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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 333-149290
 COLE CREDIT PROPERTY TRUST III, INC.
  Maryland
    
    26-1846406(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)2555 East Camelback Road, Suite 400Phoenix, Arizona, 85016
    
    (602) 778-8700(Address of principal executive offices; zip code)
    
    (Registrants telephone number, including area code)
 Not Applicable  (Former name, former address and former fiscal year, if changed since last report)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if smaller reporting company)
  o þ




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##### 



COLE CREDIT PROPERTY TRUST III, INC.
INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Unaudited Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    4Condensed Consolidated Unaudited Statements of Operations for the three and nine months ended
September 30, 2009, for the three months ended September 30, 2008, and for the period from
January 22, 2008 (Date of Inception) to September 30, 2008
    
    
    5Condensed Consolidated Unaudited Statement of Stockholders Equity for the nine months ended
September 30, 2009
    
    
    6Condensed Consolidated Unaudited Statements of Cash Flows for the nine months ended September
30, 2009 and for the period from January 22, 2008 (Date of Inception) to September 30, 2008
    
    
    7Notes to Condensed Consolidated Unaudited Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4T. Controls and Procedures
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults Upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29Signatures
    
    
    30Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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PART I
FINANCIAL INFORMATION
    3




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COLE CREDIT PROPERTY TRUST III, INC.
 
 CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSInvestment in real estate assets:Land
    
    $
    174,012,191
    
    
    $
    Buildings and improvements, less accumulated depreciation of $1,472,934
    
    
    189,526,781
    
    
    
    Acquired intangible lease assets, less accumulated amortization of $1,238,783
    
    
    72,407,018
    
    
    
    Total investment in real estate assets, net
    
    
    435,945,990
    
    
    
    Cash and cash equivalents
    
    
    217,505,378
    
    
    
    172,493Restricted cash
    
    
    1,500,183
    
    
    
    2,849,043Rents and tenant receivables
    
    
    1,574,583
    
    
    
    Prepaid expenses, mortgage loan deposits and other assets
    
    
    312,724
    
    
    
    11,293Deferred financing costs, less accumulated amortization of $95,641
    
    
    2,022,197
    
    
    
    Total assets
    
    $
    658,861,055
    
    
    $
    3,032,829LIABILITIES AND STOCKHOLDERS EQUITYNotes payable
    
    $
    79,890,000
    
    
    $
    Accounts payable and accrued expenses
    
    
    1,309,977
    
    
    
    84,934Escrowed investor proceeds
    
    
    1,443,931
    
    
    
    2,849,043Due to affiliates
    
    
    237,541
    
    
    
    Acquired below market lease intangibles, less accumulated amortization of $222,698
    
    
    12,933,147
    
    
    
    Distributions payable
    
    
    3,294,502
    
    
    
    Derivative liabilities
    
    
    293,413
    
    
    
    Deferred rent and other liabilities
    
    
    1,111,745
    
    
    
    Total liabilities
    
    
    100,514,256
    
    
    
    2,933,977Redeemable common stock
    
    
    5,558,875
    
    
    
    STOCKHOLDERS EQUITY:Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and
outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value; 490,000,000 shares authorized, 64,527,332 and
20,000 shares issued and outstanding, respectively
    
    
    645,273
    
    
    
    200Capital in excess of par value
    
    
    571,644,832
    
    
    
    199,800Accumulated distributions in excess of earnings
    
    
    (19,208,768
    )
    
    
    (101,148
    )Accumulated other comprehensive loss
    
    
    (293,413
    )
    
    
    Total stockholders equity
    
    
    552,787,924
    
    
    
    98,852Total liabilities and stockholders equity
    
    $
    658,861,055
    
    
    $
    3,032,829
   4




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COLE CREDIT PROPERTY TRUST III, INC.
 
 CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
 For the period fromJanuary 22, 2008Nine Months Ended
    
    
    (Date of Inception) toThree Months Ended September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Rental and other income
    
    $
    7,590,106
    
    
    $
    
    
    
    $
    11,071,246
    
    
    $
    Tenant reimbursement income
    
    
    109,329
    
    
    
    
    
    
    
    112,684
    
    
    
    Total revenue
    
    
    7,699,435
    
    
    
    
    
    
    
    11,183,930
    
    
    
    Expenses:General and administrative expenses
    
    
    752,974
    
    
    
    
    
    
    
    1,220,781
    
    
    
    Property operating expenses
    
    
    188,198
    
    
    
    
    
    
    
    208,406
    
    
    
    Property and asset management expenses
    
    
    651,823
    
    
    
    
    
    
    
    933,645
    
    
    
    Acquisition related expenses
    
    
    4,664,775
    
    
    
    
    
    
    
    11,299,339
    
    
    
    Depreciation
    
    
    1,012,632
    
    
    
    
    
    
    
    1,472,934
    
    
    
    Amortization
    
    
    707,729
    
    
    
    
    
    
    
    1,111,867
    
    
    
    Total operating expenses
    
    
    7,978,131
    
    
    
    
    
    
    
    16,246,972
    
    
    
    Operating loss
    
    
    (278,696
    )
    
    
    
    
    
    
    (5,063,042
    )Other income (expense):Interest income
    
    
    142,944
    
    
    
    1,003
    
    
    
    237,155
    
    
    
    3,022Interest expense
    
    
    (838,477
    )
    
    
    
    
    
    
    (1,080,012
    )
    
    
    Total other income (expense)
    
    
    (695,533
    )
    
    
    1,003
    
    
    
    (842,857
    )
    
    
    3,022Net (loss) income
    
    $
    (974,229
    )
    
    $
    1,003
    
    
    $
    (5,905,899
    )
    
    $
    3,022Weighted average number of common
shares outstanding:Basic and diluted
    
    
    49,537,023
    
    
    
    20,000
    
    
    
    26,146,998
    
    
    
    20,000Net (loss) income per common share:Basic and diluted
    
    $
    (0.02
    )
    
    $
    0.05
    
    
    $
    (0.23
    )
    
    $
    0.15
   5




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COLE CREDIT PROPERTY TRUST III, INC.
 
 CONDENSED CONSOLIDATED UNAUDITED STATEMENT OF STOCKHOLDERS EQUITY
 AccumulatedCommon Stock
    
    
    
    
    
    
    Distributions in
    
    
    Accumulated OtherNumber of
    
    
    
    
    
    
    Capital in Excess
    
    
    Excess of
    
    
    Comprehensive
    
    
    Total StockholdersShares
    
    
    Par Value
    
    
    of Par Value
    
    
    Earnings
    
    
    Loss
    
    
    EquityBalance, December
31, 2008
    
    
    20,000
    
    
    $
    200
    
    
    $
    199,800
    
    
    $
    (101,148
    )
    
    $
    
    
    
    $
    98,852Issuance of common stock
    
    
    64,527,420
    
    
    
    645,274
    
    
    
    643,687,572
    
    
    
    
    
    
    
    
    
    
    
    644,332,846Distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,201,721
    )
    
    
    
    
    
    
    (13,201,721
    )Commissions on stock
sales and related
dealer manager fees
    
    
    
    
    
    
    
    
    
    
    (56,898,764
    )
    
    
    
    
    
    
    
    
    
    
    (56,898,764
    )Other offering costs
    
    
    
    
    
    
    
    
    
    
    (9,591,279
    )
    
    
    
    
    
    
    
    
    
    
    (9,591,279
    )Redemptions of common
stock
    
    
    (20,088
    )
    
    
    (201
    )
    
    
    (193,622
    )
    
    
    
    
    
    
    
    
    
    
    (193,823
    )Redeemable common stock
    
    
    
    
    
    
    
    
    
    
    (5,558,875
    )
    
    
    
    
    
    
    
    
    
    
    (5,558,875
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,905,899
    )
    
    
    
    
    
    
    (5,905,899
    )Unrealized loss on
interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (293,413
    )
    
    
    (293,413
    )Balance, September 30,
2009
    
    
    64,527,332
    
    
    $
    645,273
    
    
    $
    571,644,832
    
    
    $
    (19,208,768
    )
    
    $
    (293,413
    )
    
    $
    552,787,924
   6




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COLE CREDIT PROPERTY TRUST III, INC.
 
 CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
 For the Period FromJanuary 22, 2008Nine Months Ended
    
    
    (Date of Inception) toSeptember 30, 2009
    
    
    September 30, 2008Cash flows from operating activities:Net (loss) income
    
    $
    (5,905,899
    )
    
    $
    3,022Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:Depreciation
    
    
    1,472,934
    
    
    
    Amortization
    
    
    1,016,085
    
    
    
    Amortization of deferred financing costs
    
    
    95,641
    
    
    
    Changes in assets and liabilities:Rents and tenant receivables
    
    
    (1,574,583
    )
    
    
    Prepaid expenses and other assets
    
    
    (276,431
    )
    
    
    Accounts payable and accrued expenses
    
    
    1,225,043
    
    
    
    Due to affiliates
    
    
    213,072
    
    
    
    Deferred rent and other liabilities
    
    
    1,111,745
    
    
    
    Net cash (used in) provided by operating activities
    
    
    (2,622,393
    )
    
    
    3,022Cash flows from investing activities:Change in restricted cash
    
    
    1,348,860
    
    
    
    Investments in real estate and related assets
    
    
    (425,501,862
    )
    
    
    Net cash used in investing activities
    
    
    (424,153,002
    )
    
    
    Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    638,580,148
    
    
    
    200,000Offering costs on issuance of common stock
    
    
    (66,465,574
    )
    
    
    Redemptions of common stock
    
    
    (193,823
    )
    
    
    Distributions to investors
    
    
    (4,154,521
    )
    
    
    Proceeds from notes payable
    
    
    79,890,000
    
    
    
    Proceeds from affiliate notes payable
    
    
    41,581,000
    
    
    
    Repayment of affiliate notes payable
    
    
    (41,581,000
    )
    
    
    Escrowed investor proceeds liability
    
    
    (1,405,112
    )
    
    
    Payment of loan deposits
    
    
    (1,597,800
    )
    
    
    Refund of loan deposits
    
    
    1,572,800
    
    
    
    Deferred financing costs paid
    
    
    (2,117,838
    )
    
    
    Net cash provided by financing activities
    
    
    644,108,280
    
    
    
    200,000Net increase in cash and cash equivalents
    
    
    217,332,885
    
    
    
    203,022Cash and cash equivalents, beginning of period
    
    
    172,493
    
    
    
    Cash and cash equivalents, end of period
    
    $
    217,505,378
    
    
    $
    203,022Supplemental Disclosures of Non-Cash Investing and
Financing Activities:Distributions declared and unpaid
    
    $
    3,294,502
    
    
    $
    Common stock issued through distribution reinvestment plan
    
    $
    5,752,698
    
    
    $
    Unrealized loss on interest rate swaps
    
    $
    (293,413
    )
    
    $
    Supplemental Cash Flow Disclosures:Interest paid
    
    $
    576,791
    
    
    $
    
   7




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COLE CREDIT PROPERTY TRUST III, INC.
 
 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
September 30, 2009
 NOTE 1  ORGANIZATION AND BUSINESS
     NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation and Basis of Presentation
    8




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 Restricted Cash and Escrowed Investor Proceeds
  Redeemable Common Stock
 Distinguishing Liabilities from Equity
 Reportable Segments
 Segment Reporting
 Investment in and Valuation of Real Estate Assets
   Building
    
    40 yearsTenant improvements
    
    Lesser of useful life or lease termIntangible lease assets
    
    Lesser of useful life or lease term
   9




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 Allocation of Purchase Price of Acquired Assets
      Revenue Recognition
   10




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 Rents and Tenant Receivables
  Deferred Financing Costs
  Due to Affiliates
  Derivative Instruments and Hedging Activities
 Derivatives and Hedging
 Earnings Per Share
  Concentration of Credit Risk
   NOTE 3  FAIR VALUE MEASUREMENTS
 Fair Value Measurements and Disclosures
  11




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COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
      Cash and cash equivalents, restricted cash, rents and tenant receivables, prepaid expenses and
mortgage loan deposits and accounts payable and accrued expenses
 Notes payable
 Derivative Instruments
   Quoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableBalance at
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsSeptember 30, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Liabilities:Interest rate swaps
    
    $
    293,413
    
    
    $
    
    
    
    $
    293,413
    
    
    $
    
  12




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 NOTE 4  REAL ESTATE ACQUISITIONS
       NOTE 5  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
  Fair Value of LiabilityBalance Sheet
    
    
    
    
    
    
    Interest
    
    
    Effective
    
    
    Maturity
    
    
    September 30,
    
    
    December 31,Derivatives designated as hedging instruments
    
    Location
    
    
    Notional Value
    
    
    Rate
    
    
    Date
    
    
    Date
    
    
    2009
    
    
    2008Interest Rate Swaps (1)
    
    Derivative liabilities
    
    $
    20,000,000
    
    
    
    5.95
    %
    
    
    9/8/2009
    
    
    
    8/29/2012
    
    
    $
    (293,413
    )
    
    $
    
 
 (1)
    
    The Company executed 15 swap agreements with identical terms and with an aggregate notional amount of $20.0 million.  13




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COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
   Amount of Loss Recognized in Other Comprehensive LossThree months
    
    
    Nine months
    
    
    Three months
    
    
    For the period fromended
    
    
    ended
    
    
    ended
    
    
    January 22, 2008September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    (Date of Inception) toDerivatives in Cash Flow Hedging Relationships
    
    2009
    
    
    2009
    
    
    2008
    
    
    September 30, 2008Interest Rate Swaps (1)
    
    $
    293,413
    
    
    $
    293,413
    
    
    $
    
    
    
    
    $
    
    
    
    
 
 (1)
    
    There were no portions relating to the change in the fair value
of the interest rate swap agreements that were considered
ineffective during the nine months ended September 30, 2009. No
previously effective portion of gains or losses that were
recorded in accumulated other comprehensive loss during the term
of the hedging relationship was reclassified into earnings during
the three and nine months ended September 30, 2009.   NOTE 6 NOTES PAYABLE
    14




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 NOTE 7  COMMITMENTS AND CONTINGENCIES
 Litigation
  Environmental Matters
  NOTE 8  RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS
     15




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COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
      16




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COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
      NOTE 9  ECONOMIC DEPENDENCY
   17




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 NOTE 10  NEW ACCOUNTING PRONOUNCEMENTS
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB , Consolidation
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment to FASB Statement No. 133 Derivatives and Hedging
 Determining Fair
Value when the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions that are not Orderly Fair Value Measurements and Disclosures
 Recognition and Presentation of
Other-Than-Temporary Impairments InvestmentsDebt and Equity
Securities
 Subsequent Events Subsequent Events
 The FASB Accounting Standards Codification Accounting Standards
Codification
  18




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##### Table of Contents



COLE CREDIT PROPERTY TRUST III, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS  (Continued)
September 30, 2009
 Fair Value
Measurements and Disclosures
 NOTE 11  SUBSEQUENT EVENTS
  Sale of Shares of Common Stock
  Redemption of Shares of Common Stock
  Real Estate Acquisitions
   19




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-Looking Statements
    Overview
    20




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##### Table of Contents



Recent Market Conditions
   Results of Operations
 Three months ended September 30, 2009
  Revenue.
 General and Administrative Expenses.
 Property Operating Expenses.
 Property and Asset Management Expenses.
   21




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##### Table of Contents



Acquisition Related Expenses.
 Depreciation and Amortization Expenses.
 Interest Income.
 Interest Expense.
  Nine months ended September 30, 2009
  Revenue.
 General and Administrative Expenses.
 Property Operating Expenses.
 Property and Asset Management Expenses.
   22




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##### Table of Contents



Acquisition Related Expenses.
 Depreciation and Amortization Expenses.
 Interest Income.
 Interest Expense.
  Modified Funds from Operations
    23




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Net loss
    
    $
    (974,229
    )
    
    $
    (5,905,899
    )Add:Depreciation of real estate assets
    
    
    1,012,632
    
    
    
    1,472,934Amortization of lease related costs
    
    
    707,729
    
    
    
    1,111,867Acquisition related expenses
    
    
    4,664,775
    
    
    
    11,299,339MFFO
    
    $
    5,410,907
    
    
    $
    7,978,241
  
    
    In order to recognize revenues on a straight-line basis
over the terms of the respective leases, we recognized
additional revenue by straight-lining rental revenue of
approximately $934,000 and $1.1 million during the three
months and nine months ended September 30, 2009,
respectively.
    
    Amortization of deferred financing costs
totaled approximately $89,000 and
approximately $96,000 million during the
three and nine months ended September 30,
2009, respectively.
 Liquidity and Capital Resources
 General
   Short-term Liquidity and Capital Resources
    24




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Long-term Liquidity and Capital Resources
   
    
    the borrowings enabled us to purchase the properties and earn rental income more quickly;
    
    the property acquisitions were likely to increase the net offering proceeds from our
initial public offering by allowing us to show potential investors actual acquisitions,
thereby improving our ability to meet our goal of acquiring a diversified portfolio of
properties to generate current income for investors and preserve investor capital; and
    
    based on expected equity sales at the time and scheduled maturities of our short-term
variable rate debt, leverage was likely to exceed the charters guidelines only for a
limited period of time.
  Payments due by period*Less Than 1
    
    
    
    
    
    
    
    
    
    
    More Than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    YearsPrincipal payments  fixed rate debt
    
    $
    79,890,000
    
    
    $
    351,600
    
    
    $
    49,538,400
    
    
    $
    
    
    
    $
    30,000,000Interest payments  fixed rate debt
    
    
    29,262,186
    
    
    
    5,062,155
    
    
    
    12,593,748
    
    
    
    3,828,000
    
    
    
    7,778,283Total
    
    $
    109,152,186
    
    
    $
    5,413,755
    
    
    $
    62,132,148
    
    
    $
    3,828,000
    
    
    $
    37,778,283
 
 *
    
    The table above does not include amounts due to our advisor or its
affiliates pursuant to our advisory agreement because such
amounts are not fixed and determinable.  25




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##### Table of Contents



Cash Flow Analysis
 Operating Activities.
 Investing Activities.
 Financing Activities.
 Election as a REIT
   Inflation
  Critical Accounting Policies and Estimates
  
    
    Investment in and Valuation of Real Estate Assets;
    
    Allocation of Purchase Price of Acquired Assets;
    
    Revenue Recognition;
    
    Income Taxes; and
    
    Derivative Instruments and Hedging Activities.
  26




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##### Table of Contents



Derivative Instruments and Hedging Activities
 Derivatives and Hedging
 Commitments and Contingencies
  Related-Party Transactions and Agreements
  Subsequent Events
  
    
    Sale of shares of common stock;
    
    Redemption of shares of common stock; and
    
    Acquisition of various properties.
 New Accounting Pronouncements
   27




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4T. Controls and Procedures
    28




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##### Table of Contents



PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
   29




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##### Table of Contents



SIGNATURES
  Cole Credit Property Trust III, Inc.(Registrant)By:
    /s/ Christopher H. ColeChristopher H. ColeChief Executive Officer and President
(Principal Executive Officer)By:
    /s/ D. Kirk McAllaster, Jr.D. Kirk McAllaster, Jr.Executive Vice President and Chief Financial Officer
(Principal Financial Officer)   30




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##### Table of Contents



EXHIBIT INDEX
  Exhibit No.
    
    Description3.1
    
    
    Third Articles of Amendment and Restatement. (Incorporated by
reference to Exhibit 3.1 to the Companys Pre-Effective
Amendment No. 3 to Form S-11 (File No. 333-149290), filed on
September 29, 2008).3.2
    
    
    Amended and Restated Bylaws. (Incorporated by reference to
Exhibit 3.2 to the Companys Pre-Effective Amendment No. 3 to
Form S-11 (File No. 333-149290), filed on May 7, 2008).4.1
    
    
    Form of Subscription Agreement and Subscription Agreement
Signature Page (Incorporated by reference to Appendix B to the
prospectus of the Company filed pursuant to Rule 424(b)(3) on
April 30, 2009).4.2
    
    
    Form of Additional Investment Subscription Agreement for
current stockholders (Incorporated by reference to Appendix C
to the prospectus of the Company filed pursuant to Rule
424(b)(3) on April 30, 2009).10.1
    
    
    First Mortgage, Security Agreement and Fixture Filing, dated
as of June 22, 2009, by and between Cole WM Albuquerque NM,
LLC and Aviva Life and Annuity Company (Incorporated by
reference to Exhibit 10.1 to the Companys Form 8-K (File No.
333-149290), filed on June 26, 2009).10.2
    
    
    Junior Mortgage, Security and Fixture Filing Agreement, dated
as of June 22, 2009, by and between Cole WM Albuquerque NM,
LLC and Aviva Life and Annuity Company (Incorporated by
reference to Exhibit 10.2 to the Companys Form 8-K (File No.
333-149290), filed on June 26, 2009).10.3
    
    
    Promissory Note, dated June 22, 2009, by and between Cole WM
Albuquerque NM, LLC and Aviva Life and Annuity Company
(Incorporated by reference to Exhibit 10.3 to the Companys
Form 8-K (File No. 333-149290), filed on June 26, 2009).10.4
    
    
    First Deed of Trust, Security Agreement and Fixture Filing,
dated as of June 22, 2009, by and between Cole MT Las Vegas
NV, LLC and Aviva Life and Annuity Company (Incorporated by
reference to Exhibit 10.4 to the Companys Form 8-K (File No.
333-149290), filed on June 26, 2009).10.5
    
    
    Promissory Note, dated June 22, 2009, by and between Cole MT
Las Vegas NV, LLC and Aviva Life and Annuity Company
(Incorporated by reference to Exhibit 10.5 to the Companys
Form 8-K (File No. 333-149290), filed on June 26, 2009).10.6
    
    
    First Mortgage, Security Agreement and Fixture Filing, dated
as of June 22, 2009, by and between Cole WG South Yale Avenue
(Tulsa) OK, LLC and Aviva Life and Annuity Company
(Incorporated by reference to Exhibit 10.6 to the Companys
Form 8-K (File No. 333-149290), filed on June 26, 2009).10.7
    
    
    Promissory Note, dated June 22, 2009, by and between Cole WG
South Yale Avenue (Tulsa) OK, LLC and Aviva Life and Annuity
Company (Incorporated by reference to Exhibit 10.7 to the
Companys Form 8-K (File No. 333-149290), filed on June 26,
2009).10.8
    
    
    First Deed of Trust, Security Agreement and Fixture
Filing, dated June 22, 2009, by and between Cole WG
Fredericksburg VA, LLC and Aviva Life and Annuity Company
(Incorporated by reference to Exhibit 10.8 to the Companys
Form 8-K (File No. 333-149290), filed on June 26, 2009).10.9
    
    
    First Deed of Trust, Security Agreement and Fixture Filing,
dated June 22, 2009, by and between Cole WG Fredericksburg VA,
LLC and Aviva Life and Annuity Company (Incorporated by
reference to Exhibit 10.8 to the Companys Form 8-K (File No.
333-149290), filed on June 26, 2009).10.10
    
    
    Loan Agreement dated August 31, 2009, by and between Jackson
National Life Insurance Company, as Lender and Cole HD San
Diego CA, LP; Cole HT Durham NC, LLC; Cole KO Monrovia CA, LP;
COLE HH North Charleston SC, LLC; Cole WG Edmond OK, LLC; Cole
CV Southaven MS, LLC; Cole KO Tavares FL, LLC; Cole BB Coral
Springs FL, LLC, collectively as Borrowers. (Incorporated by
reference to Exhibit 10.43 to the Companys Post-Effective
Amendment No. 5 to Form S-11 (File No. 333-149290), filed on
November 2, 2009).10.11
    
    
    Fixed Rate Promissory Note dated August 31, 2009 by and
between Jackson National Life Insurance Company, as Noteholder
and Cole HD San Diego CA, LP; Cole HT Durham NC, LLC; Cole KO
Monrovia CA, LP; COLE HH North Charleston SC, LLC; Cole WG
Edmond OK, LLC; Cole CV Southaven MS, LLC; Cole KO Tavares FL,
LLC; Cole BB Coral Springs FL, LLC collectively as Maker.
(Incorporated by reference to Exhibit 10.44 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.12
    
    
    Affiliated Party Subordination and Cross-Default Agreement
dated August 31, 2009 by and between Cole REIT III Operating
Partnership and Jackson National Life Insurance Company.
(Incorporated by reference to Exhibit 10.45 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.13
    
    
    Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement and Fixture Filing dated as of August 31,
2009 by and between Cole CB Abilene TX, LLC and J. Edward
Blakey as Trustee for the benefit of Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.46 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).
  31




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##### Table of Contents



Exhibit No.
    
    Description10.14
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Abilene TX, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.47 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.15
    
    
    Deed to Secure Debt and Absolute Assignment of Rents and
Leases and Security Agreement dated as of August 31, 2009 by
and between Cole CB Braselton GA, LLC and Wells Fargo Bank,
NA. (Incorporated by reference to Exhibit 10.48 to the
Companys Post-Effective Amendment No. 5 to Form S-11 (File
No. 333-149290), filed on November 2, 2009).10.16
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Braselton GA, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.49 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.17
    
    
    Deed to Secure Debt and Absolute Assignment of Rents and
Leases and Security Agreement dated as of August 31, 2009 by
and between Cole CB Bremen GA, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.50 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.18
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Bremen GA, LLC and Wells Fargo Bank, NA. (Incorporated
by reference to Exhibit 10.51 to the Companys Post-Effective
Amendment No. 5 to Form S-11 (File No. 333-149290), filed on
November 2, 2009).10.19
    
    
    Deed of Trust, Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Bristol VA, LLC and Alexander
Title Agency Incorporated as Trustee for the benefit of Wells
Fargo Bank, NA. (Incorporated by reference to Exhibit 10.52 to
the Companys Post-Effective Amendment No. 5 to Form S-11
(File No. 333-149290), filed on November 2, 2009).10.20
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Bristol VA, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.53 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.21
    
    
    Deed to Secure Debt and Absolute Assignment of Rents and
Leases and Security Agreement dated as of August 31, 2009 by
and between Cole CB Columbus GA, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.54 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.22
    
    
    Promissory Note dated as August 31, 2009 by and between Cole
CB Columbus GA, LLC and Wells Fargo Bank, NA. (Incorporated by
reference to Exhibit 10.55 to the Companys Post-Effective
Amendment No. 5 to Form S-11 (File No. 333-149290), filed on
November 2, 2009).10.23
    
    
    Deed of Trust, Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Emporia VA, LLC and Alexander
Title Agency Incorporated as Trustee for the benefit of Wells
Fargo Bank, NA. (Incorporated by reference to Exhibit 10.56 to
the Companys Post-Effective Amendment No. 5 to Form S-11
(File No. 333-149290), filed on November 2, 2009).10.24
    
    
    Promissory Note dated as August 31, 2009 by and between Cole
CB Emporia VA, LLC and Wells Fargo Bank, NA. (Incorporated by
reference to Exhibit 10.57 to the Companys Post-Effective
Amendment No. 5 to Form S-11 (File No. 333-149290), filed on
November 2, 2009).10.25
    
    
    Mortgage and Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Fort Mill SC, LLC and Wells Fargo
Bank, NA. (Incorporated by reference to Exhibit 10.58 to the
Companys Post-Effective Amendment No. 5 to Form S-11 (File
No. 333-149290), filed on November 2, 2009).10.26
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Fort Mill SC, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.59 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.27
    
    
    Deed of Trust, Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Greensboro NC, LLC and J. Edward
Blakey as Trustee for the benefit of Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.60 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.28
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Greensboro NC, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.61 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.29
    
    
    Deed of Trust, Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Mebane NC, LLC and J. Edward
Blakey as Trustee for the benefit of Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.62 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.30
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Mebane NC, LLC and Wells Fargo Bank, NA. (Incorporated
by reference to Exhibit 10.63 to the Companys Post-Effective
Amendment No. 5 to Form S-11 (File No. 333-149290), filed on
November 2, 2009).
  32




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##### Table of Contents



Exhibit No.
    
    Description10.31
    
    
    Mortgage and Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Piedmont SC, LLC and Wells Fargo
Bank, NA. (Incorporated by reference to Exhibit 10.64 to the
Companys Post-Effective Amendment No. 5 to Form S-11 (File
No. 333-149290), filed on November 2, 2009).10.32
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Piedmont SC, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.65 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.33
    
    
    Deed of Trust, Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Rocky Mount NC, LLC and J. Edward
Blakey as Trustee for the benefit of Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.66 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.34
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Rocky Mount NC, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.67 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.35
    
    
    Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB San Antonio TX, LLC and J. Edward
Blakey as Trustee for the benefit of Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.68 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.36
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB San Antonio TX, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.69 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.37
    
    
    Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Sherman TX, LLC and J. Edward
Blakey as Trustee for the benefit of Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.70 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.38
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Sherman TX, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.71 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.39
    
    
    Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Waynesboro VA, LLC and Alexander
Title Agency as Trustee Incorporated for the benefit of Wells
Fargo Bank, NA. (Incorporated by reference to Exhibit 10.72 to
the Companys Post-Effective Amendment No. 5 to Form S-11
(File No. 333-149290), filed on November 2, 2009).10.40
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Waynesboro VA, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.73 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).10.41
    
    
    Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement (and Fixture Filing) dated as of August 31,
2009 by and between Cole CB Woodstock VA, LLC and Alexander
Title Agency Incorporated as Trustee for the benefit of Wells
Fargo Bank, NA. (Incorporated by reference to Exhibit 10.74 to
the Companys Post-Effective Amendment No. 5 to Form S-11
(File No. 333-149290), filed on November 2, 2009).10.42
    
    
    Promissory Note dated as of August 31, 2009 by and between
Cole CB Woodstock VA, LLC and Wells Fargo Bank, NA.
(Incorporated by reference to Exhibit 10.75 to the Companys
Post-Effective Amendment No. 5 to Form S-11 (File No.
333-149290), filed on November 2, 2009).31.1
    
    
    Certification of the Chief Executive Officer of the Company
pursuant to Securities Exchange Act Rule 13a-14(a) or
15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    
    Certification of the Chief Financial Officer of the Company
pursuant to Securities Exchange Act Rule 13a-14(a) or
15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).32.1*
    
    
    Certification of the Chief Executive Officer and Chief
Financial Officer of the Company pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (furnished herewith).
 
 *
    
    In accordance with Item 601(b) (32) of Regulation S-K, this Exhibit is not deemed filed for
purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
Such certifications will not be deemed incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant
specifically incorporates it by reference.  33