Table of Contents





|                                   |           | 
|---------------------------------- | --------- | 
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|WASHINGTON, DC 20549              
|                                   |           | 
|                                   |           | 
|                                  
|                                   | FORM 10-Q | 
|                                  
|                                   |           | 

(Mark One)


x 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

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 000-53203

|                                                       |  | 
|------------------------------------------------------ |  | 
|                                                       |  | 
|                                                       |  | 
|AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P.          
|(Exact Name of Registrant as Specified in Its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-5685431                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|8
 Greenway Plaza, Suite 1000                                  |  |                                     
|Houston,
 Texas                                                |  | 77046                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

|                                                                                   
|-----------------------------------------------------------------------------------
|                                                                                   
|713-850-1400                                                                       
|(Registrants Telephone Number, Including Area Code)                               
|                                                                                   
|Not
 applicable                                                                    
|(Former Name, Former Address and Formal Fiscal Year, if Changed Since
 Last Report)
|                                                                                   
|                                                                                   

Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o

Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):

|                           |                      |                                             |                             
|-------------------------- | -------------------- | ------------------------------------------- | ----------------------------
|Large
 accelerated filer o | Accelerated
 filer o | Non-accelerated filer o                     | Smaller
 reporting company x
|                           |                      | (Do not check if smaller reporting company) |                             

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o
No x





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TABLE OF CONTENTS

|                               |           |                                                                                        |      |    | 
|------------------------------ | --------- | -------------------------------------------------------------------------------------- | ---- | -- | 
|                               |           |                                                                                        | Page
|Part I  Financial Information |           |                                                                                       
|                               | Item 1 -  | Financial Statements and Notes                                                         |      | 1  | 
|                               | Item 2 -  | Managements Discussion and Analysis of Financial Condition and
 Results of Operations |      | 18 | 
|                               | Item 3 -  | Quantitative and Qualitative Disclosures About Market Risk                             |      | 23 | 
|                               | Item 4T - | Controls and Procedures                                                                |      | 23 | 
|                               |           |                                                                                        |      |   
|Part II  Other Information    |           |                                                                                        |     
|                               | Item 6 -  | Exhibits                                                                               |      | 23 | 
|Signatures                     |           |                                                                                        | 24   |   
|Exhibit Index                  |           |                                                                                        | 25   |   

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Table of Contents

PART I  FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS.

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

|                                                                                                               |  |                     |        |                    |   |        |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | ------------------ | - | ------ | -
|                                                                                                               |  | September 30,
 2009 |        | December 31,
 2008 |  
|                                                                                                               |  | (unaudited)         |        |                    |  
|                                                                                                              
|ASSETS                                                                                                         |  |                     |        |                    |   |        |  
|Real estate investments at cost:                                                                               |  |                     |        |                    |   |        |  
|Land                                                                                                           |  | $                   | 30,922 |                    | $ | 30,927 |  
|Buildings                                                                                                      |  |                     | 31,012 |                    |   | 30,851 |  
|Tenant improvements                                                                                            |  |                     | 1,280  |                    |   | 1,286  |  
|                                                                                                               |  |                     | 63,214 |                    |   | 63,064 |  
|Less accumulated depreciation and
 amortization                                                                |  |                     | (3,061 | )                  |   | (1,914 | )
|                                                                                                               |  |                     | 60,153 |                    |   | 61,150 |  
|                                                                                                               |  |                     |        |                    |   |        |  
|Investment in non-consolidated entities                                                                        |  |                     | 12,159 |                    |   | 11,680 |  
|Acquired lease intangibles, net                                                                                |  |                     | 1,865  |                    |   | 2,967  |  
|Net real estate investments                                                                                    |  |                     | 74,177 |                    |   | 75,797 |  
|                                                                                                               |  |                     |        |                    |   |        |  
|Cash and cash equivalents                                                                                      |  |                     | 577    |                    |   | 1,011  |  
|Escrow deposits                                                                                                |  |                     | 211    |                    |   | 1,659  |  
|Tenant receivables, net                                                                                        |  |                     | 532    |                    |   | 223    |  
|Accounts receivable - related party                                                                            |  |                     | 55     |                    |   | 739    |  
|Notes receivable - related party                                                                               |  |                     | 131    |                    |   |       |  
|Deferred costs, net                                                                                            |  |                     | 147    |                    |   | 188    |  
|Other assets                                                                                                   |  |                     | 81     |                    |   | 52     |  
|TOTAL ASSETS                                                                                                   |  | $                   | 75,911 |                    | $ | 79,669 |  
|                                                                                                               |  |                     |        |                    |   |        |  
|LIABILITIES AND CAPITAL                                                                                        |  |                     |        |                    |   |        |  
|Liabilities:                                                                                                   |  |                     |        |                    |   |        |  
|Notes payable                                                                                                  |  | $                   | 29,969 |                    | $ | 30,000 |  
|Accounts payable and other liabilities                                                                         |  |                     | 1,264  |                    |   | 369    |  
|Accounts payable - related party                                                                               |  |                     | 133    |                    |   | 302    |  
|Derivative liability                                                                                           |  |                     | 876    |                    |   | 1,257  |  
|Asset retirement obligations                                                                                   |  |                     | 530    |                    |   | 535    |  
|Acquired below-market lease intangibles,
 net                                                                  |  |                     | 1,665  |                    |   | 2,004  |  
|Security deposits                                                                                              |  |                     | 112    |                    |   | 122    |  
|TOTAL LIABILITIES                                                                                              |  |                     | 34,549 |                    |   | 34,589 |  
|                                                                                                               |  |                     |        |                    |   |        |  
|Capital:                                                                                                       |  |                     |        |                    |   |        |  
|Partners capital:                                                                                             |  |                     |        |                    |   |        |  
|General partner                                                                                                |  |                     |       |                    |   |       |  
|Limited partners, 1,988 and 1,991 units
 outstanding at September 30, 2009 and December 31, 2008, respectively |  |                     | 31,187 |                    |   | 34,631 |  
|Accumulated other comprehensive loss                                                                           |  |                     | (461   | )                  |   | (842   | )
|TOTAL PARTNERS CAPITAL                                                                                        |  |                     | 30,726 |                    |   | 33,789 |  
|                                                                                                               |  |                     |        |                    |   |        |  
|Non-controlling interests                                                                                      |  |                     | 10,636 |                    |   | 11,291 |  
|TOTAL CAPITAL                                                                                                  |  |                     | 41,362 |                    |   | 45,080 |  
|                                                                                                               |  |                     |        |                    |   |        |  
|TOTAL LIABILITIES AND CAPITAL                                                                                  |  | $                   | 75,911 |                    | $ | 79,669 |  

See Notes to Consolidated Financial Statements.

1

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per unit data) 
(unaudited)

|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|--------------------------------------------------- |  | -------------------------------- | ------- | ------------------------------- | - | ------- | - | ---- | --------- | - | - | --------- | -
|                                                    |  | Three months ended September 30, |         | Nine months ended September 30, |  
|                                                    |  | 2009                             |         | 2008                            |   | 2009    |   | 2008 |          
|                                                   
|Revenues:                                           |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Rental income from operating leases                 |  | $                                | 1,263   |                                 | $ | 1,308   |   | $    | 3,800     |   | $ | 3,862     |  
|Total revenues                                      |  |                                  | 1,263   |                                 |   | 1,308   |   |      | 3,800     |   |   | 3,862     |  
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Expenses:                                           |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|General and administrative                          |  |                                  | 12      |                                 |   | 39      |   |      | 63        |   |   | 87        |  
|General and administrative - related party          |  |                                  | 54      |                                 |   | 29      |   |      | 248       |   |   | 86        |  
|Asset management fees - related party               |  |                                  | 108     |                                 |   | 108     |   |      | 323       |   |   | 320       |  
|Property expense                                    |  |                                  | 458     |                                 |   | 455     |   |      | 1,295     |   |   | 1,316     |  
|Property management fees - related party            |  |                                  | 44      |                                 |   | 46      |   |      | 140       |   |   | 140       |  
|Legal and professional                              |  |                                  | 63      |                                 |   | 158     |   |      | 199       |   |   | 281       |  
|Depreciation and amortization                       |  |                                  | 730     |                                 |   | 870     |   |      | 2,252     |   |   | 2,549     |  
|Total operating expenses                            |  |                                  | 1,469   |                                 |   | 1,705   |   |      | 4,520     |   |   | 4,779     |  
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Operating loss                                      |  |                                  | (206    | )                               |   | (397    | ) |      | (720      | ) |   | (917      | )
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Other income (expense):                             |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Interest income - related party                     |  |                                  | 1       |                                 |   |        |   |      | 3         |   |   |          |  
|Loss on derivative                                  |  |                                  |        |                                 |   | (39     | ) |      |          |   |   | (415      | )
|Interest and other income                           |  |                                  | 1       |                                 |   | 27      |   |      | 12        |   |   | 254       |  
|Interest expense                                    |  |                                  | (442    | )                               |   | (443    | ) |      | (1,324    | ) |   | (1,225    | )
|Interest expense - related party                    |  |                                  |        |                                 |   | (7      | ) |      |          |   |   | (21       | )
|Equity in losses from non-consolidated
 entities    |  |                                  | (274    | )                               |   | (181    | ) |      | (907      | ) |   | (679      | )
|Margin tax expense                                  |  |                                  | (7      | )                               |   | (8      | ) |      | (15       | ) |   | (28       | )
|Total other income (expense)                        |  |                                  | (721    | )                               |   | (651    | ) |      | (2,231    | ) |   | (2,114    | )
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Net loss, including non-controlling
 interests      |  |                                  | (927    | )                               |   | (1,048  | ) |      | (2,951    | ) |   | (3,031    | )
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Net loss attributable to non-controlling
 interests |  |                                  | 137     |                                 |   | 169     |   |      | 449       |   |   | 914       |  
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Net loss attributable to partners                   |  | $                                | (790    | )                               | $ | (879    | ) | $    | (2,502    | ) | $ | (2,117    | )
|                                                    |  |                                  |         |                                 |   |         |   |      |           |   |   |           |  
|Weighted average units outstanding                  |  |                                  | 1,988   |                                 |   | 1,991   |   |      | 1,989     |   |   | 1,926     |  
|Net loss per unit                                   |  | $                                | (397.38 | )                               | $ | (441.49 | ) | $    | (1,257.92 | ) | $ | (1,099.17 | )

See Notes to
Consolidated Financial Statements.

2

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAPITAL 
For the nine months ended September 30, 2009(in thousands)
(unaudited)

|                                           |  |                   |    |                  |   |                                              |   |                            |      |       |   |        |   |   |        |  
|------------------------------------------ |  | ----------------- | -- | ---------------- | - | -------------------------------------------- | - | -------------------------- | ---- | ----- | - | ------ | - | - | ------ | -
|                                           |  | Partners Capital |    |                  |   |                                              |  
|                                           |  | General Partner   |    | Limited Partners |   | Accumulated Other
 Comprehensive Gain (Loss) |   | Non-Controlling
 Interests |      | Total |  
|Balance at December 31, 2008               |  | $                 |   |                  | $ | 34,631                                       |   | $                          | (842 | )     | $ | 11,291 |   | $ | 45,080 |  
|                                           |  |                   |    |                  |   |                                              |   |                            |      |       |   |        |   |   |        |  
|Redemptions                                |  |                   |   |                  |   | (62                                          | ) |                            |     |       |   |       |   |   | (62    | )
|Net loss (1)                               |  |                   | 9  |                  |   | (2,511                                       | ) |                            |     |       |   | (449   | ) |   | (2,951 | )
|Distributions                              |  |                   | (9 | )                |   | (871                                         | ) |                            |     |       |   |       |   |   | (880   | )
|Distributions to non-controlling interests |  |                   |   |                  |   |                                             |   |                            |     |       |   | (206   | ) |   | (206   | )
|Decrease in fair value of derivative       |  |                   |   |                  |   |                                             |   |                            | 381  |       |   |       |   |   | 381    |  
|                                          
|Balance at September 30, 2009              |  | $                 |   |                  | $ | 31,187                                       |   | $                          | (461 | )     | $ | 10,636 |   | $ | 41,362 |  

|    |                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The allocation of net loss
 includes a curative allocation to increase the General Partners capital
 account by $34 for the nine months ended September 30, 2009. The cumulative
 curative allocation since inception of the Partnership is $124. The
 Partnership Agreement provides that no partner shall be required to fund a
 deficit balance in their capital account.

See Notes to Consolidated
Financial Statements.

3

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Table of Contents

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) 
(unaudited)

|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ---- | - | ------- | -
|                                                                                                                                                                                                                          |  | Nine months ended September 30, |       
|                                                                                                                                                                                                                          |  | 2009                            |        | 2008 |  
|Cash flows from operating activities:                                                                                                                                                                                     |  |                                 |        |      |   |         |  
|Net loss, including non-controlling
 interests                                                                                                                                                                            |  | $                               | (2,951 | )    | $ | (3,031  | )
|Adjustments to reconcile net loss to net
 cash provided by (used in) operating activities:                                                                                                                                |  |                                 |        |      |   |         |  
|Bad debt expense                                                                                                                                                                                                          |  |                                 | 57     |      |   |        |  
|Loss from non-consolidated entities                                                                                                                                                                                       |  |                                 | 907    |      |   | 679     |  
|Depreciation and amortization                                                                                                                                                                                             |  |                                 | 2,252  |      |   | 2,549   |  
|Amortization of above- and below-market
 leases, net                                                                                                                                                                      |  |                                 | (314   | )    |   | (326    | )
|Amortization of loan acquisition costs                                                                                                                                                                                    |  |                                 | 70     |      |   | 72      |  
|Loss on derivative                                                                                                                                                                                                        |  |                                 |       |      |   | 415     |  
|Increase in tenant receivables                                                                                                                                                                                            |  |                                 | (284   | )    |   | (53     | )
|Decrease in accounts receivable - related
 party                                                                                                                                                                          |  |                                 | 474    |      |   | 151     |  
|Increase in deferred costs                                                                                                                                                                                                |  |                                 | (38    | )    |   | (6      | )
|Decrease (increase) in other assets                                                                                                                                                                                       |  |                                 | 174    |      |   | (505    | )
|Increase in accounts payable and other
 liabilities                                                                                                                                                                       |  |                                 | 814    |      |   | 4       |  
|Decrease in accounts payable - related
 party                                                                                                                                                                             |  |                                 | (169   | )    |   | (1,864  | )
|Decrease in asset retirement obligations                                                                                                                                                                                  |  |                                 | (5     | )    |   |        |  
|(Decrease) increase in security deposits                                                                                                                                                                                  |  |                                 | (10    | )    |   | 38      |  
|Net cash provided by (used in) operating activities                                                                                                                                                                       |  |                                 | 977    |      |   | (1,877  | )
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Cash flows from investing activities:                                                                                                                                                                                     |  |                                 |        |      |   |         |  
|Improvements to real estate                                                                                                                                                                                               |  |                                 | (170   | )    |   | (287    | )
|Acquisition of investment properties                                                                                                                                                                                      |  |                                 |       |      |   | (10,550 | )
|Increase in notes receivable - related
 party                                                                                                                                                                             |  |                                 | (642   | )    |   |        |  
|Payments received on notes receivable -
 related party                                                                                                                                                                    |  |                                 | 181    |      |   |        |  
|Investment in non-consolidated entities                                                                                                                                                                                   |  |                                 | (846   | )    |   | (4,818  | )
|Reimbursement of earnest money deposits                                                                                                                                                                                   |  |                                 | 1,245  |      |   | 150     |  
|Net cash used in investing activities                                                                                                                                                                                     |  |                                 | (232   | )    |   | (15,505 | )
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Cash flows from financing activities:                                                                                                                                                                                     |  |                                 |        |      |   |         |  
|Payments on notes payable                                                                                                                                                                                                 |  |                                 | (31    | )    |   |        |  
|Proceeds from notes payable - related party                                                                                                                                                                               |  |                                 |       |      |   | 551     |  
|Contributions                                                                                                                                                                                                             |  |                                 |       |      |   | 4,899   |  
|Limited optional redemptions                                                                                                                                                                                              |  |                                 | (62    | )    |   |        |  
|Issuance costs                                                                                                                                                                                                            |  |                                 |       |      |   | (600    | )
|Loan acquisition costs                                                                                                                                                                                                    |  |                                 |       |      |   | (36     | )
|Distributions                                                                                                                                                                                                             |  |                                 | (880   | )    |   | (2,747  | )
|Distributions to non-controlling interests                                                                                                                                                                                |  |                                 | (206   | )    |   |        |  
|Net cash (used in) provided by financing
 activities                                                                                                                                                                      |  |                                 | (1,179 | )    |   | 2,067   |  
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Net decrease in cash and cash equivalents                                                                                                                                                                                 |  |                                 | (434   | )    |   | (15,315 | )
|Cash and cash equivalents, beginning of period                                                                                                                                                                            |  |                                 | 1,011  |      |   | 19,349  |  
|Cash and cash equivalents, beginning of
 period for previously non-consolidated entities                                                                                                                                  |  |                                 |       |      |   | 535     |  
|Cash and cash equivalents, beginning of
 period, adjusted for entities consolidated during the 2008 period                                                                                                                |  |                                 | 1,011  |      |   | 19,884  |  
|Cash and cash equivalents, end of period                                                                                                                                                                                  |  | $                               | 577    |      | $ | 4,569   |  
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Supplemental schedule of cash flow
 information:                                                                                                                                                                          |  |                                 |        |      |   |         |  
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Cash paid during the period for:                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Interest                                                                                                                                                                                                                  |  | $                               | 1,250  |      | $ | 1,153   |  
|Taxes                                                                                                                                                                                                                     |  | $                               | 25     |      | $ | 11      |  
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|Supplemental schedule of noncash investing
 and financing activities:                                                                                                                                                     |  |                                 |        |      |   |         |  
|                                                                                                                                                                                                                          |  |                                 |        |      |   |         |  
|During 2009, accounts receivable - related party of $168,000 from
 Shadow Creek Ranch and $42,000 from Cambridge & Holcombe were converted
 to equity, causing an increase in our investment in non-consolidated entities
|                                                                                                                                                                                                                         
|During 2009, notes receivable - related party of $330,000 from Casa
 Linda was converted to equity, causing an increase in our investment in
 non-consolidated entities.                                                 

See Notes to Consolidated Financial Statements.

4

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Table of Contents

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009(unaudited)

|   |                                                 
|-- | ------------------------------------------------
|1. | DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

AmREIT Monthly
Income & Growth Fund IV, L.P., a Delaware limited partnership (hereinafter
referred to as the Partnership, MIG IV, we, us or our), was formed on
October 10, 2006 to acquire, develop and operate, directly or indirectly
through joint venture arrangements, a portfolio of commercial real estate consisting
primarily of multi-tenant shopping centers and mixed-use developments. The
General Partner of the Partnership is AmREIT Monthly Income & Growth IV
Corporation, a Delaware corporation (the General Partner), which is a
subsidiary of AmREIT, a non-traded Maryland real estate investment trust that
files reports with the Securities and Exchange Commission (SEC). The General
Partner maintains its principal place of business in Houston, Texas.

We commenced
our principal operations on December 8, 2006 when we acquired our first
interest in a property. On January 12, 2007, we accepted subscriptions for the
minimum offering of $1.0 million pursuant to the terms of our Offering
Memorandum dated November 15, 2006 (the Offering Memorandum) and issued the
initial 40 limited partnership units (the Units). We closed the offering on
March 31, 2008 when we had received $49.7 million from the sale of 1,991 Units.
At September 30, 2009, our investments included a wholly-owned property
comprising approximately 36,000 square feet of gross leasable area, two
properties in which we own controlling interests comprising approximately
288,000 square feet of gross leasable area and three properties in which we own
a non-controlling interest through joint ventures comprising approximately
918,000 square feet of gross leasable area.

Our Units were
sold pursuant to exemptions from registration under the Securities Act of 1933,
as amended (the Securities Act), and are not currently listed on a national
exchange. These Units will be transferable only if we register them under
applicable securities laws (such registration is not expected) or pursuant to
an exemption under the Securities Act and applicable state securities laws. We
do not anticipate that any public market for the Units will develop.

Projected cash
sources and uses for the Partnerships 2010 fiscal year indicate certain
periods of cash shortfalls within the twelve month period; however, we believe
that we will be able to generate sufficient liquidity to satisfy any cash
shortfalls through (1) managing the timing of forecasted capital expenditures
related to the lease-up of properties, (2) potential joint venture equity
investments in existing non-consolidated entities (3) financings of
unencumbered properties and (4) sales of certain of our investments in
non-consolidated entities. However, no assurance can be given that we will be
able to generate such liquidity. In the event that we are unable to generate
sufficient liquidity, we may be forced to sell one or more properties at a time
when it is disadvantageous to do so, potentially resulting in losses on
disposition of those properties. See Note 5 for discussion of our debt maturing in 2010.

During the
past several months, the United States has experienced an unprecedented
business downturn, coupled with a substantial curtailment of available debt
financing and a virtual shutdown of equity capital markets, particularly in the
real estate sector. While we expect to generate sufficient cash flow from
operations in 2009 to meet our contractual obligations, a significant
additional deterioration in the national economy, the bankruptcy or insolvency
of one or more of our large tenants could cause our 2009 cash resources to be
insufficient to meet our obligations. If necessary, we have the ability to
defer capital improvements and to defer payment of certain operating costs,
including property taxes, until cash resources are available. Effective July
15, 2009, we suspended all distributions in an effort to conserve cash and to
protect partners principal. As we have numerous projects that are mid-stream
in redevelopment, we are conserving cash from operations to ensure that we have
the ability to fund capital improvements, tenant improvements and leasing
commissions, and to meet our obligations, including debt service.

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|   |                                           
|-- | ------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF
PRESENTATION

Our financial
records are maintained on the accrual basis of accounting whereby revenues are
recognized when earned and expenses are recorded when incurred. The
consolidated financial statements include our accounts as well as the accounts
of any wholly- or majority-owned subsidiaries in which we have a controlling
financial interest (see Note 10). Investments in joint ventures and
partnerships in which we have the ability to exercise significant influence but
do not exercise financial and operating control are accounted for using the
equity method (see Note 3). The significant accounting policies of our
non-consolidated entities are consistent with those of our subsidiaries in
which we have a controlling financial interest. As applicable, we consolidate
certain joint ventures and partnerships in which we own less than a 100% equity
interest if the entity is a variable interest entity and we are the primary
beneficiary (as defined in ASC 810, Consolidation).
All significant inter-company accounts and transactions have been eliminated in
consolidation.

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

The
consolidated financial statements included in this report are unaudited;
however, amounts presented in the consolidated balance sheet as of December 31,
2008 are derived from our audited financial statements as of that date. In our
opinion, all adjustments necessary for a fair presentation of such financial
statements have been included. Such adjustments consisted of normal recurring
items.

REVENUE RECOGNITION

We lease space
to tenants under agreements with varying terms. All of the leases are accounted
for as operating leases and, although certain leases of the properties provide
for tenant occupancy during periods for which no rent is due and/or increases
or decreases in the minimum lease payments over the terms of the leases,
revenue is recognized on a straight-line basis over the terms of the individual
leases. In most cases, revenue recognition under a lease begins when the lessee
takes possession of or controls the physical use of the leased asset.
Generally, possession or control occurs on the lease commencement date. We have
determined that we are the owner of any tenant improvements that we fund
pursuant to the lease terms. In cases where significant tenant improvements are
made prior to lease commencement, the leased asset is considered to be finished
space, and revenue recognition therefore begins when the improvements are
substantially complete.

Accrued rents
are included in tenant receivables. Revenue from tenant reimbursements of
taxes, maintenance expenses and insurance is recognized in the period the
related expense is recorded. Additionally, certain of the lease agreements
contain provisions that grant additional rents based on tenants sales volumes
(contingent or percentage rent). Percentage rents are recognized when the
tenants achieve the specified targets as defined in their lease agreements. No
percentage rents were recognized during the nine months ended September 30,
2009 and 2008. We recognize lease termination fees in the period that the lease
is terminated and collection of the fees is reasonably assured. Upon early
lease termination, we provide for losses related to unrecovered intangibles and
other assets. During the nine months ended September 30, 2009 and 2008, we
recognized no lease termination fees.

REAL ESTATE
INVESTMENTS

Development Properties
 Land, buildings and improvements are recorded at cost. Expenditures related
to the development of real estate are carried at cost which includes
capitalized carrying charges, acquisition costs and development costs. Carrying
charges, primarily interest, real estate taxes and loan acquisition costs, and
direct and indirect development costs related to buildings under construction,
are capitalized as part of construction in progress. The capitalization of such
costs ceases at the earlier of one year from the date of completion of major
construction or when the property, or any completed portion, becomes available
for occupancy.

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Acquired Properties and Acquired Lease
Intangibles  We account for operating real estate
acquisitions pursuant to ASC 805, Business
Combinations. Accordingly, we allocate the purchase price of the
acquired operating properties to land, building and improvements, identifiable
intangible assets and acquired liabilities based on their respective fair
values. Identifiable intangibles include amounts allocated to acquired above-
and below-market leases, the value of in-place leases and customer relationship
value, if any. We determine fair value based on estimated cash flow projections
that utilize appropriate discount and capitalization rates and available market
information. Estimates of future cash flows are based on a number of factors
including the historical operating results, known trends and specific market
and economic conditions that may affect the property. Factors considered by
management in our analysis of determining the as-if-vacant property value
include an estimate of carrying costs during the expected lease-up periods considering
market conditions and costs to execute similar leases. In estimating carrying
costs, management includes real estate taxes, insurance and estimates of lost
rentals at market rates during the expected lease-up periods, tenant demand and
other economic conditions. Management also estimates costs to execute similar
leases including leasing commissions, tenant improvements, legal and other
related expenses. Intangibles related to above- (and below-) market leases and
in-place lease value are recorded as acquired lease intangibles (liabilities)
and are amortized as an adjustment to rental income or amortization expense, as
appropriate, over the remaining terms of the underlying leases. Below market
leases include fixed-rate renewal periods. Premiums or discounts on acquired
above and below market debt are amortized to interest expense over the
remaining term of such debt.

We expense
acquisition costs associated with operating properties as incurred in
accordance with ASC 805. Prior to the adoption of the guidance, such costs were
capitalized and expensed if and when the acquisition became no longer probable.
During the nine months ended September 30, 2009 and 2008, we expensed
acquisition costs of $7,000 and $80,000, respectively. We did not capitalize
any interest or taxes during the same periods.

Depreciation 
Depreciation is computed using the straight-line method over an estimated
useful life of up to 36 years for buildings, up to 11 years for site
improvements and over the term of lease for tenant improvements.

Properties Held for Sale
 Properties will be classified as held for sale if we have decided to market
the property for immediate sale in its present condition with the belief that
the sale will be completed within one year. Properties held for sale will be
carried at the lower of cost or fair value less cost to sell. Depreciation and
amortization are suspended during the held for sale period. As of September 30,
2009 and December 31, 2008, we had no properties held for sale.

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

ENVIRONMENTAL
EXPOSURES

We are subject
to numerous environmental laws and regulations as they apply to real estate,
including those addressing chemicals used by the dry cleaning industry, the
existence of asbestos in older shopping centers, and underground petroleum
storage tanks. We believe that the tenants occupying our properties who
currently operate dry cleaning plants or gas stations do so in accordance with
current laws and regulations. We believe that the ultimate disposition of
currently known environmental matters will not have a material affect on our
financial position, liquidity, or operations (see Note 11). However, we can
give no assurance that existing environmental studies with respect to the
shopping centers have revealed all potential environmental liabilities; that
any previous owner, occupant or tenant did not create any material
environmental condition not known to it; that the current environmental
condition of the shopping centers will not be affected by tenants and
occupants, by the condition of nearby properties, or by unrelated third
parties; or that changes in applicable environmental laws and regulations or
their interpretation will not result in additional environmental liability to
the Partnership.

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RECEIVABLES AND
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

Tenant Receivables
 Included in tenant receivables are base rents, tenant reimbursements and
adjustments attributable to recording rents on a straight-line basis. An
allowance for the uncollectible portion of accrued rents and accounts
receivable is determined based upon customer credit-worthiness (including
expected recovery of our claim with respect to any tenants in bankruptcy), historical
bad debt levels and current economic trends. Bad debt expenses and any related
recoveries related to tenant receivables are included in property expense. As
of September 30, 2009 and December 31, 2008, our allowance for uncollectible
accounts related to our tenant receivables was $57,000 and $0, respectively.

Accounts Receivable - Related Party
 Included in accounts receivable - related party are short-term cash advances
provided to certain of our affiliated investment entities primarily for their
working capital needs. These cash advances are due upon demand.

DERIVATIVE FINANCIAL
INSTRUMENTS

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

ASC 815
requires that changes in fair value of derivatives that qualify as cash flow
hedges be recognized in other comprehensive income (OCI) while the
ineffective portion of the derivatives change in fair value be recognized in
the statement of operations as interest expense. Upon the settlement of a
hedge, gains and losses associated with the transaction are recorded in OCI and
amortized over the underlying term of the hedge transaction. We assess, both at
inception of the hedge and on an ongoing basis, whether the derivatives that
are used in hedging transactions are highly effective in offsetting changes in
the cash flows of the hedged items. In assessing the hedge, we use standard
market conventions and techniques such as discounted cash flow analysis, option
pricing models and termination costs at each balance sheet date. All methods of
assessing fair value result in a general approximation of value, and such value
may never actually be realized. See Note 6 for further discussion regarding our
derivative financial instruments.

DEFERRED COSTS

Deferred costs
include deferred leasing costs and loan acquisition costs, net of amortization.
Loan acquisition costs are incurred in obtaining financing and are amortized to
interest expense over the term of the debt agreements using a method that
approximates the effective interest method. Deferred leasing costs consist of
external commissions associated with leasing our properties and are amortized
to depreciation and amortization expense on a straight-line basis over the
lease term. Accumulated amortization related to loan acquisition costs totaled
$191,000 and $121,000 as of September 30, 2009 and December 31, 2008,
respectively. Accumulated amortization related to leasing costs totaled $13,000
and $5,000 as of September 30, 2009 and December 31, 2008, respectively.

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INCOME TAXES

Federal  No
provision for U.S. federal income taxes is included in the accompanying
consolidated financial statements. As a partnership, we are not subject to
federal income tax, and the federal tax effect of our activities is passed
through to our partners.

State In May
2006, the State of Texas adopted House Bill 3, which modified the states
franchise tax structure, replacing the previous tax based on capital or earned
surplus with one based on margin (often referred to as the Texas Margin Tax)
effective with franchise tax reports filed on or after January 1, 2007. The
Texas Margin Tax is computed by applying the applicable tax rate (1% for the Partnership)
to the profit margin, which, generally, will be determined for us as total
revenue less a 30% standard deduction. Although House Bill 3 states that the
Texas Margin Tax is not an income tax, the Partnership believes that ASC 740,Income Taxes, applies to the Texas Margin
Tax. We have recorded margin tax provisions of approximately $15,000 and
$28,000 for the Texas Margin Tax for the nine months ended September 30, 2009
and 2008, respectively.

USE OF ESTIMATES

The
preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

FAIR VALUE OF
FINANCIAL INSTRUMENTS

We account for
assets and liabilities measured at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.
ASC 820 emphasizes that fair value is a market-based measurement, not an
entity-specific measurement. Therefore, a fair value measurement should be
determined based on the assumptions that market participants would use in
pricing the asset or liability. As a basis for considering market participant
assumptions in fair value measurements, ASC 820 establishes a fair value
hierarchy that distinguishes between market participant assumptions based on
market data obtained from sources independent of the reporting entity
(observable inputs that are classified within Levels 1 and 2 of the hierarchy)
and the reporting entitys own assumptions about market participant assumptions
(unobservable inputs classified within Level 3 of the hierarchy). The three
levels of inputs used to measure fair value are as follows:

| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1
 Inputs  Quoted prices (unadjusted) in active markets for identical assets or
 liabilities that the Company has the ability to access.                                     
| |   |                                                                                                                                                                                     
| |  | Level 2
 Inputs  Inputs other than quoted prices included in Level 1 that are
 observable for the asset or liability, either directly or indirectly.                               
| |   |                                                                                                                                                                                     
| |  | Level 3
 Inputs  Unobservable inputs for the asset or liability, which are typically
 based on the Companys own assumptions, as there is little, if any, related
 market activity.

Derivative Financial Instruments
 In determining the fair value of our derivative instrument, we consider
whether credit valuation adjustments are necessary to appropriately reflect
both our own nonperformance risk and the respective counterpartys
nonperformance risk in the fair value measurements. Although we have determined
that the majority of the inputs used to value our derivatives fall within Level
2 of the fair value hierarchy, the credit valuation assumptions associated with
its derivatives utilize Level 3 inputs, such as estimates of current credit
spreads to evaluate the likelihood of default by us and our counterparties.
However, as of September 30, 2009, we have assessed the significance of the
impact of the credit valuation adjustments on the overall valuation of our
derivative positions and have determined that the credit valuation adjustments
are not significant to the overall valuation of our derivatives. As a result,
we have determined that our derivative valuations in their entirety are
classified in Level 2 of the fair value hierarchy.

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The following
table presents our assets and liabilities and related valuation inputs within
the fair value hierarchy utilized to measure fair value as of September 30,
2009 (in thousands):

|                      |  |         |   |         |   |         |  |   |   | 
|--------------------- |  | ------- | - | ------- | - | ------- |  | - | - | 
|                      |  | Level 1 |   | Level 2 |   | Level 3 | 
|Derivative
 Liability |  | $       |  |         | $ | 876     |  | $ |  | 

Notes Payable 
As of September 30, 2009 and December 31, 2008, the carrying value of debt
obligations associated with our consolidated entities was approximately $30
million, $6.2 million of which represents a fixed-rate obligation with an
estimated fair value of $5.9 million and $6.3 million, respectively, based on a
discounted cash flow analysis using current market rates of interest. As of
September 30, 2009 and December 31, 2008, the estimated fair value of our $23.8
million variable-rate obligation approximated $23.3 million and $23.2 million,
respectively, based on a discounted cash flow analysis using current market
rates of interest.

NEW ACCOUNTING
STANDARDS

In December
2007, the FASB issued an update to ASC 805. The amended guidance contained in
ASC 805 changes the accounting for business combinations. Under the amended
guidance, an acquiring entity is required to recognize all the assets acquired
and liabilities assumed in a transaction at the acquisition-date fair value
with limited exceptions. The amended guidance applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. We
adopted the provisions of ASC 805 on January 1, 2009. Such adoption did not
have an impact on our results of operations, cash flows or financial condition
as we did not acquire any operating properties or entities during the nine
months ended September 30, 2009.

In December
2007, the FASB issued an update to ASC 810, Consolidation.
The amended guidance contained in ASC 810 establishes accounting and reporting
standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also clarifies that a non-controlling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. The
amended guidance is effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. ASC 810 requires
retroactive adoption of the presentation and disclosure requirements for
existing non-controlling interests. All other requirements of the guidance
shall be applied prospectively. Our adoption of the guidance caused our
partners capital to increase as a result of transferring the non-controlling interest
in our consolidated subsidiaries from the mezzanine section of our balance
sheet into equity.

In March 2008,
the FASB issued an update to ASC 815, Derivatives
and Hedging. The amended guidance contained in ASC 815 requires
enhanced disclosures about an entitys derivative and hedging activities. Under
the amended guidance, entities are required to provide enhanced disclosures
about how and why an entity uses derivative instruments, and related hedged
items affect an entitys financial position, financial performance, and cash
flows. The amended guidance became effective for fiscal years and interim
periods beginning after November 15, 2008. The adoption of this guidance did
not have a material effect on our results of operations or financial position.

In April 2008,
the FASB issued an update to ASC 350, Intangibles.
The amended guidance revises the factors that should be considered in
developing renewal or extension assumptions determining the useful life of a
recognized intangible asset. The amended guidance will be effective for
intangibles acquired during fiscal years beginning after December 15, 2008. The
adoption had no effect as we have not acquired any intangibles during the
current year.

In May 2009,
the FASB issued ASC 855, Subsequent Events.
This guidance establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. We adopted ASC 855 in the second
quarter of 2009 and evaluated all events or transactions through November 13,
2009. During this period, we did not have any material subsequent events that
impacted our consolidated financial statements.

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In June 2009,
the FASB issued Statement No. 167, Amendments
to FASB Interpretation No. 46(R) (SFAS No. 167), which amends the
consolidation guidance applicable to variable interest entities. The amendments
will significantly affect the overall consolidation analysis under FASB
Interpretation No. 46(R), Consolidation of Variable
Interest Entitiesan interpretation of ARB No. 51 and changes the
way entities account for securitizations and special purpose entities as a
result of the elimination of the QSPE concept in SFAS No. 166. SFAS No. 167 is
effective as of the beginning of the first fiscal year that begins after
November 15, 2009 and early adoption is prohibited. Management is currently
evaluating the impact on our consolidated financial statements of adopting SFAS
No. 167.

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

CASH AND CASH
EQUIVALENTS

We consider
all highly-liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents. Cash and cash equivalents consist of
demand deposits at commercial banks and money market funds.

INTEREST

Interest is
charged to interest expense as it accrues. No interest has been capitalized on
our wholly owned property since the inception of the Partnership.

SEGMENT REPORTING

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

RECLASSIFICATIONS

Certain prior
period amounts in the consolidated financial statements have been reclassified
to conform to the presentation used in the current period consolidated
financial statements.

|   |                                         
|-- | ----------------------------------------
|3. | INVESTMENTS IN NON-CONSOLIDATED ENTITIES

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

| |   |                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In December
 2006, we acquired a 50% interest in AmREIT Casa Linda, LP which owns Casa
 Linda Plaza, a multi-tenant retail property located in Dallas, Texas with a
 combined gross leasable area of approximately 325,000 square feet. The
 remaining 50% is owned by AmREIT Monthly Income & Growth Fund III, Ltd.,
 an affiliated AmREIT entity.
| |   |                                                                                                                                                                                                                                                                                                                                                    
| |  | In December
 2007, we acquired a 50% interest in Cambridge & Holcombe, LP which owns
 2.02 acres of raw land that may be developed, sold or contributed to a joint
 venture in the future. The property is located adjacent to the Texas Medical
 Center in Houston, Texas. The remaining 50% is owned by an unaffiliated third
 party.            

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| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In February
 2008, we acquired a 10% interest in Shadow Creek Holding Company LLC which
 owns Shadow Creek Ranch, a multi-tenant retail property located in Pearland,
 Texas with a combined gross leasable area of approximately 593,000 square
 feet. The remaining 90% is owned by an unaffiliated third party (80%) and
 REITPlus, Inc. (10%), an affiliated AmREIT entity.

We report our
investments in these three entities using the equity method of accounting due
to our ability to exercise significant influence over them. Combined condensed
financial information for the underlying investee entities (at 100%) is
summarized for the three and nine months ended September 30, 2009 and 2008 as
follows (in thousands):

|                               |  |                                   |        |                                  |   |        |   |      |        |   |   |        |  
|------------------------------ |  | --------------------------------- | ------ | -------------------------------- | - | ------ | - | ---- | ------ | - | - | ------ | -
|                               |  | Three months ended
 September 30, |        | Nine months ended
 September 30, |  
|                               |  | 2009                              |        | 2008                             |   | 2009   |   | 2008 |       
|Revenue                        |  | $                                 | 3,016  |                                  | $ | 2,590  |   | $    | 8,831  |   | $ | 6,111  |  
|Depreciation
 and amortization |  |                                   | (1,592 | )                                |   | (933   | ) |      | (4,419 | ) |   | (2,531 | )
|Interest
 expense              |  |                                   | (1,450 | )                                |   | (1,456 | ) |      | (4,342 | ) |   | (3,743 | )
|Net loss                       |  |                                   | (1,146 | )                                |   | (879   | ) |      | (3,467 | ) |   | (2,579 | )

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

In accordance
with ASC 805 we have identified and recorded the value of acquired lease
intangibles at the property acquisition date. Such intangibles include the
value of acquired in-place leases and above and below market leases. Acquired
lease intangible assets (in-place leases and above-market leases) are amortized
over the leases remaining terms, which range from two months to approximately
thirteen years. The amortization of above-market leases is recorded as a
reduction of rental income, and the amortization of in-place leases is recorded
to amortization expense. The amortization expense related to in-place leases
was approximately $1.1 million and $1.4 million for the nine months ended
September 30, 2009 and 2008, respectively. We recorded disposals of
in-place leases  of $239,000 and $42,000 for the nine months ended September 30,
2009 and 2008, respectively, related to lease expirations.  The amortization of above-market leases, which was
recorded as a reduction of rental income, was approximately $25,000 and $42,000
for the nine months ended September 30, 2009 and 2008, respectively. Acquired
lease intangible liabilities (below-market leases) are accreted over the leases
remaining non-cancelable lease term plus any fixed rate renewal options, if
applicable, which range from two months to approximately thirteen years.
Accretion of below-market leases was approximately $339,000 and $368,000 for
the nine months ended September 30, 2009 and 2008, respectively. Such accretion
is recorded as an increase to rental income. We recorded disposals of
below-market leases of $35,000 and $0 for the nine months ended September 30,
2009 and 2008, respectively, related to lease expirations.

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

|                                                |  |                     |        |                    |   |        |  
|----------------------------------------------- |  | ------------------- | ------ | ------------------ | - | ------ | -
|                                                |  | September 30,
 2009 |        | December 31,
 2008 |  
|Acquired lease intangible assets:               |  |                     |        |                    |   |        |  
|In-place leases                                 |  | $                   | 4,765  |                    | $ | 5,004  |  
|In-place leases  accumulated amortization      |  |                     | (2,998 | )                  |   | (2,160 | )
|Above-market leases                             |  |                     | 193    |                    |   | 193    |  
|Above-market leases  accumulated
 amortization |  |                     | (95    | )                  |   | (70    | )
|Acquired lease intangibles, net                 |  | $                   | 1,865  |                    | $ | 2,967  |  
|                                                |  |                     |        |                    |   |        |  
|Acquired lease intangible liabilities:          |  |                     |        |                    |   |        |  
|Below-market leases                             |  | $                   | 2,605  |                    | $ | 2,640  |  
|Below-market leases  accumulated
 amortization |  |                     | (940   | )                  |   | (636   | )
|Acquired below-market lease intangibles,
 net   |  | $                   | 1,665  |                    | $ | 2,004  |  

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

Our
outstanding debt at September 30, 2009 consisted of two loans  a fixed-rate
mortgage loan of $6.2 million secured by the Village on the Green property
which matures in April 2017 and a variable-rate mortgage loan of $23.8 million
secured by the Woodlake Square property which matures in September 2010,
carries an interest rate of LIBOR plus 1.35% (1.61% at September 30, 2009) and
requires monthly interest-only payments. We have entered into an interest rate
swap agreement which fixes the interest rate at 5.465% on our $23.8 million
variable-rate mortgage loan.

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

Interest-only
loans are generally due in full at maturity. Our mortgage loans are secured by
real estate properties and may be prepaid but could be subject to a
yield-maintenance premium or prepayment penalty. As of September 30, 2009, the
weighted-average interest rate on our fixed-rate debt is 5.5%, and the weighted
average remaining life of such debt is 7.5 years.

As of September 30, 2009, scheduled principal repayments on notes payable were as
follows (in thousands):

|                            |  |                            |     |                     |   |               |  |   |        | 
|--------------------------- |  | -------------------------- | --- | ------------------- | - | ------------- |  | - | ------ | 
|Scheduled
 Payments by Year |  | ScheduledPrincipalPayments |     | Term-LoanMaturities |   | TotalPayments | 
|2009                        |  | $                          | 20  |                     | $ |              |  | $ | 20     | 
|2010                        |  |                            | 81  |                     |   | 23,800        |  |   | 23,881 | 
|2011                        |  |                            | 86  |                     |   |              |  |   | 86     | 
|2012                        |  |                            | 90  |                     |   |              |  |   | 90     | 
|2013                        |  |                            | 96  |                     |   |              |  |   | 96     | 
|Thereafter                  |  |                            | 353 |                     |   | 5,443         |  |   | 5,796  | 
|Total                       |  | $                          | 726 |                     | $ | 29,243        |  | $ | 29,969 | 

We serve as
the guarantor of debt in the amount of $6.2 million that is the primary
obligation of our wholly-owned subsidiary. Additionally, we serve as the
guarantor of debt in the amount of $68.3 million that is the primary obligation
of our joint ventures.

|   |                                 
|-- | --------------------------------
|6. | DERIVATIVE FINANCIAL INSTRUMENTS

We use
derivative instruments primarily to manage exposures to interest rate risks. In
order to manage the volatility relating to interest rate risk, we may enter
into interest rate swaps from time to time. We do not use derivative financial
instruments for trading or speculative purposes. In December 2007, Woodlake
Square entered into an interest rate swap with a notional amount of $23.8
million and a fixed rate of 5.465% to hedge the interest rate risk on the $23.8
million variable-rate loan that was placed in conjunction with the 2007
acquisition of the Woodlake Square shopping center. The fair value of the swap
was a liability of $876,000 at September 30, 2009. The swap settles monthly
with an amount paid to or received from our counterparty upon settlement being
recorded as an adjustment to interest expense. For the nine months ended
September 30, 2009 and 2008, we paid $642,000 and $165,000, respectively,
related to this swap which is included in interest expense.

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

We have
designated our interest rate swap as a hedge for financial reporting purposes.
Accordingly, gains or losses resulting from changes in the value of our
derivatives will be recorded as an adjustment to our partners capital. We could
be exposed to losses in the event of nonperformance by the counterparties.

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|   |               
|-- | --------------
|7. | CONCENTRATIONS

As of September 30, 2009 and December 31, 2008, each of our three consolidated
properties individually comprises greater than 12% of our consolidated total
assets. Consistent with our strategy of investing in areas that we know well,
two of our three properties are located in the Houston metropolitan area. These
Houston properties represent 79% and 86% of our rental income for the nine
months ended September 30, 2009 and 2008, respectively. Houston is Texas
largest city and the fourth largest city in the United States.

Following are the base rents generated by our top tenants during the nine months ended
September 30, 2009 and 2008 (in thousands):

|            |  |                                 |       |      |   |       | 
|----------- |  | ------------------------------- | ----- | ---- | - | ----- | 
|            |  | Nine months ended September 30, |      
|Tenant      |  | 2009                            |       | 2008 |  
|Borders     |  | $                               | 626   |      | $ | 643   | 
|Walgreens   |  |                                 | 249   |      |   | 249   | 
|Randalls   |  |                                 | 182   |      |   | 182   | 
|Jos A. Bank |  |                                 | 155   |      |   | 155   | 
|Paesanos   |  |                                 | 144   |      |   | 96    | 
|            |  | $                               | 1,356 |      | $ | 1,325 | 

As of September 30, 2009, Borders, Inc. (Borders) constitutes our
largest tenant as determined by base rents paid. Accordingly, we are dependent upon the continued occupancy of Borders, and any termination or non-renewal by
Borders of its lease could materially impact our liquidity and cash flows. Borders existing lease expires in January 2010, and we do not expect Borders to
renew their lease. Accordingly, our 2010 forecasted cash flows, as addressed in Note 1, assume no rental income from Borders for the 2010 period. We expected
this impending lease expiration when we acquired the property and believe that we will be able to recover its carrying value based on our property redevelopment
plan. We are actively identifying potential lessees to occupy the premises as part of this plan. The closing of any new leases would be subject to the
negotiation and execution of definitive lease agreements and the fulfillment of customary conditions. No assurance can be given that a new lease would be
procured on the same terms as the Borders lease, or at all.

|   |                                                
|-- | -----------------------------------------------
|8. | PARTNERS CAPITAL AND NON-CONTROLLING INTERESTS

The General
Partner invested $800,000 as a limited partner and $1,000 as a general partner
in MIG IV. We began raising capital in December 2006. We closed the offering on
March 31, 2008 when we had raised approximately $49.7 million. The General
Partners $800,000 investment represents a 1.6% limited partner interest in the
Partnership.

Limited Optional Redemption Our Units were sold
pursuant to exemptions from registration under the Securities Act of 1933 and
are not currently listed on a national exchange or otherwise traded in an
organized securities market. These Units may be transferred only with the
consent of the General Partner after the delivery of required documents, and in
any event, only if we register the offer and sale of the Units under applicable
securities laws or if an exemption from such registration is available. We do
not expect to register the offer and sale of Units. Moreover, we do not
anticipate that any public market for the Units will develop. In order to
provide limited partners with the possibility of liquidity, at any time after
November 15, 2009 and prior to November 15, 2013, limited partners who have
held their Units for at least three years may receive the benefit of interim
liquidity by presenting all of those Units to the Partnership for redemption.
At that time, we may, at our sole election and subject to the conditions and limitations
described below, redeem the Units presented for cash to the extent that we have
sufficient funds available to us to fund such redemption. The redemption price
to be paid will be 92% of the limited partners unreturned invested capital. At
no time during a 12-month period, however, may the number of Units redeemed by
us exceed 2% of the number of Units outstanding at the beginning of that
12-month period. During the nine months ended September 30, 2009, we received
five redemption requests, three of which were denied in the aggregate amount of
$253,000 and two of which were granted in the amount of $62,000, despite the
restriction on redemptions until November 15, 2009. We received no redemption
requests during the nine months ended September 30, 2008. All redemption
requests that have been granted represent a return of capital. We suspended the
optional redemption program during the second quarter of 2009 due to
macroeconomic conditions and the need to preserve cash.

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Distributions During
the operating stage of the Partnership, net cash flow, as defined, will be
distributed 99% to the limited partners and 1% to the General Partner. We paid
a distribution of 7.5% per annum on invested capital through December 2008.
Beginning in January 2009 through June 2009, we paid a distribution of 3.0% per
annum on invested capital. Effective July 15, 2009 we suspended payment of all
distributions and we do not plan to resume the payment of distributions until
improvements in the real estate and liquidity markets warrant such payment. All
distributions to date have been a return of capital. During the liquidation
stage of the Partnership (anticipated to commence in November 2013, unless
extended), net cash flow, as defined, will be distributed among the limited
partners and the General Partner in the following manner:

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

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

|   |                           
|-- | --------------------------
|9. | RELATED PARTY TRANSACTIONS

Certain of our
affiliates received fees and compensation during the organizational stage of
the Partnership, including securities commissions and due diligence
reimbursements, marketing reimbursements and reimbursement of organizational
and offering expenses. These affiliates also receive fees for ongoing property
management and administrative services. In the event that these companies are
unable to provide us with the respective services, we would be required to find
alternative providers of these services. The following table summarizes the
amount of such compensation paid to our affiliates during the three and nine
months ended September 30, 2009 and 2008 (in thousands):

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|                                                                    |  |                                  |     |                                 |   |      |  |      |     |  |   |       | 
|------------------------------------------------------------------- |  | -------------------------------- | --- | ------------------------------- | - | ---- |  | ---- | --- |  | - | ----- | 
|                                                                    |  | Three months ended September 30, |     | Nine months ended September 30, |  
|Type of
 service                                                    |  | 2009                             |     | 2008                            |   | 2009 |  | 2008 |    
|                                                                    |  |                                  |     |                                 |   |      |  |      |     |  |   |       | 
|Securities commissions,
 due diligence and marketing reimbursements |  | $                                |    |                                 | $ | 11   |  | $    |    |  | $ | 569   | 
|Organizational and
 offering cost reimbursements                    |  |                                  |    |                                 |   |     |  |      |    |  |   | 41    | 
|Asset management fees                                               |  |                                  | 108 |                                 |   | 108  |  |      | 323 |  |   | 320   | 
|Development and
 acquisition fees                                   |  |                                  |    |                                 |   |     |  |      |    |  |   | 264   | 
|Property management fees
 and leasing costs                         |  |                                  | 50  |                                 |   | 48   |  |      | 177 |  |   | 147   | 
|Administrative costs
 reimbursements                                |  |                                  | 54  |                                 |   | 29   |  |      | 248 |  |   | 86    | 
|                                                                    |  | $                                | 212 |                                 | $ | 196  |  | $    | 748 |  | $ | 1,427 | 

In addition to
the above fees paid by us, the non-consolidated entities in which we have
investments paid $516,000 and $223,000 in property management and leasing fees
to one of our affiliated entities for the nine months ended September 30, 2009
and 2008, respectively. See also Note 3 regarding investments in
non-consolidated entities.

|    |                                          
|--- | -----------------------------------------
|10. | REAL ESTATE ACQUISITIONS AND DISPOSITIONS

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

In November
2007, we acquired a 40% interest in AmREIT Westheimer Gessner, LP which owns
Woodlake Pointe, a multi-tenant retail property located in Houston, Texas with
a combined gross leasable area of approximately 82,000 square feet. In June
2008, we acquired an additional 20% investment interest in AmREIT Westheimer
Gessner, LP from an affiliated entity at its net book value. Until June 2008,
we reported our interest in AmREIT Westheimer Gessner, LP under the equity
method of accounting as we owned a 40% interest in the partnership. With the
additional 20% investment, we own a 60% controlling interest in this
partnership, and we began including its financial position and operations in
our consolidated financial statements beginning with our financial statements
for the quarter ended June 30, 2008 and effective as of January 1, 2008. On May
30, 2008, AmREIT Westheimer Gessner, LP acquired an additional tract of land
adjacent to Woodlake Pointe. The results of operations are included in the
accompanying consolidated financial statements from the date of acquisition.

In August
2007, we acquired a 40% interest in AmREIT Woodlake, LP which owns Woodlake
Square, a multi-tenant retail property located in Houston, Texas with a
combined gross leasable area of approximately 206,000 square feet. In June
2008, we acquired an additional investment interest of 20% in AmREIT Woodlake,
LP from an affiliated entity at its net book value. Until June 2008, we
reported our interest in AmREIT Woodlake, LP under the equity method of
accounting as we owned a 40% interest in the partnership. With the additional
20% investment, we own a 60% controlling interest in this partnership, and we
began including its financial position and operations in our consolidated
financial statements beginning with our financial statements for the quarter
ended June 30, 2008 and effective as of January 1, 2008.

See Note 3 for
a discussion of our investment activity since our inception with respect to our
non-consolidated entities.

|    |                              
|--- | -----------------------------
|11. | COMMITMENTS AND CONTINGENCIES

Litigation  In
the ordinary course of business, we may become subject to litigation or claims.
There are no material pending legal proceedings known to be contemplated
against us.

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Environmental matters
 In connection with the ownership and operation of real estate, we may be potentially
liable for costs and damages related to environmental matters. We have not been
notified by any governmental authority of any non-compliance, liability or
other claim.

In conjunction
with our acquisition of the Woodlake Square shopping center in August 2007, we
identified environmental exposures caused by businesses that operated on the
property prior to our ownership. We recorded an asset retirement obligation of
$700,000 on the acquisition date related to these exposures. In conjunction
with the acquisition, the seller placed $700,000 in escrow which approximated
the estimated remediation costs on the acquisition date. During 2009, we
reassessed our environmental exposure at the site and now believe that the
estimated costs to remediate the site will be approximately $530,000.
Accordingly, we have reduced the asset retirement obligation by $170,000 and
released a corresponding amount to the seller pursuant to the terms of the
escrow agreement. As of September 30, 2009, we have a remaining asset retirement
obligation related to this matter of $530,000. We believe that these matters
will not have a material adverse effect on our consolidated financial position
or results of operations, and we are aware of no other environmental exposures.

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|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND
 ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following
discussion and analysis should be read in conjunction with the accompanying
consolidated financial statements and notes thereto.

Certain
information presented in this Quarterly Report constitutes forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934 (the Exchange Act). Although we
believe that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, our actual results could differ materially
from those set forth in the forward-looking statements. Certain factors that
might cause such a difference include the following: changes in general
economic conditions, changes in real estate market conditions, continued
availability of proceeds from our debt or equity capital, our ability to locate
suitable tenants for our properties, the ability of tenants to make payments
under their respective leases, timing of acquisitions, development starts and
sales of properties, the ability to meet development schedules and the other
risks, uncertainties and assumptions. Any forward-looking statement speaks only
as of the date on which it was made, and the Partnership undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operation results over time.

Overview

We are a
Delaware limited partnership formed on October 10, 2006 to acquire, develop and
operate, directly or indirectly through joint venture arrangements, a portfolio
of commercial real estate consisting primarily of multi-tenant shopping centers
and mixed-use developments throughout the Southern and Southwestern United
States. Our investment strategy is to (1) sell approximately 40% of our
properties when appropriate and re-invest the net sales proceeds into
additional properties and (2) retain the remaining properties as income-producing
assets during our entire operating period. We focus on properties characterized
by high automobile traffic counts, high populations, high household incomes and
limited opportunities for competition.

We have no
employees and are managed by AmREIT Monthly & Income IV Corporation, our
General Partner, pursuant to our Partnership Agreement. Our General Partner is
a wholly owned subsidiary of AmREIT, a non-traded Maryland real estate
investment trust that files reports with the SEC. We qualify as a partnership
for federal income tax purposes.

As of
September 30, 2009, our investments included a wholly-owned property comprised
of approximately 36,000 square feet of gross leasable area, two properties in
which we own controlling interests comprised of approximately 288,000 square
feet of gross leasable area and three properties in which we own investment
interests through joint ventures comprised of approximately 918,000 square feet
of gross leasable area. A majority of our properties are located in highly-populated,
suburban communities in Texas. We derive a substantial portion of our revenue
from rental income from these properties, primarily from net leasing
arrangements, where most of the operating expenses of the properties are
absorbed by our tenants. As a result, our operating results and cash flows are
primarily influenced by rental income from our properties and interest expense
on our property acquisition indebtedness. Rental income accounted for 100% of
our total revenue during the nine months ended September 30, 2009 and 2008. As
of September 30, 2009, our properties had an average occupancy rate of
approximately 73%, and the average debt leverage ratio of the properties in
which we own an interest was approximately 57%, with 83% of such debt carrying
a fixed-rate of interest.

Summary of Critical Accounting Policies

The
preparation of the consolidated financial statement information contained
herein requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, net sales and expenses and related
disclosure of contingent assets and liabilities. Management bases its estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

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An accounting
policy is deemed to be critical if it requires an accounting estimate to be
made based on assumptions about matters that are highly uncertain at the time
the estimate is made, and if different estimates that reasonably could have
been used, or changes in the accounting estimates that are reasonably likely to
occur periodically, could materially impact the financial statements.
Information with respect to the Partnerships critical accounting policies that
the Partnership believes could have the most significant effect on the
Partnerships reported results and require subjective or complex judgments by
management is contained in Item 6. Financial Information  Managements
Discussion and Analysis or Plan of Operation of the Partnerships Annual Report
on Form 10-K for the fiscal year ended December 31, 2008. Management believes
that as of September 30, 2009, there have been no material changes to this
information.

Results of Operations

We commenced
our principal operations on December 8, 2006 when we acquired our first
interest in a property. On January 12, 2007 we accepted subscriptions for the
minimum offering of $1.0 million pursuant to the terms of our Offering
Memorandum and issued the initial 40 Units to investors. During 2007, we made
investments in three joint ventures through which we obtained an ownership
interest in three properties. During 2008, we acquired a direct interest in one
property on March 25, 2008, made an investment in a joint venture through which
we obtained an ownership interest in one property and made additional
investments in two joint ventures through which we obtained additional
ownership interests in two properties. As of September 30, 2009, our
investments included a wholly-owned property comprised of approximately 36,000
square feet of gross leasable area, two properties in which we owned
controlling interests comprised of approximately 288,000 square feet of gross
leasable area and three properties in which we owned investment interests
through joint ventures comprised of approximately 918,000 square feet of gross
leasable area.

Our direct
property acquisition was accounted for as a purchase and the results of its
operations are included in our consolidated financial statements from the date
of acquisition. We report our investments in joint ventures under the equity
method of accounting given our ability to exercise significant influence over
them. Until June 2008, we reported our interest in AmREIT Woodlake, LP and
AmREIT Westheimer Gessner, LP under the equity method of accounting as we owned
a 40% interest in each. With the additional 20% investment that we made in
these properties during the second quarter of 2008, we are now consolidating
their financial position and the results of operations in the accompanying
consolidated financial statements. See Note 3 to the financial statements
included in this Quarterly Report for a discussion of our investment activity
since our inception with respect to our non-consolidated entities.

Three Months Ended September 30, 2009 versus Three
Months Ended September 30, 2008

Revenue.Revenue
decreased approximately $45,000 to approximately $1.3 million during the three
months ended September 30, 2009 compared to approximately $1.3 million for the
three months ended September 30, 2008. The decrease is primarily due to
decreased revenue from Woodlake Square due to tenant move outs related to lease
expirations and reduced recoverable property expenses. As we are in the early
stages of redeveloping this property, we have not aggressively pursued lease
renewals related to lease expirations.

General and Administrative  Related Party.General
and administrative  related party expenses paid to our affiliate increased
approximately $25,000 to approximately $54,000 during the three months ended
September 30, 2009 compared to approximately $29,000 for the three months ended
September 30, 2008. This increase was due to an increase in the compensation
pool and to an increase in the allocation of those costs during the period to
better reflect the level of effort expended by our affiliates financial
personnel in providing accounting and financial reporting services to us.

Legal and Professional Fees.Legal
and professional fees decreased approximately $95,000 to approximately $63,000
during the three months ended September 30, 2009 compared to approximately
$158,000 for the three months ended September 30, 2008. The decrease in costs
was primarily attributable a decrease in due diligence costs incurred related
to potential transactions that ultimately were not closed.

Depreciation and Amortization Expense.Depreciation
and amortization expense decreased approximately $140,000 to approximately
$730,000 during the three months ended September 30, 2009 compared to $870,000
for the three months ended September 30, 2008. This decrease was due to a
decrease in intangible lease cost amortization on Woodlake Square due to these
costs becoming fully amortized during the year.

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Loss on Derivative.
There was no loss on derivative for the three months ended September 30, 2009.
Loss on derivative of approximately $39,000 during the three months ended
September 30, 2008 represents the net change in fair value of our interest rate
swap on the variable-rate loan secured by Woodlake Square. The interest rate
swap was designated as a hedge on October 1, 2008. The net change in fair value
subsequent to October 1, 2008 is reported through accumulated other
comprehensive income.

Interest and Other Income.
Interest and other income decreased approximately $26,000 to approximately
$1,000 during the three months ended September 30, 2009 compared to
approximately $27,000 for the three months ended September 30, 2008. This
decrease was primarily due to a lower balance of investable funds as these
funds were invested in Shadow Creek Ranch and Casa Linda. We invest our excess
cash in short-term investments until properties suitable for acquisition can be
identified and acquired.

Interest Expense  Related Party.Interest
expense  related party recorded during the three months ended September 30, 2008
was related to a note payable that Woodlake Square had with an affiliated
AmREIT entity. The note was paid in full during 2008 and we had no related
party notes payable outstanding during the third quarter of 2009.

Equity in Losses From Non-Consolidated
Entities. Loss from non-consolidated entities
increased approximately $93,000 to approximately $274,000 for the three months
ended September 30, 2009 compared to approximately $181,000 for the three
months ended September 30, 2008. These amounts represent our ownership portion
of our joint ventures net income or loss for the period. The increased loss is
primarily attributable to Casa Linda, for which the redevelopment was completed
in early 2009.

Net Loss Attributable to Non-controlling Interests.
Net loss attributable to non-controlling interests decreased approximately
$32,000 to approximately $137,000 during the three months ended September 30,
2009 compared to net loss attributable to non-controlling interests of
approximately $169,000 for the three months ended September 30, 2008. This was
primarily due to a decrease in depreciation and amortization on Woodlake
Square.

Nine Months Ended September 30, 2009 versus
Nine Months Ended September 30, 2008

Revenue.Revenue
decreased approximately $62,000 to approximately $3.8 million during the nine
months ended September 30, 2009 compared to approximately $3.9 million for the
nine months ended September 30, 2008. The decrease is primarily due to
decreased revenue from Woodlake Square due to tenant move outs related to lease
expirations and reduced recoverable property expenses. As we are in the early
stages of redeveloping this property, we have not aggressively pursued lease
renewals related to lease expirations.

General and Administrative  Related Party.General
and administrative  related party expenses paid to our affiliate increased
approximately $162,000 to approximately $248,000 during the nine months ended
September 30, 2009 compared to approximately $86,000 for the nine months ended
September 30, 2008. This increase was due to an increase in the compensation
pool and to an increase in the allocation of those costs during the period to
better reflect the level of effort expended by our affiliates financial
personnel in providing accounting and financial reporting services to us.

Legal and Professional Fees.Legal
and professional fees decreased approximately $82,000 to approximately $199,000
during the nine months ended September 30, 2009 compared to approximately
$281,000 for the nine months ended September 30, 2008. The decrease in costs
was primarily attributable a decrease in due diligence costs incurred related
to potential transactions that ultimately were not closed.

Depreciation and Amortization Expense.Depreciation
and amortization expense decreased approximately $297,000 to approximately $2.3
million during the nine months ended September 30, 2009 compared to $2.5
million for the nine months ended September 30, 2008. This decrease was due to
a decrease in intangible lease cost amortization on Woodlake Square due to
these costs becoming fully amortized during the year. This decrease was
partially offset by an increase in depreciation and amortization expense on
Village on the Green since the property was acquired in March 2008.

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Loss on Derivative.
Loss on derivative of approximately $415,000 during the nine months ended
September 30, 2008 represents the net change in fair value of our interest rate
swap on the variable-rate loan secured by Woodlake Square. The interest rate swap
was designated as a hedge on October 1, 2008. The net change in fair value
subsequent to October 1, 2008 is reported through accumulated other
comprehensive income.

Interest and Other Income.
Interest and other income decreased approximately $242,000 to approximately
$12,000 during the nine months ended September 30, 2009 compared to
approximately $254,000 for the nine months ended September 30, 2008. This
decrease was primarily due to a lower balance of investable funds as these
funds were invested in Shadow Creek Ranch, Woodlake Square, Westheimer Gessner,
Village on the Green, and Casa Linda. We invest our excess cash in short-term
investments until properties suitable for acquisition can be identified and
acquired.

Interest Expense.Interest
expense increased approximately $99,000 to approximately $1.3 million during
the nine months ended September 30, 2009 compared to $1.2 million for the nine
months ended September 30, 2008. The increase in interest expense is related to
the notes payable on Village on the Green, which we acquired in March 2008.

Interest Expense  Related Party.Interest
expense  related party recorded during the nine months ended September 30, 2008
was related to a note payable that Woodlake Square had with an affiliated
AmREIT entity. The note was paid in full during 2008 and we had no related
party notes payable outstanding during 2009.

Equity in Losses From Non-Consolidated
Entities.Loss from non-consolidated entities
increased approximately $228,000 to approximately $907,000 for the nine months
ended September 30, 2009 compared to approximately $679,000 for the nine months
ended September 30, 2008. These amounts represent our ownership portion of our
joint ventures net income or loss for the period. The increased loss is primarily
attributable to Shadow Creek Ranch, which was acquired in February 2008, and
Casa Linda, for which the redevelopment was completed in early 2009.

Net Loss Attributable to Non-controlling
Interests. Net loss attributable to non-controlling
interests decreased approximately $465,000 to approximately $449,000 during the
nine months ended September 30, 2009 compared to approximately $914,000 for the
nine months ended September 30, 2008. This was due to a decrease in net loss on
Woodlake Square during the nine months ended September 30, 2009.

Liquidity and Capital Resources

We expect to
meet our short-term liquidity requirements with cash on hand as well as through
net cash provided by property operations. We expect to meet our long-term
liquidity requirements through proceeds from secured or unsecured financings
from banks and other lenders, the selective and strategic sale of properties
and net cash flows from operations.

As of
September 30, 2009 and December 31, 2008, our cash and cash equivalents totaled
approximately $577,000 and approximately $1.0 million, respectively. Cash flows
provided by (used in) operating activities, investing activities and financing
activities for the nine months ended September 30, 2009 and 2008 are as follows
(in thousands):

|                      |  |                                 |        |      |   |         |  
|--------------------- |  | ------------------------------- | ------ | ---- | - | ------- | -
|                      |  | Nine months ended September 30, |       
|                      |  | 2009                            |        | 2008 |  
|Operating
 activities |  | $                               | 977    |      | $ | (1,877  | )
|Investing
 activities |  |                                 | (232   | )    |   | (15,505 | )
|Financing
 activities |  |                                 | (1,179 | )    |   | 2,067   |  

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Net cash flows
provided by operating activities increased approximately $2.9 million to
approximately $977,000 for the nine months ended September 30, 2009 compared to
net cash flows used in operating activities of approximately $1.9 million for
the nine months ended September 30, 2008. This increase in operating cash
inflows was primarily driven by a net increase in payables of $2.5 million
coupled with a net decrease in escrow deposits of $671,000. In 2008 we
reimbursed to an affiliate $1.3 million in earnest money and pre-acquisition
costs incurred on our behalf related to the acquisitions of the Woodlake Square
and Woodlake Pointe properties. In 2008, we also paid $685,000 in expenses that
had accrued on the Woodlake Square property during the previous year.
Additionally, we paid property taxes of $120,000 during the 2008 period whereas
we have made no such payments during the 2009 period. With respect to escrow
deposits, during 2009 we received $339,000 in escrow reserves on our Village on
the Green property whereas we placed such escrows when we acquired the property
in 2008.

Net cash flows
used in investing activities decreased approximately $15.3 million to
approximately $232,000 for the nine months ended September 30, 2009 compared to
approximately $15.5 million for the nine months ended September 30, 2008. This
decrease in investing outflows was primarily due to a decrease in the
acquisition of investment properties; we invested $805,000 in Casa Linda and
$41,000 in Shadow Creek Ranch during the nine months ended September 30, 2009
compared to investing $2.9 million in Village on the Green, $2.5 million in
Woodlake Square, $5.2 million in Westheimer Gessner and $4.8 million in Shadow
Creek Ranch during the 2008 period. In addition to the reduction of investing
outflows, we received a net reimbursement of $1.2 million in earnest money
deposits during the nine months ended September 30, 2009.

Net cash flows
used in financing activities increased approximately $3.3 million to
approximately $1.2 million for the nine months ended September 30, 2009
compared to net cash flows provided by financing activities of approximately
$2.1 million for the nine months ended September 30, 2008. This decrease in
financing inflows was primarily due to a reduction in contributions received of
approximately $4.3 million, net of issuance costs, as the offering was closed
on March 31, 2008. Additionally, we had a decrease in proceeds from notes
payable  related party of $551,000, had redemptions of $62,000 and made
distributions of $206,000 to non-controlling interests during the nine months
ended September 30, 2009. These outflows were partially offset by a decrease in
distributions paid to investors of $1.9 million.

Our $23.8 million variable-rate mortgage loan secured by the Woodlake Square
property matures in September 2010. We expect to be able to refinance the Woodlake Square loan by September 2010, either with our existing lender or another
lender. However, no assurance can be given that we will be able to obtain such financing. See Note 1 for discussion of our forecasted 2010 cash flows
and plans to generate sufficient liquidity to satisfy our obligations. We serve
as the guarantor of debt in the amount of $6.2 million that is the primary obligation of our wholly-owned subsidiary. Additionally, we serve as the guarantor of
debt in the amount of $68.3 million that is the primary obligation of our joint ventures.

As of September 30, 2009, Borders, Inc. (Borders) constitutes our
largest tenant as determined by base rents paid. Accordingly, we are dependent upon the continued occupancy of Borders, and any termination or non-renewal by
Borders of its lease could materially impact our liquidity and cash flows. Borders existing lease expires in January 2010, and we do not expect Borders to
renew their lease. Accordingly, our 2010 forecasted cash flows, as addressed in Note 1, assume no rental income from Borders for the 2010 period. We expected
this impending lease expiration when we acquired the property and believe that we will be able to recover its carrying value based on our property redevelopment
plan. We are actively identifying potential lessees to occupy the premises as part of this plan. The closing of any new leases would be subject to the
negotiation and execution of definitive lease agreements and the fulfillment of customary conditions. No assurance can be given that a new lease would be
procured on the same terms as the Borders lease, or at all.

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

During the
past several months, the United States has experienced an unprecedented
business downturn, coupled with a substantial curtailment of available debt
financing and a virtual shutdown of equity capital markets, particularly in the
real estate sector. While we expect to generate sufficient cash flow from
operations in 2009 to meet our contractual obligations, a significant
additional deterioration in the national economy, the bankruptcy or insolvency
of one or more of our large tenants could cause our 2009 cash resources to be
insufficient to meet our obligations. If necessary, we have the ability to
defer capital improvements and to defer payment of certain operating costs,
including property taxes, until cash resources are available. Effective July
15, 2009, we suspended all distributions in an effort to conserve cash and to
protect investors invested capital. As we have numerous projects that are
mid-stream in redevelopment, we are conserving cash from operations to improve
our ability to fund capital improvements, tenant improvements and leasing
commissions, and to meet our obligations, including debt service.

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|        |                                                             
|------- | ------------------------------------------------------------
|ITEM 3. | QUANTITATIVE AND QUALITATIVE
 DISCLOSURES ABOUT MARKET RISK.

Not
applicable.

|         |                         
|-------- | ------------------------
|ITEM 4T. | CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and
Procedures

Under the
supervision and with the participation of our General Partners Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), our General Partners
management has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e)
of the Exchange Act) as of September 30, 2009. Based on that evaluation, our
General Partners CEO and CFO concluded that, as of September 30, 2009, our
disclosure controls and procedures were effective in causing material
information relating to us to be recorded, processed, summarized and reported
by management on a timely basis and to ensure the quality and timeliness of our
public disclosures in accordance with SEC disclosure obligations.

Changes in Internal Controls

There has been
no change to our internal control over financial reporting during the quarter
ended September 30, 2009 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.

PART II  OTHER INFORMATION

|        |          
|------- | ---------
|ITEM 6. | EXHIBITS.

The exhibits
listed on the accompanying Exhibit Index are filed, furnished or incorporated
by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                         |                                               |                                                                             | 
|------------------------ | --------------------------------------------- | --------------------------------------------------------------------------- | 
|                         | AmREIT
 Monthly Income & Growth Fund IV, L.P. |                                                                            
|                         |                                               |                                                                             | 
|                         | By:                                           | AmREIT
 Monthly Income & Growth IV Corporation, its General Partner         | 
|Date:
 November 13, 2009 |                                               |                                                                             | 
|                         |                                               |                                                                             | 
|                         | By:                                           | /s/ H. Kerr
 Taylor                                                         | 
|                         |                                               | H. Kerr
 Taylor                                                             | 
|                         |                                               | President,
 Chief Executive Officer and Director                            | 
|                         |                                               |                                                                             | 
|                         | By:                                           | /s/ Chad C.
 Braun                                                          | 
|                         |                                               | Chad C. Braun                                                               | 
|                         |                                               | Executive
 Vice President, Chief Financial Officer, Treasurer and Secretary | 

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EXHIBIT INDEX

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

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