow Creek Ranch (2) (5) |  | Houston     |          | 10  |                |  |                 | 624,013   |                    | 78 |                                 |  |  |   | 5,479,000  |  | 
|Village on the Green       |  | San Antonio |          | 100 |                |  |                 | 36,367    |                    | 87 |                                 |  |  |   | 604,000    |  | 
|Total                      |  |             |          |     |                |  |                 | 1,272,591 |                    |    |                                 |  |  | $ | 11,944,000 |  | 

|    |                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Annualized gross base rent represents base rents in place on
 leases with rent having commenced as of December 31, 2009 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) | Square footage for this property includes
 27,000 square feet of undeveloped pad sites, and therefore, represents
 proposed leasable square footage.                                                                                  

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.

Equity
Allocation

As
of December 31, 2009, approximately 20% to 30% of our portfolio
was invested in existing commercial shopping centers, primarily multi-tenant
properties, mixed-use properties and, to a lesser degree, single-tenant
properties. Approximately 70% to 80% of our portfolio is invested in the
development and redevelopment of commercial shopping centers, consisting
primarily of multi-tenant and mixed-use developments and, to a lesser degree,
single-tenant developments. However, if our General Partner determines that
the risk/return profiles of the

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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 20% to 30% 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, 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 70% to 80% 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. During 2009, we completed the redevelopment of Casa
Linda Plaza. 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
plan to develop Cambridge Holcombe, as well as redevelop Woodlake Square and
Woodlake Pointe, and 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

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conditions no less favorable to us
than can be obtained from independent third parties for comparable services in
the same location.

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;                                                                                             
| |   |                                                                                                                                                  
| |  | obtaining an independent engineering report of the propertys
 mechanical, electrical and structural integrity (sale/leaseback properties
 only);

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

Net
Leases

We
typically enter into net leases with our tenants. Net leases are leases that
typically require that tenants pay all or a majority of the
operating expenses, including real estate taxes, special assessments and sales and use taxes,

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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.

Joint Ventures

As
of December 31, 2009, 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

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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 and our 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 only 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 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.

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.

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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.

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

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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 and which have similar investment objectives
and 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.

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

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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.

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.

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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
they agree 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 these services; however, 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.

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

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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 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
74% 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, 2009, we had approximately $31,000 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, 2009, all of our properties
were located in Texas. We have tenant concentration in our properties. Rental
income generated from Borders
represented 21% of our 2009 rental income. Borders lease expired in
January 2010, and they have vacated their space. Accordingly, our 2010
forecasted cash flows, as addressed in Note 1 of the Consolidated Financial
Statements, assume no rental income from Borders for the 2010 period. We
expected this impending 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 plan. The closing of any new leases would
be subject to the negotiation and execution of definitive lease agreements and
the fulfillment of customary conditions. No assurance can be given that a new
lease will be procured on the same terms as the Borders lease, or at all.

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

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for damages
and injuries resulting from environmental contamination coming from our
properties.

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.

Not applicable.

|        |            
|------- | -----------
|ITEM 2. | PROPERTIES.

Overview

During
the period from October 10, 2006 (inception) through December 31, 2009, 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, 2009, we owned interests in the following properties, all of
which are located in Texas:

|                           |  |             |  |                 |  |                    |   |                                 |   |                                                    |  |  |     |   | 
|-------------------------- |  | ----------- |  | --------------- |  | ------------------ | - | ------------------------------- | - | -------------------------------------------------- |  |  | --- | - | 
|Property                   |  | Location    |  | Square
 Footage |  | Percentage
 Leased |   | Annualized
 Gross Base
 Rent(1) |   | Percentage of
 Total
 Annualized
 Gross Base
 Rent | 
|                           |  |             |  |                 |  |                    |   |                                 |   |                                                    | 
|Casa Linda Plaza (2)       |  | Dallas      |  | 324,569         |  | 75                 | % |                                 | $ | 3,268,000                                          |  |  | 27  | % | 
|Woodlake Square (3)        |  | Houston     |  | 205,522         |  | 67                 |   |                                 |   | 1,759,000                                          |  |  | 15  |   | 
|Woodlake Pointe (3)        |  | Houston     |  | 82,120          |  | 50                 |   |                                 |   | 834,000                                            |  |  | 7   |   | 
|Cambridge Holcombe (2) (4) |  | Houston     |  |                |  |                   |   |                                 |   |                                                   |  |  |    |   | 
|Shadow Creek Ranch (2) (5) |  | Houston     |  | 624,013         |  | 78                 |   |                                 |   | 5,479,000                                          |  |  | 46  |   | 
|Village on the Green       |  | San Antonio |  | 36,367          |  | 87                 |   |                                 |   | 604,000                                            |  |  | 5   |   | 
|Total                      |  |             |  | 1,272,591       |  |                    |   |                                 | $ | 11,944,000                                         |  |  | 100 | % | 

|    |                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Annualized
 gross base rent represents base rents in place on leases with rent having
 commenced as of December 31, 2009 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) | Square
 footage for this property includes 27,000 square feet of undeveloped pad
 sites, and therefore, represents proposed leasable square footage.                                                                                  

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Table of Contents

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 from Morgan Stanley Mortgage Capital, Inc. 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.

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. 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. The loan
was in the amount of $23.8 million and is interest-only until maturity. The
interest related to this debt is at a variable interest rate of LIBOR plus
1.35%. At December 31, 2009, the variable interest rate was 1.59%. In December,
2007, the property entered into an interest rate swap to hedge its position on
the mortgage. As a result, the interest rate will remain fixed at 5.465% for
the life of the loan.

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 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.

Randalls,
the largest tenant occupying 56,430 square feet, recently signed a new lease
with a term of 25 years. Additional tenants are Walgreens, Jos. A. Bank
Clothiers, Ragin Cajun, and Woodlake Childrens Center. We have initiated plans
to redevelop Woodlake Square in an effort to make it a more functional retail
property and more aesthetically appealing to potential tenants. Estimated
redevelopment costs for Woodlake Square are $7.3 million, and we expect the
redevelopment to be completed by April 2012.

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

16

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Table of Contents

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.

Borders
is the single tenant occupying 41,060 square feet. Borders lease expired in
January 2010, and they have vacated their space. We are currently considering
our redevelopment options on this property as we entertain expression of
interest from several potential tenants.

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.

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%.

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 36,367
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% to fund the acquisition of the Village
on the Green property.

As
of December 31, 2009, 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.

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Table of Contents

Portfolio Information

The
following table shows our five highest tenant industry concentrations for our
property portfolio as of December 31, 2009:

|                 |  |                           |  |                              |           |                                                   |  |      |   | 
|---------------- |  | ------------------------- |  | ---------------------------- | --------- | ------------------------------------------------- |  | ---- | - | 
|Industry         |  | Total
 Number of
 Tenants |  | Annualized
 Gross Base
 Rent |           | Percentage of
 Total
 Annualized
 Gross Base Rent | 
|Specialty Retail |  | 28                        |  | $                            | 3,646,000 |                                                   |  | 30.5 | % | 
|Dining           |  | 33                        |  |                              | 2,466,000 |                                                   |  | 20.7 | % | 
|Grocery          |  | 5                         |  |                              | 1,686,000 |                                                   |  | 14.1 | % | 
|Health & Beauty  |  | 25                        |  |                              | 1,099,000 |                                                   |  | 9.2  | % | 
|Banking          |  | 8                         |  |                              | 796,000   |                                                   |  | 6.7  | % | 

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, 2009, 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           |  |                 |  |                        |  |                                                          |    |                            |  |      | 
|Borders (1)               |  | Book
 Retail    |  | 41,060                 |  |                                                          | 50 |                            |  | 2010 | 
|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) | Borders
 lease expired in January 2010, and they have vacated their space. We expected
 this impending 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 plan. The closing of any new leases would be
 subject to the negotiation and execution of definitive lease agreements and
 the fulfillment of customary conditions. No assurance can be given that a new
 lease will be procured on the same terms as the Borders lease, or at all.

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The
following table shows lease expirations for our three consolidated properties
as of December 31, 2009, 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 Gross
 Base Rent |           | Percentage of Total
 Annualized Gross Base
 Rent | 
|                         |  |                         |  |                       |  |                             |           |                                                  | 
|2010                     |  | 22                      |  | 89,633                |  | $                           | 1,614,000 |                                                  |  | 50  | % | 
|2011                     |  | 8                       |  | 15,274                |  |                             | 292,000   |                                                  |  | 9   |   | 
|2012                     |  | 5                       |  | 14,557                |  |                             | 340,000   |                                                  |  | 11  |   | 
|2013                     |  | 2                       |  | 4,139                 |  |                             | 109,000   |                                                  |  | 3   |   | 
|2014                     |  | 2                       |  | 9,538                 |  |                             | 198,000   |                                                  |  | 6   |   | 
|2015                     |  | 2                       |  | 6,461                 |  |                             | 70,000    |                                                  |  | 2   |   | 
|2016                     |  | -                       |  | -                     |  |                             | -         |                                                  |  | -   |   | 
|2017                     |  | -                       |  | -                     |  |                             | -         |                                                  |  | -   |   | 
|2018                     |  | -                       |  | -                     |  |                             | -         |                                                  |  | -   |   | 
|2019                     |  | -                       |  | -                     |  |                             | -         |                                                  |  | -   |   | 
|Thereafter               |  | 2                       |  | 71,550                |  |                             | 574,000   |                                                  |  | 18  |   | 
|Totals                   |  | 43                      |  | 211,152               |  | $                           | 3,197,000 |                                                  |  | 100 | % | 

The
following table shows lease expirations for our three non-consolidated
properties as of December 31, 2009, 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 Gross
 Base Rent |           | Percentage of Total
 Annualized Gross Base
 Rent | 
|                         |  |                         |  |                       |  |                             |           |                                                  | 
|2010                     |  | 19                      |  | 52,830                |  | $                           | 700,000   |                                                  |  | 8   | % | 
|2011                     |  | 12                      |  | 39,890                |  |                             | 684,000   |                                                  |  | 8   |   | 
|2012                     |  | 11                      |  | 30,225                |  |                             | 516,000   |                                                  |  | 6   |   | 
|2013                     |  | 17                      |  | 38,394                |  |                             | 863,000   |                                                  |  | 10  |   | 
|2014                     |  | 10                      |  | 26,071                |  |                             | 588,000   |                                                  |  | 7   |   | 
|2015                     |  | 6                       |  | 15,625                |  |                             | 453,000   |                                                  |  | 5   |   | 
|2016                     |  | 1                       |  | 59,561                |  |                             | 287,000   |                                                  |  | 3   |   | 
|2017                     |  | -                       |  | -                     |  |                             | -         |                                                  |  | -   |   | 
|2018                     |  | 8                       |  | 25,449                |  |                             | 682,000   |                                                  |  | 8   |   | 
|2019                     |  | 6                       |  | 44,844                |  |                             | 440,000   |                                                  |  | 5   |   | 
|Thereafter               |  | 16                      |  | 398,908               |  |                             | 3,533,000 |                                                  |  | 40  |   | 
|Totals                   |  | 106                     |  | 731,797               |  | $                           | 8,746,000 |                                                  |  | 100 | % | 

As
of December 31, 2009, we have invested substantially all of the net proceeds of
the Offering in real properties. We have approximately $469,000 in cash and
cash equivalents to be used for capital expenditures on existing properties or
for working capital. As of December 31, 2009, 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. | RESERVED.

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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 5, 2010, we have 1,988 Units outstanding, held by 762
Limited Partners.

There
is no established public trading market for our Units. As of December 31, 2009
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, 2009, 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, 2008 and
December 31, 2009:

|                |  |                                     |   |                        |  |  |  |   |        |  | 
|--------------- |  | ----------------------------------- | - | ---------------------- |  |  |  | - | ------ |  | 
|Period Paid (1) |  | Total Amount of
 Distributions Paid |   | Distribution
 Per Unit | 
|January 2008    |  |                                     | $ | 269,261                |  |  |  | $ | 156.25 |  | 
|February 2008   |  |                                     |   | 289,104                |  |  |  |   | 156.25 |  | 
|March 2008      |  |                                     |   | 300,823                |  |  |  |   | 156.25 |  | 
|April 2008      |  |                                     |   | 306,037                |  |  |  |   | 156.25 |  | 
|May 2008        |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|June 2008       |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|July 2008       |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|August 2008     |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|September 2008  |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|October 2008    |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|November 2008   |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|December 2008   |  |                                     |   | 311,091                |  |  |  |   | 156.25 |  | 
|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   |  |                                     |   |                       |  |  |  |   |       |  | 
|                |  |                                     |   |                        |  |  |  |   |        |  | 
|Total           |  |                                     | $ | 4,524,418              |  |  |  |   |        |  | 

20

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Table of Contents

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

We
have 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 have 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.

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

21

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Table of Contents

$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 arrangement, 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, 2009 and 2008. As of December 31, 2009, our properties had an
average occupancy of 74%, and the average debt leverage ratio of the properties
in which we have an investment was approximately 57%, with 77% 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, 2009, 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, 2009, we invested substantially all of the net proceeds of
the Offering in real properties. We have approximately $469,000 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.

We
continually monitor the sales trends and creditworthiness of our tenants. We do
not expect store closings or bankruptcy reorganizations to have a material
impact on our consolidated financial statements. The tenants with which we have
concerns represent less than 10% of our current total portfolio annualized
rental income.

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 ongoing
basis. We base our estimates on historical experience as well as various other
assumptions that we believe to be

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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. 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). 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. We have not recorded any impairment losses for the years ended
December 31, 2009, 2008 or 2007.

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 lease for
tenant improvements and intangible lease costs.

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Investment in Non-consolidated
Entities

As
of December 31, 2009, 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 three of the five joint ventures. Accordingly, our joint
venture interests in these three properties are reported under the equity
method of accounting pursuant to U.S. generally accepted accounting principles.
Certain of the significant accounting policies in this section are applicable
specifically to property-level reporting and represent policies that are
therefore primarily relevant at the investee entity level as of December 31,
2009.

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

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.

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

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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 (FASB) issued Statement
No. 167, Amendments to FASB Interpretation
No. 46(R) (SFAS No. 167), which amends the consolidation guidance
applicable to variable interest entities. 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 special purpose entities as a result of the elimination
of the QSPE concept in SFAS No. 166. SFAS No. 167 is effective as of the
beginning of the first fiscal year that begins after November 15, 2009 and
early adoption is prohibited. Management is currently evaluating the impact on
our consolidated financial statements of adopting SFAS No. 167.

In
June 2009, the FASB issued ASC 105, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles (the Codification). This guidance is the
single source of authoritative nongovernmental GAAP, superseding existing FASB,
American Institute of Certified Public Accountants, Emerging Issues Task Force,
and related accounting literature. ASC 105 reorganizes the thousands of GAAP
pronouncements into roughly 90 accounting topics and displays them using a
consistent structure. Also included is relevant SEC guidance organized using
the same topical structure in separate sections. This guidance is effective for
financial statements issued for reporting periods that end after September 15,
2009. We adopted the use of the Codification for the quarter ending September
30, 2009.

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.

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Scheduled Lease Expirations

During
2010, 27.7% of the total square footage of our consolidated properties is
scheduled to expire, and 5.6% of the total square footage of our
non-consolidated properties is scheduled to expire. Our leasing strategy for
2010 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.

Borders
lease expired in January 2010, and they have vacated their space. Borders was
the single tenant on our Woodlake Pointe property as of December 31, 2009, and it
represents 45.8% of the leased square footage of our consolidated properties
that is scheduled to expire during 2010. We expected this impending 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
plan. The closing of any new leases would be subject to the negotiation and
execution of definitive lease agreements and the fulfillment of customary
conditions. No assurance can be given that a new lease will be procured on the
same terms as the Borders lease, or at all.

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, 2009, our investments
included a wholly-owned property comprised of approximately 36,000 square feet
of gross leasable area, two properties in which we owned controlling interests
comprised of approximately 288,000 square feet of gross leasable area and three
properties in which we owned investment interests through joint ventures
comprised of approximately 949,000 square feet of gross leasable area.

Until
June 2008, we reported our interest in Woodlake Square and Woodlake Pointe
under the equity method of accounting as we owned a 40% interest in each. With
the additional 20% investment that we made in these properties during the
second quarter of 2008, we began consolidating their financial position and the
results of operations in the accompanying consolidated financial statements
effective January 1, 2008. The ownership interests were acquired at their
respective carrying values from ARIC, which still maintains a 10% interest in
both partnerships.

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

Revenue.Revenue decreased approximately
$300,000 to approximately $4.9 million during the year ended December 31, 2009
compared to approximately $5.2 million for the year ended December 31, 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 to approximately
$79,000 during the year ended December 31, 2009 compared to approximately
$109,000 for the year ended December 31, 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 to approximately $337,000 during the year ended December
31, 2009 compared to approximately $132,000 for the year ended December 31,
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

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reporting
services to us.

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

Depreciation and Amortization Expense.Depreciation
and amortization expense decreased approximately $400,000 to approximately $3.0
million during the year ended December 31, 2009 compared to approximately $3.4
million for the year ended December 31, 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 to approximately $16,000 during
the year ended December 31, 2009 compared to approximately $263,000 for the
year ended December 31, 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 $100,000 to approximately $1.8 million during the year
ended December 31, 2009 compared to approximately $1.7 million for the year
ended December 31, 2008. The increase in interest expense is related to the
notes payable on Village on the Green, which we acquired in March 2008.

Interest Expense  Related Party.Interest
expense  related party recorded during the year ended December 31, 2008 was
related to a note payable that Woodlake Square had with an affiliated AmREIT
entity. The note was paid in full during 2008.

Equity in Losses From Non-Consolidated Entities.Loss
from non-consolidated entities increased approximately $400,000 to
approximately $1.2 million for the year ended December 31, 2009 compared to
approximately $795,000 for the year ended December 31, 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 to approximately $590,000 during the year ended December 31, 2009
compared to $1.1 million for the year ended December 31, 2008. This was due to
a decrease in net loss on Woodlake Square during the year ended December 31,
2009.

Comparison of the year ended December 31,
2008 to the year ended December 31, 2007

Revenue.Revenue increased to
approximately $5.2 million during the year ended December 31, 2008 compared to
$0 for the year ended December 31, 2007. This increase was due to rental income
earned from Village on the Green (acquired March 2008), Woodlake Square
(acquired interest in August 2007 and June 2008) and Woodlake Pointe (acquired
interest in November 2007 and June 2008) during the year ended December 31,
2008.

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General and
Administrative.General and administrative expenses
increased approximately $15,000 to approximately $109,000 during the year ended
December 31, 2008 compared to approximately $94,000 for the year ended December
31, 2007. This increase was primarily due to additional marketing costs and
Directors and Officers insurance costs incurred this year that were not
incurred in the prior year.

General and
Administrative  Related Party.General and
administrative  related party expenses paid to our affiliate increased
approximately $70,000 to approximately $132,000 during the year ended December
31, 2008 compared to approximately $62,000 for the year ended December 31,
2007. This increase is attributable to an increase in administrative cost
reimbursements such as personnel and technology costs which are due to higher
activity within the Partnership during the year ended December 31, 2008 as
compared to the prior year.

Asset
Management Fees  Related Party.Asset management fees
 related party paid to our affiliate increased approximately $224,000 to
approximately $428,000 during the year ended December 31, 2008 compared to
approximately $204,000 for the year ended December 31, 2007. Asset management
fees  related party have increased commensurate with the increase in assets
under management as a result of our capital-raising efforts which we completed
in March 2008.

Property
Expense. Property expense increased to approximately
$1.7 million during the year ended December 31, 2008 compared to $0 for the
year ended December 31, 2007. This increase was due to property expenses
incurred by Village on the Green (acquired March 2008), Woodlake Square
(acquired interest in August 2007 and June 2008) and Woodlake Pointe (acquired
interest in November 2007 and June 2008) during the year ended December 31,
2008.

Property
Management Fees  Related Party. Property management
fees  related party increased to approximately $186,000 during the year ended
December 31, 2008 compared to $0 for the year ended December 31, 2007. This
increase was due to property management fees incurred by Village on the Green
(acquired March 2008), Woodlake Square (acquired interest in August 2007 and
June 2008) and Woodlake Pointe (acquired interest in November 2007 and June
2008) during the year ended December 31, 2008.

Legal and
Professional Fees.Legal and professional fees
increased approximately $338,000 to approximately $457,000 during the year
ended December 31, 2008 compared to approximately $119,000 for the year ended
December 31, 2007. The additional costs are due to increased financial
reporting requirements during 2008 associated with our filings with the SEC,
and are due to due diligence costs incurred related to potential acquisitions
that ultimately were not consummated.

Depreciation
and Amortization Expense.Depreciation and
amortization expense increased to approximately $3.4 million during the year
ended December 31, 2008 compared to $0 for the year ended December 31, 2007.
This increase was due to depreciation and amortization charges incurred by
Village on the Green (acquired March 2008), Woodlake Square (acquired interest
in August 2007 and June 2008) and Woodlake Pointe (acquired interest in November
2007 and June 2008) during the year ended December 31, 2008.

Loss on
Derivative.Loss on derivative increased to
approximately $415,000 during the year ended December 31, 2008 compared to $0
for the year ended December 31, 2007. The increase represents the net change
during the period from January 1, 2008 through September 30, 2008 in fair value
of the interest rate swap. Beginning on October 1, 2008, we designated the
interest rate swap as a hedge for financial reporting purposes. Accordingly, gains
or losses resulting from changes in the value of our derivatives subsequent to
September 30, 2008 will be recorded as an adjustment to our partners capital.
We entered into the swap in order to lock the interest at a fixed rate on our
$23.8 million variable-rate mortgage loan on Woodlake Square.

Interest
and Other Income. Interest and other income decreased
approximately $260,000 to approximately $263,000 during the year ended December
31, 2008 compared to approximately $523,000 for the year ended December 31,
2007. This decrease was primarily due to earning less interest on a lower
balance of investable funds as these funds were invested in Woodlake Square,
Woodlake Pointe, and Village on the Green.
We invest our excess cash in short-term
investments or overnight funds until properties suitable for acquisition can be
identified and acquired.

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Interest
Expense.Interest expense increased to approximately
$1.7 million during the year ended December 31, 2008 compared to $0 for the year
ended December 31, 2007. Interest expense incurred during the year ended
December 31, 2008 is related to notes payable on Village on the Green (acquired
in March 2008) and also to Woodlake Square (acquired interest in August 2007
and June 2008), which we began consolidating effective January 1, 2008.
Woodlake Square is encumbered by a $23.8 million variable-rate note payable.

Interest
Expense  Related Party.Interest expense  related
party decreased approximately $77,000 to approximately $24,000 during the year
ended December 31, 2008 compared to $101,000 for the year ended December 31,
2007. Interest expense for the year ended December 31, 2007 was incurred due to
a note payable  related party that was established during December 2006 and
was not repaid until the second quarter of 2007. Interest expense incurred
during the year ended December 31, 2008 is related to a note payable by
Woodlake Square which was acquired in August 2007.

Equity in
Losses From Non-Consolidated Entities.Loss from
non-consolidated entities decreased approximately $328,000 to approximately
$795,000 for the year ended December 31, 2008 compared to approximately $1.1
million for the year ended December 31, 2007. These amounts represent our
ownership portion of our joint ventures net income or loss for the period. The
decreased loss is primarily attributable to our consolidation, effective
January 1, 2008, of Woodlake Square as a result of our additional 20%
investment during the second quarter of 2008. Woodlake Squares operations were
included in equity in losses from non-consolidated entities during the year
ended December 31, 2007. The loss during 2008 is primarily attributable to the
loss on the Casa Linda Plaza property due to its redevelopment.

Margin Tax
Expense. Margin tax expense increased approximately
$34,000 to approximately $38,000 during the year ended December 31, 2008
compared to $4,000 for the year ended December 31, 2007. This increase was due
to increased taxable margin generated by Village on the Green (acquired March
2008), Woodlake Square (acquired interest in August 2007 and June 2008) and
Woodlake Pointe (acquired interest in November 2007 and June 2008) during the
year ended December 31, 2008.

Net Loss
Attributable to Non-controlling Interests. Net loss
attributable to non-controlling interests was approximately $1.1 million during
the year ended December 31, 2008 compared to $0 for the year ended December 31,
2007. This is related to the 40% non-controlling interests in Woodlake Square
and Woodlake Pointe, which was due to our consolidation, effective January 1,
2008, as a result of our additional 20% investment in each of these entities
during the second quarter of 2008.

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.

In June
2008, we began consolidating AmREIT Woodlake Square, LP and AmREIT Westheimer Gessner, LP into our
results of operations effective January 1, 2008 as a result of the additional
20% interests that we acquired during the second quarter of 2008.

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At
December 31, 2009 and December 31, 2008, our cash and cash equivalents totaled
approximately $469,000 and approximately $1.0 million,
respectively. Cash flows provided by (used in) operating activities, investing
activities and financing activities for the years ended December 31, 2009, 2008
and 2007 are as follows (in thousands):

|                     |  |      |        |      |   |         |   |   |         |  
|-------------------- |  | ---- | ------ | ---- | - | ------- | - | - | ------- | -
|                     |  | 2009 |        | 2008 |   | 2007    |  
|Operating activities |  | $    | 1,337  |      | $ | (2,638  | ) | $ | 360     |  
|Investing activities |  | $    | (691   | )    | $ | (16,528 | ) | $ | (14,547 | )
|Financing activities |  | $    | (1,188 | )    | $ | 293     |   | $ | 32,740  |  

Net
cash flows provided by operating activities increased approximately $3.9
million to approximately $1.3 million for the year ended December 31, 2009 compared to net cash used in
operating activities of approximately
$2.6 million for the year ended December 31, 2008. This increase in operating cash inflows
was primarily driven by a net increase in payables of $3.3 million coupled with
a net decrease in receivables of approximately $700,000. In 2008, we reimbursed
to an affiliate $1.3 million in earnest money and pre-acquisition costs
incurred on our behalf related to the acquisitions of the Woodlake Square and
Woodlake Pointe properties. In 2008, we also paid $685,000 in expenses that had
accrued on the Woodlake Square property during the previous year. Additionally,
we paid property taxes of $1.1 million during the 2008 period whereas we paid
only $153,000 in property taxes during the 2009 period.

Net
cash used in investing activities decreased approximately $15.8 million to approximately $691,000 for the year ended December 31, 2009 compared to
approximately $16.5 million for the year
ended December 31, 2008. This
decrease in investing outflows was primarily due to a decrease in the
acquisition of investment properties; we invested $805,000 in Casa Linda and
$52,000 in Shadow Creek Ranch during 2009 compared to investing $2.8 million in
Village on the Green, $2.5 million in Woodlake Square, $5.2 million in Woodlake
Pointe, $4.8 million in Shadow Creek Ranch and $567,000 in Casa Linda during
the 2008 period. In addition to the reduction of investing outflows, we
received a net reimbursement of $1.2 million in earnest money deposits during
2009 compared to a net payment of $375,000 during 2008. The decrease in
investing outflows was partially offset by a net increase in notes receivable -
related party of $582,000.

Net
cash flows used in financing activities increased approximately $1.5 million to
approximately $1.2 million for the year ended December 31, 2009 compared to net
cash flows provided by financing activities of approximately $293,000 for
the year ended December 31, 2008. This decrease in financing inflows was
primarily due to a reduction in contributions received of approximately $4.3
million, net of issuance costs, as the Offering was closed on March 31, 2008.
The reduction in contributions received was partially offset by a decrease in
distributions paid to investors of approximately $2.8 million.

As of
December 31, 2009, Borders, Inc. (Borders) constituted our largest tenant as
determined by base rents paid. Borders lease expired in January 2010, and
Borders vacated its space. Accordingly, our 2010 forecasted cash flows, as
addressed in Note 1 of the Consolidated Financial Statements, assume no rental
income from Borders for the 2010 period. We expected this impending 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
plan. The closing of any new leases would be subject to the negotiation and
execution of definitive lease agreements and the fulfillment of customary
conditions. No assurance can be given that a new lease will be procured on the same
terms as the Borders lease, or at all.

During the
past two years, the United States has experienced an unprecedented business
downturn, coupled with a substantial curtailment of available debt and equity
financing. While we expect to generate sufficient cash flow from operations in
2010 to meet our contractual obligations, a significant additional
deterioration in the national economy, the bankruptcy or insolvency of one or
more of our large tenants could cause our 2010 cash resources to be insufficient
to meet our obligations. If necessary, we have the ability to defer capital
improvements and to defer payment of certain operating costs, including
property taxes, until cash resources are available. Effective July 15, 2009, we
suspended all distributions in an effort to conserve cash and to protect
investors invested capital. As we have numerous 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

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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 will seek to postpone
liquidation if we believe such a liquidation is not in the best interest of the Partners at that time.

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

Contractual
Obligations

As of
December 31, 2009, 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):

|                  |  |      |        |      |   |      |  |      |     |      |   |            |  |       |     |  |   |       |  |   |        | 
|----------------- |  | ---- | ------ | ---- | - | ---- |  | ---- | --- | ---- | - | ---------- |  | ----- | --- |  | - | ----- |  | - | ------ | 
|                  |  | 2010 |        | 2011 |   | 2012 |  | 2013 |     | 2014 |   | Thereafter |  | Total |    
|Secured debt      |  | $    | 23,881 |      | $ | 86   |  | $    | 90  |      | $ | 96         |  | $     | 102 |  | $ | 5,694 |  | $ | 29,949 | 
|Interest (1)      |  |      | 1,220  |      |   | 337  |  |      | 333 |      |   | 327        |  |       | 321 |  |   | 727   |  |   | 3,265  | 
|Total obligations |  | $    | 25,101 |      | $ | 423  |  | $    | 423 |      | $ | 423        |  | $     | 423 |  | $ | 6,421 |  | $ | 33,214 | 

| |     |                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Interest
 expense includes our interest obligations as of December 31, 2009 and does
 not assume the refinancing of any maturing debt.

Our
$23.8 million variable-rate mortgage loan secured by the Woodlake Square
property matures in September 2010. We expect to be able to refinance the
Woodlake Square loan by September 2010, either with our existing lender or
another lender. However, no assurance can be given that we will be able to
obtain such financing. See Note 1 of the Consolidated Financial Statements for
discussion of our forecasted 2010 cash flows and plans to generate sufficient
liquidity to satisfy our obligations. We serve as the guarantor of debt in the
amount of $68.3 million that is the primary obligation of our joint ventures.

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,

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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, 2009.

|                                                                                                          | 
|--------------------------------------------------------------------------------------------------------- | 
|ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                          
|                                                                                                          | 
|See
 the Index to Financial Statements beginning on page F-1.                                            
|                                                                                                         
|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, 2009. Based on that evaluation, our
General Partners CEO and CFO concluded, that as of December 31, 2009, 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

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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, 2009 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, 2009.

This Annual
Report does not include an attestation report of the companys registered
public accounting firm regarding internal control over financial reporting.
Managements report was not subject to attestation by the companys registered
public accounting firm pursuant to temporary rules of the SEC that permit the
company to provide only managements report in this Annual Report.

Changes in Internal Controls

There has
been no change to our internal control over financial reporting during the
quarter ended December 31, 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

|         |                                  
|-------- | ---------------------------------
|ITEM 9B. | OTHER INFORMATION.               
|         |                                  
|None.   
|         |                                  
|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     |  | 59 |     | Chairman, President and Chief Executive Officer                 
|Chad C.
 Braun      |  | 37 |     | Vice President, Chief Financial Officer, Treasurer and Secretary
|Brett P.
 Treadwell |  | 40 |     | Managing Vice President  Finance                               

H. Kerr
Taylor serves as the Chairman, President and CEO of
our General Partner and is the sole director of our General Partner. He is the
founder of AmREIT and serves as its Chairman of the Board, Chief Executive
Officer and President. For over 24 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 30 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.

Chad C.
Braun serves as the Vice President, CFO, Secretary and
Treasurer of the General Partner and as AmREITs Executive Vice President,
Chief Financial Officer, Treasurer and Secretary. Mr. Braun is responsible for
corporate finance, equity capital markets, debt structuring and
placement, investor relations, accounting, SEC

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reporting, and he oversees investment sponsorship and product creation.
Mr. Braun has over 15 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 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 18 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.

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, 2009, we know of no reporting
person that has failed to file on a timely basis, as disclosed in the above
forms, report required by Section 16(a) of the Exchange Act during the fiscal
year ended December 31, 2009.

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

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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
5, 2010, there were 1,988 Units issued and outstanding owned by 762 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 $743,000 in property management, construction
management and leasing fees to one of our affiliated entities for the fiscal
year ended December 31, 2009. Our Casa Linda Plaza property paid a total of $6.2 million in construction fees to one of our affiliated entities during 2008 and 2009.

|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           |                                         |                           |  |      |  |  |  |      | 
|----------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | --------------------------------------- | ------------------------- |  | ---- |  |  |  | ---- | 
|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           | For the fiscal year ended
 December 31,
|Type and Recipient                                    |  |                                                                                                                                                                                                                                                                                                   |  | Determination of Amount   |                                         |                           |  | 2009 |  |  |  | 2008 | 
|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           |                                         |                          
|                                                      |  | 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 |                                         | $  557,971               
|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           |                                         |                          
|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 |                                         | $   41,058               
|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           |                                         |                          
|                                                      |  | 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                |                                         | $  427,554               
|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           |                                         |                          
|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 |                                         | $  264,000               
|                                                      |  |                                                                                                                                                                                                                                                                                                   |  |                           |                                         |                          
|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  |  | 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   |                                         |                           |  | 2009 |  |  |  | 2008 | 
|                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                           |                                         |                          
|                                                                          |  | 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 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. |  | $  252,612                |                                         | $  197,112               
|                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                           |                                         |                          
|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.                                                                                                                                                                                                                                                                                                                                         |  | $  336,698                |                                         | $  131,675               
|                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                           |                                         |                          
|Distributions During Operating Stage -
 General Partner                   |  | Our General
 Partner is entitled to distributions during our operating period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | $   8,793                 |                                         | $  36,909                
|                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                           |                                         |                          
|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.

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Joint Ventures with Affiliates

As
of December 31, 2009, 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.

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 that 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.

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.

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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.

AmREIT Securities Company

AmREIT
Securities Company is a member firm of Financial Industry Regulatory Authority,
Inc., and a wholly owned subsidiary of AmREIT. AmREIT Securities Company was
organized in 1999 for the purpose of participating in and facilitating the
distribution of securities of AmREIT affiliated entities. As the dealer manager
for our Offering of Units, AmREIT Securities Company provided
certain sales, promotional and marketing services
to us in connection with the distribution of the Units. We paid selling
commission and marketing reimbursements to AmREIT Securities Company in
connection with our offering, a portion of which was reallowed to participating broker-dealers. Chad
Braun is the President, Secretary and Treasurer of AmREIT Securities Company
and H. Kerr Taylor serves as its Chairman and the sole member of its board
of directors. As of October 2008, AmREIT Securities Company is no longer
operating as a broker-dealer. As AmREIT Securities Company has not provided
capital-raising services to us since the closing of our Offering in 2006, we
expect that the closing of the broker-dealer operation will have no impact on
the Partnership.

|         |                                        
|-------- | ---------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.

KPMG
LLP, independent registered public accounting firm and certified public
accountants, served as our independent accountants for the fiscal year ended
December 31, 2009. The following is an explanation of the fees billed to us by
Accountants for professional services rendered for the fiscal years ended
December 31, 2009 and December 31, 2008.

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 LLP in connection with
statutory and regulatory filings or engagements for the fiscal years ended
December 31, 2009 and December 31, 2008 totaled $170,000 and $149,000,
respectively. Included in these fees are $41,000 and $0 related to the audit of
a significant subsidiary for the years ended December 31, 2009 and 2008,
respectively. Also included in these fees are $19,000 and $0 related to the
audit of our internal controls for the years ended December 31, 2009 and 2008,
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, 2009 and 2008.

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.

38

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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).                                            

39

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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 10, 2010 |                                                                             |                                   
|                     |                                                                             |                                   
|                     | By:                                                                         | /s/ H. Kerr
 Taylor                | 
|                     | H. Kerr Taylor                                                             
|                     | President, Chief Executive Officer and Director                            
|                     |                                                                             |                                    | 
|                     | By:                                                                         | /s/ Chad C.
 Braun                 | 
|                     | Chad C. Braun                                                              
|                     | Executive Vice President, Chief Financial Officer, Treasurer and
 Secretary

40

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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, 2009 and December 31, 2008                                        |  | F-3 
|Consolidated
 Statements of Operations for the years ended December 31, 2009, 2008 and 2007                       |  | F-4 
|Consolidated
 Statements of Partners Capital for the years ended December 31, 2009, 2008
 and 2007               |  | F-5 
|Consolidated
 Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007                       |  | 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, 2009 |  | S-1 
|Report of
 Independent Registered Public Accounting Firm                                                          |  | S-2 
|Schedule IV 
 Financial Statements and Notes for AmREIT Casa Linda, LP                                           |  | S-3 

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

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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, 2009 and 2008, 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, 2009. 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, 2009
and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009,
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 10,
 2010

F-2

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Table of Contents

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

|                                                                                                 |  |                    |        |                    |   |        |  
|------------------------------------------------------------------------------------------------ |  | ------------------ | ------ | ------------------ | - | ------ | -
|                                                                                                 |  | December 31,
 2009 |        | December 31,
 2008 |  
|ASSETS                                                                                           |  |                    |        |                    |   |        |  
|Real estate investments at cost:                                                                 |  |                    |        |                    |   |        |  
|Land                                                                                             |  | $                  | 31,168 |                    | $ | 30,927 |  
|Buildings                                                                                        |  |                    | 31,060 |                    |   | 30,851 |  
|Tenant improvements                                                                              |  |                    | 1,270  |                    |   | 1,286  |  
|                                                                                                 |  |                    | 63,498 |                    |   | 63,064 |  
|Less accumulated depreciation and amortization                                                   |  |                    | (3,419 | )                  |   | (1,914 | )
|                                                                                                 |  |                    | 60,079 |                    |   | 61,150 |  
|                                                                                                 |  |                    |        |                    |   |        |  
|Investment in non-consolidated entities                                                          |  |                    | 12,042 |                    |   | 11,680 |  
|Acquired lease intangibles, net                                                                  |  |                    | 1,547  |                    |   | 2,967  |  
|Net real estate investments                                                                      |  |                    | 73,668 |                    |   | 75,797 |  
|                                                                                                 |  |                    |        |                    |   |        |  
|Cash and cash equivalents                                                                        |  |                    | 469    |                    |   | 1,011  |  
|Escrow deposits                                                                                  |  |                    | 115    |                    |   | 1,659  |  
|Tenant receivables, net                                                                          |  |                    | 283    |                    |   | 223    |  
|Accounts receivable - related party                                                              |  |                    | 9      |                    |   | 739    |  
|Notes receivable - related party                                                                 |  |                    | 162    |                    |   | -      |  
|Deferred costs, net                                                                              |  |                    | 139    |                    |   | 188    |  
|Other assets                                                                                     |  |                    | 48     |                    |   | 52     |  
|TOTAL ASSETS                                                                                     |  | $                  | 74,893 |                    | $ | 79,669 |  
|                                                                                                 |  |                    |        |                    |   |        |  
|LIABILITIES AND CAPITAL                                                                          |  |                    |        |                    |   |        |  
|Liabilities:                                                                                     |  |                    |        |                    |   |        |  
|Notes payable                                                                                    |  | $                  | 29,949 |                    | $ | 30,000 |  
|Notes payable - related party                                                                    |  |                    | 230    |                    |   | -      |  
|Accounts payable and other liabilities                                                           |  |                    | 1,328  |                    |   | 369    |  
|Accounts payable - related party                                                                 |  |                    | 4      |                    |   | 302    |  
|Derivative liability                                                                             |  |                    | 678    |                    |   | 1,257  |  
|Asset retirement obligations                                                                     |  |                    | 530    |                    |   | 535    |  
|Acquired below-market lease intangibles, net                                                     |  |                    | 1,563  |                    |   | 2,004  |  
|Security deposits                                                                                |  |                    | 110    |                    |   | 122    |  
|TOTAL LIABILITIES                                                                                |  |                    | 34,392 |                    |   | 34,589 |  
|                                                                                                 |  |                    |        |                    |   |        |  
|Capital:                                                                                         |  |                    |        |                    |   |        |  
|Partners capital:                                                                               |  |                    |        |                    |   |        |  
|General partner                                                                                  |  |                    | -      |                    |   | -      |  
|Limited partners, 1,988 and 1,991 units outstanding at December 31,
 2009 and 2008, respectively |  |                    | 30,293 |                    |   | 34,631 |  
|Accumulated other comprehensive loss                                                             |  |                    | (263   | )                  |   | (842   | )
|TOTAL PARTNERS CAPITAL                                                                          |  |                    | 30,030 |                    |   | 33,789 |  
|                                                                                                 |  |                    |        |                    |   |        |  
|Non-controlling interests                                                                        |  |                    | 10,471 |                    |   | 11,291 |  
|TOTAL CAPITAL                                                                                    |  |                    | 40,501 |                    |   | 45,080 |  
|                                                                                                 |  |                    |        |                    |   |        |  
|TOTAL LIABILITIES AND CAPITAL                                                                    |  | $                  | 74,893 |                    | $ | 79,669 |  

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, 2009, 2008 and 2007(in
thousands, except for per unit data)

|                                                   |  |      |           |      |   |           |   |   |           |  
|-------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | - | - | --------- | -
|                                                   |  | 2009 |           | 2008 |   | 2007      |  
|                                                  
|Revenues:                                          |  |      |           |      |   |           |   |   |           |  
|Rental income from operating leases                |  | $    | 4,917     |      | $ | 5,178     |   | $ | -         |  
|Total revenues                                     |  |      | 4,917     |      |   | 5,178     |   |   | -         |  
|                                                   |  |      |           |      |   |           |   |   |           |  
|Expenses:                                          |  |      |           |      |   |           |   |   |           |  
|General and administrative                         |  |      | 79        |      |   | 109       |   |   | 94        |  
|General and administrative - related party         |  |      | 337       |      |   | 132       |   |   | 62        |  
|Asset management fees - related party              |  |      | 430       |      |   | 428       |   |   | 204       |  
|Property expense                                   |  |      | 1,667     |      |   | 1,700     |   |   | -         |  
|Property management fees - related party           |  |      | 198       |      |   | 186       |   |   | -         |  
|Legal and professional                             |  |      | 260       |      |   | 457       |   |   | 119       |  
|Depreciation and amortization                      |  |      | 2,944     |      |   | 3,351     |   |   | -         |  
|Total operating expenses                           |  |      | 5,915     |      |   | 6,363     |   |   | 479       |  
|                                                   |  |      |           |      |   |           |   |   |           |  
|Operating loss                                     |  |      | (998      | )    |   | (1,185    | ) |   | (479      | )
|                                                   |  |      |           |      |   |           |   |   |           |  
|Other income (expense):                            |  |      |           |      |   |           |   |   |           |  
|Interest income - related party                    |  |      | 6         |      |   | -         |   |   | -         |  
|Loss on derivative                                 |  |      | -         |      |   | (415      | ) |   | -         |  
|Interest and other income                          |  |      | 16        |      |   | 263       |   |   | 523       |  
|Interest expense                                   |  |      | (1,767    | )    |   | (1,656    | ) |   | -         |  
|Interest expense - related party                   |  |      | (1        | )    |   | (24       | ) |   | (101      | )
|Equity in losses from non-consolidated entities    |  |      | (1,222    | )    |   | (795      | ) |   | (1,123    | )
|Margin tax expense                                 |  |      | (20       | )    |   | (38       | ) |   | (4        | )
|Total other income (expense)                       |  |      | (2,988    | )    |   | (2,665    | ) |   | (705      | )
|                                                   |  |      |           |      |   |           |   |   |           |  
|Net loss, including non-controlling interests      |  |      | (3,986    | )    |   | (3,850    | ) |   | (1,184    | )
|                                                   |  |      |           |      |   |           |   |   |           |  
|Net loss attributable to non-controlling interests |  |      | 590       |      |   | 1,072     |   |   | -         |  
|                                                   |  |      |           |      |   |           |   |   |           |  
|Net loss attributable to partners                  |  | $    | (3,396    | )    | $ | (2,778    | ) | $ | (1,184    | )
|                                                   |  |      |           |      |   |           |   |   |           |  
|Weighted average units outstanding                 |  |      | 1,988     |      |   | 1,970     |   |   | 889       |  
|Net loss per unit                                  |  | $    | (1,708.25 | )    | $ | (1,410.15 | ) | $ | (1,331.83 | )

See Notes to Consolidated Financial
Statements.

F-4

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAPITAL 
For the years ended December 31, 2009, 2008 and 2007(in
thousands)

|                                               |  |                   |     |                  |   |                                              |   |                            |      |       |   |        |   |   |        |  
|---------------------------------------------- |  | ----------------- | --- | ---------------- | - | -------------------------------------------- | - | -------------------------- | ---- | ----- | - | ------ | - | - | ------ | -
|                                               |  | Partners Capital |     |                  |   |                                              |  
|                                               |  | General Partner   |     | Limited Partners |   | Accumulated Other
 Comprehensive Gain (Loss) |   | Non-Controlling
 Interests |      | Total |  
|Balance at December 31, 2006                   |  | $                 | 1   |                  | $ | 318                                          |   | $                          | -    |       | $ | -      |   | $ | 319    |  
|                                               |  |                   |     |                  |   |                                              |   |                            |      |       |   |        |   |   |        |  
|Contributions, net of offering costs           |  |                   | -   |                  |   | 39,069                                       |   |                            | -    |       |   | -      |   |   | 39,069 |  
|Net loss (1)                                   |  |                   | 13  |                  |   | (1,197                                       | ) |                            | -    |       |   | -      |   |   | (1,184 | )
|Distributions                                  |  |                   | (14 | )                |   | (1,390                                       | ) |                            | -    |       |   | -      |   |   | (1,404 | )
|                                               |  |                   |     |                  |   |                                              |   |                            |      |       |   |        |   |   |        |  
|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 |  

| |     |                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The allocation of net loss
 includes a curative allocation to increase the General Partners capital
 account by $43, $65 and $25 for the 2009, 2008 and 2007 periods. The
 cumulative curative allocation since inception of the Partnership is $133.
 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

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV,
L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
For the years ended December 31, 2009, 2008 and 2007(in thousands)

|                                                                                                           |  |      |        |      |   |         |   |   |         |  
|---------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------- | - | - | ------- | -
|                                                                                                           |  | 2009 |        | 2008 |   | 2007    |  
|Cash flows from operating activities:                                                                      |  |      |        |      |   |         |   |   |         |  
|Net loss, including non-controlling interests                                                              |  | $    | (3,986 | )    | $ | (3,850  | ) | $ | (1,184  | )
|Adjustments to reconcile net loss to net cash provided by (used in)
 operating activities:                 |  |      |        |      |   |         |   |   |         |  
|Bad debt expense                                                                                           |  |      | 124    |      |   | -       |   |   | -       |  
|Loss from non-consolidated entities                                                                        |  |      | 1,222  |      |   | 795     |   |   | 1,123   |  
|Depreciation and amortization                                                                              |  |      | 2,944  |      |   | 3,351   |   |   | -       |  
|Amortization of above- and below-market leases, net                                                        |  |      | (406   | )    |   | (438    | ) |   | -       |  
|Amortization of loan acquisition costs                                                                     |  |      | 93     |      |   | 92      |   |   | -       |  
|Loss on derivative                                                                                         |  |      | -      |      |   | 415     |   |   | -       |  
|(Increase) decrease in tenant receivables                                                                  |  |      | (103   | )    |   | 30      |   |   | -       |  
|Increase in accounts receivable                                                                            |  |      | -      |      |   | -       |   |   | (113    | )
|Decrease (increase) in accounts receivable - related party                                                 |  |      | 444    |      |   | (410    | ) |   | -       |  
|Increase in deferred costs                                                                                 |  |      | (56    | )    |   | (13     | ) |   | -       |  
|Decrease (increase) in other assets                                                                        |  |      | 303    |      |   | 8       |   |   | (10     | )
|Increase (decrease) in accounts payable and other liabilities                                              |  |      | 878    |      |   | (805    | ) |   | 100     |  
|(Decrease) increase in accounts payable - related party                                                    |  |      | (103   | )    |   | (1,686  | ) |   | 444     |  
|Decrease in asset retirement obligations                                                                   |  |      | (5     | )    |   | (165    | ) |   | -       |  
|(Decrease) increase in security deposits                                                                   |  |      | (12    | )    |   | 38      |   |   | -       |  
|Net
 cash provided by (used in) operating activities                                                       |  |      | 1,337  |      |   | (2,638  | ) |   | 360     |  
|                                                                                                           |  |      |        |      |   |         |   |   |         |  
|Cash flows from investing activities:                                                                      |  |      |        |      |   |         |   |   |         |  
|Improvements to real estate                                                                                |  |      | (476   | )    |   | (316    | ) |   | -       |  
|Acquisition of investment properties                                                                       |  |      | -      |      |   | (10,452 | ) |   | -       |  
|Increase in notes receivable - related party                                                               |  |      | (763   | )    |   | -       |   |   | -       |  
|Payments received on notes receivable - related party                                                      |  |      | 181    |      |   | -       |   |   | -       |  
|Investment in non-consolidated entities                                                                    |  |      | (878   | )    |   | (5,385  | ) |   | (13,007 | )
|Earnest money deposits collected (made, net of reimbursements)                                             |  |      | 1,245  |      |   | (375    | ) |   | (1,540  | )
|Net cash used in investing activities                                                                      |  |      | (691   | )    |   | (16,528 | ) |   | (14,547 | )
|                                                                                                           |  |      |        |      |   |         |   |   |         |  
|Cash flows from financing activities:                                                                      |  |      |        |      |   |         |   |   |         |  
|Payments on notes payable                                                                                  |  |      | (51    | )    |   | -       |   |   | (4,926  | )
|Proceeds from notes payable - related party                                                                |  |      | 35     |      |   | -       |   |   | -       |  
|Contributions                                                                                              |  |      | -      |      |   | 4,899   |   |   | 44,011  |  
|Limited optional redemptions                                                                               |  |      | (62    | )    |   | -       |   |   | -       |  
|Issuance costs                                                                                             |  |      | -      |      |   | (600    | ) |   | (4,942  | )
|Loan acquisition costs                                                                                     |  |      | -      |      |   | (36     | ) |   | -       |  
|Distributions                                                                                              |  |      | (880   | )    |   | (3,690  | ) |   | (1,403  | )
|Distributions to non-controlling interests                                                                 |  |      | (230   | )    |   | (280    | ) |   | -       |  
|Net cash (used in) provided by financing activities                                                        |  |      | (1,188 | )    |   | 293     |   |   | 32,740  |  
|                                                                                                           |  |      |        |      |   |         |   |   |         |  
|Net (decrease) increase in cash and cash equivalents                                                       |  |      | (542   | )    |   | (18,873 | ) |   | 18,553  |  
|Cash and cash equivalents, beginning of period                                                             |  |      | 1,011  |      |   | 19,349  |   |   | 796     |  
|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 |  |      | 1,011  |      |   | 19,884  |   |   | 796     |  
|Cash and cash equivalents, end of period                                                                   |  | $    | 469    |      | $ | 1,011   |   | $ | 19,349  |  
|                                                                                                           |  |      |        |      |   |         |   |   |         |  
|Supplemental schedule of cash flow information:                                                            |  |      |        |      |   |         |   |   |         |  
|                                                                                                           |  |      |        |      |   |         |   |   |         |  
|Cash paid during the period for:                                                                           |  |      |        |      |   |         |   |   |         |  
|Interest                                                                                                   |  | $    | 1,777  |      | $ | 1,594   |   | $ | 101     |  
|Taxes                                                                                                      |  | $    | 26     |      | $ | 10      |   | $ | -       |  

| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Supplemental
 schedule of noncash investing and financing activities:
| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                       | During 2009, accounts
 receivable - related party of $168,000 from Shadow Creek Ranch and $118,000
 from Cambridge & Holcombe were converted to equity, causing an increase in our
 investment in non-consolidated entities.                                                                                                                                                                                                                          
| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                       | During 2009, notes
 receivable - related party of $420,000 from Casa Linda was converted to
 equity, causing an increase in our investment in non-consolidated entities.                                                                                                                                                                                                                                                                              
| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                       | During 2008, we placed $6.2
 million in debt that was funded directly to the buyer in conjunction with our
 acquisition of the Village on the Green property.                                                                                                                                                                                                                                                                                         
| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                       | In conjunction with our investment in the Shadow Creek Ranch property, we placed $1.5 million in escrow deposits in December 2007.
When we acquired the property in February 2008, an affiliated AmREIT entity purchased an interest in the property, resulting in
a $900,000 reimbursement of our escrow deposits.  The remaining $600,000, which represents our portion of the escrow, was reclassified
 to investment in non-consolidated entities.
| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Supplemental
 notes:                                                 
| |                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                       | Effective January 1, 2008,
 we began consolidating AmREIT Woodlake Square, LP and Westheimer Gessner, LP
 into our results of operations as a result of the additional 20% interest that we
 acquired in these properties during the second quarter of 2008.                                                                                                                                                                                          

See Notes to Consolidated
Financial Statements.

F-6

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Table of Contents

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

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

|   |                                                 
|-- | ------------------------------------------------
|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, 2009,
our investments included a wholly-owned property comprising approximately
36,000 square feet of gross leasable area, two properties in which we own
controlling interests comprising approximately 288,000 square feet of gross
leasable area and three properties in which we own a non-controlling interest
through joint ventures comprising approximately 949,000 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.

During
the past two years, the United States has experienced an unprecedented business
downturn, coupled with a substantial curtailment of available debt and equity
financing. While we expect to generate sufficient cash flow from operations in
2010 to meet our contractual obligations, a significant additional
deterioration in the national economy, the bankruptcy or insolvency of one or
more of our large tenants could cause our 2010 cash resources to be
insufficient to meet our obligations. If necessary, we have the ability to
defer capital improvements and to defer payment of certain operating costs,
including property taxes, until cash resources are available. Effective July
15, 2009, we suspended all distributions in an effort to conserve cash and to
protect investors invested capital. As we have numerous 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.

Projected
cash sources and uses for the Partnerships 2010 fiscal year indicate certain
periods of cash shortfalls within the twelve month period; however, we believe
that we will be able to generate sufficient liquidity to satisfy any cash
shortfalls through (1) managing the timing of forecasted capital expenditures
related to the lease-up of properties, (2) potential joint venture equity
investments in existing non-consolidated entities (3) financings of
unencumbered properties and (4) sales of certain of our investments in
non-consolidated entities. However, no assurance can be given that we will be
able to generate such liquidity. In the event that we are unable to generate
sufficient liquidity, we may be forced to sell one or more properties at a time
when it is disadvantageous to do so, potentially resulting in losses on
disposition of those properties. See Note 6 for discussion of our debt maturing
in 2010.

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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 4). 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). All significant
inter-company accounts and transactions have been eliminated in consolidation.

Effective
July 1, 2009, the Financial Accounting Standards Board (FASB) established the
Accounting Standards Codification (ASC) as the primary source of
authoritative Generally Accepted Accounting Principles (GAAP) recognized by
the FASB to be applied to nongovernmental entities. Although the establishment
of the ASC did not change current GAAP, it did change the way we refer to GAAP
throughout this document to reflect the updated referencing convention.

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, 2009, 2008
and 2007. We recognize lease termination fees in the period that the lease is
terminated and collection of the fees is reasonably assured. Upon early lease
termination, we provide for losses related to unrecovered intangibles and other
assets. During the years ended December 31, 2009, 2008 and 2007, we recognized
no lease termination fees.

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, 2009, 2008 and 2007, interest and taxes in the
amount of $246,000, $0 and $0, respectively, were capitalized on properties
under development or redevelopment.

F-8

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Table of Contents

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, 2009, 2008 and 2007,
we expensed acquisition costs of $7,000, $169,000 and $15,000, 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.

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, 2009 and 2008, we had no
properties held for sale.

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

INVESTMENTS IN NON-CONSOLIDATED ENTITIES

As of
December 31, 2009, we have 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 three of the five joint ventures. Accordingly, our joint
venture interests in these three properties are reported
under the equity method of accounting pursuant to GAAP. Certain of the
significant accounting policies in below are applicable specifically to
property-level reporting and represent policies that are therefore primarily
relevant at the investee entity level as of December 31, 2009.

F-9

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Table of Contents

The
joint ventures lease space to tenants under agreements with varying terms. The
majority of the leases are accounted
for as operating leases with revenue being recognized on a straight-line basis
over the terms of the individual leases.
When our joint ventures acquire a property, the term of existing leases is
considered to commence as of the acquisition date for the purposes of this
calculation.

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.

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, 2009 and 2008, our allowance for
uncollectible accounts related to our tenant receivables was $124,000
and $0, 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.

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

F-10

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Table of Contents

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. Accumulated amortization related to loan acquisition costs totaled $214,000 and $121,000 as
of December 31, 2009 and 2008, respectively. Accumulated amortization related
to leasing costs totaled $16,000 and $5,000 as of December 31, 2009 and
2008, 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. We have recorded margin tax
provisions of approximately $20,000 and $38,000 for the Texas Margin Tax for
the years ended December 31, 2009 and 2008, 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:

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

F-11

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Table of Contents

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

Derivative
Financial Instruments  In determining the fair
value of our derivative instrument, we consider whether credit valuation
adjustments are necessary to appropriately reflect both our own nonperformance
risk and the respective counterpartys nonperformance risk in the fair value
measurements. Although we have determined that the majority of the inputs used
to value our derivatives fall within Level 2 of the fair value hierarchy, the
credit valuation assumptions associated with its derivatives utilize Level 3
inputs, such as estimates of current credit spreads to evaluate the likelihood
of default by us and our counterparties. However, as of December 31, 2009, we
have assessed the significance of the impact of the credit valuation
adjustments on the overall valuation of our derivative positions and have
determined that the credit valuation adjustments are not significant to the
overall valuation of our derivatives. As a result, we have determined that our
derivative valuations in their entirety are classified in Level 2 of the fair
value hierarchy.

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, 2009 (in thousands):

|                      |  |         |  |         |  |         |  |  |  | 
|--------------------- |  | ------- |  | ------- |  | ------- |  |  |  | 
|                      |  | Level 1 |  | Level 2 |  | Level 3 | 
|Derivative
 Liability |  | $      |  | $ 678   |  | $      | 

Notes
Payable  As of
December 31, 2009 and 2008, the carrying value of debt obligations associated
with our consolidated entities was approximately $29.9 million and $30 million,
respectively, $6.1 million of which represents a fixed-rate obligation with an
estimated fair value of $5.7 million and $6.3 million, respectively,
based on a discounted cash flow analysis using current market rates of
interest. As of December 31, 2009 and 2008, the estimated fair value of our
$23.8 million variable-rate obligation approximated $23.4 million and $23.2
million, respectively, based on a discounted cash flow analysis using current
market rates of interest.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In December 2003, the FASB reissued ASC 810 Consolidation.
ASC 810 addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means
other than voting rights.  ASC 810 requires a variable interest entity to be consolidated by a company that is subject to a majority
of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both.
Disclosures are also required about variable interest entities in which a company has a significant variable interest but that it is not
required to consolidate. As of December 31, 2009 and 2008, we had no investments in any entities that qualify as variable interest entities pursuant to ASC 810.

NEW
ACCOUNTING STANDARDS

In
June 2009, the FASB issued Statement No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS
No. 167), which amends the consolidation guidance applicable to variable
interest entities. 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 special purpose entities as a result of the
elimination of the QSPE concept in SFAS No. 166. SFAS No. 167 is effective
as of the beginning of the first fiscal year that begins after November 15,
2009 and early adoption is prohibited. The adoption of SFAS No. 167 is not
expected to have a material impact on our consolidated financial statements.

In
June 2009, the FASB issued ASC 105, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles (the
Codification). This guidance is the single source of authoritative
nongovernmental GAAP, superseding existing FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force, and related
accounting literature. ASC 105 reorganizes the thousands of GAAP pronouncements
into roughly 90 accounting topics and displays them using a consistent
structure. Also included is relevant Securities and Exchange Commission
guidance organized using the same topical structure in separate sections. This
guidance is effective for financial statements issued for reporting periods
that end after September 15, 2009. The Company adopted the use of the
Codification for the quarter ending September 30, 2009.

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.

F-12

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Table of Contents

INTEREST

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

SEGMENT REPORTING

ASC 280, Segment
Reporting, establishes
standards for reporting financial and descriptive information about an enterprises reportable segments. We determined
that we have one reportable segment with activities related to investing in
real estate. Our investments in real estate generate rental revenue and other
income through the leasing of
multi-tenant retail properties, which comprised 100% of our total consolidated revenues
for all periods presented. We evaluate operating performance on an individual
property level. However, as 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, 2009 is as follows (in
thousands):

|           |  |   |        | 
|---------- |  | - | ------ | 
|           |  |   |        | 
|2010       |  | $ | 1,999  | 
|2011       |  |   | 1,699  | 
|2012       |  |   | 1,343  | 
|2013       |  |   | 957    | 
|2014       |  |   | 777    | 
|Thereafter |  |   | 15,684 | 
|           |  | $ | 22,459 | 

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 $1.1
million, $1.4 million and $0 during the years ended December 31, 2009, 2008 and
2007, respectively.

|   |                                         
|-- | ----------------------------------------
|4. | INVESTMENTS IN NON-CONSOLIDATED ENTITIES

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

| |   |                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 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., 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.           
| |   |                                                                                                                                                                                                                                                                                                                                                   
| |  | 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%).         

F-13

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Table of Contents

We
report our investments in these three 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, 2009 (at 100%) is summarized
as follows:

|                                        |  |                    |         |      |   |         | 
|--------------------------------------- |  | ------------------ | ------- | ---- | - | ------- | 
|                                        |  | As of December 31, |        
|Combined Balance Sheets (in thousands)  |  | 2009               |         | 2008 |  
|Assets                                  |  |                    |         |      |   |         | 
|Property, net                           |  | $                  | 156,648 |      | $ | 162,642 | 
|Cash                                    |  |                    | 2,439   |      |   | 550     | 
|Other assets                            |  |                    | 25,445  |      |   | 22,506  | 
|Total Assets                            |  | $                  | 184,532 |      | $ | 185,698 | 
|Liabilities
 and partners capital:     |  |                    |         |      |   |         | 
|Notes payable                           |  |                    | 111,715 |      |   | 111,162 | 
|Other liabilities                       |  |                    | 12,485  |      |   | 13,199  | 
|Partners capital                        |  |                    | 60,332  |      |   | 61,337  | 
|Total Liabilities and Partners Capital |  | $                  | 184,532 |      | $ | 185,698 | 
|                                        |  |                    |         |      |   |         | 
|MIG IV share
 of net assets             |  | $                  | 12,042  |      | $ | 11,680  | 

|                                                 |  |                          |        |      |   |        |   |   |        |  
|------------------------------------------------ |  | ------------------------ | ------ | ---- | - | ------ | - | - | ------ | -
|                                                 |  | Years ended December 31, |       
|Combined Statements of Operations (in thousands) |  | 2009                     |        | 2008 |   | 2007   |  
|Revenue                                          |  |                          |        |      |   |        |   |   |        |  
|Total Revenue                                    |  | $                        | 11,854 |      | $ | 10,126 |   | $ | 5,046  |  
|Expense                                          |  |                          |        |      |   |        |   |   |        |  
|Depreciation and amortization                    |  |                          | 5,872  |      |   | 4,033  |   |   | 2,516  |  
|Interest                                         |  |                          | 5,793  |      |   | 5,191  |   |   | 2,172  |  
|Other                                            |  |                          | 4,883  |      |   | 3,904  |   |   | 2,018  |  
|Total expense                                    |  |                          | 16,548 |      |   | 13,128 |   |   | 6,706  |  
|Net loss                                         |  | $                        | (4,694 | )    | $ | (3,002 | ) | $ | (1,660 | )
|                                                 |  |                          |        |      |   |        |   |   |        |  
|MIG IV share
 of net loss                        |  | $                        | (1,222 | )    | $ | (795   | ) | $ | (830   | )

|   |                           
|-- | --------------------------
|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 expense related to in-place leases
was approximately $1,385,000, $1,800,000 and $0 for the years ended December 31,
2009, 2008 and 2007, respectively. We
recorded disposals related to in-place leases of $328,000, $41,000 and $0 for
the years ended December 31, 2009,
2008 and 2007, respectively. The
amortization of above-market leases, which was recorded as a reduction of rental
income, was approximately $35,000, $53,000 and $0 during the years ended December 31, 2009, 2008 and 2007, 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 $441,000, $491,000 and $0 during the years ended December 31, 2009, 2008 and 2007, respectively. Such accretion is recorded
as an increase to rental income. We recorded
disposals of below-market leases of $41,000,
$0 and $0 for the years ended
December 31, 2009, 2008 and 2007, respectively, related to lease expirations.

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Table of Contents

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

|                                                |  |                    |         |                    |   |         | 
|----------------------------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | 
|                                                |  | December 31,
 2009 |         | December 31,
 2008 |  
|Acquired
 lease intangible assets:              |  |                    |         |                    |   |         | 
|In-place
 leases                                |  | $                  | 4,676   |                    | $ | 5,004   | 
|In-place
 leases  accumulated amortization     |  |                    | (3,217) |                    |   | (2,160) | 
|Above-market
 leases                            |  |                    | 193     |                    |   | 193     | 
|Above-market
 leases  accumulated amortization |  |                    | (105)   |                    |   | (70)    | 
|Acquired leases intangibles, net                |  | $                  | 1,547   |                    | $ | 2,967   | 
|                                                |  |                    |         |                    |   |         | 
|Acquired
 lease intangible liabilities:         |  |                    |         |                    |   |         | 
|Below-market
 leases                            |  | $                  | 2,599   |                    | $ | 2,640   | 
|Below-market
 leases  accumulated amortization |  |                    | (1,036) |                    |   | (636)   | 
|Acquired below-market lease intangibles,
 net   |  | $                  | 1,563   |                    | $ | 2,004   | 

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) | 
|2010                      |  |                                              | $ | 474                                             |  | $ | 348   | 
|2011                      |  |                                              |   | 313                                             |  |   | 323   | 
|2012                      |  |                                              |   | 262                                             |  |   | 313   | 
|2013                      |  |                                              |   | 135                                             |  |   | 186   | 
|2014                      |  |                                              |   | 47                                              |  |   | 41    | 
|                          |  |                                              | $ | 1,231                                           |  | $ | 1,211 | 

|   |              
|-- | -------------
|6. | NOTES PAYABLE

Our
outstanding debt at December 31,
2009 consisted of two loans  a fixed-rate mortgage loan of $6.1 million secured by the Village on the Green
property which matures in April 2017 and a variable-rate mortgage loan of $23.8
million secured by the Woodlake Square property which matures in September
2010, carries an interest rate of LIBOR plus 1.35% (1.59% at December 31,
2009), and requires monthly interest-only payments. We have entered into
an interest rate swap agreement which fixes the interest rate at 5.465% on our
$23.8 million variable-rate mortgage loan.

We
expect to be able to refinance the Woodlake Square loan by September 2010,
either with our existing lender or another lender. However, no assurance can be
given that we will be able to obtain such financing. See Note 1 for discussion of our forecasted 2010 cash flows and plans to
generate sufficient liquidity to satisfy our obligations.

Interest-only
loans are generally due in full at maturity. Our
mortgage loans are secured by real estate properties and may be prepaid but could be subject to a
yield-maintenance premium or prepayment penalty. As of December 31,
2009, the weighted-average interest rate on our fixed-rate debt is 5.5%, and
the weighted average remaining life of such
debt is 7.27 years.

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Table of Contents

As of
December 31, 2009, scheduled principal repayments on notes
payable were as follows (in thousands):

|                           |            |                               |  |                       |     |                 |  |  |   |        |  |  |  |   |        |  | 
|-------------------------- | ---------- | ----------------------------- |  | --------------------- | --- | --------------- |  |  | - | ------ |  |  |  | - | ------ |  | 
|Scheduled Payments by Year |            | Scheduled
 Principal Payments |  | Term-Loan
 Maturities |     | Total
 Payments | 
|                           | 2010       |                               |  | $                     | 81  |                 |  |  | $ | 23,800 |  |  |  | $ | 23,881 |  | 
|                           | 2011       |                               |  |                       | 86  |                 |  |  |   |       |  |  |  |   | 86     |  | 
|                           | 2012       |                               |  |                       | 90  |                 |  |  |   |       |  |  |  |   | 90     |  | 
|                           | 2013       |                               |  |                       | 96  |                 |  |  |   |       |  |  |  |   | 96     |  | 
|                           | 2014       |                               |  |                       | 102 |                 |  |  |   |       |  |  |  |   | 102    |  | 
|                           | Thereafter |                               |  |                       | 251 |                 |  |  |   | 5,443  |  |  |  |   | 5,694  |  | 
|                           | Total      |                               |  | $                     | 706 |                 |  |  | $ | 29,243 |  |  |  | $ | 29,949 |  | 

We
serve as guarantor on debt in the amount of $68.3 million that is the primary
obligation of our joint ventures.  The mortgage for one of our joint ventures in the amount
of $23.8 million matures in the fourth quarter of 2010.  Should that entity be unable to pay or
refinance the mortgage, we would be liable for 25% of the balance. The remaining debt for our joint ventures matures between 2011 and 2015.

Notes
Payable  Related Party -During 2009, we borrowed $230,000 from
an affiliate of our General Partner. 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 and Woodlake Square properties.

|   |                                 
|-- | --------------------------------
|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 fair value of the
swap was a liability of $678,000 at December 31, 2009. The swap settles monthly
with an amount paid to or received from our counter-party upon settlement being
recorded as an adjustment to interest expense. For the years ended
December 31, 2009, 2008 and 2007, we paid $954,000, $231,000 and $0,
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.

We have
designated our interest rate swap as a hedge for financial reporting purposes, beginning on October 1, 2008. Accordingly,
gains or losses resulting from changes in the value of our derivates subsequent
to September 30, 2008 will be recorded as an adjustment to our partners
capital. Prior to October 1, 2008, we had
recorded a $415,000 loss on derivative in our consolidated statement of
operations which represented the change in value of this derivative during the
nine months ended September 30, 2008. The $579,000 decrease in fair value of
the derivative liability during the year ended December 31, 2009 has been
recorded in partners capital as an increase to other comprehensive gain. We
could be exposed to losses in the event of nonperformance by the
counter-parties.

|   |               
|-- | --------------
|8. | CONCENTRATIONS

As of
December 31, 2009, each of our three consolidated properties individually
comprises greater than 10% of our
consolidated total assets. Consistent with our strategy of investing in areas
that we know well, two of our three
properties are located in the Houston metropolitan area. These Houston
properties represent 80% and 82% of
our rental income for the years
ended December 31, 2009 and 2008, respectively. 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 our top tenants during the years ended December 31, 2009, 2008 and 2007 (in thousands):

| |             |  |      |   |       |  |      |  |   |       |  |  |  |   |   |  | 
| | ----------- |  | ---- | - | ----- |  | ---- |  | - | ----- |  |  |  | - | - |  | 
| | Tenant      |  | 2009 |   | 2008  |  | 2007 | 
| | Borders     |  |      | $ | 834   |  |      |  | $ | 851   |  |  |  | $ |  |  | 
| | Walgreens   |  |      |   | 332   |  |      |  |   | 332   |  |  |  |   |  |  | 
| | Randalls   |  |      |   | 242   |  |      |  |   | 242   |  |  |  |   |  |  | 
| | Jos A. Bank |  |      |   | 207   |  |      |  |   | 207   |  |  |  |   |  |  | 
| | Paesanos   |  |      |   | 194   |  |      |  |   | 142   |  |  |  |   |  |  | 
| |             |  |      | $ | 1,809 |  |      |  | $ | 1,774 |  |  |  | $ |  |  | 

As of
December 31, 2009, Borders, Inc. (Borders) constituted our largest tenant as
determined by base rents paid. Borders lease expired in January 2010, and
Borders vacated its space. Accordingly, our 2010 forecasted cash flows, as
addressed in Note 1, assume no rental income from Borders for the 2010 period.
We expected this impending 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 plan. The closing of any new leases would
be subject to the negotiation and execution of definitive lease agreements and
the fulfillment of customary conditions. 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 of 1933
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. 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. During the year ended December 31, 2008,
we received one redemption request in the aggregate amount of $46,000, which
was denied. We received no redemption requests during the year ended December
31, 2007. 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 two of our affiliates have in two real estate partnerships that we
consolidate as a result of our 60% controlling financial interest in
such partnerships.

|    |                            
|--- | ---------------------------
|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, 2009, 2008 and 2007:

|                                                 |  |                                                                                                                                                                  |  |      |   |      |  |      |  |   |         |  |  |  |   |           |  | 
|------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | - | ---- |  | ---- |  | - | ------- |  |  |  | - | --------- |  | 
|Type of Service                                  |  | Service Description
 & Compensation                                                                                                                              |  | 2009 |   | 2008 |  | 2007 | 
|Dealer Manager Fees                              |  | Dealer manager fees (3.25%) received for placement of the limited
 partnership units.                                                                            |  |      | $ |     |  |      |  | $ | 557,971 |  |  |  | $ | 4,744,162 |  | 
|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  |  |  |  |   | 198,784   |  | 
|Total                                            |  |                                                                                                                                                                  |  |      | $ |     |  |      |  | $ | 599,029 |  |  |  | $ | 4,942,946 |  | 

F-18

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Table of Contents

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, 2009, 2008 and 2007:

|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |      |   |         |  |      |  |   |         |  |  |  |   |         |  | 
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | - | ------- |  | ---- |  | - | ------- |  |  |  | - | ------- |  | 
|Type of Service                  |  | Service Description
 & Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 2009 |   | 2008    |  | 2007 | 
|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 |  |      |  | $ | 427,554 |  |  |  | $ | 203,621 |  | 
|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.                          |  |      |   | 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.                                                                                                                                                                                                  |  |      |   |        |  |      |  |   |        |  |  |  |   |        |  | 

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|                                     |  |                                                                                                                                                                                                                                                                   |  |      |   |           |  |      |  |   |           |  |  |  |   |         |  | 
|------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | - | --------- |  | ---- |  | - | --------- |  |  |  | - | ------- |  | 
|Type of Service                      |  | Service Description
 & Compensation                                                                                                                                                                                                                               |  | 2009 |   | 2008      |  | 2007 | 
|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. |  |      |   | 336,698   |  |      |  |   | 131,675   |  |  |  |   | 62,350  |  | 
|Total                                |  |                                                                                                                                                                                                                                                                   |  |      | $ | 1,019,717 |  |      |  | $ | 1,020,341 |  |  |  | $ | 265,971 |  | 

In
addition to the above fees paid by us, the non-consolidated entities in which
we have an investment paid a total of $743,000, $385,000 and $236,000 in
property management, construction management and leasing fees to one of our
affiliated entities for the years ended December 31, 2009, 2008 and 2007. Our Casa Linda Plaza property paid a total of $6.2 million in construction fees to one of our affiliated entities during 2008 and 2009.

|    |                                          
|--- | -----------------------------------------
|11. | REAL ESTATE ACQUISITIONS AND DISPOSITIONS

In March
2008, we acquired Village on the Green, a multi-tenant retail property located
in San Antonio, Texas with a gross leasable area of approximately 36,000 square
feet. The acquisition was
accounted for as a purchase and the results of its operations are included in the
accompanying consolidated financial statements from the date of acquisition.

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 with a combined gross leasable area of approximately 82,000 square feet. In June 2008, we acquired an
additional 20% investment interest in AmREIT Westheimer Gessner, LP from an
affiliated entity at its net book value. Until June 2008, we reported our interest in AmREIT Westheimer Gessner,
LP under the equity method of accounting as we owned a 40% interest in the
partnership. With the additional 20% investment, we own a 60%
controlling interest in this partnership, and we began including its financial
position and operations in our
consolidated financial statements beginning with our financial statements for
the quarter ended June 30, 2008 and effective as of January 1, 2008. On May 30,
2008, AmREIT Westheimer Gessner, LP acquired an additional tract of land
adjacent to Woodlake Pointe. The results of operations are included in the
accompanying consolidated financial statements from the date of acquisition.

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
with a combined gross leasable area of approximately 206,000 square feet. In June 2008, we acquired an additional
investment interest of 20% in AmREIT Woodlake, LP from an affiliated entity at
its net book value. Until June 2008,
we reported our interest in AmREIT Woodlake, LP under the equity method of
accounting as we owned a 40% interest in the partnership. With
the additional 20% investment, we own a 60% controlling interest in this
partnership, and we began including its financial position and operations in our consolidated financial
statements beginning with our financial statements for the quarter ended June
30, 2008 and effective as of January 1, 2008.

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 that
operated on the property prior to our ownership. We recorded an

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asset retirement obligation of $700,000 on the acquisition date related
to these exposures. In conjunction with the acquisition, the seller placed
$700,000 in escrow which approximated the estimated remediation costs on the
acquisition date. During 2009, we reassessed our environmental exposure at the
site and now believe that the estimated costs to remediate the site will be
approximately $530,000. Accordingly, we have reduced the asset retirement
obligation by $170,000 and released a corresponding amount to the seller
pursuant to the terms of the escrow agreement. As of December 31, 2009, we had
a remaining asset retirement obligation related to this matter of $530,000. We
believe that these matters will not have a material adverse effect on our
consolidated financial position or results of operations, and we are aware of
no other environmental exposures.

|    |                  
|--- | -----------------
|13. | SUBSEQUENT EVENTS

In May 2009,
 the FASB issued ASC 855, Subsequent Events, which we adopted in the second quarter of 2009. We have evaluated all events or transactions through
 March 10, 2010. During this period, we did not have any material subsequent events that impacted our consolidated financial statements.

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MIG IV Schedule III

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, 2009

|                      |  |  |                            |            |  |  |      |            |  |                                              |   |         |                            |  |   |            |      |  |   |            |       |  |   |                           |  |  |                |            |   |              |  |            |  |  |   |            | 
|--------------------- |  |  | -------------------------- | ---------- |  |  | ---- | ---------- |  | -------------------------------------------- | - | ------- | -------------------------- |  | - | ---------- | ---- |  | - | ---------- | ----- |  | - | ------------------------- |  |  | -------------- | ---------- | - | ------------ |  | ---------- |  |  | - | ---------- | 
|                      |  |  | 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
 Square      |  |  |                            | 18,919,808 |  |  |      | 18,948,617 |  |                                              |   | 134,585 |                            |  |   | 19,054,393 |      |  |   | 18,948,617 |       |  |   | 38,003,010                |  |  |                | (2,208,264 | ) |              |  | 08/31/2007 |  |  |   | 23,800,000 | 
|Woodlake
 Pointe      |  |  |                            | 7,617,318  |  |  |      | 8,845,089  |  |                                              |   | 344,508 |                            |  |   | 7,720,863  |      |  |   | 9,086,052  |       |  |   | 16,806,915                |  |  |                | (790,921   | ) |              |  | 11/21/2007 |  |  |   | -          | 
|Village on
 the Green |  |  |                            | 5,468,698  |  |  |      | 3,133,574  |  |                                              |   | 86,427  |                            |  |   | 5,555,125  |      |  |   | 3,133,574  |       |  |   | 8,688,699                 |  |  |                | (419,347   | ) |              |  | 03/25/2008 |  |  |   | 6,148,831  | 
|                      |  |  |                            |            |  |  |      |            |  |                                              |   |         |                            |  |   |            |      |  |   |            |       |  |   |                           |  |  |                |            |   |              |  |            |  |  |   |            | 
|                      |  |  |                            |            |  |  |      |            |  |                                              |   |         |                            |  |   |            |      |  |   |            |       |  |   |                           |  |  |                |            |   |              |  |            |  |  |   |            | 
|Total                 |  |  | $                          | 32,005,824 |  |  | $    | 30,927,280 |  |                                              | $ | 565,520 |                            |  | $ | 32,330,381 |      |  | $ | 31,168,243 |       |  | $ | 63,498,624                |  |  | $              | (3,418,532 | ) |              |  |            |  |  | $ | 29,948,831 | 

Activity within real estate and accumulated depreciation during the three years ended
December 31, 2009 are as follows:

|                                   |  |      |            |                           |   |           |  
|---------------------------------- |  | ---- | ---------- | ------------------------- | - | --------- | -
|                                   |  | Cost |            | Accumulated
 Depreciation |  
|Balance at December 31,
 2006      |  | $    | -          |                           | $ | -         |  
|Acquisitions / additions
 (Note A) |  |      | 50,070,116 |                           |   | -         |  
|Disposals                          |  |      | -          |                           |   | -         |  
|Depreciation expense (Note
 A)     |  |      | -          |                           |   | 378,621   |  
|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
 (Note A) |  |      | 475,886    |                           |   | -         |  
|Disposals                          |  |      | (41,733    | )                         |   | (41,733   | )
|Depreciation expense (Note
 A)     |  |      | -          |                           |   | 1,545,919 |  
|Balance at December 31,
 2009      |  | $    | 63,498,624 |                           | $ | 3,418,532 |  

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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Table of Contents

Report of
Independent Registered Public Accounting Firm

The Partners of AmREIT Casa Linda, L.P.:

We
have audited the accompanying balance sheets of AmREIT Casa Linda, L.P. (the Partnership) as of December 31, 2009 and
2008, and the related statements of operations, partners capital and
cash flows for each of the years in the three-year period ended December 31,
2009. These financial
statements are the responsibility of the Partnerships management. Our
responsibility is to express an
opinion on these financial statements 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 Company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 financial statements referred to above present fairly, in all
material respects, the
financial position of AmREIT Casa Linda, L.P. as of December 31, 2009 and 2008, and the results of its operations and its cash
flows for each of the years in the three-year period ended December
31, 2009, in conformity with U.S. generally accepted
accounting principles.

|              
|--------------
|KPMG LLP      
|              
|Houston, Texas
|March 10, 2010

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SCHEDULE IV ― FINANCIAL STATEMENTS AND NOTES FOR
AmREIT CASA LINDA, L.P.

AmREIT CASA LINDA, L.P.
BALANCE SHEETS
December 31, 2009 and December 31, 2008 
(in thousands)

|                                               |  |                    |        |                    |   |        |  
|---------------------------------------------- |  | ------------------ | ------ | ------------------ | - | ------ | -
|                                               |  | December 31,
 2009 |        | December 31,
 2008 |  
|ASSETS                                         |  |                    |        |                    |   |        |  
|Real estate investments at cost:               |  |                    |        |                    |   |        |  
|Land                                           |  | $                  | 11,420 |                    | $ | 11,420 |  
|Buildings                                      |  |                    | 36,784 |                    |   | 34,546 |  
|Tenant improvements                            |  |                    | 1,330  |                    |   | 752    |  
|                                               |  |                    | 49,534 |                    |   | 46,718 |  
|Less accumulated depreciation and amortization |  |                    | (4,314 | )                  |   | (2,849 | )
|                                               |  |                    | 45,220 |                    |   | 43,869 |  
|                                               |  |                    |        |                    |   |        |  
|Intangible lease cost, net                     |  |                    | 1,670  |                    |   | 2,286  |  
|Net real estate investments                    |  |                    | 46,890 |                    |   | 46,155 |  
|                                               |  |                    |        |                    |   |        |  
|Cash and cash equivalents                      |  |                    | 109    |                    |   | 338    |  
|Tenant receivables                             |  |                    | 339    |                    |   | 384    |  
|Deferred costs, net                            |  |                    | 620    |                    |   | 467    |  
|Other assets                                   |  |                    | 2,137  |                    |   | 2,212  |  
|TOTAL ASSETS                                   |  | $                  | 50,095 |                    | $ | 49,556 |  
|                                               |  |                    |        |                    |   |        |  
|LIABILITIES AND PARTNERS CAPITAL              |  |                    |        |                    |   |        |  
|Liabilities:                                   |  |                    |        |                    |   |        |  
|Notes payable                                  |  | $                  | 37,950 |                    | $ | 37,950 |  
|Notes payable - related party                  |  |                    | 307    |                    |   | -      |  
|Accounts payable and accrued liabilities       |  |                    | 1,314  |                    |   | 1,378  |  
|Accounts payable - related party               |  |                    | 1      |                    |   | 177    |  
|Asset retirement obligations                   |  |                    | 800    |                    |   | 800    |  
|Below market leases, net                       |  |                    | 115    |                    |   | 418    |  
|Security deposits                              |  |                    | 104    |                    |   | 127    |  
|TOTAL LIABILITIES                              |  |                    | 40,591 |                    |   | 40,850 |  
|                                               |  |                    |        |                    |   |        |  
|Partners capital:                             |  |                    |        |                    |   |        |  
|General partner                                |  |                    | -      |                    |   | -      |  
|Limited partners                               |  |                    | 9,504  |                    |   | 8,706  |  
|TOTAL PARTNERS CAPITAL                        |  |                    | 9,504  |                    |   | 8,706  |  
|TOTAL LIABILITIES AND PARTNERS CAPITAL        |  | $                  | 50,095 |                    | $ | 49,556 |  

See
Notes to Financial Statements.

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AmREIT CASA LINDA, L.P. 
STATEMENTS OF OPERATIONS
For the years ended December 31, 2009, 2008 and 2007 
(in thousands)

|                                         |  |      |        |      |   |        |   |   |        |  
|---------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                         |  | 2009 |        | 2008 |   | 2007   |  
|                                         |  |      |        |      |   |        |   |   |        |  
|Revenues:                                |  |      |        |      |   |        |   |   |        |  
|Rental income from operating leases      |  | $    | 4,340  |      | $ | 4,737  |   | $ | 5,004  |  
|Total revenues                           |  |      | 4,340  |      |   | 4,737  |   |   | 5,004  |  
|                                         |  |      |        |      |   |        |   |   |        |  
|Expenses:                                |  |      |        |      |   |        |   |   |        |  
|General and administrative               |  |      | 30     |      |   | 25     |   |   | 54     |  
|Property expense                         |  |      | 1,557  |      |   | 1,350  |   |   | 1,670  |  
|Property management fees - related party |  |      | 164    |      |   | 174    |   |   | 163    |  
|Legal and professional                   |  |      | 69     |      |   | 82     |   |   | 113    |  
|Depreciation and amortization            |  |      | 2,017  |      |   | 2,146  |   |   | 2,497  |  
|Total expenses                           |  |      | 3,837  |      |   | 3,777  |   |   | 4,497  |  
|                                         |  |      |        |      |   |        |   |   |        |  
|Operating
 income                        |  |      | 503    |      |   | 960    |   |   | 507    |  
|                                         |  |      |        |      |   |        |   |   |        |  
|Other income (expense):                  |  |      |        |      |   |        |   |   |        |  
|Interest and other income                |  |      | 37     |      |   | 41     |   |   | 42     |  
|Interest expense                         |  |      | (2,170 | )    |   | (2,176 | ) |   | (2,172 | )
|Interest expense - related party         |  |      | (6     | )    |   | -      |   |   | -      |  
|Margin tax expense                       |  |      | (16    | )    |   | (28    | ) |   | (36    | )
|Total other income (expense)             |  |      | (2,155 | )    |   | (2,163 | ) |   | (2,166 | )
|                                         |  |      |        |      |   |        |   |   |        |  
|                                         |  |      |        |      |   |        |   |   |        |  
|Net loss                                 |  | $    | (1,652 | )    | $ | (1,203 | ) | $ | (1,659 | )

See Notes to Financial Statements.

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AmREIT CASA
LINDA, L.P.
STATEMENTS OF PARTNERS CAPITAL
For the years ended December 31, 2009, 2008 and 2007
(in thousands)

|                             |  |                  |   |                   |   |        |   |   |        |  
|---------------------------- |  | ---------------- | - | ----------------- | - | ------ | - | - | ------ | -
|                             |  | General
 Partner |   | Limited
 Partners |   | Total  |  
|Balance at December 31, 2006 |  | $                | - |                   | $ | 10,432 |   | $ | 10,432 |  
|                             |  |                  |   |                   |   |        |   |   |        |  
|Net loss (1)                 |  |                  | - |                   |   | (1,659 | ) |   | (1,659 | )
|                             |  |                  |   |                   |   |        |   |   |        |  
|Balance at December 31, 2007 |  | $                | - |                   | $ | 8,773  |   | $ | 8,773  |  
|                             |  |                  |   |                   |   |        |   |   |        |  
|Contributions                |  |                  | - |                   |   | 1,136  |   |   | 1,136  |  
|Net loss (1)                 |  |                  | - |                   |   | (1,203 | ) |   | (1,203 | )
|                             |  |                  |   |                   |   |        |   |   |        |  
|Balance at December 31, 2008 |  | $                | - |                   | $ | 8,706  |   | $ | 8,706  |  
|                             |  |                  |   |                   |   |        |   |   |        |  
|Contributions                |  |                  | - |                   |   | 2,450  |   |   | 2,450  |  
|Net loss (1)                 |  |                  | - |                   |   | (1,652 | ) |   | (1,652 | )
|                             |  |                  |   |                   |   |        |   |   |        |  
|Balance at December 31, 2009 |  | $                | - |                   | $ | 9,504  |   | $ | 9,504  |  

| |     |                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The allocation of net loss
 includes a curative allocation to increase the GP capital account by $17, $12
 and $17 for the years ended December 31, 2009, 2008 and 2007, respectively,
 as the partnership agreement provides that no partner shall be required to
 fund a deficit balance in their capital account. The cumulative curative
 allocation since inception of the Partnership is $47.

See Notes to Financial
Statements.

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AmREIT
CASA LINDA, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2009, 2008 and 2007
(in thousands)

|                                                                                           |  |      |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                                           |  | 2009 |        | 2008 |   | 2007   |  
|Cash flows
 from operating activities:                                                     |  |      |        |      |   |        |   |   |        |  
|Net loss                                                                                   |  | $    | (1,652 | )    | $ | (1,203 | ) | $ | (1,659 | )
|Adjustments to reconcile net loss to net
 cash provided by (used in) operating activities: |  |      |        |      |   |        |   |   |        |  
|Bad debt expense                                                                           |  |      | 45     |      |   | 25     |   |   | -      |  
|Depreciation and amortization                                                              |  |      | 2,017  |      |   | 2,146  |   |   | 2,497  |  
|Amortization of above and below market
 leases, net                                        |  |      | (114   | )    |   | (362   | ) |   | (480   | )
|Amortization of loan acquisition costs                                                     |  |      | 61     |      |   | 61     |   |   | 64     |  
|Decrease (increase) in tenant receivables                                                  |  |      | -      |      |   | 111    |   |   | (405   | )
|Increase in deferred costs                                                                 |  |      | (281   | )    |   | (168   | ) |   | (44    | )
|Decrease (increase) in other assets                                                        |  |      | 75     |      |   | 3,442  |   |   | (772   | )
|Increase (decrease) in accounts payable and
 accrued liabilities                           |  |      | (20    | )    |   | (180   | ) |   | 1,483  |  
|Increase (decrease) in accounts payable -
 related party                                   |  |      | (95    | )    |   | 60     |   |   | (145   | )
|Increase (decrease) in security deposits                                                   |  |      | (23    | )    |   | 19     |   |   | (12    | )
|Net cash provided (used in) by operating
 activities                                       |  |      | 13     |      |   | 3,951  |   |   | 527    |  
|                                                                                           |  |      |        |      |   |        |   |   |        |  
|Cash flows
 from investing activities:                                                     |  |      |        |      |   |        |   |   |        |  
|Improvements to real estate                                                                |  |      | (2,729 | )    |   | (4,999 | ) |   | (277   | )
|Net cash used in investing activities                                                      |  |      | (2,729 | )    |   | (4,999 | ) |   | (277   | )
|                                                                                           |  |      |        |      |   |        |   |   |        |  
|Cash flows
 from financing activities:                                                     |  |      |        |      |   |        |   |   |        |  
|Proceeds from notes payable - related party                                                |  |      | 712    |      |   | -      |   |   | -      |  
|Payments on notes payable - related party                                                  |  |      | (180   | )    |   | -      |   |   | -      |  
|Contributions                                                                              |  |      | 1,955  |      |   | 1,136  |   |   | -      |  
|Net cash provided by financing activities                                                  |  |      | 2,487  |      |   | 1,136  |   |   | -      |  
|                                                                                           |  |      |        |      |   |        |   |   |        |  
|Net increase
 (decrease) in cash and cash equivalents                                      |  |      | (229   | )    |   | 88     |   |   | 250    |  
|Cash and
 cash equivalents, beginning of period                                            |  |      | 338    |      |   | 250    |   |   | -      |  
|Cash and
 cash equivalents, end of period                                                  |  | $    | 109    |      | $ | 338    |   | $ | 250    |  
|                                                                                           |  |      |        |      |   |        |   |   |        |  
|Supplemental schedule of cash flow information:                                            |  |      |        |      |   |        |   |   |        |  
|                                                                                           |  |      |        |      |   |        |   |   |        |  
|Cash paid during the period for:                                                           |  |      |        |      |   |        |   |   |        |  
|Interest                                                                                   |  | $    | 2,109  |      | $ | 2,114  |   | $ | 1,929  |  
|Taxes                                                                                      |  | $    | 24     |      | $ | 32     |   | $ | -      |  

Supplemental schedule
of non-cash transactions:

| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the
 year ended December 31, 2009, $75,000 of accounts payable to our limited
 partners was reclassified to equity contributions from limited partners.     
| |                                                                                                                                                                    
| | During the
 year ended December 31, 2009, $420,000 of notes payable to one of our limited
 partners was reclassified to equity contributions from limited partners.
| |                                                                                                                                                                    
| | During the
 year ended December 31, 2009, we financed $145,000 of improvements to real estate through notes payable-related party.                                 

See Notes to
Financial Statements.

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Table of Contents

AmREIT CASA LINDA, L.P.

NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

|   |                        
|-- | -----------------------
|1. | DESCRIPTION OF BUSINESS

AmREIT Casa
Linda, L.P., a Texas limited partnership (the Partnership), was formed on
December 8, 2006 to acquire Casa Linda, (the Property) a multi-tenant retail
property located in Dallas, Texas with a combined gross leasable area of
324,569 square feet. During the year ended December 31, 2009, the property
completed a substantial renovation that will allow it to maintain its
historical character and prominence in the community, while updating the
propertys features. This renovation was completed in April 2009 at a cost of
$7.1 million. The General Partner of the Partnership is AmREIT Casa Linda GP,
Inc. The General Partner maintains its principal place of business in Houston,
Texas.

The limited
partners of the Partnership are AmREIT Monthly Income & Growth Fund III,
Ltd. (MIG III) and AmREIT Monthly Income & Growth Fund IV, L.P. (MIG
IV). Distributions are split between the partners in accordance with each partners ownership percentage.
We have contracted with AmREIT Realty Investment Corporation (ARIC) to
provide property management and leasing services. ARIC is a wholly-owned
subsidiary of AmREIT, a Maryland corporation that has elected to be taxed as a
real estate investment trust, and is an affiliate of MIG III and MIG IV.

|   |                                           
|-- | ------------------------------------------
|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.
Effective July 1, 2009, the Financial Accounting Standards Board (FASB)
established the Accounting Standards Codification (ASC) as the primary source
of authoritative Generally Accepted Accounting Principles (GAAP) recognized
by the FASB to be applied to nongovernmental entities. Although the
establishment of ASC did not change current GAAP, it did change the way we
refer to GAAP throughout this document to reflect the updated referencing
convention.

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, this occurs on the lease commencement date. In all cases, we
have determined that we are the owner of any tenant improvements that we fund
pursuant to the lease terms. In cases where 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. During the years ended December 31, 2009, 2008 and 2007, we
recognized percentage rents of $5,000, $35,000 and $26,000, respectively. We
recognize lease termination fees in the period that the lease is terminated and
collection of the fees is reasonably assured. Upon early lease termination we
provide for losses related to unrecovered intangibles and other assets. During
the years ended December 31, 2009, 2008 and 2007, we recognized no lease
termination fees.

REAL
ESTATE INVESTMENTS

Redevelopment - Land, buildings and improvements are
recorded at cost. Expenditures related to the redevelopment of real estate are carried at cost which includes capitalized
carrying charges and redevelopment 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 to building improvements.

Acquired
Properties and Acquired Lease Intangibles - We
account for real estate acquisitions pursuant to ASC 805 Business Combinations.
Accordingly, we allocate the purchase price of the acquired properties to land,
building and improvements, identifiable intangible assets and acquired
liabilities based on their respective fair values.

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Table of Contents

Identifiable intangibles include amounts allocated to acquired above
and below-market leases, the value of in-place leases and customer relationship
value, if any. We determine fair value based on estimated cash flow projections
that utilize appropriate discount and capitalization rates and available market
information. Estimates of future cash flows are based on a number of factors
including the historical operating results, known trends and specific market
and economic conditions that may affect the property. Factors considered by
management in our analysis of determining the as-if-vacant property value
include an estimate of carrying costs during the expected lease-up periods
considering market conditions and costs to execute similar leases. In
estimating carrying costs, management includes real estate taxes, insurance and
estimates of lost rentals at market rates during the expected lease-up periods,
tenant demand and other economic conditions. Management also estimates costs to
execute similar leases including leasing commissions, tenant improvements,
legal and other related expenses. Intangibles related to above-market and
in-place leases are recorded as intangible lease costs, and intangibles related
to below-market leases are recorded as below-market leases. Amortization of above
and below-market leases and in-place leases recorded as an adjustment to rental
revenue or amortization expense, as appropriate, over the remaining terms of
the underlying leases. Premiums or discounts on acquired above and below market
debt are amortized to interest expense over the remaining term of such debt.

Depreciation
-Depreciation is computed using the straight-line
method over an estimated useful life of up to 39 years for buildings, up to 20
years for site improvements and over the term of lease for tenant improvements.

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

ENVIRONMENTAL
EXPOSURES

We are
subject to numerous environmental laws and regulations as they apply to real
estate pertaining to 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 who currently operate dry cleaning plants or gas
stations do so in accordance with current laws and regulations. We believe that
the ultimate disposition of currently known environmental matters will not have
a material affect on our financial position, liquidity, or operations (see Note
8). 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 center will not be affected by tenants
and occupants, by the condition of nearby properties, or by unrelated third
parties; or that changes in applicable environmental laws and regulations or
their interpretation will not result in additional environmental liability to
the Partnership.

RECEIVABLES
AND ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

Tenant
Receivables -Included in tenant receivables are
base rents, tenant reimbursements and receivables attributable to recording
rents on a straight-line basis. An allowance for the uncollectible portion of
accrued rents and accounts receivable is determined based upon customer
credit-worthiness (including expected recovery of our claim with respect to any
tenants in bankruptcy), historical bad debt levels, and current economic
trends. Bad debt expenses and any related recoveries related to tenant
receivables are included in property expense. As of December 31, 2009 and 2008,
our allowance for uncollectible accounts related to our tenant receivables was
$67,000 and $25,000, respectively.

DEFERRED
COSTS

Deferred
costs include loan acquisition costs and deferred leasing 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.

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Table of Contents

Deferred leasing costs consist of external commissions associated with
leasing our properties and are amortized to depreciation and amortization
expense over the lease term. Accumulated amortization related to loan
acquisition costs as of December 31, 2009 and 2008 totaled $190,000 and
$128,000, respectively. Accumulated amortization related to leasing costs as of
December 31, 2009 and 2008 totaled $89,000 and $35,000, respectively.

INCOME
TAXES

Federal
-No provision for U.S. federal income taxes is
included in the accompanying 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, 2009 and 2008 totaled $31,000 and
$33,000, respectively.

USE OF ESTIMATES

The
preparation of 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 financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our
financial instruments consist primarily of cash and cash equivalents, tenant
receivables, note payable, notes payable  related party, accounts payable and
accrued liabilities, and accounts payable-related party. The carrying value of
all but the notes payable are representative of their respective fair values
due to the short-term nature of these instruments.

In
determining the fair value of our debt instruments, we determine the
appropriate Treasury Bill Rate based on the remaining time to maturity for each
of the debt instruments. We then add the appropriate yield spread to the
Treasury Bill Rate. The yield spread is a risk premium estimated by investors
to account for credit risk involved in debt financing. The spread is typically
estimated based on the property type and loan-to-value ratio of the debt
instrument. The result is an estimate of the market interest rate a typical
investor would expect to receive given the underlying subject asset (property
type) and remaining time to maturity. Based on these estimates, the fair value
of notes payable was $37.1 million and $38.8 million at December 31, 2009 and
2008, respectively.

NEWACCOUNTING STANDARDS

In June
2009, the FASB issued SFAS No. 167, Amendments
to FASB Interpretation No. 46(R) (SFAS No. 167), which amends the
consolidation guidance applicable to variable interest entities. 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 special purpose entities as a result of the elimination of
the Qualified Special Purpose Entity (QSPE) concept in SFAS No.166. SFAS No.
167 is effective as of the beginning of the first fiscal year that begins after
November 15, 2009 and early adoption is prohibited. We believe the
consolidation requirements of SFAS No. 167 will not have an impact on our
financial statements as we do not have any investments that would be considered
variable interest entities.

In June
2009, the FASB issued ASC 105, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, which became the single source of
authoritative nongovernmental U.S. generally accepted accounting principles,
superseding existing FASB, American Institute of Certified Public Accountants,
EITF, and related accounting literature. ASC 105 reorganizes the thousands of
GAAP pronouncements

S-9

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Table of Contents

into roughly 90 accounting topics and displays them using a consistent
structure. Also included is relevant SEC guidance organized using the same
topical structure in separate sections. ASC 105 is effective for all quarterly
and annual reporting periods ending after September 15, 2009. We adopted the
provisions of ASC 105 in 2009. Such adoption only changed the way we refer to
GAAP to reflect the updated referencing convention and did not have an impact
on our financial statements.

CASH AND CASH EQUIVALENTS

For
purposes of the statements of cash flows, 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.

INTEREST

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

|   |                 
|-- | ----------------
|3. | OPERATING LEASES

Our
operating leases generally range from one month to twelve 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, 2009 is as follows:

|           |  |   |            | 
|---------- |  | - | ---------- | 
|2010       |  | $ | 2,955,000  | 
|2011       |  |   | 2,418,000  | 
|2012       |  |   | 1,963,000  | 
|2013       |  |   | 1,550,000  | 
|2014       |  |   | 1,270,000  | 
|Thereafter |  |   | 6,490,000  | 
|Total      |  | $ | 16,646,000 | 

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 $1.1 million, $1.1 million and
$1.3 million during the years ended December 31, 2009, 2008 and 2007,
respectively.

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

In
accordance with ASC 805, Business Combinations,
we have identified and recorded the value of acquired lease intangibles at the
property acquisition date. Such intangibles include the value of acquired
in-place leases and above and below-market leases. Acquired lease intangible
assets (in-place leases and above-market leases) are amortized over the leases
remaining terms, which range from one month to approximately fourteen years.
The amortization of above-market leases is recorded as a reduction of rental
income and the amortization of in-place leases is recorded as depreciation and
amortization expense. The amortization expense related to in-place leases was
approximately $428,000, $701,000 and $1.1 million during the years ended
December 31, 2009, 2008 and 2007, respectively. The amortization of
above-market leases, which was recorded as a reduction of rental income, was
approximately $188,000, $165,000 and $173,000 during the years ended December
31, 2009, 2008 and 2007, 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
one month to approximately five years. Accretion of below-market leases was
approximately $303,000, $527,000 and $653,000 during the years ended December
31, 2009, 2008 and 2007, respectively. Such accretion is recorded as an
increase to rental income.

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Table of Contents

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

|                                               |  |                          |        |                          |   |        |  
|---------------------------------------------- |  | ------------------------ | ------ | ------------------------ | - | ------ | -
|                                               |  | As of
 December 31, 2009 |        | As of
 December 31, 2008 |  
|                                               |  |                          |        |                          |  
|Acquired lease intangible assets:              |  |                          |        |                          |   |        |  
|In-place leases                                |  | $                        | 2,236  |                          | $ | 2,440  |  
|In-place leases - accumulated amortization     |  |                          | (1,748 | )                        |   | (1,525 | )
|Above-market leases                            |  |                          | 1,649  |                          |   | 1,718  |  
|Above-market leases - accumulated amortization |  |                          | (467   | )                        |   | (347   | )
|Acquired lease intangibles, net                |  | $                        | 1,670  |                          | $ | 2,286  |  
|                                               |  |                          |        |                          |   |        |  
|Acquired lease intangible liabilities:         |  |                          |        |                          |   |        |  
|Below-market leases                            |  | $                        | 1,232  |                          | $ | 1,409  |  
|Below-market leases - accumulated accretion    |  |                          | (1,117 | )                        |   | (991   | )
|Acquired below-market lease intangibles, net   |  | $                        | 115    |                          | $ | 418    |  

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 leases) |     | Rental income (above
 and below-market
 leases) |  
|                          |  |                                         |     |                                                 |  
|2010                      |  | $                                       | 165 |                                                 | $ | (69  | )
|2011                      |  |                                         | 70  |                                                 |   | (110 | )
|2012                      |  |                                         | 45  |                                                 |   | (134 | )
|2013                      |  |                                         | 41  |                                                 |   | (137 | )
|2014                      |  |                                         | 37  |                                                 |   | (139 | )
|Totals                    |  | $                                       | 358 |                                                 | $ | (589 | )

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

Our
outstanding debt at December 31, 2009 and 2008 consisted entirely of a $38.0
million fixed-rate mortgage loan, which requires monthly interest-only payments
and matures in January 2014. Our mortgage loan is secured by certain real
estate properties and may be prepaid, but is subject to a yield-maintenance
premium or prepayment penalty. Our mortgage loan is fully guaranteed by our
limited partners, MIG III and MIG IV.

As of
December 31, 2009, the interest rate on our fixed-rate debt is 5.5%, and the
remaining life is 4 years. Scheduled principal repayments on our note payable
for the next 5 years are as follows (in thousands):

|                            |  |           |   |                 |   |                |  |   |        | 
|--------------------------- |  | --------- | - | --------------- | - | -------------- |  | - | ------ | 
|Scheduled
 payments by year |  | Principal |   | Loan maturities |   | Total payments | 
|                            |  |           |   |                 |   |                | 
|2010                        |  | $         | - |                 | $ | -              |  | $ | -      | 
|2011                        |  |           | - |                 |   | -              |  |   | -      | 
|2012                        |  |           | - |                 |   | -              |  |   | -      | 
|2013                        |  |           | - |                 |   | -              |  |   | -      | 
|2014                        |  |           | - |                 |   | 37,950         |  |   | 37,950 | 
|Thereafter                  |  |           | - |                 |   | -              |  |   | -      | 
|Total                       |  | $         | - |                 | $ | 37,950         |  | $ | 37,950 | 

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Table of Contents

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

As of
December 31, 2009, Casa Linda consisted of 61 tenants; none of which comprised
more than 10% of our total base rent. Following are the base rents generated by
our top five tenants during the years ended December 31, 2009, 2008 and 2007
(in thousands):

|                        |  |                         |       |      |   |      |  |   |     | 
|----------------------- |  | ----------------------- | ----- | ---- | - | ---- |  | - | --- | 
|                        |  | Year ended December 31, |      
|                        |  |                         |       |      |   |      |  |   |     | 
|Tenant                  |  | 2009                    |       | 2008 |   | 2007 | 
|                        |  |                         |       |      |   |      |  |   |     | 
|Albertsons             |  | $                       | 287   |      | $ | 287  |  | $ | 287 | 
|Chilis                  |  |                         | 186   |      |   | 148  |  |   | 144 | 
|El Fenix Restaurant     |  |                         | 181   |      |   | 181  |  |   | 181 | 
|PETCO                   |  |                         | 181   |      |   | 178  |  |   | 178 | 
|Highland Park Cafeteria |  |                         | 173   |      |   | 179  |  |   | 131 | 
|Totals                  |  | $                       | 1,008 |      | $ | 973  |  | $ | 921 | 

|   |                           
|-- | --------------------------
|7. | RELATED PARTY TRANSACTIONS

We have no
employees or offices. We rely on our General Partner to manage our business and
affairs. Our General Partner utilizes the services of AmREIT and its affiliates
in performing its duties to us. These services primarily include the
supervision of the management, leasing of the Property, construction management
related to the redevelopment of the Property and brokerage commissions related
to disposition of the property. As a result, we are dependent upon AmREIT and
its affiliates. 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. During the years ended December 31, 2009, 2008 and 2007, we
incurred property management and leasing fees of $443,000, $330,000 and
$207,000, respectively. Our managing member and its affiliates receive fees
primarily for providing services to us in the areas of property management and
leasing. We have incurred $382,000 in construction management fees and $6.2 million in construction fees since the
redevelopment began in April 2008. These fees have been capitalized to
building.

|   |                              
|-- | -----------------------------
|8. | 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 Casa Linda in December 2006, we identified
an environmental exposure caused by a dry cleaning business that operated on
the property prior to our ownership. We estimate that our obligation related to
remediation of this exposure will be approximately $800,000. Such amount has
been placed in escrow and represents the deductible amount under an
environmental insurance policy that we placed on the property upon acquisition.
We have recorded an asset retirement obligation for $800,000 and capitalized
those estimated costs to Land in our accompanying balance sheet. We believe
that this matter will not have an adverse effect on our financial position or
results of operations, and we are aware of no other environmental exposures.

|   |                  
|-- | -----------------
|9. | SUBSEQUENT EVENTS

In May 2009,
the FASB issued ASC 855, Subsequent Events, which we adopted in the second quarter of 2009. We have evaluated all events or transactions
 through March 10, 2010. During this period, we did not have any material subsequent events that impacted our consolidated financial statements.

S-12

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