##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  FORM 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934For the transition period
    fromtoCommission file number:
    333-130945   NNN Apartment REIT,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Maryland

20-3975609(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1551 N. Tustin Avenue,
    Suite 200Santa Ana, California

92705(Address of principal executive
    offices)

(Zip Code)   Registrants
    telephone number, including area code:
    (877) 888-7348
  Securities
    registered pursuant to Section 12(b) of the Act:
  Title of each class

Name of each exchange on which
    registeredNone


None   Securities registered pursuant to
    Section 12(g) of the Act:
   None
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large accelerated
    filero          Accelerated
    filer                    o          Non-accelerated
    filer þ
  Rule 12b-2  o þ




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##### 



NNN
    Apartment REIT, INC.
    (A Maryland Corporation)
    TABLE OF CONTENTS
  PagePART IItem 1.


Business


3Item 1A.


Risk
    Factors


18Item 2.


Properties


36Item 3.


Legal
    Proceedings


37Item 4.


Submission of
    Matters to a Vote of Security Holders


37PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


37Item 6.


Selected Financial
    Data


38Item 7.


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


40Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


55Item 8.


Financial
    Statements and Supplementary Data


56Item 9.


Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


56Item 9A.


Controls and
    Procedures


56Item 9B.


Other
    Information


56PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


57Item 11.


Executive
    Compensation


62Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


65Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


66Item 14.


Principal
    Accounting Fees and Services


71PART IVItem 15.


Exhibits, Financial
    Statement Schedules


72SIGNATURES


99EXHIBIT 21.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




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PART I  Item 1.
    Business.  The use of the words we, us or
    our refers to NNN Apartment REIT, Inc. and our
    subsidiaries, including NNN Apartment REIT Holdings, L.P.,
    except where the context otherwise requires.
  OUR
    COMPANY
      day-to-day
    Developments
    During 2006 and 2007
  
    In August 2006, our board of directors approved an initial
    distribution rate of 6.0% per annum to be paid monthly to
    stockholders of record, contingent upon our acquisition of
    Walker Ranch Apartment Homes, or the Walker Ranch property. We
    paid our first monthly distribution on December 15, 2006
    for the period ended November 30, 2006.
    On October 5, 2006, excluding shares purchased by our
    executive officers and directors, our Dealer Manager and our
    Advisor and its affiliates, we had received and accepted
    subscriptions in our Offering for 204,107 shares of our
    common stock, or $2,037,000, thereby exceeding the minimum
    offering. Having raised the minimum offering, the offering
    proceeds were released by the escrow agent to us and became
    available for the acquisition of properties and other purposes
    disclosed in our Registration Statement on
    Form S-11(File
    No.
    333-130945,
    effective July 19, 2006) filed with the Securities and
    Exchange Commission,or our Offering prospectus. 3




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
    On October 31, 2006, we purchased the Walker Ranch
    property, located in San Antonio, Texas, from an
    unaffiliated third party for a purchase price of $30,750,000.
    On December 28, 2006, we purchased Hidden Lake Apartment
    Homes, or the Hidden Lake property, located in San Antonio,
    Texas, from an unaffiliated third party for a purchase price of
    $32,030,000.
    On February 22, 2007, our board of directors approved a
    7.0% per annum distribution to be paid to stockholders beginning
    with our March 2007 monthly distribution which will be paid
    in April 2007. Distributions are paid monthly. 4




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5




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(1)
    
    As of December 31, 2006, Anthony W. Thompson, Chairman of
    our Sponsor, and Louis J. Rogers, our director and director of
    our Sponsor, own 25.9% and 5.5%, respectively, of the
    outstanding common stock of NNN Realty Advisors. As of
    December 31, 2006, Stanley J. Olander, Jr., Scott D.
    Peters and Andrea R. Biller, each own less than 1.0% of the
    outstanding common stock of NNN Realty Advisors.  (714) 667-8252.
   6




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CURRENT
    INVESTMENT OBJECTIVES AND POLICIES
  General
    
    stable cash flow available for distribution to our stockholders;
    preservation and protection of capital; and
    growth of income and principal without taking undue risk.    
    invest in income producing real property generally through
    equity investments in a manner which permits us to qualify as a
    REIT for federal income tax purposes; and
    realize capital appreciation upon the ultimate sale of our
    properties.    Business
    Strategies
    Following
    Demographic Trends and Population Shifts to Find Attractive
    Tenants in Quality Apartment Community Markets    and/or
  10-year
 7




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Outsourcing
    of Property Management    Focusing
    on our Strengths
      Focusing
    on Quality Properties
    Focusing
    on Quality Tenant Attraction and Retention
    Focusing
    on Networking and Business Synergies to Enhance Property
    Acquisitions
  and/or and/or
  Focusing
    on Building Property Value
      Leveraging
    the Experience of Our Management   8




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Acquisition
    Strategies
  Types
    of Investments
           9




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Acquisition
    Standards
  and/or
 10




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lease-up lease-up lease-up lease-up
    month-to-month
        
    We intend to preserve capital through selective acquisitions and
    professional management, whereby we intend to increase rental
    rates, maintain high economic occupancy rates, reduce tenant
    turnover, make value-enhancing and income producing capital
    improvements, where appropriate, and control operating costs and
    capital expenditures.
    We will seek to acquire premier apartment properties in growth
    markets, at attractive prices relative to replacement cost, that
    provide the opportunity to improve operating performance through
    professional management, marketing and selective leasing and
    renovation programs.
    We intend to purchase apartment communities at favorable prices
    and obtain immediate income from tenant rents, with the
    potential for appreciation in value over time.    
    geographic location and type;
    construction quality and condition;
    potential for capital appreciation; 11




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
    the general credit quality of current and potential tenants;
    the potential for rent increases;
    the interest rate environment;
    potential for economic growth in the tax and regulatory
    environment of the community in which the property is located;
    potential for expanding the physical layout of the property;
    occupancy and demand by tenants for properties of a similar type
    in the same geographic vicinity;
    prospects for liquidity through sale, financing or refinancing
    of the property;
    competition from existing properties and the potential for the
    construction of new properties in the area; and
    treatment under applicable federal, state and local tax and
    other laws and regulations.            
    changes in general economic or local conditions;
    changes in supply of or demand for similar competing properties
    in an area;
    changes in interest rates and availability of permanent mortgage
    funds which may render the sale of a property difficult or
    unattractive;
    changes in tax, real estate, environmental and zoning laws;
    periods of high interest rates and tight money supply which may
    make the sale of properties more difficult;
    tenant turnover; and
    general overbuilding or excess supply in the market area.   12




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Property
    Acquisition
            Joint
    Ventures
  tenant-in-common
    
    there are no duplicate property management or other fees; 13




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
    the investment of each entity is on substantially the same terms
    and conditions; and
    we have a right of first refusal if our Advisor or its
    affiliates wish to sell its interest in the property held in
    such arrangement.      Disposition
    Strategies
           14




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
    in the judgment of our Advisor, the value of a property might
    decline substantially;
    an opportunity has arisen to improve other properties;
    we can increase cash flow through the disposition of the
    property; or
    in our judgment, the sale of the property is in our best
    interests.    Operating
    Strategies
    
    aggressively leasing available space through targeted marketing;
    controlling operating expenses by outsourcing property
    management, leasing, and marketing activities;
    emphasizing regular maintenance and periodic renovation to meet
    the needs of tenants and to maximize long-term returns; and
    financing acquisitions and refinancing properties when favorable
    terms are available to increase cash flow.  FINANCING
    POLICIES
   15




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TAX
    STATUS
    DISTRIBUTION
    POLICY
     16




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COMPETITION
        GOVERNMENT
    REGULATIONS
    Costs of Compliance with the Americans with Disabilities
    Act.
  Costs of Government Environmental Regulation and Private
    Litigation.
  Use of Hazardous Substances by Some of Our Tenants.
  Other Federal, State and Local Regulations.
 17




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EMPLOYEES
    FINANCIAL
    INFORMATION ABOUT INDUSTRY SEGMENTS
    Item 1A.
    Risk
    Factors.  Limited
    Operating History
  We and
    our Advisor are newly formed and have limited business
    operations, which makes our future performance and the
    performance of an investment in our common stock difficult to
    predict.
    We
    have only identified two specific investments to make with the
    net proceeds as of April 9, 2007.
    If we
    are unable to find suitable investments, we may not be able to
    achieve our investment objectives.
   18




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We
    face competition from other apartment communities, which may
    limit our profitability and returns to our
    stockholders.
      There
    may be delays in our investments in real property, and this
    delay may decrease the return to stockholders.
    We are
    not diversified and are dependent on our investment in a single
    asset class, making our performance more vulnerable to economic
    downturns in the apartment industry than if we had diversified
    investments.
    Limited
    Working Capital
  We
    have limited sources of working capital and may not be able to
    obtain capital on acceptable terms or at all, decreasing the
    value of an investment in our common stock.
     19




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Lack of
    Investment Diversification
  The
    effect of adverse conditions at specific properties will be
    magnified to the extent we are able to acquire only a limited
    number of properties.
    Acquisition
    Risks
  Our
    inability to find funding for acquisitions could prevent us from
    realizing our objectives and would adversely impact the
    distributions we pay to our stockholders and the value of an
    investment in shares of our common stock.
          We are
    likely to incur mortgage and other indebtedness, which may
    increase our business risks.
   20




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Competition
    with entities that have greater financial resources could make
    it more difficult for us to acquire attractive properties and
    achieve our investment objectives.
    Distributions
    May Include a Return of Capital
  We may
    not have sufficient cash available from operations to pay
    distributions, and, therefore, distributions may include a
    return of capital.
    No Market
    for Our Common Stock
  The
    absence of a public market for our common stock makes it
    difficult for our stockholders to sell their
    shares.
   21




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The
    per-share offering price of our common stock has been
    established arbitrarily by us and may not reflect the true value
    of shares of our common stock; therefore investors may be paying
    more for a share than such share is actually
    worth.
    Conflicts
    of Interest
    
    any person directly or indirectly owning, controlling or
    holding, with the power to vote, 10.0% or more of the
    outstanding voting securities of such other person;
    any person 10.0% or more of whose outstanding voting securities
    are directly or indirectly owned, controlled or held, with the
    power to vote, by such other person;
    any person directly or indirectly controlling, controlled by or
    under common control with such other person;
    any executive officer, director, manager, trustee or general
    partner of such other person; and
    any legal entity for which such person acts as an executive
    officer, director, manager, trustee or general partner.  The
    conflicts of interest described below may mean we are not
    managed solely in our stockholders best interests, which
    may adversely affect our results of operations and the value of
    an investment in our common stock.
   22




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23




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The
    absence of arms-length bargaining may mean that our
    agreements are not as favorable to our stockholders as they
    otherwise would have been.
    Our
    Advisor may be entitled to receive significant compensation in
    the event of our liquidation or in connection with a termination
    of the Advisory Agreement.
   24




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Our
    business and financial due diligence investigation was conducted
    by an affiliate. That investigation might not have been as
    thorough as an investigation conducted by an unaffiliated third
    party, and might not have uncovered facts that would be
    important to a potential investor.
    Borrowings
    May Increase Our Business Risks
  As we
    incur indebtedness, we increase the expenses of our operations,
    which could result in a decrease in cash available for
    distribution to our stockholders.
      Borrowing
    increases our business risks.
   25




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We may
    incur indebtedness secured by our properties, which may subject
    our properties to foreclosure.
    Increases
    in interest rates could increase the amount of our debt payments
    and adversely affect our ability to make cash distributions to
    our stockholders.
    Restrictions
    on Share Repurchase Plan
  Our
    stockholders are limited in their ability to sell their shares
    pursuant to our share repurchase plan and repurchases will be
    made at our sole discretion.
      Our
    stockholders interests may be diluted in various ways,
    which may result in lower returns to our
    stockholders.
   26




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Federal
    Income Tax Requirements
  The
    requirement to distribute at least 90.0% of our taxable income
    may require us to borrow, sell assets or issue additional
    securities for cash, which would increase the risks associated
    with an investment in shares of our common stock.
      Our
    failure to qualify as a REIT would subject us to corporate
    income tax and would materially impact our
    earnings.
     27




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SEC
    Investigation of Triple Net Properties
  The
    ongoing SEC investigation of Triple Net Properties could
    adversely impact our Advisors ability to perform its
    duties to us.
      Risks
    Related to Our Advisor and its Affiliates
  Our
    ability to operate profitably depends upon the ability of our
    Advisor and its management team.
  day-to-day
  Our
    Advisor may terminate the Advisory Agreement, which would
    require us to find a new advisor.
   28




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day-to-day
  If our
    Advisor cannot retain the services of its key executives, their
    replacements may not manage us as effectively.
    Our
    Advisor and its affiliates have no obligation to defer or
    forgive fees or loans or advance any funds to us, which could
    reduce our ability to make investments or pay
    distributions.
    Advisors
    Broad Discretion in Allocating Proceeds
  Stockholders
    have little, if any, control over how the proceeds from our
    Offering are spent.
  day-to-day day-to-day
  Investment
    Company Act
  Our
    stockholders investment returns may be reduced if we are
    required to register as an investment company under the
    Investment Company Act.
    
    limitations on capital structure;
    restrictions on specified investments;
    prohibitions on transactions with affiliates; and 29




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
    compliance with reporting, record keeping, voting, proxy
    disclosure and other rules and regulations that would
    significantly change our operations.  and/or
    Joint
    Venture Arrangements
  Any
    joint venture arrangements may not reflect solely our
    stockholders best interests.
    Investing
    in properties through joint ventures subjects that investment to
    increased risk.
    
    the risk that our co-venturer or partner in an investment might
    become bankrupt;
    the risk that such co-venturer or partner may at any time have
    economic or business interests or goals which are inconsistent
    with our business interests or goals; or
    the risk that such co-venturer or partner may be in a position
    to take action contrary to our instructions or requests are
    contrary to our policies or objectives, such as selling a
    property at a time when it would have adverse consequences for
    our stockholders.    Our
    Ability to Change Policies Without a Stockholder Vote;
    Limitation on Debt
  Most
    of our policies, including the limits on debt, may be changed or
    eliminated by our board of directors at any time without a vote
    of the stockholders.
   30




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Possible
    Adverse Consequences of Limits on Ownership and Transfer of Our
    Shares
  The
    limitation on ownership of our stock prevents a stockholder from
    acquiring more than 9.9% of our stock or more than 9.9% of our
    common stock and may force him or her to sell stock back to
    us.
    
    may consider the transfer to be null and void;
    will not reflect the transaction on our books;
    may institute legal action to enjoin the transaction;
    will not pay dividends or other distributions to him or her with
    respect to those excess shares;
    will not recognize his or her voting rights for those excess
    shares; and
    may consider the excess shares held in trust for the benefit of
    a charitable beneficiary.      
    he or she may lose his or her power to dispose of the stock;
    he or she may not recognize profit from the sale of such stock
    if the market price of the stock increases; and
    he or she may incur a loss from the sale of such stock if the
    market price decreases.  Potential
    Anti-Takeover Effects
  Limitations
    on share ownership and transfer may deter a sale of our stock in
    which our stockholders could profit.
   31




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Our
    ability to issue preferred stock may include a preference in
    distributions superior to our common stock and also may deter or
    prevent a sale of shares of our common stock in which our
    stockholders could profit.
    Maryland
    takeover statutes may deter others from seeking to acquire us
    and prevent our stockholders from making a profit in such
    transaction.
    Dilution
  An
    investment in our common stock is diluted immediately by
    $1.00 per share.
    Several
    potential events could cause the fair market and book value of
    an investment in our common stock to decline.
    
    future offerings of our securities, including issuances under
    the DRIP and up to 50,000,000 shares of any preferred stock
    that our board may authorize;
    private issuances of our securities to other investors,
    including institutional investors;
    issuances of our securities under our 2006 Incentive Award
    Plan; or
    redemptions of units of limited partnership interest in our
    Operating Partnership in exchange for shares of our common stock. 32




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Dilution
    and Our Operating Partnership
  Our
    Advisor may receive economic benefits from its status as a
    special limited partner without bearing any of the investment
    risk.
    Our
    Seller Financing May Delay Liquidation or Reinvestment
  Our
    stockholders may not receive any profits resulting from the sale
    of one of our properties, or receive such profits in a timely
    manner, because we may provide financing for the purchaser of
    such property.
    Negative
    Characteristics of Real Estate Investments
  We
    depend upon our tenants to pay rent, and their inability to pay
    rent may substantially reduce our revenues and cash available
    for distribution to our stockholders.
    
    changes in national, regional or local economic conditions;
    changes in local market conditions; and
    changes in federal, state or local regulations and controls
    affecting rents, prices of goods, interest rates, fuel and
    energy consumption.   33




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A
    default by a mortgagor on any mortgage loan we hold may reduce
    our revenues and cash available for distribution to our
    stockholders.
    Increased
    construction of similar properties that compete with our
    properties in any particular location could adversely affect the
    operating results of our properties and our cash available for
    distribution to our stockholders.
    
    make it more difficult for us to find tenants to lease units in
    our apartment communities;
    force us to lower our rental prices in order to lease units in
    our apartment communities; and
    substantially reduce our revenues and cash available for
    distribution to our stockholders.  Lack
    of diversification and liquidity of real estate make it
    difficult for us to sell underperforming properties or recover
    our investment in one or more properties.
    Lack
    of geographic diversity may expose us to regional economic
    downturns that could adversely impact our operations or our
    ability to recover our investment in one or more
    properties.
    Costs
    required to become compliant with the Americans with
    Disabilities Act at our properties may affect our ability to
    make distributions to our stockholders.
   34




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Discovery
    of previously undetected environmentally hazardous conditions
    may decrease our revenues and the return on an investment in our
    common stock.
    Losses
    for which we either could not or did not obtain insurance, and
    lender requirements to obtain terrorism insurance, will
    adversely affect our earnings.
      Dramatic
    increases in insurance rates could adversely affect our cash
    flow and our ability to make distributions to our
    stockholders.
   35




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Our
    investments in unimproved real property will take longer to
    produce returns and will be riskier than investments in
    developed property.
  and/or
  Effects
    of ERISA Regulations
  Our
    common stock may not be a suitable investment for qualified
    pension and profit-sharing trusts.
    
    whether the investment satisfies the diversification
    requirements of ERISA,
    or other applicable restrictions imposed by ERISA; and
    whether the investment is prudent and suitable, since we
    anticipate that initially there will be no market in which our
    stockholders can sell or otherwise dispose of our shares.        Item 2.
    Properties.  Real
    Estate Investments
        Annual Rent%


Date


Annual


% Physical


per LeasedProperty Name

Property Location


# of Units


Owned


Acquired


Rent(1)


Occupancy(2)


Unit(3)Consolidated
    Properties:Walker Ranch


San Antonio, TX



325



100.0
%


10/31/06


$
3,501,000



97.9
%

$
11,008Hidden Lake


San Antonio, TX



380



100.0
%


12/28/06



3,356,000



97.6



9,047Total/Weighted-Average






705










$
6,857,000



97.7
%

$
20,055  36




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(1)
    
    Annualized rental income is based on contractual base rent from
    leases in effect as of December 31, 2006.(2)
    
    Physical occupancy as of December 31, 2006.(3)
    
    Average effective annual rent per leased unit as of
    December 31, 2006.    
    we believe all of the properties are adequately covered by
    insurance and are suitable for their intended purposes;
    we have no plans for any material renovations, improvements or
    development of the properties, except in accordance with planned
    budgets; and
    our properties are located in markets where we are subject to
    competition for attracting new tenants and retaining current
    tenants.    
  Indebtedness
    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II Item 5. Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information
   37




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Stockholders
    Distributions
        Use of
    Public Offering Proceeds
  Form S-11 No. 333-130945)
      Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
    Item 6.
    Selected
    Financial Data.     38




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Form 10-K.
  December 31,


January 10, 2006Selected Financial Data(1)

2006


(Date of Inception)BALANCE SHEET DATA:Total assets

$
67,214,336


$
201,007Mortgage loan payable

$
19,218,000


$
Stockholders equity

$
14,246,489


$
200,007 Period fromJanuary 10, 2006(Date of Inception)throughDecember 31,2006STATEMENT OF OPERATIONS DATA:Total revenues

$
659,442Loss from continuing operations

$
(522,906
)Net loss

$
(522,906
)Loss per common share 
    basic and diluted(1):Loss from continuing operations

$
(1.99
)Net loss

$
(1.99
)STATEMENT OF CASH FLOWS DATA:Cash flows provided by operating
    activities

$
301,040Cash flows used in investing
    activities

$
(63,990,306
)Cash flows provided by financing
    activities

$
65,143,590OTHER DATA:Distributions declared

$
145,592Distributions declared per share(1)

$
0.14Funds from operations(2)

$
(234,008
)     (1)
    
    Net loss and distributions per share are based upon the
    weighted-average number of shares of our common stock
    outstanding. Distributions by us of our current and accumulated
    earnings and profits for federal income tax purposes are taxable
    to stockholders as ordinary income. Distributions in excess of
    these earnings and profits generally are treated as a
    non-taxable reduction of the stockholders basis in the
    shares to the extent thereof (a return of capital for tax
    purposes) and, thereafter, as taxable gain. These distributions
    in excess of earnings and profits will have the effect of
    deferring taxation of the distributions until the sale of the
    stockholders common stock.(2)
    
    One of our objectives is to provide cash distributions to our
    stockholders from cash generated by our operations. Funds from
    operations is not equivalent to our net operating income or loss
    as determined under accounting principles generally accepted in
    the United States of America, or GAAP. Due to certain unique
    operating characteristics of real estate companies, the National
    Association of Real Estate Investment Trusts, or NAREIT, an
    industry trade group, has promulgated a measure known as Funds
    From Operations, or FFO, which it believes more accurately
    reflects the operating performance of a REIT such as us.We define FFO, a non-GAAP measure, consistent with the standards
    established by the White Paper on FFO approved by the Board of
    Governors of NAREIT, as revised in February 2004. The White
    Paper defines FFO as net income or loss computed in accordance
    with GAAP, excluding gains or losses from sales of property but
    including asset impairment writedowns, plus depreciation and
    amortization, and after adjustments for unconsolidated
    partnerships and joint ventures. Adjustments for unconsolidated
    partnerships and joint ventures are calculated to reflect FFO.We are disclosing FFO and intend to disclose FFO in future
    filings because we consider FFO to be an appropriate
    supplemental measure of a REITs operating performance as
    it is based on a net income analysis of property portfolio
    performance that excludes non-cash items such as depreciation.
    The 39




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##### Table of Contents



historical accounting convention used for real estate assets
    requires straight-line depreciation of buildings and
    improvements, which implies that the value of real estate assets
    diminishes predictably over time. Since real estate values
    historically rise and fall with market conditions, presentations
    of operating results for a REIT, using historical accounting for
    depreciation, could be less informative. The use of FFO is
    recommended by the REIT industry as a supplemental performance
    measure.Presentation of this information is intended to assist the
    reader in comparing the operating performance of different
    REITs, although it should be noted that not all REITs calculate
    FFO the same way, so comparisons with other REITs may not be
    meaningful. Furthermore, FFO is not necessarily indicative of
    cash flow available to fund cash needs and should not be
    considered as an alternative to net income as an indication of
    our performance. Our FFO reporting complies with NAREITs
    policy described above.For additional information, see Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Funds from Operations, which includes a
    reconciliation of our GAAP net income available to stockholders
    to FFO for the period from January 10, 2006 (Date of
    Inception) through December 31, 2006.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The use of the words we, us or
    our refers to NNN Apartment REIT, Inc. and our
    subsidiaries, including NNN Apartment REIT Holdings, L.P.,
    except where the context otherwise requires.
  Form 10-K.
  Forward-Looking
    Statements
   40




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##### Table of Contents



Overview
    and Background
      day-to-day
      Business
    Strategies
    Following
    Demographic Trends and Population Shifts to Find Attractive
    Tenants in Quality Apartment Community Markets
    and/or
 41




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##### Table of Contents



10-year
  Outsourcing
    of Property Management
    Focusing
    on Our Strengths
      Focusing
    on Quality Properties
    Focusing
    on Quality Tenant Attraction and Retention
    Focusing
    on Networking and Business Synergies to Enhance Property
    Acquisitions
  and/or and/or
  Focusing
    on Building Property Value
   42




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##### Table of Contents



Leveraging
    the Experience of Our Management
              Acquisitions
    in 2006
  Walker
    Ranch  San Antonio, Texas
  325-unit
 43




---



##### Table of Contents



Hidden
    Lake  San Antonio, Texas
  380-unit
  Critical
    Accounting Policies
  Use of
    Estimates
    Revenue
    Recognition, Tenant Receivables and Allowance for Uncollectible
    Accounts
      Capitalization
    of Expenditures and Depreciation of Assets
    Impairment
    
    significant negative industry or economic trends;
    a significant underperformance relative to historical or
    projected future operating results; and
    a significant change in the manner in which the asset is used. 44




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##### Table of Contents



Properties
    Held for Sale
  Accounting for the Impairment or Disposal of
    Long Lived Assets,
    
    management, having the authority to approve the action, commits
    to a plan to sell the asset;
    the asset is available for immediate sale in its present
    condition subject only to terms that are usual and customary for
    sales of such assets;
    an active program to locate a buyer and other actions required
    to complete the plan to sell the asset has been initiated;
    the sale of the asset is probable and the transfer of the asset
    is expected to qualify for recognition as a completed sale
    within one year;
    the asset is being actively marketed for sale at a price that is
    reasonable in relation to its current fair value; and
    given the actions required to complete the plan to sell the
    asset, it is unlikely that significant changes to the plan would
    be made or that the plan would be withdrawn.  Purchase
    Price Allocation
  Business
    Combinations, lease-up
   45




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##### Table of Contents



Qualification
    as a REIT
    Factors
    Which May Influence Results of Operations
  Rental
    Income
    Sarbanes-Oxley
    Act
      Results
    of Operations
   46




---



##### Table of Contents



Article 3-14 Regulation S-X
         47




---



##### Table of Contents



Liquidity
    and Capital Resources
             48




---



##### Table of Contents



Cash
    Flows
        Accrued
    Liabilities
    Distributions
          Year EndedDecember 31,2006Ordinary income

$




Capital gain






Return of capital


68,000



100.0
%$
68,000



100.0
%  49




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##### Table of Contents



Capital
    Resources
  Financing
               50




---



##### Table of Contents



REIT
    Requirements
    Commitments
    and Contingencies
    Insurance
    Coverage
    Debt
    Service Requirements
   51




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##### Table of Contents



Year

Amount2007

$
31,585,0002008


2009


2010


2011


Thereafter


19,218,000$
50,803,000   Contractual
    Obligations
    Payments Due by PeriodLess Than








More Than1 Year


1-3 Years


3-5 Years


5 Years(2007)


(2008-2009)


(2010-2011)


(After 2011)


TotalPrincipal payments 
    variable rate debt

$
21,585,000


$



$



$



$
21,585,000Principal payments 
    fixed rate debt


10,000,000











19,218,000



29,218,000Interest payments 
    variable rate debt (based on rate in effect as of
    December 31, 2006)


145,000















145,000Interest payments 
    fixed rate debt


1,369,000



2,052,000



2,052,000



5,162,000



10,635,000Total

$
33,099,000


$
2,052,000


$
2,052,000


$
24,380,000


$
61,583,000   Off-Balance
    Sheet Arrangements
    Inflation
   52




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##### Table of Contents



Funds
    from Operations
            Period fromJanuary 10, 2006(Date of Inception)throughDecember 31, 2006Net loss

$
(522,906
)Add:Depreciation and
    amortization  consolidated properties


288,898FFO

$
(234,008
)Weighted average common shares
    outstanding  basic and
    diluted


262,609   Subsequent
    Events
  Line
    of Credit
   53




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##### Table of Contents



Unsecured
    Note Payable to Affiliate
    Distributions
    Status
    of Offering
    Termination
    of our President and Chairman of our Advisor
    Recently
    Issued Accounting Pronouncements
  Accounting for
    Uncertainty in Income Taxes
  Fair Value Measurement
  Considering the Effects of Prior Year
    Misstatements When Quantifying Current Year Misstatements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
 54




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##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.          Expected Maturity Date2007


2008


2009


2010


2011


Thereafter


Total


Fair ValueFixed rate debt

$
10,000,000


$



$



$



$



$
19,218,000


$
29,218,000



*Average interest rate on maturing
    debt


6.86%



















5.34%



5.86%



Variable rate debt

$
21,585,000


$



$



$



$



$



$
21,585,000


$
21,585,000Average interest rate on maturing
    debt (based on rates in effect as of December 31, 2006)


6.88%























6.88%



        55




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation of disclosure controls and
    procedures.
  Form 10-K Rules 13a-14(a) 15d-14(a) Form 10-K
  Rules 13a-15(e) 15d-15(e)
  (b) Changes in internal control over financial
    reporting.
  Item 9B.
    Other
    Information.   56




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##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.    Name

Age


Position

Term of OfficeStanley J. Olander, Jr.


52


Chief Executive Officer, 
    President and Chairman of
    the Board of Directors


Since 2006David L. Carneal


43


Executive Vice President 
    and Chief Operating Officer


Since 2006Gus G. Remppies


47


Executive Vice President
    and Chief Investment Officer


Since 2006Scott D. Peters


49


Executive Vice President


Since 2006Shannon K S Johnson


29


Chief Financial Officer


Since 2006Andrea R. Biller


57


Secretary


Since 2006Glenn W. Bunting, Jr.


62


Independent Director


Since 2006Robert A. Gary, IV


53


Independent Director


Since 2006W. Brand Inlow


53


Independent Director


Since 2006Louis J. Rogers


50


Director


Since 2006     Stanley J. (Jay) Olander, Jr.
  David L. Carneal
  Gus G. Remppies
 57




---



##### Table of Contents



Scott D. Peters
  Shannon K S Johnson
  Andrea R. Biller
  Glenn W. Bunting, Jr.
  Robert A. Gary, IV
 58




---



##### Table of Contents



W. Brand Inlow
  Louis J. Rogers
  Our
    Advisor
  Management
    Name

Age


PositionStanley J. Olander, Jr.


52



Chief Executive OfficerScott D. Peters


49



Executive Vice President and Chief
    Financial OfficerAndrea R. Biller


57



Executive Vice PresidentDavid L. Carneal


43



Executive Vice President and Chief
    Operating OfficerGus G. Remppies


47



Executive Vice President and Chief
    Investment Officer  59




---



##### Table of Contents



day-to-day
  NNN
    Realty Advisors and Triple Net Properties
       60




---



##### Table of Contents



Committees
    of Our Board of Directors
  Acquisition
    Committee
    Audit
    Committee
    
    makes recommendations to our board of directors concerning the
    engagement of independent public accountants;
    reviews the plans and results of the audit engagement with the
    independent public accountants;
    approves professional services provided by, and the independence
    of, the independent public accountants;
    considers the range of audit and non-audit fees; and
    consults with the independent public accountants regarding the
    adequacy of our internal accounting controls.  Executive
    Compensation Committee
    2006
    Incentive Award Plan
   61




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##### Table of Contents



Amendment
    and Termination of the 2006 Incentive Award Plan
      Code of
    Business Conduct and Ethics
    Item 11.
    Executive
    Compensation.  Executive
    Compensation
  day-to-day Form 10-K.
   62




---



##### Table of Contents



Option/SAR
    Grants in Last Fiscal Year
    Director
    Compensation
    
    Annual Retainer. Our independent directors receive an
    annual retainer of $15,000.
    Meeting Fees. Our independent directors receive $1,000
    for each board meeting attended in person or by telephone, and
    $500 for each committee meeting attended in person or by
    telephone, and an additional $2,000 to the audit committee chair
    for each audit committee meeting attended in person or by
    telephone. If a board meeting is held on the same day as a
    committee meeting, an additional fee will not be paid for
    attending the committee meeting.
    Equity Compensation. Upon initial election to the board,
    each independent director receives 1,000 shares of
    restricted common stock, and an additional 1,000 shares of
    restricted common stock upon his or her subsequent election each
    year. The restricted shares will vest as to 20.0% of the shares
    on the date of grant and on each anniversary thereafter over
    four years from the date of grant.
    Other Compensation. We reimburse our directors for
    reasonable
    out-of-pocket
    expenses incurred in connection with attendance at meetings,
    including committee meetings, of the board of directors.
    Independent directors do not receive other benefits from us.      Change inPension ValueandNon-Equity


NonqualifiedFees Earned


Stock


Option


Incentive Plan


Deferred


All Otheror Paid in


Awards


Awards


Compensation


Compensation


Compensation


TotalName


Cash($)


($)


($)


($)


Earnings ($)


($)


($)(a)


(b)(1)


(c)(2)


(d)


(e)


(f)


(g)


(h)Stanley J.
    Olander, Jr. (3)


$


$


$


$


$


$


$Louis J. Rogers (3)


$


$


$


$


$


$


$Glenn W. Bunting, Jr.


$13,667


$2,890


$


$


$


$


$16,557Robert A. Gary, IV


$17,667


$2,890


$


$


$


$


$20,557W. Brand Inlow


$12,667


$2,890


$


$


$


$


$15,557D. Fleet Wallace (4)


$9,431


$2,000


$


$


$


$


$11,431   (1)
    
    Consists of the amounts described below.  63




---



##### Table of Contents



Basic AnnualRetainer


Meeting FeesDirector


Role


($)


($)Olander


Chairman of the Board


$


$Rogers


Director


$


$Bunting


Member, Audit Committee


$6,667


$7,000Gary


Chairman, Audit Committee


$6,667


$11,000Inlow


Member, Audit Committee


$6,667


$6,000Wallace


Member, Audit Committee


$4,931


$4,500   (2)
    
    The amounts in this column represent the proportionate amount of
    the total fair value of stock awards recognized by the Company
    in 2006 for financial accounting purposes, disregarding for this
    purpose the estimate of forfeitures related to service-based
    vesting conditions. The amounts included in the table for each
    award include the amount recorded as expense in our statement of
    operations for the period from January 10, 2006 (Date of
    Inception) through December 31, 2006. The fair values of
    these awards and the amounts expensed in 2006 were determined in
    accordance with Statement of Financial Accounting Standards, or
    SFAS, No. 123 (R), Share-Based Payment, or
    SFAS No. 123(R).    Full Grant DateNumber of


Fair Value ofRestricted Shares


AwardDirector


Grant Date


(#)


($)Olander








$Rogers








$Bunting


7/19/06


1,000


$10,000Gary


7/19/06


1,000


$10,000Inlow


7/19/06


1,000


$10,000Wallace


7/19/06


1,000


$10,000     Director


Nonvested Restricted StockOlander



Rogers



Bunting



800Gary



800Inlow



800Wallace



   (3)
    
    Mr. Olander and Mr. Rogers are not independent
    directors.(4)
    
    Effective November 16, 2006, D. Fleet Wallace resigned from
    our board of directors. 64




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##### Table of Contents



Item 12. Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  PRINCIPAL
    STOCKHOLDERS
    Number of SharesofCommon Stock

PercentBeneficially

ofName of Beneficial Owners(1)

Owned

ClassStanley J. Olander, Jr.(2)

22,223

*Glenn W. Bunting, Jr.(3)

1,026

*Robert A. Gary, IV(3)

1,000

*W. Brand Inlow(3)

1,000

*Louis J. Rogers

1,105

*All directors and executive
    officers as a group (10 persons)

26,354

*     *
    
    Represents less than 1.0% of our outstanding common stock.(1)
    
    The address of each beneficial owner listed is c/o NNN
    Apartment REIT, Inc., 1551 N. Tustin Avenue,
    Suite 200, Santa Ana, California 92705.(2)
    
    Includes 22,223 shares of our common stock owned by our
    Advisor. Stanley J. Olander, Jr. is the Chief Executive
    Officer of our Advisor. Our Advisor also owns 100 units of
    NNN Apartment REIT Holdings, L.P., or our Operating Partnership.(3)
    
    Includes vested and nonvested restricted shares of common stock.  Equity
    Compensation Plan Information
    Weighted AverageNumber of Securities to be Issued

Exercise Price of

Number of SecuritiesUpon Exercise of Outstanding

Outstanding Options,

Remaining Available forPlan Category

Options, Warrants and Rights

Warrants and Rights

Future IssuanceEquity compensation plans approved
    by security holders(1)


-


-


1,996,000Equity compensation plans not
    approved by security holders


-


-


-Total


-





1,996,000      65




---



##### Table of Contents



Item 13.
    Certain Relationships and Related Transactions, and Director
    Independence.  Relationships
    Among Our Affiliates
  and/or
      Fees
    and Expenses Paid to Affiliates
    Offering
    Stage
  Selling
    Commissions
    Marketing
    Support Fee and Due Diligence Expense Reimbursements
   66




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##### Table of Contents



Other
    Organizational and Offering Expenses
    Acquisition
    and Development Stage
  Acquisition
    Fees
    Reimbursement
    of Acquisition Expenses
    Operational
    Stage
  Asset
    Management Fee
    Property
    Management Fees
   67




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##### Table of Contents



Operating
    Expenses
    Compensation
    for Additional Services
    Liquidity
    Stage
  Disposition
    Fees
    Incentive
    Distribution Upon Sales
    Incentive
    Distribution Upon Listing
    Fees
    Payable upon Termination of Advisory Agreement
   68




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##### Table of Contents



Accounts
    Payable Due to Affiliates
        Unsecured
    Note Payable to Affiliate
    Director
    and Former Presidents Financial Arrangement with Legal
    Counsel
     69




---



##### Table of Contents



Process
    for Resolution of Conflicting Opportunities
        Acquisitions
    and Leases of Property from Our Advisor, Directors, Officers and
    Affiliates
    Sales
    and Leases of Property to Our Advisor, Directors, Officers and
    Affiliates
    Our
    Advisor May Have Conflicting Fiduciary Obligations in the Event
    Our Company Acquires Properties with Our Advisors
    Affiliates
    Non-Arms-Length
    Agreements; Conflicts; Competition
   70




---



##### Table of Contents



give-ups
  Director
    Independence
      Item 14.
    Principal Accounting Fees and Services.      Services

2006Audit Fees(1)

$
99,000Audit-Related Fees(2)


Tax Fees(3)


All Other Fees


Total

$
99,000     (1)
    
    Audit fees billed in 2006 consisted of the audit of our annual
    consolidated financial statements, a review of our quarterly
    consolidated financial statements, and statutory and regulatory
    audits, consents and other services related to filings with the
    SEC.(2)
    
    Audit-related fees consist of financial accounting and reporting
    consultations.(3)
    
    Tax services consist of tax compliance and tax planning and
    advice.   71




---



##### Table of Contents



PART IV Item 15.
    Exhibits, Financial Statement Schedules.  Financial Statements:
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PagesReport of
    Independent Registered Public Accounting Firm


73Consolidated
    Balance Sheets as of December 31, 2006 and January 10,
    2006 (Date of Inception)


74Consolidated
    Statement of Operations for the Period from January 10,
    2006 (Date of Inception) through December 31,
    2006


75Consolidated
    Statement of Stockholders Equity for the Period from
    January 10, 2006 (Date of Inception) through
    December 31, 2006


76Consolidated
    Statement of Cash Flows for the Period from January 10,
    2006 (Date of Inception) through December 31,
    2006


77Notes to
    Consolidated Financial Statements


78Schedules


97   Financial Statement Schedules:
    PageValuation and
    Qualifying Accounts (Schedule II)


97Real Estate
    Operating Properties and Accumulated
    Depreciation (Schedule III)


98     Exhibits:
    Exhibits
    Financial Statement Schedules
  PageValuation and Qualifying Accounts
    (Schedule II)


97Real Estate Operating Properties
    and Accumulated
    Depreciation (Schedule III)


98   SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
    PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH
    HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF
    THE ACT.
   72




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
        Deloitte &
    Touche
    73




---



##### Table of Contents



NNN
    Apartment REIT, Inc.
  CONSOLIDATED BALANCE SHEETS
 December 31,
    2006 and January 10, 2006 (Date of Inception)
  January 10, 2006December 31, 2006


(Date of Inception)ASSETSReal estate investments:Operating properties, net

$
63,685,029


$
-Cash and cash equivalents


1,454,324



201,007Accounts and other receivable, net


169,697



-Restricted cash


192,603



-Identified intangible assets, net


903,893



-Other assets, net


808,790



-Total assets

$
67,214,336


$
201,007LIABILITIES, MINORITY INTEREST
    AND STOCKHOLDERS EQUITYLiabilities:Mortgage loan payable

$
19,218,000


$
-Unsecured note payable to affiliate


10,000,000



-Line of credit


21,585,000



-Accounts payable and accrued
    liabilities


530,125



-Accounts payable due to affiliates


1,449,837



-Security deposits and prepaid rent


183,906



-Total liabilities


52,966,868



-Commitments and contingencies
    (Note 8)Minority interest of limited
    partner in Operating Partnership


979



1,000Stockholders equity:Preferred stock, $0.01 par
    value; 50,000,000 shares authorized; none issued and
    outstanding


-



-Common stock, $0.01 par
    value; 300,000,000 shares authorized; 1,686,068 and
    22,223 shares issued and outstanding as of
    December 31, 2006 and January 10, 2006, respectively


16,861



222Additional paid-in capital


14,898,126



199,785Accumulated deficit


(668,498
)Total stockholders equity


14,246,489



200,007Total liabilities, minority
    interest and stockholders equity

$
67,214,336


$
201,007    74




---



##### Table of Contents



NNN
    Apartment REIT, Inc.
 CONSOLIDATED
    STATEMENT OF OPERATIONS For the
    Period from January 10, 2006 (Date of Inception) through
    December 31, 2006
  Revenues:Rental income

$
614,995Other property revenue


44,447Total revenues


659,442Expenses:Rental expenses


266,331General and administrative


293,968Depreciation and amortization


288,898Total expenses


849,197Loss before other income
    (expense)


(189,755
)Other income (expense):Interest expense (including
    amortization of deferred financing costs):Mezzanine and note payable to
    affiliate interest expense


(24,669
)Mortgage loan payable and line of
    credit interest expense


(313,790
)Interest and dividend income


5,287Minority interest


21Net loss

$
(522,906
)Net loss per share 
    basic and diluted

$
(1.99
)Weighted-average number of
    shares outstanding  basic and diluted


262,609Distributions declared per
    common share

$
0.14    75




---



##### Table of Contents



NNN
    Apartment REIT, Inc.
 CONSOLIDATED
    STATEMENT OF STOCKHOLDERS EQUITYFor the Period from January 10, 2006 (Date of
    Inception) through December 31, 2006 Common Stock











TotalNumber of





Additional


Preferred


Accumulated


StockholdersShares


Amount


Paid-In Capital


Stock


Deficit


EquityBALANCE - January 10, 2006


-


$
-


$
-


$
-


$
-


$
-Issuance of common stock


1,680,776



16,808



16,751,476



-



-



16,768,284Issuance of vested and nonvested
    common stock


4,000



40



7,960



-



-



8,000Offering Costs


-



-



(1,883,839
)


-



-



(1,883,839
)Forfeture of nonvested shares of
    common stock


(800
)


(8
)


(722
)


-



-



(730
)Amortization of nonvested common
    stock compensation


-



-



3,400



-



-



3,400Issurance of common stock under the
    DRIP


2,092



21



19,851



-



-



19,872Distributions


-



-



-



-



(145,592
)


(145,592
)Net loss


-



-



-



-



(522,906
)


(522,906
)BALANCE - December 31, 2006


1,686,068


$
16,861


$
14,898,126


$
-


$
(668,498
)

$
14,246,489    76




---



##### Table of Contents



NNN
    Apartment REIT, Inc.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWSFor the Period from January 10, 2006 (Date of
    Inception) through December 31, 2006 CASH FLOWS FROM OPERATING
    ACTIVITIESNet loss

$
(522,906
)Adjustments to reconcile net loss
    to net cash provided by operating activities:Depreciaton and amortization
    (including deferred financing costs)


318,557Stock based compensation, net of
    forfeitures


10,670Minority interest


(21
)Changes in operating assets and
    liabilities:Accounts and other receivable, net


(43,158
)Other assets


(96,693
)Accounts payable and accrued
    liabilities


345,144Accounts payable due to affiliates


324,877Prepaid rent


(35,430
)Net cash provided by operating
    activities


301,040CASH FLOWS FROM INVESTING
    ACTIVITIESAcquisition of real estate
    operating properties


(63,794,054
)Capital expenditures


(3,649
)Restricted cash


(192,603
)Net cash used in investing
    activities


(63,990,306
)CASH FLOWS FROM FINANCING
    ACTIVITIESBorrowings on motgage loan payable


19,218,000Borrowings on unsecured note
    payable to affiliate


10,000,000Borrowings under line of credit,
    net


21,585,000Payment of deferred financing costs


(543,141
)Proceeds from issuance of common
    stock


16,650,562Minority interest contribution to
    Operating Partnership


1,000Payment of offering costs


(1,719,779
)Distributions


(48,052
)Net cash provided by financing
    activities


65,143,590NET CHANGE IN
    CASH


1,454,324CASH AND CASH EQUIVALENTS -
    Beginning of period


-CASH AND CASH EQUIVALENTS - End of
    period

$
1,454,324SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATION:Cash paid for:Interest

$
127,558Income taxes

$
-SUPPLEMENTAL DISCLOSURE OF
    NONCASH ACTIVITIES:Investing Activities:The following represents the
    increase in certain assets and liabilities
    in connection with our acquisitions of operating
    properties:Accounts and other receivable

$
11,267Other assets

$
185,373Security deposits and prepaid rent

$
221,786Accrued expenses

$
94,069Accounts payable due to affiliate

$
960,900Financing Activities:Issuance of common stock under the
    DRIP

$
19,872Distributions declared but not paid

$
77,668Accrued offering costs

$
164,060Accrued deferred financing costs

$
13,243Receivable from transfer agent for
    issuance of common stock

$
117,722    77




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the Period from January 10, 2006 (Date of
    Inception) through December 31, 2006
  The use of the words we, us or
    our refers to NNN Apartment REIT, Inc. and our
    subsidiaries, including NNN Apartment REIT Holdings, L.P.,
    except where the context otherwise requires.
  1.
    Organization
    and Description of Business      day-to-day
      2.
    Summary
    of Significant Accounting Policies    Basis
    of Presentation
   78




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Use of
    Estimates
    Cash
    and Cash Equivalents
    Restricted
    Cash
    Revenue
    Recognition, Tenant Receivables and Allowance for Uncollectible
    Accounts
      Properties
    Held for Sale
  Accounting for the Impairment or Disposal of
    Long Lived Assets
 79




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     
    management, having the authority to approve the action, commits
    to a plan to sell the asset;
    the asset is available for immediate sale in its present
    condition subject only to terms that are usual and customary for
    sales of such assets;
    an active program to locate a buyer and other actions required
    to complete the plan to sell the asset has been initiated;
    the sale of the asset is probable and the transfer of the asset
    is expected to qualify for recognition as a completed sale
    within one year;
    the asset is being actively marketed for sale at a price that is
    reasonable in relation to its current fair value; and
    given the actions required to complete the plan to sell the
    asset, it is unlikely that significant changes to the plan would
    be made or that the plan would be withdrawn.  Purchase
    Price Allocation
  Business
    Combinations lease-up
       80




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Operating
    Properties
      Other
    Assets
    Fair
    Value of Financial Instruments
  Disclosures About Fair Value of
    Financial Instruments
   81




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Concentration
    of Credit Risk
      Organizational,
    Offering and Related Expenses
    Stock
    Compensation
  Share-Based Payment
  Income
    Taxes
   82




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Per
    Share Data
  Earnings Per Share
    Segment
    Disclosure
    Recently
    Issued Accounting Pronouncements
  Accounting for
    Uncertainty in Income Taxes
  Fair Value Measurement
  Considering the Effects of Prior Year
    Misstatements When Quantifying Current Year Misstatements
 83




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  3.
    Real
    Estate Investments    January 10, 2006December 31, 2006


(Date of Inception)Land

$
6,056,000


$
-Land improvements


4,301,000



-Building and improvements


50,722,000



-Furniture, fixtures and equipment


2,794,000



-63,873,000



-Less: accumulated depreciation


(188,000
)


-$
63,685,000


$
-     Acquisitions
    in 2006
  Walker
    Ranch  San Antonio, Texas
  325-unit
  Hidden
    Lake  San Antonio, Texas
  380-unit
 84




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    4.
    Identified
    Intangible Assets    January 10, 2006December 31, 2006


(Date of Inception)In place leases, net of
    accumulated amortization of $85,000 and $0 at December 31,
    2006 and January 10, 2006 (Date of Inception),
    respectively, (with a weighted-average life of 8 months as
    of December 31, 2006.)

$
649,000


$
-Tenant relationships, net of
    accumulated amortization of $16,000 and $0 at December 31,
    2006 and January 10, 2006 (Date of Inception),
    respectively, (with a weighted-average life of 15 months as
    of December 31, 2006.)


255,000



-$
904,000


$
-       Year

Amount2007

$
872,0002008

$
32,0002009

$
-2010

$
-2011

$
-   5.
    Other
    Assets    January 10, 2006December 31, 2006


(Date of Inception)Deferred financing costs, net of
    accumulated amortization of $30,000 and $0 as of
    December 31, 2006 and January 10, 2006 (Date of
    Inception), respectively

$
526,000


$
-Prepaid expenses and deposits


283,000



-Total other assets

$
809,000


$
-   6.
    Mortgage
    Loan Payable and Unsecured Note Payable to
    Affiliate  Mortgage
    Loan Payable
   85




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year

Amount2007

$
2008


2009


2010


2011


Thereafter


19,218,000$
19,218,000   Unsecured
    Note Payable to Affiliate
    7.
    Line of
    Credit     86




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          8.
    Commitments
    and Contingencies  Litigation
    Environmental
    Matters
    Organizational,
    Offering and Related Expenses
   87




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    9.
    Related
    Party Transactions  Fees
    and Expenses Paid to Affiliates
  and/or
  Offering
    Stage
  Selling
    Commissions
    Marketing
    Support Fee and Due Diligence Expense Reimbursements
    Other
    Organizational and Offering Expenses
   88




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Acquisition
    and Development Stage
  Acquisition
    Fees
    Reimbursement
    of Acquisition Expenses
    Operational
    Stage
  Asset
    Management Fee
    Property
    Management Fees
    Operating
    Expenses
   89




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Compensation
    for Additional Services
    Liquidity
    Stage
  Disposition
    Fees
    Incentive
    Distribution Upon Sales
    Incentive
    Distribution Upon Listing
    Fees
    Payable upon Termination of Advisory Agreement
   90




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Accounts
    Payable Due to Affiliates
        Unsecured
    Note Payable to Affiliate
    Director
    and Former Presidents Financial Arrangement with Legal
    Counsel
     91




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Minority
    Interest    11.
    Stockholders
    Equity  Common
    Stock
      Preferred
    Stock
    Distribution
    Reinvestment Plan
    Share
    Repurchase Plan
    2006
    Incentive Award Plan
     92




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        WeightedRestricted


AverageCommon


GrantDateStock


Fair ValueBalance 
    January 10, 2006


Granted


4,000


$
10.00Vested


(800
)

$
10.00Forfeited


(800
)

$
10.00Balance 
    December 31, 2006


2,400


$
10.00Vested or expected to
    vest  December 31, 2006


2,400


$
10.00   12.
    Special
    Limited Partner Interest   93




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   13.
    Tax
    Treatment of Distributions    Year EndedDecember 31,2006Ordinary income

$




Capital gain






Return of capital


68,000



100.0%$
68,000



100.0%   14.
    Business
    Combinations      Walker Ranch


Hidden Lake


TotalLand

$
3,025,000


$
3,031,000


$
6,056,000Land improvements


3,513,000



788,000



4,301,000Building and improvements


23,864,000



26,858,000



50,722,000Furniture, fixtures and equipment


896,000



1,894,000



2,790,000In place leases


349,000



385,000



734,000Tenant relationships


124,000



147,000



271,000Net assets acquired

$
31,771,000


$
33,103,000


$
64,874,000     15.
    Selected
    Quarterly Financial Data (Unaudited)   94




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Period fromJanuary 10, 2006Quarters Ended


(Date of Inception)December 31,


September 30,


June 30,


through2006


2006


2006


March 31, 2006Revenues

$
659,442


$



$



$
Expenses


(778,383
)


(70,814
)






Loss before other expense


(118,941
)


(70,814
)






Other expense


(333,172
)










Minority interests


21











Net loss

$
(452,092
)

$
(70,814
)

$



$
Loss per share  basic
    and diluted

$
(0.47
)


(3.10
)

$



$
Weighted average number of shares
    outstanding  basic and diluted


958,883



22,866



22,223



22,223   16.
    Subsequent
    Events  Line
    of Credit
    Unsecured
    Note Payable to Affiliate
   95




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Distributions
    Status
    of Offering
    Termination
    of our President and Chairman of our Advisor
   96




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  SCHEDULE II  VALUATION AND
    QUALIFYING ACCOUNTS
  AdditionsBalance at

Charged to

Charged to



Balance atBeginning of

Costs and

Other



End ofDescription

Period

Expenses

Accounts

Deductions

PeriodPeriod from January 10, 2006
    (Date of Inception) through December 31, 2006 
    Reserve deducted from accounts receivable

$



$



$



$



$
  97




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##### Table of Contents



NNN
    Apartment REIT, Inc.
  SCHEDULE III  REAL ESTATE
    OPERATING PROPERTIES AND
 ACCUMULATED DEPRECIATION
  Maximum Lifeon WhichInitial Cost to Company


Gross Amounts at Which Carried at Close of Period











Depreciation inBuildings,











Accumulated








Latest IncomeImprovements





Buildings and


Total


Depreciation


Date


Date


Statement isEncumbrance


Land


and Fixtures


Land


Improvements


(a)


(b)


Constructed


Acquired


ComputedWalker Ranch  (Residential),
    San Antonio, TX

$
21,585,000


$
3,025,000


$
28,273,000


$
3,025,000


$
28,273,000


$
31,298,000


$
(178,000
)


2004



31-Oct-06



40 yearsHidden Lake (Residential),
    San Antonio, TX


19,218,000



3,031,000



29,540,000



3,031,000



29,540,000



32,571,000



(10,000
)


2004



28-Dec-06



40 yearsTotal

$
40,803,000


$
6,056,000


$
57,813,000


$
6,056,000


$
57,813,000


$
63,869,000


$
(188,000
)     2006Balance as of January 10,
    2006 (Date of Inception)

$
Acquisitions


63,869,000Additions


Dispositions


Balance as of December 31,
    2006

$
63,869,000       2006Balance as of January 10,
    2006 (Date of Inception)

$
Additions


188,000DisposalsBalance as of December 31,
    2006

$
188,000  98




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##### Table of Contents



SIGNATURES     (Registrant)
  Stanley
    J. Olander, Jr.
   Chief Executive Officer and President
 (principal executive officer)
      Name

Title

Date/s/  Stanley
    J.
    Olander, Jr.Stanley
    J. Olander, Jr.

Chief Executive Officer, President
    
    and Chairman of the Board of Directors (principal executive
    officer)

April 9, 2007/s/  Shannon
    K S JohnsonShannon
    K S Johnson

Chief Financial Officer
    (principal financial officer)

April 9, 2007/s/  Glenn
    W.
    Bunting, Jr.Glenn
    W. Bunting, Jr.

Director

April 9, 2007/s/  Robert
    A. Gary, IVRobert
    A. Gary, IV

Director

April 9, 2007/s/  W.
    Brand InlowW.
    Brand Inlow

Director

April 9, 2007Louis
    J. Rogers

Director  99




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##### Table of Contents



EXHIBIT INDEX
  Regulation S-K,
  Form 10-K Regulation S-K).
  1
.1

Dealer Manager Agreement dated
    July 19, 2006 between NNN Apartment REIT, Inc. and NNN
    Capital Corp. (included as Exhibit 1.1 to our
    Form 10-Q
    filed November 9, 2006 and incorporated herein by reference)1
.2

Form of Participating
    Broker-Dealer Agreement (included as Exhibit 1.2 to our
    Registration Statement on
    Form S-11,
    Amendment No. 6, filed on July 3, 2006 (File
    No. 333-130945)
    and incorporated herein by reference)3
.1

Articles of Amendment and
    Restatement of NNN Apartment REIT, Inc. dated July 18, 2006
    (included as Exhibit 3.1 to our
    Form 10-Q
    filed November 9, 2006 and incorporated herein by reference)3
.2

Amended and Restated Bylaws of NNN
    Apartment REIT, Inc. dated July 19, 2006 (included as
    Exhibit 3.2 to our
    Form 10-Q
    filed November 9, 2006 and incorporated herein by reference)3
.3

Amendment to Amended and Restated
    Bylaws of NNN Apartment REIT, Inc. dated December 6, 2006
    (included as Exhibit 3.2 to our Post-Effective Amendment
    filed January 31, 2007 and incorporated herein by reference)3
.4

Agreement of Limited Partnership
    of NNN Apartment REIT Holdings, L.P. dated July 19,
    2006(included as Exhibit 3.3 to our
    Form 10-Q
    filed November 9, 2006 and incorporated herein by reference)4
.1

Form of Subscription Agreement
    (included as Exhibit to Supplement No. 1 to our Prospectus
    filed on September 19, 2006 (File
    No. 333-130945)
    and incorporated herein by reference)10
.1

Distribution Reinvestment Plan
    (included as Exhibit C to our Prospectus filed on
    July 19, 2006 (File
    No. 333-130945)
    and incorporated herein by reference)10
.2

Share Repurchase Plan (included as
    Exhibit D to our Prospectus filed on July 19, 2006
    (File
    No. 333-130945)
    and incorporated herein by reference)10
.3+

2006 Incentive Award Plan of NNN
    Apartment REIT, Inc. (included as Exhibit 10.3 to our
    Registration Statement on
    Form S-11,
    Amendment No. 3, filed on April 21, 2006 (File
    No. 333-130945)
    and incorporated herein by reference)10
.4+

Amendment to 2006 Incentive Award
    Plan of NNN Apartment REIT, Inc. (included as Exhibit 10.6
    to our
    Form 10-Q
    filed on November 9, 2006 and incorporated herein by
    reference)10
.5

Advisory Agreement dated
    July 19, 2006 among NNN Apartment REIT, Inc. and NNN
    Apartment Advisor, LLC (included as Exhibit 10.4 to our
    Form 10-Q
    filed November 9, 2006 and incorporated herein by reference)10
.6

Amendment to Advisory Agreement
    dated November 16, 2006 among NNN Apartment REIT, Inc. and
    NNN Apartment Advisor, LLC (included as Exhibit 10.7 to our
    Post-Effective Amendment filed January 31, 2007 and
    incorporated herein by reference)10
.7

Escrow Agreement dated
    June 22, 2006 (included as Exhibit 10.5 to our
    Form 10-Q
    filed November 9, 2006 and incorporated herein by reference)10
.8

Contract of Sale dated May 4,
    2006 by and between TR Walker Ranch Partners, Ltd. and Triple
    Net Properties, LLC (included as Exhibit 10.1 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.9

Contract of Sale dated May 4,
    2006 by and between TR Hidden Lake Partners, Ltd. and Triple Net
    Properties, LLC (included as Exhibit 10.1 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference) 100




---



##### Table of Contents



10
.10

Agreement pursuant to the Contract
    of Sale dated May 5, 2006 by and between TR Walker Ranch
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.2 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.11

Letter Agreement pursuant to the
    Contract of Sale dated May 5, 2006 by and between TR Hidden
    Lake Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.2 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.12

Agreement pursuant to the Contract
    of Sale dated May 12, 2006 by and between TR Walker Ranch
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.3 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.13

Agreement pursuant to the Contract
    of Sale dated May 25, 2006 by and between TR Walker Ranch
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.4 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.14

Letter Agreement pursuant to the
    Contract of Sale dated May 25, 2006 by and between TR
    Hidden Lake Partners, Ltd. and Triple Net Properties, LLC
    (included as Exhibit 10.3 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.15

Amendment to the Contract of Sale
    dated June 2, 2006 by and between TR Walker Ranch Partners,
    Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.5 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.16

Amendment to the Contract of Sale
    dated June 2, 2006 by and between TR Hidden Lake Partners,
    Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.4 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.17

Amendment to the Contract of Sale
    dated July 31, 2006 by and between TR Walker Ranch
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.6 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.18

Amendment to the Contract of Sale
    dated September 6, 2006 by and between TR Walker Ranch
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.7 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.19

Letter Agreement pursuant to the
    Contract of Sale dated September 11, 2006 by and between TR
    Hidden Lake Partners, Ltd. and Triple Net Properties, LLC
    (included as Exhibit 10.5 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.20

Amendment to the Contract of Sale
    dated September 25, 2006 by and between TR Hidden Lake
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.6 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.21

Assignment of Contract dated
    October 30, 2006 by Triple Net Properties, LLC to Apartment
    REIT Walker Ranch, L.P. (included as Exhibit 10.8 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.22

Credit Agreement dated
    October 31, 2006 by and among NNN Apartment REIT Holdings,
    L.P. and Wachovia Bank, National Association (included as
    Exhibit 10.9 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.23

Deed of Trust, Security Agreement
    and Fixture Filing dated October 31, 2006 by and among NNN
    Apartment REIT Holdings, L.P. and Wachovia Bank, National
    Association (included as Exhibit 10.10 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.24

Revolving Note dated
    October 31, 2006 by and among NNN Apartment REIT Holdings,
    L.P. and Wachovia Bank, National Association (included as
    Exhibit 10.11 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.25

Swingline Note dated
    October 31, 2006 by and among NNN Apartment REIT Holdings,
    L.P. and Wachovia Bank, National Association (included as
    Exhibit 10.12 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by
    reference) 101




---



##### Table of Contents



10
.26

Guaranty dated October 31,
    2006 by and among NNN Apartment REIT Holdings, L.P. and Wachovia
    Bank, National Association (included as Exhibit 10.13 to
    our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.27

Assignment of Leases and Rents
    dated October 31, 2006 by and among NNN Apartment REIT
    Holdings, L.P. and Wachovia Bank, National Association (included
    as Exhibit 10.14 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.28

Mezzanine Credit Agreement dated
    October 31, 2006 by and among NNN Apartment REIT Holdings,
    L.P. and Wachovia Bank, National Association (included as
    Exhibit 10.15 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.29

Second Deed of Trust, Security
    Agreement and Fixture Filing dated October 31, 2006 by and
    among NNN Apartment REIT Holdings, L.P. and Wachovia Bank,
    National Association (included as Exhibit 10.16 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.30

Note (Mezzanine Loan) for the
    Walker Ranch Property dated October 31, 2006 by and among
    NNN Apartment REIT Holdings, L.P. and Wachovia Bank, National
    Association (included as Exhibit 10.17 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.31

Guaranty (Mezzanine Loan) dated
    October 31, 2006 by and among NNN Apartment REIT Holdings,
    L.P. and Wachovia Bank, National Association (included as
    Exhibit 10.18 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.32

Second Assignment of Leases and
    Rents dated October 31, 2006 by and among NNN Apartment
    REIT Holdings, L.P. and Wachovia Bank, National Association
    (included as Exhibit 10.19 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.33

Senior Credit Agreement Waiver
    dated October 31, 2006 by and among NNN Apartment REIT
    Holdings, L.P. and Wachovia Bank, National Association (included
    as Exhibit 10.20 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.34

Mezzanine Credit Agreement Waiver
    dated October 31, 2006 by and among NNN Apartment REIT
    Holdings, L.P. and Wachovia Bank, National Association (included
    as Exhibit 10.21 to our
    Form 8-K
    filed November 3, 2006 and incorporated herein by reference)10
.35

Amendment to the Contract of Sale
    dated November 27, 2006 by and between TR Hidden Lake
    Partners, Ltd. and Triple Net Properties, LLC (included as
    Exhibit 10.7 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.36

Assignment of Contract dated
    December 28, 2006 by Triple Net Properties, LLC to
    Apartment REIT Hidden Lakes, L.P. (included as Exhibit 10.8
    to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.37

Promissory Note dated
    December 28, 2006 issued by Apartment REIT Hidden Lakes,
    L.P. to Wachovia Bank, National Association (included as
    Exhibit 10.9 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.38

Deed of Trust, Security Agreement
    and Fixture Filing dated December 28, 2006 by and among
    Apartment REIT Hidden Lakes, L.P. and Wachovia Bank, National
    Association (included as Exhibit 10.10 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.39

Indemnity and Guaranty Agreement
    dated December 28, 2006 by and among NNN Apartment REIT,
    Inc. in favor of Wachovia Bank, National Association (included
    as Exhibit 10.11 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.40

Assignment of Leases and Rents
    dated December 28, 2006 by and among Apartment REIT Hidden
    Lakes, L.P. to Wachovia Bank, National Association (included as
    Exhibit 10.12 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.41

Assignment of Warranties and Other
    Contract Rights dated December 28, 2006 by and among
    Apartment REIT Hidden Lakes, L.P. in favor of Wachovia Bank,
    National Association (included as Exhibit 10.13 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference) 102




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##### Table of Contents



10
.42

Environmental Indemnity Agreement
    dated December 28, 2006, by and among NNN Apartment REIT,
    Inc. in favor of Wachovia Bank, National Association (included
    as Exhibit 10.14 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.43

SEC Indemnity and Guaranty
    Agreement dated December 28, 2006 by and among NNN
    Apartment REIT, Inc. in favor of Wachovia Bank, National
    Association (included as Exhibit 10.15 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)10
.44

Unsecured Promissory Note dated
    December 28, 2006 by and among NNN Apartment REIT Holdings,
    L.P. in favor of Wachovia Bank, National Association (included
    as Exhibit 10.16 to our
    Form 8-K
    filed January 4, 2007 and incorporated herein by reference)21
.1*

Subsidiaries of NNN Apartment
    REIT, Inc.31
.1*

Certification of Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2*

Certification of Chief Financial
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1*

Certification of Chief Executive
    Officer, pursuant to 18 U.S.C. Section 1350, as
    created by Section 906 of the Sarbanes-Oxley Act of 200232
.2*

Certification of Chief Financial
    Officer, pursuant to 18 U.S.C. Section 1350, as
    created by Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    Filed herewith.+
    
    Compensatory plan or arrangement. 103