##### 



Exhibit 99.1


INDEX TO COMBINED FINANCIAL STATEMENTS


|                                                   |                                                         |       |  |    | 
|-------------------------------------------------- | ------------------------------------------------------- | ----- |  | -- | 
|                                                   |                                                         | Pages | 
|                                                   |                                                         |       | 
|T REIT, Inc. Unconsolidated Properties Portfolio   |                                                         |       |  |   
|                                                   | Report of Independent Registered Public Accounting Firm |       |  | 2  | 
|                                                   | Combined Balance Sheets                                 |       |  | 3  | 
|                                                   | Combined Statements of Operations                       |       |  | 4  | 
|                                                   | Combined Statements of Owners Equity                   |       |  | 5  | 
|                                                   | Combined Statements of Cash Flows                       |       |  | 6  | 
|                                                   | Notes to Combined Financial Statements                  |       |  | 7  | 
|City Center West A and Reno Trademark Properties |                                                         |       |  |   
|                                                   | Report of Independent Registered Public Accounting Firm |       |  | 26 | 
|                                                   | Combined Balance Sheet                                  |       |  | 27 | 
|                                                   | Combined Statement of Operations                        |       |  | 28 | 
|                                                   | Combined Statement of Owners Equity                    |       |  | 29 | 
|                                                   | Combined Statement of Cash Flows                        |       |  | 30 | 
|                                                   | Notes to Combined Financial Statements                  |       |  | 31 | 

1



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












| |                               
| | ------------------------------
| | /s/ Deloitte &
    Touche, LLP





2



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


COMBINED BALANCE SHEETS


December 31, 2004 and 2003 (Unaudited)


|                                          |                             |              |             |             |      |   |             |             | 
|----------------------------------------- | --------------------------- | ------------ | ----------- | ----------- | ---- | - | ----------- | ----------- | 
|                                          |                             | December 31, |            
|                                          |                             |              |            
|                                          |                             | 2004         |             |             | 2003 |  
|                                          |                             |              |             |             |      |  
|                                          |                             |              |             | (Unaudited) |     
|ASSETS                                   
|Real estate investments:                  |                             |              |             |             |      |   |             |            
|                                          | Operating properties, net   |              | $           | 311,395,000 |      |   | $           | 218,641,000 | 
|                                          | Property held for sale, net |              |             |            |      |   |             | 11,500,000  | 
|                                          |                             |              |             |             |      |  
|                                          |                             |              | 311,395,000 |             |      |   | 230,141,000 |            
|Cash and cash equivalents                 |                             |              | 7,788,000   |             |      |   | 8,326,000   |            
|Restricted cash                           |                             |              | 8,712,000   |             |      |   | 2,288,000   |            
|Accounts receivable, net                  |                             |              | 984,000     |             |      |   | 834,000     |            
|Accounts receivable from related parties  |                             |              | 163,000     |             |      |   | 348,000     |            
|Other assets, net                         |                             |              | 20,931,000  |             |      |   | 10,667,000  |            
|                                          |                             |              |             |             |      |  
|Total assets                              |                             | $            | 349,973,000 |             |      | $ | 252,604,000 |            
|                                          |                             |              |             |             |      |  
|                                         
|LIABILITIES, AND OWNERS EQUITY          
|Mortgages payable                         |                             | $            | 224,552,000 |             |      | $ | 152,497,000 |            
|Mortgages payable, property held for sale |                             |              |            |             |      |   | 7,439,000   |            
|Notes payable due to related parties      |                             |              | 201,000     |             |      |   | 90,000      |            
|Accounts payable and accrued liabilities  |                             |              | 7,773,000   |             |      |   | 2,133,000   |            
|Accounts payable due to related parties   |                             |              | 69,000      |             |      |   | 927,000     |            
|Identified intangible liabilities, net    |                             |              | 868,000     |             |      |   |            |            
|Security deposits and prepaid rent        |                             |              | 1,620,000   |             |      |   | 683,000     |            
|                                          |                             |              |             |             |      |  
|Total liabilities                         |                             |              | 235,085,000 |             |      |   | 163,769,000 |            
|Commitments and contingencies (Note 9)    |                             |              |             |             |      |   |             |            
|Total owners equity                      |                             |              | 114,888,000 |             |      |   | 88,835,000  |            
|                                          |                             |              |             |             |      |  
|Total liabilities and owners equity      |                             | $            | 344,973,000 |             |      | $ | 252,604,000 |            
|                                          |                             |              |             |             |      |  



3



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


COMBINED STATEMENTS OF OPERATIONS


For the Years Ended December 31, 2004, 2003 (Unaudited),
and 2002 (Unaudited)


|                                             |                                                                           |                          |            |             |      |   |             |            |   |   |           |            |  
|-------------------------------------------- | ------------------------------------------------------------------------- | ------------------------ | ---------- | ----------- | ---- | - | ----------- | ---------- | - | - | --------- | ---------- | -
|                                             |                                                                           | Years Ended December 31, |           
|                                             |                                                                           |                          |           
|                                             |                                                                           | 2004                     |            |             | 2003 |   |             | 2002       |  
|                                             |                                                                           |                          |            |             |      |   |             |            |  
|                                             |                                                                           |                          |            | (Unaudited) |      |   | (Unaudited) |           
|Revenues:                                    |                                                                           |                          |            |             |      |   |             |            |   |   |           |           
|                                             | Rental income                                                             |                          | $          | 38,742,000  |      |   | $           | 22,962,000 |   |   | $         | 5,989,000  |  
|                                             |                                                                           |                          |            |             |      |   |             |            |  
|Expenses:                                    |                                                                           |                          |            |             |      |   |             |            |   |   |           |           
|                                             | Rental                                                                    |                          |            | 16,779,000  |      |   |             | 8,616,000  |   |   |           | 1,833,000  |  
|                                             | General and administrative                                                |                          |            | 734,000     |      |   |             | 465,000    |   |   |           | 160,000    |  
|                                             | Depreciation and amortization                                             |                          |            | 11,288,000  |      |   |             | 6,181,000  |   |   |           | 1,151,000  |  
|                                             |                                                                           |                          |            |             |      |   |             |            |  
|                                             |                                                                           |                          | 28,801,000 |             |      |   | 15,262,000  |            |   |   | 3,144,000 |           
|                                             |                                                                           |                          |            |             |      |   |             |            |  
|Operating income                             |                                                                           |                          | 9,941,000  |             |      |   | 7,700,000   |            |   |   | 2,845,000 |           
|Other income (expense):                      |                                                                           |                          |            |             |      |   |             |            |   |   |           |           
|                                             | Interest expense (including amortization of deferred financing
    costs) |                          |            | (11,674,000 | )    |   |             | (5,679,000 | ) |   |           | (1,942,000 | )
|                                             | Interest income                                                           |                          |            | 78,000      |      |   |             | 25,000     |   |   |           | 9,000      |  
|                                             |                                                                           |                          |            |             |      |   |             |            |  
|Income (loss) before discontinued operations |                                                                           |                          | (1,665,000 | )           |      |   | 2,046,000   |            |   |   | 912,000   |           
|                                             | Gain on sale of real estate investments                                   |                          |            |            |      |   |             | 694,000    |   |   |           | 401,000    |  
|                                             | Income from discontinued operations                                       |                          |            | 231,000     |      |   |             | 205,000    |   |   |           | 168,000    |  
|                                             |                                                                           |                          |            |             |      |   |             |            |  
|Net income (loss)                            |                                                                           | $                        | (1,424,000 | )           |      | $ | 2,945,000   |            |   | $ | 1,481,000 |           
|                                             |                                                                           |                          |            |             |      |   |             |            |  



4



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


COMBINED STATEMENTS OF OWNERS EQUITY


For the Years Ended December 31, 2004, 2003
(Unaudited) and 2002 (Unaudited)


|                                             |  |   |             |  
|-------------------------------------------- |  | - | ----------- | -
|Balance  January 1, 2001 (unaudited)        |  | $ | 7,362,000   |  
|Capital contributions, net of offering costs |  |   | 25,814,000  |  
|Distributions                                |  |   | (3,404,000  | )
|Distributions of capital due to dispositions |  |   | (386,000    | )
|Net income                                   |  |   | 1,481,000   |  
|                                             |  |   |            
|BALANCE  December 31, 2002 (unaudited)      |  |   | 30,867,000  |  
|Capital contributions, net of offering costs |  |   | 61,035,000  |  
|Distributions                                |  |   | (4,463,000  | )
|Distributions of capital due to dispositions |  |   | (1,549,000  | )
|Net income                                   |  |   | 2,945,000   |  
|                                             |  |   |            
|BALANCE  December 31, 2003 (unaudited)      |  |   | 88,835,000  |  
|Capital contributions, net of offering costs |  |   | 46,300,000  |  
|Distributions                                |  |   | (14,876,000 | )
|Distributions of capital due to dispositions |  |   | (3,947,000  | )
|Net loss                                     |  |   | (1,424,000  | )
|                                             |  |   |            
|BALANCE  December 31, 2004                  |  | $ | 144,888,000 |  
|                                             |  |   |            



5



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


COMBINED STATEMENTS OF CASH FLOWS


For the Years Ended December 31, 2004, 2003 (Unaudited),
and 2002 (Unaudited)


|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |            |   |           |             |           |  
|------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ---------- | ----------- | ---------- | - | ----------- | ----------- | ---------- | - | --------- | ----------- | --------- | -
|                                                                                            |                                                                                                                                                                           | Years Ended December 31,                 |           
|                                                                                            |                                                                                                                                                                           |                                          |           
|                                                                                            |                                                                                                                                                                           | 2004                                     |            |             | 2003       |   |             | 2002        |           
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|                                                                                            |                                                                                                                                                                           |                                          |            | (Unaudited) |            |   | (Unaudited) |            
|CASH FLOWS FROM OPERATING ACTIVITIES                                                        |                                                                                                                                                                           |                                          |            |             |            |   |             |             |            |   |           |            
|Net income (loss)                                                                           |                                                                                                                                                                           | $                                        | (1,424,000 | )           |            | $ | 2,945,000   |             |            | $ | 1,481,000 |            
|Adjustments to reconcile net income (loss) to net cash provided
    by operating activities |                                                                                                                                                                           |                                          |            |             |            |   |             |             |            |   |           |            
|                                                                                            | Gain on sale of operating property                                                                                                                                        |                                          |            |            |            |   |             | (694,000    | )          |   |           | (401,000    | )        
|                                                                                            | Depreciation and amortization including amortization of deferred
    financing costs and amortization of below market
    leases  continuing and discontinued operations |                                          |            | 12,258,000  |            |   |             | 6,332,000   |            |   |           | 1,062,000   |          
|                                                                                            | Change in operating assets and liabilities:                                                                                                                               |                                          |            |             |            |   |             |             |            |   |           |             |          
|                                                                                            |                                                                                                                                                                           | Accounts receivable                      |            |             | (159,000   | ) |             |             | (623,000   | ) |           |             | 59,000    |  
|                                                                                            |                                                                                                                                                                           | Accounts receivable from related parties |            |             | 185,000    |   |             |             | (280,000   | ) |           |             | (68,000   | )
|                                                                                            |                                                                                                                                                                           | Other assets                             |            |             | (1,233,000 | ) |             |             | (1,966,000 | ) |           |             | (244,000  | )
|                                                                                            |                                                                                                                                                                           | Accounts payable and accrued liabilities |            |             | 4,735,000  |   |             |             | 1,013,000  |   |           |             | 1,276,000 |  
|                                                                                            |                                                                                                                                                                           | Security deposits and prepaid rent       |            |             | 722,000    |   |             |             | 188,000    |   |           |             | 307,000   |  
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|                                                                                            | Net cash provided by operating activities                                                                                                                                 |                                          |            | 15,084,000  |            |   |             | 6,915,000   |            |   |           | 3,472,000   |          
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|CASH FLOWS FROM INVESTING ACTIVITIES                                                        |                                                                                                                                                                           |                                          |            |             |            |   |             |             |            |   |           |            
|                                                                                            | Purchase of real estate operating properties                                                                                                                              |                                          |            | (44,534,000 | )          |   |             | (51,130,000 | )          |   |           | (25,318,000 | )        
|                                                                                            | Restricted cash                                                                                                                                                           |                                          |            | 1,417,000   |            |   |             | (1,811,000  | )          |   |           | (186,000    | )        
|                                                                                            | Capital expenditures                                                                                                                                                      |                                          |            | (3,426,000  | )          |   |             | (1,927,000  | )          |   |           | (143,000    | )        
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|                                                                                            | Net cash used in investing activities                                                                                                                                     |                                          |            | (46,543,000 | )          |   |             | (54,868,000 | )          |   |           | (25,647,000 | )        
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                                        |                                                                                                                                                                           |                                          |            |             |            |   |             |             |            |   |           |            
|                                                                                            | Contributions                                                                                                                                                             |                                          |            | 46,300,000  |            |   |             | 61,035,000  |            |   |           | 25,814,000  |          
|                                                                                            | Borrowings under notes payable                                                                                                                                            |                                          |            | 97,693,000  |            |   |             | 90,000      |            |   |           | 4,600,000   |          
|                                                                                            | Principal payments on notes payable and credit facility                                                                                                                   |                                          |            | (98,196,000 | )          |   |             | (2,432,000  | )          |   |           | (2,939,000  | )        
|                                                                                            | Distributions                                                                                                                                                             |                                          |            | (14,876,000 | )          |   |             | (4,463,000  | )          |   |           | (3,404,000  | )        
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|                                                                                            | Net cash provided by financing activities                                                                                                                                 |                                          |            | 30,921,000  |            |   |             | 54,230,000  |            |   |           | 24,071,000  |          
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                        |                                                                                                                                                                           |                                          | (538,000   | )           |            |   | 6,277,000   |             |            |   | 1,896,000 |            
|CASH AND CASH EQUIVALENTS  beginning of year                                               |                                                                                                                                                                           |                                          | 8,326,000  |             |            |   | 2,049,000   |             |            |   | 153,000   |            
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           
|CASH AND CASH EQUIVALENTS  end of year                                                     |                                                                                                                                                                           | $                                        | 7,788,000  |             |            | $ | 8,326,000   |             |            | $ | 2,049,000 |            
|                                                                                            |                                                                                                                                                                           |                                          |            |             |            |   |             |             |           



6



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


COMBINED STATEMENTS OF CASH FLOWS  SUPPLEMENTAL
INFORMATION


For the Years Ended December 31, 2004, 2003 (Unaudited),
and 2002 (Unaudited)


|                                                  |                                                                                      |                          |   |             |      |  |             |             |   |  |   |            | 
|------------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------ | - | ----------- | ---- |  | ----------- | ----------- | - |  | - | ---------- | 
|                                                  |                                                                                      | Years Ended December 31, |  
|                                                  |                                                                                      |                          |  
|                                                  |                                                                                      | 2004                     |   |             | 2003 |  |             | 2002        |  
|                                                  |                                                                                      |                          |   |             |      |  |             |             |  
|                                                  |                                                                                      |                          |   | (Unaudited) |      |  | (Unaudited) |            
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                                      |                          |   |             |      |  |             |             |   |  |   |           
|Cash paid during the year for:                    |                                                                                      |                          |   |             |      |  |             |             |   |  |   |           
|                                                  | Interest                                                                             |                          | $ | 10,305,000  |      |  | $           | 5,712,000   |   |  | $ | 2,027,000  | 
|SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:    |                                                                                      |                          |   |             |      |  |             |             |   |  |   |           
|INVESTING ACTIVITIES                              |                                                                                      |                          |   |             |      |  |             |             |   |  |   |           
|                                                  | Increase (decrease) in assets net of liabilities of
    acquisitions/dispositions    |                          | $ | (57,000     | )    |  | $           | (673,000    | ) |  |   |           | 
|                                                  | Increase in investment in operating properties due to the
    purchase of a property |                          | $ | 97,202,000  |      |  | $           | 165,848,000 |   |  | $ | 66,749,000 | 
|                                                  | Increase in restricted cash                                                          |                          | $ | 7,841,000   |      |  |             |            |   |  |   |           | 
|                                                  | Decrease in investment in operating properties due to the sale
    of a property     |                          | $ | 11,117,000  |      |  | $           | 5,085,000   |   |  | $ | 5,572,000  | 
|                                                  | Increase in other assets net of liabilities of
    acquisitions/dispositions         |                          | $ | 12,338,000  |      |  | $           | 8,430,000   |   |  | $ | 719,000    | 
|FINANCING ACTIVITIES                              |                                                                                      |                          |   |             |      |  |             |             |   |  |   |           
|                                                  | Decrease in capital due to disposition of property                                   |                          | $ | 3,947,000   |      |  | $           | 1,549,000   |   |  | $ | 386,000    | 
|                                                  | Decrease in notes payable due to the sale of properties                              |                          | $ | 7,269,000   |      |  | $           | 4,230,000   |   |  | $ | 5,587,000  | 
|                                                  | Increase in notes payable due to the purchase of a property                          |                          | $ | 72,500,000  |      |  | $           | 122,475,000 |   |  | $ | 42,150,000 | 



7



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL STATEMENTS


For the Years Ended December 31, 2004, 2003
(Unaudited) and 2002 (Unaudited)




|   |                                         
|-- | ----------------------------------------
|1. | Organization and Description of Business



|                                                                        |  |               |          | 
|----------------------------------------------------------------------- |  | ------------- | -------- | 
|                                                                        |  | Date Acquired |         
|                                                                        |  |               |         
|NNN Emerald Plaza, LLC and Emerald Plaza Property                       |  |               | 07/06/04 | 
|NNN Oakey Building, LLC and Oakey Building Property                     |  |               | 04/02/04 | 
|NNN Enclave Parkway, LLC and Enclave Parkway Property                   |  |               | 12/22/03 | 
|NNN Congress Center, LLC and Congress Center Property                   |  |               | 01/09/03 | 
|Titan Building & Plaza Property                                         |  |               | 04/17/02 | 
|NNN Pacific Corporate Park, LLC and Pacific Corporate Park
    Property |  |               | 03/25/02 | 
|City Center West A Property                                           |  |               | 03/15/02 | 
|County Center Drive Property                                            |  |               | 09/28/02 | 
|Saddleback Financial Center (Sold 12/27/04)                             |  |               | 09/25/02 | 
|Reno Trademark Property                                                 |  |               | 09/04/01 | 









| |                                          
| | -----------------------------------------
| | Emerald Plaza  San Diego,
    California





|                                                                             |  |                 
|---------------------------------------------------------------------------- |  | ----------------
|Tenants-in-Common                                                            |  |                 
|                                                                             |  |                 
|AWT Family LP, a limited partnership wholly owned by Anthony W.
    Thompson |  | 1.9%            
|NNN Emerald Plaza, LLC                                                       |  | 20.5%           
|Unaffiliated third parties                                                   |  | 77.6% (combined)

8



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##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|                         |  |                        |      |   |                           |  |      |  
|------------------------ |  | ---------------------- | ---- | - | ------------------------- |  | ---- | -
|                         |  | Membership Interest in |      |   | Interest in Emerald Plaza | 
|Members                  |  | NNN Emerald Plaza, LLC |      |   | Property                  | 
|                         |  |                        |      |   |                           | 
|NNN 2003 Value Fund, LLC |  |                        | 22.2 | % |                           |  | 4.6  | %
|T REIT, LP               |  |                        | 13.2 | % |                           |  | 2.7  | %
|Affiliated Members       |  |                        | 0.4  | % |                           |  | .1   | %
|Unaffiliated Members     |  |                        | 64.2 | % |                           |  | 13.2 | %





| |                                   
| | ----------------------------------
| | Oakey Building  Las Vegas, Nevada





|                        |  |       
|----------------------- |  | ------
|NNN Oakey Building, LLC |  | 100.0%



|                         |  |                         |      |   |                            |  |      |  
|------------------------ |  | ----------------------- | ---- | - | -------------------------- |  | ---- | -
|                         |  | Membership Interest in  |      |   | Interest in Oakey Building | 
|Members                  |  | NNN Oakey Building, LLC |      |   | Property                   | 
|                         |  |                         |      |   |                            | 
|NNN 2003 Value Fund, LLC |  |                         | 75.4 | % |                            |  | 75.4 | %
|T REIT Oakey, LP         |  |                         | 9.8  | % |                            |  | 9.8  | %
|Unaffiliated members     |  |                         | 14.8 | % |                            |  | 14.8 | %



| |                                 
| | --------------------------------
| | Enclave Parkway  Houston, Texas





|                           |  |               |      |  
|-------------------------- |  | ------------- | ---- | -
|Tenants-in-Common          |  | Interest Held |     
|                           |  |               |     
|NNN Enclave Parkway, LLC   |  |               | 7.0  | %
|Unaffiliated third parties |  |               | 93.0 | %

9



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|                     |  |                          |       |  |                             |  |      | 
|-------------------- |  | ------------------------ | ----- |  | --------------------------- |  | ---- | 
|                     |  | Membership Interest in   |       |  | Interest in Enclave Parkway | 
|Members              |  | NNN Enclave Parkway, LLC |       |  | Property                    | 
|                     |  |                          |       |  |                             | 
|T REIT, LP           |  |                          | 46.5% |  |                             |  | 3.3% | 
|Unaffiliated members |  |                          | 53.5% |  |                             |  | 3.7% | 



| |                                    
| | -----------------------------------
| | Congress Center  Chicago, Illinois





|                           |  |               |       | 
|-------------------------- |  | ------------- | ----- | 
|Tenants-in-Common          |  | Interest Held |      
|                           |  |               |      
|G REIT Inc.                |  |               | 30.0% | 
|NNN Congress Center, LLC   |  |               | 28.9% | 
|Unaffiliated third parties |  |               | 41.1% | 



|                         |  |                          |       |  |                             |  |       | 
|------------------------ |  | ------------------------ | ----- |  | --------------------------- |  | ----- | 
|                         |  | Membership Interest in   |       |  | Interest in Congress Center | 
|Members                  |  | NNN Congress Center, LLC |       |  | Property                    | 
|                         |  |                          |       |  |                             | 
|NNN 2002 Value Fund, LLC |  |                          | 42.5% |  |                             |  | 12.3% | 
|T REIT, LP               |  |                          | 35.5% |  |                             |  | 10.3% | 
|Unaffiliated members     |  |                          | 22.0% |  |                             |  | 6.3%  | 



| |                                                
| | -----------------------------------------------
| | Titan Building & Plaza 
    San Antonio, Texas





|                                   |  |               |       | 
|---------------------------------- |  | ------------- | ----- | 
|Tenants-in-Common                  |  | Interest Held |      
|                                   |  |               |      
|T REIT Titan Building & Plaza, LLC |  |               | 48.5% | 
|Unaffiliated third parties         |  |               | 51.5% | 

10



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




| |                                         
| | ----------------------------------------
| | Pacific Corporate Park  Lake Forest, CA





|                                |  |               |       | 
|------------------------------- |  | ------------- | ----- | 
|Tenants-in-Common               |  | Interest Held |      
|                                |  |               |      
|NNN Pacific Corporate Park, LLC |  |               | 60.0% | 
|NNN 2001 Value Fund LLC         |  |               | 40.0% | 



|                                |  |                             |       |  |                               |  |       | 
|------------------------------- |  | --------------------------- | ----- |  | ----------------------------- |  | ----- | 
|                                |  | Membership Interest in      |       |  |                              
|                                |  | NNN Pacific Corporate Park, |       |  | Interest in Pacific Corporate | 
|Members                         |  | LLC                         |       |  | Property                      | 
|                                |  |                             |       |  |                               | 
|T REIT, LP                      |  |                             | 37.9% |  |                               |  | 22.8% | 
|Unaffiliated members (combined) |  |                             | 62.1% |  |                               |  | 37.2% | 



| |                                                      
| | -----------------------------------------------------
| | City Center West A Building  Las
    Vegas, Nevada





|                           |  |               |       | 
|-------------------------- |  | ------------- | ----- | 
|Tenants-in-Common          |  | Interest Held |      
|                           |  |               |      
|T REIT, LP                 |  |               | 89.1% | 
|Unaffiliated third parties |  |               | 10.9% | 



| |                                               
| | ----------------------------------------------
| | County Center Drive  Temecula,
    California



11



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|                             |  |               |      |  
|---------------------------- |  | ------------- | ---- | -
|Tenants-in-Common            |  | Interest Held |     
|                             |  |               |     
|T REIT, LP                   |  |               | 16.0 | %
|Affiliated Tenants in Common |  |               | 1.4  | %
|NNN County Center Drive, LLC |  |               | 1.0  | %
|Unaffiliated third parties   |  |               | 81.6 | %



| |                                                           
| | ----------------------------------------------------------
| | Saddleback Financial Center  Laguna Hills,
    California





|                                |  |               |      |  
|------------------------------- |  | ------------- | ---- | -
|Tenants-in-Common               |  | Interest Held |     
|                                |  |               |     
|T REIT Saddleback Financial, LP |  |               | 25.0 | %
|NNN Saddleback Financial, LLC   |  |               | 1.3  | %
|Unaffiliated members (combined) |  |               | 73.7 | %



| |                                       
| | --------------------------------------
| | Reno Trademark Building  Reno, Nevada





|                           |  |               |       | 
|-------------------------- |  | ------------- | ----- | 
|Tenants-in-Common          |  | Interest Held |      
|                           |  |               |      
|T REIT, LP                 |  |               | 40.0% | 
|Unaffiliated third parties |  |               | 60.0% | 



|   |                                           
|-- | ------------------------------------------
|2. | Summary of Significant Accounting Policies



12



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | Principles of Combination





| |                        
| | -----------------------
| | Real Estate Investments



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







| |                       
| | ----------------------
| | Property Held for Sale

Accounting for 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 have been initiated;                               
|
| |  | the sale of the asset is probable and the transfer of the asset
    is expected to qualify for recognition as a completed sale
    within one year;          
|
| |  | the asset is being actively marketed for sale at a price that is
    reasonable in relation to its current fair value; and                                   
|
| |  | given the actions required to complete the plan, it is unlikely
    that significant changes to the plan will be made or that the
    plan will be withdrawn.

13



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




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





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





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

Business Combinations










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





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



14



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)










|                     |  |              |           |               |             |  |       |          |  |                 |  |  |                 |  |  |  |            | 
|-------------------- |  | ------------ | --------- | ------------- | ----------- |  | ----- | -------- |  | --------------- |  |  | --------------- |  |  |  | ---------- | 
|                     |  |              |           | Percentage of |             |  |       |          |  |                 | 
|                     |  | 2003 Annual  |           |               | 2003 Annual |  |       |          |  | Square          |  |  | Lease           | 
|Tenant               |  | Base Rent(*) |           |               | Base Rent   |  |       | Property |  | Footage         |  |  | Expiration Date | 
|                     |  |              |           |               |             |  |       |          |  |                 |  |  |                 | 
|GSA/ Social Security |  | $            | 3,167,000 |               |             |  | 14.7% |          |  | Congress Center |  |  | 76,000          |  |  |  | April 2012 | 






|    |                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------
|(*) | Annualized rental income based on contractual base rent sent
    forth in leases in effect at December 31, 2003.





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments

Disclosures About Fair Value of
Financial Instruments




15



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Derivative financial instruments



Derivative Instruments and Hedging
Activities.




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





| |             
| | ------------
| | Other Assets





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





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





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

Consolidation of
Variable Interest Entities, Consolidated Financial Statements


16



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)






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



|                                  |  |              |             |             |      |   |             | 
|--------------------------------- |  | ------------ | ----------- | ----------- | ---- | - | ----------- | 
|                                  |  | December 31, |            
|                                  |  |              |            
|                                  |  | 2004         |             |             | 2003 |  
|                                  |  |              |             |             |      |  
|                                  |  |              |             | (Unaudited) |     
|Buildings and tenant improvements |  | $            | 294,854,000 |             |      | $ | 203,456,000 | 
|Land                              |  |              | 30,846,000  |             |      |   | 21,433,000  | 
|                                  |  |              |             |             |      |  
|                                  |  |              | 325,700,000 |             |      |   | 224,889,000 | 
|Less: accumulated depreciation    |  |              | 14,305,000  |             |      |   | 6,248,000   | 
|                                  |  |              |             |             |      |  
|                                  |  | $            | 311,395,000 |             |      | $ | 218,641,000 | 
|                                  |  |              |             |             |      |  





| |                  
| | -----------------
| | 2004 Acquisitions

|               |  |          |               |          |      |  |          |                |             |   |                |        |  |      |            |  |           |  |         |  |  |   |           | 
|-------------- |  | -------- | ------------- | -------- | ---- |  | -------- | -------------- | ----------- | - | -------------- | ------ |  | ---- | ---------- |  | --------- |  | ------- |  |  | - | --------- | 
|               |  |          |               |          |      |  |          | Borrowing      |             |   |                |        | 
|               |  |          |               | Purchase |      |  |          |                | Incurred at |   |                | Square |  |      | Commission | 
|Property       |  | Location |               |          | Date |  |          | Purchase Price |             |   | Acquisition(*) |        |  | Feet |            |  | to Realty | 
|               |  |          |               |          |      |  |          |                |             |   |                |        |  |      |            |  |           | 
|Oakey Building |  |          | Las Vegas, NV |          |      |  | 04/02/04 |                |             | $ | 8,137,000      |        |  | $    | 4,000,000  |  |           |  | 104,000 |  |  | $ | 237,000   | 
|Emerald Plaza  |  |          | San Diego, CA |          |      |  | 07/26/04 |                |             |   | 100,940,000    |        |  |      | 68,500,000 |  |           |  | 354,525 |  |  |   | 2,940,000 | 
|               |  |          |               |          |      |  |          |                |             |   |                |        |  |      |            |  |           | 
|Totals         |  |          |               |          |      |  |          |                |             | $ | 109,077,000    |        |  | $    | 72,500,000 |  |           |  | 458,525 |  |  | $ | 3,177,000 | 
|               |  |          |               |          |      |  |          |                |             |   |                |        |  |      |            |  |           | 






|    |                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | Represents the amount of the mortgage loan assumed by us upon
    the closing of the acquisition by us or newly placed on the
    property at closing.



| |                              
| | -----------------------------
| | 2003 Acquisitions (unaudited)

|                |  |          |             |          |      |  |          |                |             |   |                |        |  |      |             |  |           |  |         |  |  |   |           | 
|--------------- |  | -------- | ----------- | -------- | ---- |  | -------- | -------------- | ----------- | - | -------------- | ------ |  | ---- | ----------- |  | --------- |  | ------- |  |  | - | --------- | 
|                |  |          |             |          |      |  |          | Borrowing      |             |   |                |        | 
|                |  |          |             | Purchase |      |  |          |                | Incurred at |   |                | Square |  |      | Commission  | 
|Property        |  | Location |             |          | Date |  |          | Purchase Price |             |   | Acquisition(*) |        |  | Feet |             |  | to Realty | 
|                |  |          |             |          |      |  |          |                |             |   |                |        |  |      |             |  |           | 
|Congress Center |  |          | Chicago, IL |          |      |  | 01/09/03 |                |             | $ | 136,108,000    |        |  | $    | 96,989,000  |  |           |  | 525,000 |  |  | $ | 2,000,000 | 
|Enclave Parkway |  |          | Houston, TX |          |      |  | 12/22/03 |                |             |   | 34,500,000     |        |  |      | 23,600,000  |  |           |  | 207,000 |  |  |   | 1,000,000 | 
|                |  |          |             |          |      |  |          |                |             |   |                |        |  |      |             |  |           | 
|Totals          |  |          |             |          |      |  |          |                |             | $ | 170,608,000    |        |  | $    | 120,589,000 |  |           |  | 732,000 |  |  | $ | 3,000,000 | 
|                |  |          |             |          |      |  |          |                |             |   |                |        |  |      |             |  |           | 






|    |                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | Represents the amount of the mortgage loan assumed by us upon
    the closing of the acquisition by us or newly placed on the
    property at closing.



| |                  
| | -----------------
| | 2004 Dispositions



17



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)






| |                              
| | -----------------------------
| | 2003 Dispositions (unaudited)





| |                              
| | -----------------------------
| | 2002 Dispositions (unaudited)









|   |                
|-- | ---------------
|4. | Restricted Cash



18



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|   |             
|-- | ------------
|5. | Other Assets



|                                                                                                                                                                                                                                                                                            |  |      |            |             |      |   |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----------- | ---- | - | ---------- | 
|                                                                                                                                                                                                                                                                                            |  | 2004 |            |             | 2003 |  
|                                                                                                                                                                                                                                                                                            |  |      |            |             |      |  
|                                                                                                                                                                                                                                                                                            |  |      |            | (Unaudited) |     
|In-place leases and tenant relationships, net of accumulated
    amortization of $3,122,000 and $177,000 (unaudited) at
    December 31, 2004 and 2003, respectively (with a
    weighted-average life of 42 and 66 months for in- place
    leases and tenant relationships, respectively) |  | $    | 9,249,000  |             |      | $ | 1,522,000  | 
|Above market leases, net of accumulated amortization of
    $1,694,000 and $474,000 (unaudited) at December 31,
    2004 and 2003, respectively with a weighted-average life of
    84 months                                                                                               |  |      | 3,837,000  |             |      |   | 3,906,000  | 
|Deferred rent receivable                                                                                                                                                                                                                                                                    |  |      | 5,056,000  |             |      |   | 3,539,000  | 
|Lease commissions, net of accumulated amortization of $177,000
    and $77,000 (unaudited) at December 31, 2004 and 2003,
    respectively                                                                                                                                                  |  |      | 847,000    |             |      |   | 610,000    | 
|Deferred financing costs, net of accumulated amortization of
    $1,876,000 and $681,000 (unaudited) at December 31,
    2004 and 2003, respectively                                                                                                                                        |  |      | 1,813,000  |             |      |   | 881,000    | 
|Prepaid expenses                                                                                                                                                                                                                                                                            |  |      | 114,000    |             |      |   | 209,000    | 
|Other assets                                                                                                                                                                                                                                                                                |  |      | 15,000     |             |      |   |           | 
|                                                                                                                                                                                                                                                                                            |  |      |            |             |      |  
|Total other assets                                                                                                                                                                                                                                                                          |  | $    | 20,931,000 |             |      | $ | 10,667,000 | 
|                                                                                                                                                                                                                                                                                            |  |      |            |             |      |  





|     |  |        |           | 
|---- |  | ------ | --------- | 
|Year |  | Amount |          
|     |  |        |          
|2005 |  | $      | 3,901,000 | 
|2006 |  | $      | 2,095,000 | 
|2007 |  | $      | 1,707,000 | 
|2008 |  | $      | 1,637,000 | 
|2009 |  | $      | 1,523,000 | 

19



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|   |                  
|-- | -----------------
|6. | Mortgages Payable



|                      |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |            | 
|--------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | - | ----------- | ---- |  | - | ---------- | 
|                      |                                                                                                                                                                                                                                                                                                                                                         | December 31, |  
|                      |                                                                                                                                                                                                                                                                                                                                                         |              |  
|                      |                                                                                                                                                                                                                                                                                                                                                         | 2004         |   |             | 2003 | 
|                      |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      | 
|                      |                                                                                                                                                                                                                                                                                                                                                         |              |   | (Unaudited) |     
|Saddleback Financial: |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |           
|                      | Note payable to a bank, secured by a deed of trust, interest at
    the Wall Street Journal Prime Rate plus 0.5% per annum,
    with a floor of 5.25% per annum. Principal payments of
    $14,100 required each month plus interest. At December 31,
    2003 the interest rate was 5.25% per annum. The property
    was sold on December 27, 2004(a) |              | $ |            |      |  | $ | 7,439,000  | 
|Reno Trademark:       |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |           
|                      | Note payable to a bank, secured by a first deed of trust,
    interest at a fixed interest rate of 6.35% per annum.
    Monthly principal and interest payments of $28,623 are required
    until the note matures on January 1, 2013                                                                                                                   |              |   | 4,504,000   |      |  |   | 4,555,000  | 
|City Center West A:   |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |           
|                      | Note payable to life insurance company, secured by a first deed
    of trust, interest at a fixed interest rate of 6.50% per
    annum. Monthly principal and interest payments of $85,223 are
    required until the note matures in April of 2007                                                                                                     |              |   | 12,484,000  |      |  |   | 12,688,000 | 
|Titan Building:       |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |           
|                      | Note payable to a bank, secured by a first deed of trust,
    interest at 30-day LIBOR plus 3.25% per annum with a floor
    rate of 5.00% per annum. Monthly principal payments of
    $6,640 plus interest. At December 31, 2004 and 2003 the
    interest rate was 5.66% and 5.0% per annum, respectively.
    The loan matures in May of 2005.      |              |   | 5,795,000   |      |  |   | 5,874,000  | 
|Emerald Plaza:        |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |           
|                      | Note payable to a bank, secured by a first deed of trust,
    interest at 30-day LIBOR plus 2.45% per annum with payments
    of interest only through the maturity date. At December 31,
    2004 the interest rate was 4.55% per annum and the loan
    matures in June of 2007                                                                       |              |   | 68,504,000  |      |  |   |           | 
|Congress Center:      |                                                                                                                                                                                                                                                                                                                                                         |              |   |             |      |  |   |           
|                      | Note payable to a mortgage company, secured by a deed of trust,
    interest at a fixed interest rate of 5.635% per annum.
    Interest only payments are payable monthly, with the principal
    due on October 1, 2014                                                                                                                                |              |   | 80,000,000  |      |  |   |           | 
|                      | Note payable to a mortgage company, secured by a second deed of
    trust, interest at a fixed interest rate of 5.635% per
    annum. Interest only payments are payable monthly, with the
    principal due on October 1, 2014                                                                                                                         |              |   | 15,000,000  |      |  |   |           | 
|                      | Note payable to a mortgage company, secured by a third deed of
    trust, interest at a fixed interest rate of 7.0% per annum.
    Interest only payments are payable monthly until October 1,
    2006 at which time principal and interest is due monthly on a
    30-year amortization                                                               |              |   | 2,500,000   |      |  |   |           | 

20



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)


|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |   |             |            |           | 
|-------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------- | --------- | - | ----------- | ---------- | --------- | 
|                                                         |                                                                                                                                                                                                                                                                                                                                  | December 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |            
|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |            
|                                                         |                                                                                                                                                                                                                                                                                                                                  | 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |             |             | 2003      |  
|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |  
|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             | (Unaudited) |          
|                                                         | Note payable to a mortgage company, secured by a deed of trust,
    interest at the 30-day LIBOR rate plus 175 basis points.
    Interest only payments are payable monthly, the note was repaid
    in 2004                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |            |           |   |             | 81,989,000 |          
|                                                         | Mezzanine note payable to a mortgage company, interest at the
    30-day LIBOR plus 675 basis points. Interest only payments
    are payable monthly, the note was repaid in 2004                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |            |           |   |             | 15,000,000 |          
|Enclave Parkway:                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |   |             |           
|                                                         | Note payable to a bank, secured by a first deed of trust,
    interest at a fixed rate of 5.60% per annum. Loan is
    amortized at a fixed monthly principal and interest payment of
    $135,483 and matures January 1, 2009                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             | 23,310,000  |           |   |             | 23,600,000 |          
|Pacific Corporate Park:                                  |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |   |             |           
|                                                         | Note payable to a bank, secured by a first deed of trust,
    interest only with a variable interest rate at one of the
    following options:                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |   |             |            |          
|                                                         |                                                                                                                                                                                                                                                                                                                                  | (1) The higher of either the Prime Rate plus 2.25% per
    annum or the Federal Funds Rate plus 3.25% per annum or
    (2) LIBOR plus 3.25% per annum. The borrower has the
    option to change the interest rate option periodically as well
    as the option to choose either 30, 60 or 90-day LIBOR as
    the base rate. At December 31, 2004 and 2003 the interest
    rate was 5.66% and 4.39% (unaudited) per annum,
    respectively and the loan matures in September 2005. The loan
    was paid in full in March 2005 |             |             | 5,474,000 |   |             |            | 5,474,000 | 
|County Center Drive:                                     |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |   |             |           
|                                                         | Note payable to a bank, secured by a first deed of trust,
    interest at a fixed rate of 8.00% per annum. Monthly
    principal and interest payment of $27,036 required until the
    loan matures on October 1, 2011                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             | 2,980,000   |           |   |             | 3,059,000  |          
|Oakey Building:                                          |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |   |             |           
|                                                         | Note payable to a private party, secured by a first deed of
    trust, interest at a fixed rate of 10.00% per annum.
    Initial maturity date of the loan was April 1, 2005. In
    March of 2005, the loan was extended until October 1, 2005,
    with monthly interest only payments, at a fixed rate of
    8.00% per annum |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             | 4,000,000   |           |   |             |           |          
|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |  
|                                                         |                                                                                                                                                                                                                                                                                                                                  | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 224,552,000 |             |           | $ | 159,678,000 |           
|Less: notes payable secured by property held for sale(a) |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |            |             |           |   | 7,439,000   |           
|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |  
|                                                         |                                                                                                                                                                                                                                                                                                                                  | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 224,552,000 |             |           | $ | 152,497,000 |           
|                                                         |                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             |             |           |  

21



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|           |  |        |             | 
|---------- |  | ------ | ----------- | 
|Year       |  | Amount |            
|           |  |        |            
|2005       |  | $      | 18,831,000  | 
|2006       |  |        | 620,000     | 
|2007       |  |        | 80,945,000  | 
|2008       |  |        | 429,000     | 
|2009       |  |        | 22,037,000  | 
|Thereafter |  |        | 101,690,000 | 
|           |  |        |            
|           |  | $      | 224,552,000 | 
|           |  |        |            





|   |                    
|-- | -------------------
|7. | Future Minimum Rent



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



|            |       |        |            |             | 
|----------- | ----- | ------ | ---------- | ----------- | 
|Year Ending |       | Amount |           
|            |       |        |           
|2005        |       | $      | 31,025,000 |            
|2006        |       |        | 23,983,000 |            
|2007        |       |        | 19,206,000 |            
|2008        |       |        | 17,915,000 |            
|2009        |       |        | 15,633,000 |            
|Thereafter  |       |        | 41,813,000 |            
|            |       |        |           
|            | Total |        | $          | 149,575,000 | 
|            |       |        |           





|   |                           
|-- | --------------------------
|8. | Related Party Transactions



| |                         
| | ------------------------
| | Property management fees



22



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




| |                        
| | -----------------------
| | Real estate commissions





| |                                         
| | ----------------------------------------
| | Accounts receivable from related parties





| |                            
| | ---------------------------
| | Debt due to related parties





| |                   
| | ------------------
| | 2004 Notes Program





| |                   
| | ------------------
| | Cunningham Lending







| |                      
| | ---------------------
| | Triple Net Properties



23



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|   |                              
|-- | -----------------------------
|9. | Commitments and Contingencies



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

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




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





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





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





|    |                                                 
|--- | ------------------------------------------------
|10. | Discontinued Operations  Property Held for Sale





Accounting for the
Impairment or Disposal of Long-Lived Assets


24



---



##### 



T REIT, INC. UNCONSOLIDATED PROPERTIES PORTFOLIO


NOTES TO COMBINED FINANCIAL
STATEMENTS  (Continued)




|                                                                          |  |                          |           |             |      |   |             |      |  |   |         | 
|------------------------------------------------------------------------- |  | ------------------------ | --------- | ----------- | ---- | - | ----------- | ---- |  | - | ------- | 
|                                                                          |  | Years Ended December 31, |          
|                                                                          |  |                          |          
|                                                                          |  | 2004                     |           |             | 2003 |   |             | 2002 | 
|                                                                          |  |                          |           |             |      |   |             |      | 
|                                                                          |  |                          |           | (Unaudited) |      |   | (Unaudited) |     
|Rental income                                                             |  | $                        | 1,672,000 |             |      | $ | 1,615,000   |      |  | $ | 489,000 | 
|Rental expenses                                                           |  |                          | 778,000   |             |      |   | 742,000     |      |  |   | 153,000 | 
|Depreciation and amortization                                             |  |                          | 259,000   |             |      |   | 267,000     |      |  |   | 72,000  | 
|Interest expense (including amortization of deferred financing
    costs) |  |                          | 404,000   |             |      |   | 401,000     |      |  |   | 96,000  | 
|                                                                          |  |                          |           |             |      |   |             |      | 
|Income from discontinued operations  property held
    for sale, net     |  | $                        | 231,000   |             |      | $ | 205,000     |      |  | $ | 168,000 | 
|                                                                          |  |                          |           |             |      |   |             |      | 



|    |                  
|--- | -----------------
|11. | Subsequent Events









25



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












| |                               
| | ------------------------------
| | /s/ Deloitte &
    Touche, LLP





26



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


COMBINED BALANCE SHEET


December 31, 2003


|                                         |                      |   |            |            | 
|---------------------------------------- | -------------------- | - | ---------- | ---------- | 
|ASSETS                                  
|Real estate investments:                 |                      |   |            |           
|                                         | Operating properties |   | $          | 28,134,000 | 
|                                         |                      |   |           
|                                         |                      |   | 28,134,000 |           
|Cash and cash equivalents                |                      |   | 261,000    |           
|Restricted cash                          |                      |   | 149,000    |           
|Accounts receivable, net                 |                      |   | 67,000     |           
|Accounts receivable from related parties |                      |   | 2,000      |           
|Other assets, net                        |                      |   | 547,000    |           
|                                         |                      |   |           
|Total assets                             |                      | $ | 29,160,000 |           
|                                         |                      |   |           
|                                        
|LIABILITIES, AND OWNERS EQUITY         
|Mortgages payable                        |                      | $ | 17,243,000 |           
|Notes payable due to related parties     |                      |   | 19,000     |           
|Accounts payable and accrued liabilities |                      |   | 163,000    |           
|Security deposits and prepaid rent       |                      |   | 225,000    |           
|                                         |                      |   |           
|Total liabilities                        |                      |   | 17,650,000 |           
|Commitments and contingencies (Note 10)  |                      |   |            |           
|Total owners equity                     |                      |   | 11,510,000 |           
|                                         |                      |   |           
|Total liabilities and owners equity     |                      | $ | 29,160,000 |           
|                                         |                      |   |           



27



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


COMBINED STATEMENT OF OPERATIONS


For the Year Ended December 31, 2003


|                        |                                                                           |  |           |            |  
|----------------------- | ------------------------------------------------------------------------- |  | --------- | ---------- | -
|Revenues:               |                                                                           |  |           |           
|                        | Rental income                                                             |  | $         | 4,174,000  |  
|                        |                                                                           |  |          
|Expenses:               |                                                                           |  |           |           
|                        | Rental                                                                    |  |           | 1,084,000  |  
|                        | General and administrative                                                |  |           | 75,000     |  
|                        | Depreciation and amortization                                             |  |           | 654,000    |  
|                        |                                                                           |  |          
|Total expenses          |                                                                           |  | 1,813,000 |           
|                        |                                                                           |  |          
|Operating income        |                                                                           |  | 2,361,000 |           
|Other income (expense): |                                                                           |  |           |           
|                        | Interest expense (including amortization of deferred financing
    costs) |  |           | (1,204,000 | )
|                        | Interest income                                                           |  |           | 3,000      |  
|                        |                                                                           |  |          
|                        | Net income                                                                |  | $         | 1,160,000  |  
|                        |                                                                           |  |          



28



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


COMBINED STATEMENT OF OWNERS EQUITY


For the Year Ended December 31, 2003


|                            |  |       |            |  
|--------------------------- |  | ----- | ---------- | -
|                            |  | Total |           
|                            |  |       |           
|BALANCE  January 1, 2003   |  | $     | 11,395,000 |  
|Distributions               |  |       | (1,045,000 | )
|Net income                  |  |       | 1,160,000  |  
|                            |  |       |           
|BALANCE  December 31, 2003 |  | $     | 11,510,000 |  
|                            |  |       |           



29



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


COMBINED STATEMENT OF CASH FLOWS


For the Year Ended December 31, 2003


|                                                                                     |                                             |                                          |                                           |            |          |            |  
|------------------------------------------------------------------------------------ | ------------------------------------------- | ---------------------------------------- | ----------------------------------------- | ---------- | -------- | ---------- | -
|CASH FLOWS FROM OPERATING ACTIVITIES                                                 |                                             |                                          |                                           |           
|Net income                                                                           |                                             | $                                        | 1,160,000                                 |           
|Adjustments to reconcile net income to net cash provided by
    operating activities |                                             |                                          |                                           |           
|                                                                                     | Depreciation and amortization               |                                          |                                           | 671,000    |         
|                                                                                     | Change in operating assets and liabilities: |                                          |                                           |            |         
|                                                                                     |                                             | Accounts receivable                      |                                           |            | (55,000  | )         
|                                                                                     |                                             | Accounts receivable from related parties |                                           |            | 17,000   |           
|                                                                                     |                                             | Other assets                             |                                           |            | (519,000 | )         
|                                                                                     |                                             | Accounts payable and accrued liabilities |                                           |            | 117,000  |           
|                                                                                     |                                             | Security deposits and prepaid rent       |                                           |            | 134,000  |           
|                                                                                     |                                             |                                          |                                          
|                                                                                     |                                             |                                          | Net cash provided by operating activities |            |          | 1,525,000  |  
|                                                                                     |                                             |                                          |                                          
|CASH FLOWS FROM INVESTING ACTIVITIES                                                 |                                             |                                          |                                           |           
|                                                                                     | Restricted cash                             |                                          |                                           | (49,000    | )       
|                                                                                     | Capital expenditures                        |                                          |                                           | (59,000    | )       
|                                                                                     |                                             |                                          |                                          
|                                                                                     |                                             |                                          | Net cash used in investing activities     |            |          | (108,000   | )
|                                                                                     |                                             |                                          |                                          
|CASH FLOWS FROM FINANCING ACTIVITIES                                                 |                                             |                                          |                                           |           
|                                                                                     | Principal payments on mortgages payable     |                                          |                                           | (285,000   | )       
|                                                                                     | Distributions                               |                                          |                                           | (1,045,000 | )       
|                                                                                     |                                             |                                          |                                          
|                                                                                     |                                             |                                          | Net cash used in financing activities     |            |          | (1,330,000 | )
|                                                                                     |                                             |                                          |                                          
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                            |                                             |                                          | 87,000                                    |           
|CASH AND CASH EQUIVALENTS  beginning of year                                        |                                             |                                          | 174,000                                   |           
|                                                                                     |                                             |                                          |                                          
|CASH AND CASH EQUIVALENTS  end of year                                              |                                             | $                                        | 261,000                                   |           
|                                                                                     |                                             |                                          |                                          
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                    |                                             |                                          |                                           |           
|Cash paid during the year for:                                                       |                                             |                                          |                                           |           
|                                                                                     | Interest                                    |                                          | $                                         | 1,105,000  |         
|                                                                                     |                                             |                                          |                                          



30



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED FINANCIAL STATEMENTS


For the Year Ended December 31, 2003




|   |                                         
|-- | ----------------------------------------
|1. | Organization and Description of Business











| |                                                     
| | ----------------------------------------------------
| | City Center West ABuilding  Las
    Vegas, Nevada





|                           |  |               |       | 
|-------------------------- |  | ------------- | ----- | 
|Tenants-in-Common          |  | Interest Held |      
|                           |  |               |      
|T REIT, LP                 |  |               | 89.1% | 
|Unaffiliated third parties |  |               | 10.9% | 



| |                                       
| | --------------------------------------
| | Reno Trademark Building  Reno, Nevada





|                           |  |               |       | 
|-------------------------- |  | ------------- | ----- | 
|Tenants-in-Common          |  | Interest Held |      
|                           |  |               |      
|T REIT, LP                 |  |               | 40.0% | 
|Unaffiliated third parties |  |               | 60.0% | 

31



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED
FINANCIAL STATEMENTS  (Continued)




|   |                                           
|-- | ------------------------------------------
|2. | Summary of Significant Accounting Policies





| |                          
| | -------------------------
| | Principles of Combination





| |                        
| | -----------------------
| | Real Estate Investments



| |                   
| | ------------------
| | Operating Property







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





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





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



32



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED
FINANCIAL STATEMENTS  (Continued)






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







|                     |  |              |         |               |             |  |       |          |  |                    |  |  |                 |  |  |  |              | 
|-------------------- |  | ------------ | ------- | ------------- | ----------- |  | ----- | -------- |  | ------------------ |  |  | --------------- |  |  |  | ------------ | 
|                     |  |              |         | Percentage of |             |  |       |          |  |                    | 
|                     |  | 2003 Annual  |         |               | 2003 Annual |  |       |          |  | Square Footage     |  |  | Lease           | 
|Tenant               |  | Base Rent(*) |         |               | Base Rent   |  |       | Property |  | (Approximately)    |  |  | Expiration Date | 
|                     |  |              |         |               |             |  |       |          |  |                    |  |  |                 | 
|Memec, Inc           |  | $            | 748,000 |               |             |  | 21.8% |          |  | Reno Trademark     |  |  | 75,000          |  |  |  | January 2013 | 
|Citadel Broadcasting |  | $            | 442,000 |               |             |  | 12.9% |          |  | City Center West A |  |  | 17,000          |  |  |  | May 2005     | 






|    |                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------
|(*) | Annualized rental income based on contractual base rent sent
    forth in leases in effect at December 31, 2003.



| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments

Disclosures About Fair Value of Financial Instruments




33



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED
FINANCIAL STATEMENTS  (Continued)




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





| |             
| | ------------
| | Other Assets





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





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





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

Consolidation of
Variable Interest Entities Combined Financial Statements


34



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED
FINANCIAL STATEMENTS  (Continued)




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



|                                  |  |   |            | 
|--------------------------------- |  | - | ---------- | 
|Buildings and tenant improvements |  | $ | 24,951,000 | 
|Land                              |  |   | 4,370,000  | 
|                                  |  |   |           
|                                  |  |   | 29,321,000 | 
|Less: accumulated depreciation    |  |   | 1,187,000  | 
|                                  |  |   |           
|                                  |  | $ | 28,134,000 | 
|                                  |  |   |           





|   |                
|-- | ---------------
|4. | Restricted Cash





|   |             
|-- | ------------
|5. | Other Assets



|                                                                                              |  |              |         | 
|--------------------------------------------------------------------------------------------- |  | ------------ | ------- | 
|                                                                                              |  | December 31, |        
|                                                                                              |  | 2003         |        
|                                                                                              |  |              |        
|Deferred rent receivable                                                                      |  | $            | 416,000 | 
|Lease commissions, net of accumulated amortization of $15,000 at
    December 31, 2003        |  |              | 71,000  | 
|Deferred financing costs, net of accumulated amortization of
    $28,000 at December 31, 2003 |  |              | 54,000  | 
|Prepaid expenses                                                                              |  |              | 6,000   | 
|                                                                                              |  |              |        
|Total other assets                                                                            |  | $            | 547,000 | 
|                                                                                              |  |              |        



|   |                  
|-- | -----------------
|7. | Mortgages Payable



|                    |                                                                                                                                                                                                                                                     |              |            |            | 
|------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ---------- | ---------- | 
|                    |                                                                                                                                                                                                                                                     | December 31, |           
|                    |                                                                                                                                                                                                                                                     | 2003         |           
|                    |                                                                                                                                                                                                                                                     |              |           
|Reno Trademark:     |                                                                                                                                                                                                                                                     |              |            |           
|                    | Note payable to a bank, secured by a first deed of trust,
    interest at a fixed interest rate of 6.35% per annum.
    Monthly principal and interest payments of $28,622 are required
    until the note matures on January 1, 2013               |              | $          | 4,555,000  | 
|City Center West A: |                                                                                                                                                                                                                                                     |              |            |           
|                    | Note payable to life insurance company, secured by a first deed
    of trust, interest at a fixed interest rate of 6.50% per
    annum. Monthly principal and interest payments of $85,223 are
    required until the note matures in April of 2007 |              |            | 12,688,000 | 
|                    |                                                                                                                                                                                                                                                     |              |           
|                    |                                                                                                                                                                                                                                                     | $            | 17,243,000 |           
|                    |                                                                                                                                                                                                                                                     |              |           

35



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED
FINANCIAL STATEMENTS  (Continued)




|           |  |        |            | 
|---------- |  | ------ | ---------- | 
|Year       |  | Amount |           
|           |  |        |           
|2004       |  | $      | 255,000    | 
|2005       |  |        | 273,000    | 
|2006       |  |        | 291,000    | 
|2007       |  |        | 12,097,000 | 
|2008       |  |        | 66,000     | 
|Thereafter |  |        | 4,261,000  | 
|           |  |        |           
|           |  | $      | 17,243,000 | 
|           |  |        |           





|   |                    
|-- | -------------------
|8. | Future Minimum Rent



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



|            |       |        |           |            | 
|----------- | ----- | ------ | --------- | ---------- | 
|Year Ending |       | Amount |          
|            |       |        |          
|2004        |       | $      | 3,398,000 |           
|2005        |       |        | 3,043,000 |           
|2006        |       |        | 2,436,000 |           
|2007        |       |        | 1,960,000 |           
|2008        |       |        | 1,720,000 |           
|Thereafter  |       |        | 3,813,000 |           
|            |       |        |          
|            | Total |        | $         | 16,370,000 | 
|            |       |        |          





|   |                           
|-- | --------------------------
|9. | Related Party Transactions



| |                         
| | ------------------------
| | Property management fees





| |                        
| | -----------------------
| | Real estate commissions



36



---



##### 



CITY CENTER WEST A and RENO TRADEMARK
PROPERTIES


NOTES TO COMBINED
FINANCIAL STATEMENTS  (Continued)




| |                                         
| | ----------------------------------------
| | Accounts receivable from related parties





|    |                              
|--- | -----------------------------
|10. | Commitments and Contingencies



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

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




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





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





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





|    |                 
|--- | ----------------
|11. | Subsequent Event



37