UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~Form~~ FORM 10-K

(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2003
For the fiscal year ended December 31, 2008
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to		~~For the transition period from to~~

Commission file number: 0-49782*

T REIT~~, Inc.~~ Liquidating Trust

(Exact name of registrant as specified in its charter)

Virginia		5226-~~2140299~~0536128
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1551 N. Tustin Avenue, Suite 200		92705
Santa Ana, California		(Zip Code)
(Address of principal executive offices)

~~1551 N. Tustin~~ Registrant’s ~~Avenue~~telephone number, ~~Suite~~ including area code: (714) ~~200~~667-8252

Santa Ana, California 92705

(Address of principal executive offices)

(877) 888-7348

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of ~~Each~~each ~~Class:~~class Name of ~~Each~~each ~~Exchange~~exchange on ~~Which~~which ~~Registered~~registered None None

Securities registered pursuant to Section 12(g) of the Act:

~~Title of class: Common Stock~~ None

~~Indicate by check mark whether the registrant~~ (~~1) has~~Title ~~filed all reports required to be filed by Sections 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~~Class)~~, and (2) has been~~ ~~subject to such filing requirements for the past~~ ~~90 days. Yes þ No o~~

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent~~is ~~filers~~a ~~pursuant to Item 405 of Regulation S~~well-Kknown isseasoned ~~not contained herein~~issuer, ~~and~~ ~~will~~as ~~not~~defined ~~be contained, to the best of registrant’s knowledge,~~ in ~~definitive~~Rule ~~proxy~~405 ~~or information statements incorporated by reference in Part III~~ of ~~this Form 10-K~~the orSecurities ~~any~~Act. ~~amendment~~Yes too ~~this Form 10-K.~~ No þ

~~The~~Indicate ~~aggregate market~~by ~~value~~check ofmark ~~common~~if ~~stock~~the ~~held~~registrant byis ~~non-affiliates~~not ofrequired ~~the registrant~~to ~~was~~file ~~approximately~~reports ~~$46,723,590~~pursuant asto ofSection ~~June 30, 2003~~13 or Section 15(~~based~~d) onof the ~~price~~Act.* ~~for~~Yes ~~which~~o ~~each~~No ~~share was sold).~~ o

Indicate by check mark whether the registrant is(1) anhas ~~accelerated~~filed ~~filer~~all ~~(as~~reports ~~defined in~~required ~~Rule 12b-2~~to be filed by Sections 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 o No þ o

AsIndicate by check mark if disclosure of ~~April 9~~delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, ~~2004,~~ ~~there~~and ~~were~~will 4not be contained,~~646,085 shares~~ ofto ~~common~~the ~~stock~~best of ~~T REIT~~ registrant’s knowledge, ~~Inc.~~ ~~outstanding~~in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. * o

T Indicate ~~REIT~~by check mark whether the registrant is a large accelerated filer, ~~INC~~ 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.

Large accelerated filer o Accelerated filer o Non-accelerated filer þ (ADo ~~VIRGINIA~~not ~~CORPORATION~~check if a smaller reporting company) Smaller reporting company o


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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2008. Not applicable.

As of March 18, 2009, there were 4,605,000 units of beneficial interest in T REIT Liquidating Trust outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None


	*	T REIT Liquidating Trust is the transferee of the assets and liabilities of T REIT, Inc., and files reports under the Commission file number for T REIT, Inc. T REIT, Inc. filed a Form 15 on July 20, 2007, indicating its notice of termination of registration and filing requirements.

T REIT LIQUIDATING TRUST

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		13
Item 2.	Properties		5
Item 1A.	Risk Factors		7
Item 3.	Legal Proceedings		6
Item 1B.	Unresolved Staff Comments		20
Item 4.	Submission of Matters to a Vote of Security Holders		7
Item 2.	Properties		21
Item 3.	Legal Proceedings		22
Item 4.	Submission of Matters to a Vote of Security Holders		23
PART II
Item 5.	Market for Registrant’s Common Equity, ~~and~~ Related ~~Stockholder~~Shareholder Matters and Issuer Purchases of Equity Securities		724
Item 6.	Selected Financial Data		824
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		925
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		1932
Item 8.	~~Consolidated~~ Financial Statements and Supplementary Data		2032
Item 9.	Changes in and Disagreements ~~with~~With Accountants on Accounting and Financial Disclosure		4832
Item 9A.	Controls and Procedures		49
Item 9A(T).	Controls and Procedures		32
Item 9B.	Other Information		33
PART III
Item 10.	Directors, ~~and~~ Executive Officers ofand ~~the~~Corporate ~~Registrant~~Governance		4933
Item 11.	Executive Compensation		5234
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		5334
Item 13.	Certain Relationships and Related Transactions, and Director Independence		5335
Item 14.	Principal Accounting Fees and Services		5436
PART IV
Item 15.	Exhibits, Financial Statement Schedules~~, and Reports on Form 8-K~~		5537
SIGNATURES			58
SIGNATURE			50
EXHIBIT 31.1
EX-21.1
EXHIBIT 31.2
EX-31.1
EXHIBIT 32.1
EX-32.1
EXHIBIT 32.2

PART I

Item 1. Business

Description of Business

T REIT, Inc. (the “Company”) was formed as a Virginia corporation in December 1998 and has qualified and elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. The Company was organized to acquire, manage and invest in a diversified portfolio of real estate composed of office, industrial, retail and service properties located primarily in the following focus states: Alaska, Florida, Iowa, Michigan, Minnesota, Nevada, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin and Wyoming.

The Company conducts business and owns properties through its operating partnership, T REIT, L.P., which was formed as a Virginia limited partnership in December 1998. The Company is the sole general partner of its operating partnership and has control over the affairs of its operating partnership.

The Company’s day to day operations are managed by Triple Net Properties, LLC (the “Advisor”), under an advisory agreement (the “Advisory Agreement”). The Advisor engages affiliated entities, including Triple Net Properties Realty, Inc. (“Realty”), a real estate brokerage and management company, to provide various services for the properties. The Advisor and its affiliated property manager were formed in 1998 to serve as an asset and property manager for real estate investment trusts, syndicated real estate limited partnerships, limited liability companies and similar real estate entities.

The Company’s principal executive offices are located at 1551 N. Tustin Avenue, Suite 200, Santa Ana, California 92705 and its telephone number is (877) 888-7348.

Developments During 2003

During 2003:

• the Company invested approximately $9,000,000 to purchase a retail center and $5,500,000 to purchase interests in two unconsolidated properties; • the Company sold three retail properties for a total gross sales price of approximately $39,000,000; and • the Company continued to pay monthly distributions to our shareholders at an annual rate of 8.25% (based on a $10.00 per share purchase price).

Investment Objectives & Policies

General

The Company’s primary investment objective is to obtain current income from investments in real estate. The Company intends to:

• invest in income producing real property generally through equity investments in a manner which permits it to continue to qualify as a REIT for federal income tax purposes; • generate cash available for distribution to its shareholders; • preserve and protect shareholder capital; and • realize capital appreciation upon the ultimate sale of its properties.

To the extent feasible, the Company will strive to invest in a diversified portfolio of properties, in terms of geography, type of property and types of tenants, that will satisfy its investment objectives. However, the Company cannot assure you that it will attain these objectives or that shareholder capital will not decrease.

Acquisition Strategies

The Company primarily acquires, through wholly owned subsidiaries of its operating partnership, fee simple and undivided tenant in common interests in office, industrial, retail and service properties. The Company seeks to acquire properties leased by creditworthy tenants under net leases. The Company may acquire properties through a joint venture or the acquisition of substantially all of the interests of an entity which in turn owns the real property. In connection with the purchase of undivided tenant in common interests in real properties, the Company may purchase tenant in common interests in properties where the other tenants in common are participating in tax-free exchanges arranged by the Advisor. Such transactions will earn the Advisor or its affiliates commissions on the tax-free exchanges, and may impact the extent to which the Company participates in such acquisitions. The Company may also enter into sale and leaseback transactions, under which it will purchase a property from an entity and lease the property back to such entity under a net lease.

The Company primarily acquires properties with cash and mortgage or other debt, but may acquire some properties free and clear of permanent mortgage indebtedness by paying the entire purchase price for such property in cash or in units of limited partnership interest in its operating partnership. With properties purchased on an all-cash basis, the Company may later incur mortgage indebtedness by obtaining loans secured by selected properties, if favorable financing terms are available. The proceeds from such loans would be used to acquire additional properties and increase its cash flow. Although not required by the Company’s Articles of Incorporation or Bylaws, the Company does not intend to incur indebtedness in excess of 70% of the aggregate fair market value of all its properties, as determined at the end of each calendar year. In addition, the Company does not intend to incur secured indebtedness on a specific property in excess of approximately 80% of such property’s fair market value

A majority of properties acquired will be at least 75% leased on the acquisition date. Management expects that most of the Company’s leases will be “net” leases with terms of 10 to 15 years, but generally not less than 5 years, usually providing for a base minimum annual rent with periodic increases. “Net” leases typically require that tenants pay all or a majority of the operating expenses, including real estate taxes, special assessments, utilities, insurance and building repairs related to the property, in addition to lease payments.

In acquiring a property, the Company may enter into arrangements with the seller of a property in support of minimum cash flow requirements from the property, obtain an option on a property or commit to purchase a property subject to completion of remodeling or construction.

To assist the Company, the Advisor and its affiliates may purchase properties in their own name, assume loans in connection with the purchase of properties and temporarily hold title to such properties for the purpose of facilitating the acquisition of such property, borrowing money or obtaining financing, completing construction of the property or for any other purpose related to its business. The Company may also acquire properties from entities advised by the Advisor. Such acquisitions must be approved by a majority of the Company’s Directors, including a majority of the independent Directors.

Acquisition Standards

Based on the Advisor’s prior real estate experience, the Company believes its Advisor has the ability to identify properties capable of meeting its investment objectives. In evaluating potential acquisitions, the primary factor considered is the property’s current and projected cash flow. The Company also considers a number of other factors, including a property’s:

• geographic location and type; • construction quality and condition; • potential for capital appreciation; • lease terms and rent roll, including the potential for rent increases;

• potential for economic growth in the tax and regulatory environment of the community in which the property is located; • potential for expanding the physical layout of the property; • occupancy and demand by tenants for properties of a similar type in the same geographic vicinity; • prospects for liquidity through sale, financing or refinancing of the property; • competition from existing properties and the potential for the construction of new properties in the area; and • treatment under applicable federal, state and local tax and other laws and regulations. PART I

~~Operating~~Item ~~Strategies~~ 1. Business.

The ~~Company’s~~use ~~primary~~of ~~operating~~the ~~strategy~~words ~~is to~~“we,” ~~acquire~~us,” ~~suitable~~or “our” ~~properties~~refers ~~and~~ to ~~enhance~~T ~~the~~REIT ~~performance and~~Liquidating ~~value~~Trust ofand ~~those properties through management strategies~~its ~~designed~~ subsidiaries, toexcept ~~address~~where the ~~needs~~context ofotherwise ~~current and prospective tenants~~requires. ~~Management strategies include:~~

• managing costs and seeking to minimize operating expenses by centralizing management, leasing, marketing, financing, accounting, renovation and data processing activities; • improving rental income and cash flow by aggressively marketing rentable space and raising rents when feasible; • emphasizing regular maintenance and periodic renovation to meet the needs of tenants and to maximize long-term returns; • re-positioning properties, for example, shifting from single to multi-tenant use in order to maximize desirability and utility for prospective tenants; and • financing acquisitions and refinancing properties when favorable financing terms are available to increase its cash flow. Overview

~~Tax~~ We ~~Status~~were organized on July 16, 2007, as a liquidating trust pursuant to a plan of liquidation of T REIT, Inc., or T REIT. On July 20, 2007, in accordance with the Agreement and Declaration of Trust, or the Liquidating Trust Agreement, by and between T REIT and W. Brand Inlow, or our Trustee, T REIT transferred its then remaining assets and liabilities to us pursuant to the Liquidating Trust Agreement. Mr. Inlow previously served as an independent director of T REIT and the chairman of T REIT’s board of directors. Upon the transfer of the assets and liabilities to us, each shareholder of T REIT as of July 16, 2007, or the Record Date, automatically became the holder of one unit of beneficial interest, or unit, in T REIT Liquidating Trust for each share of T REIT’s common stock then currently held of record by such shareholder. Our purpose is to wind up the affairs of T REIT by liquidating our remaining assets, distributing the proceeds from the liquidation of our remaining assets to the holders of units, each a beneficiary and, collectively, our beneficiaries, and paying all liabilities, costs and expenses of T REIT and T REIT Liquidating Trust.

~~The~~ T ~~Company~~REIT was formed in December 1998 in the Commonwealth of Virginia and qualified and elected to be taxed as a ~~REIT~~real ~~for~~estate investment ~~federal~~trust, ~~income~~or ~~tax~~REIT, ~~purposes~~ under ~~Sections 856 through 860 of~~ the Internal Revenue Code ~~(the “Code”).~~of As 1986, ~~long~~ as ~~the~~amended. ~~Company~~T ~~qualifies~~REIT ~~for~~was ~~taxation~~organized asto ~~a REIT~~acquire, itmanage and ~~generally~~ invest ~~will~~in ~~not~~a bediversified ~~subject~~portfolio toof ~~federal~~real ~~income~~estate ~~tax~~projects ~~to the~~of ~~extent~~ office, itindustrial, ~~distributes~~retail atand ~~least~~service ~~90%~~properties. ofT ~~its~~ REIT ~~taxable~~was formed ~~income~~with to the ~~Company’s~~intent ~~shareholders.~~to Ifbe ~~the~~listed ~~Company~~on ~~fails~~a tonational ~~qualify~~stock as exchange, quoted on a ~~REIT~~quotation insystem ~~any~~of ~~taxable~~a ~~year,~~national itsecurities association ~~will~~or bemerged ~~subject~~with toan ~~federal~~entity whose shares are listed or ~~income~~ quoted. ~~tax~~In ~~(including~~2005, ~~any~~as ~~applicable~~a ~~alternative~~result ~~minimum~~of ~~tax~~(i) then oncurrent market ~~its~~ conditions, ~~taxable~~(ii) the ~~income~~increasing atcosts ~~regular~~of corporate ~~rates. Unless entitled~~ to compliance ~~relief~~(including, ~~under~~without ~~specific~~limitation, ~~statutory~~all ~~provisions~~federal, ~~the~~state and ~~Company~~local ~~will also~~regulatory berequirements ~~disqualified~~applicable ~~for~~to ~~taxation~~us, asincluding the aSarbanes-Oxley ~~REIT~~Act ~~for~~of ~~the~~2002, ~~four~~as ~~taxable years~~amended, ~~following~~or the Sarbanes-Oxley ~~year~~Act), inand ~~which~~(iii) the itpossible ~~loses~~need ~~its~~to ~~qualification.~~reduce ~~Even~~ monthly ifdistributions, the ~~Company~~T ~~qualifies~~REIT asboard aof ~~REIT,~~directors itdetermined that ~~may~~a beliquidation ~~subject~~would ~~to certain~~provide ~~state~~shareholders ~~and~~with ~~local~~a ~~taxes~~greater return on ~~its~~their ~~income~~investment ~~and~~over ~~property~~a ~~and~~reasonable ~~to federal~~period ~~income~~of ~~and~~time ~~excise~~than through ~~taxes~~implementation onof ~~its~~other ~~undistributed~~alternatives ~~income~~considered.

~~Competition~~ Liquidation of T REIT, Inc.

In On ~~seeking~~June 3, ~~new~~2005, ~~investment~~the ~~opportunities,~~board of directors of T REIT approved a plan of liquidation which was thereafter approved by the ~~Company~~ shareholders ~~competes~~of ~~with~~T ~~other~~REIT ~~real~~at ~~estate~~its ~~investors,~~2005 ~~including~~Annual Meeting of ~~pension~~ Shareholders ~~funds~~held on July 27, ~~insurance~~2005. ~~companies~~The T REIT plan of liquidation, ~~foreign~~or ~~investors~~the plan of liquidation, ~~real~~contemplated the ~~estate~~ orderly ~~partnerships,~~sale ~~other~~of ~~public~~all ~~and~~of ~~private~~T ~~real~~REIT’s ~~estate investment~~assets, ~~trusts~~the payment of its liabilities, ~~private~~the ~~individuals~~winding up of operations and ~~other~~the ~~domestic~~dissolution ~~real~~of ~~estate~~ T ~~companies,~~REIT. ~~many~~The board of director’s decision to adopt the plan of liquidation followed a lengthy process in which ~~have~~the ~~greater~~board ~~financial~~of directors and ~~other~~management reviewed a number of strategic ~~resources~~ alternatives ~~than~~with the ~~Company~~goal of maximizing shareholder value. ~~With~~T REIT ~~respect~~engaged Robert A. Stanger & Co., Inc., or Stanger, to ~~properties~~perform ~~presently~~financial advisory services in connection ~~owned~~ with orT REIT’s plan of liquidation, including rendering an opinion as to whether T REIT’s net real estate liquidation value range estimate and estimated per share distribution range were reasonable. In June 2005, Stanger opined that T REIT’s net real estate liquidation value range estimate and estimated per share distribution range were reasonable from a financial point of view. The plan of liquidation gave T REIT’s board of directors the power to sell any and all of its assets without further approval by its shareholders and provided that liquidating distributions be ~~owned~~made to its shareholders as determined by T REIT’s board of directors. The plan of liquidation also provided for the ~~Company,~~transfer itof ~~competes~~T ~~with~~REIT’s remaining ~~other~~assets and liabilities to a liquidating trust if T ~~owners~~ REIT was unable to sell its assets and pay its liabilities within 24 months of ~~like~~its ~~properties~~shareholders’ ~~for~~approval ~~tenants~~of the plan of liquidation (which was July 27, 2007). On May 10, 2007, T REIT’s board of directors approved the transfer and assignment of T REIT’s assets to a liquidating trust.

~~Government~~ On ~~Regulations~~July 16, 2007, T REIT and our Trustee entered into the Liquidating Trust Agreement in connection with our formation. On July 20, 2007, T REIT transferred its remaining assets to, and its remaining liabilities

Many laws and governmental regulations are applicable to the Company’s properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.

~~Costs~~ were ofassumed ~~Compliance~~by, us in accordance with the ~~Americans~~plan ~~with~~of liquidation ~~Disabilities~~ and ~~Act~~the Liquidating Trust Agreement. ~~Under~~In ~~the~~connection ~~Americans~~ with ~~Disabilities~~the transfer ~~Act~~ of ~~1990~~assets to, orand ~~ADA,~~assumption ~~all~~of ~~public~~liabilities ~~accommodations~~by, us the ~~must~~ stock ~~meet~~transfer ~~federal~~books ~~requirements~~of ~~for~~T ~~access~~REIT ~~and~~were ~~use~~closed byas ~~disabled~~of the close of ~~persons.~~ business ~~Although~~on the ~~Company~~Record ~~believes~~Date ~~that~~and iteach isshare inof ~~substantial~~T REIT’s ~~compliance~~ common ~~with~~stock ~~present~~outstanding ~~requirements~~on of the ~~ADA,~~Record ~~none~~Date ofwas ~~its~~converted ~~properties~~ automatically ~~have~~into ~~been~~a ~~audited,~~unit ~~nor~~of ~~have~~beneficial ~~investigations~~interest. ofFollowing ~~its~~the ~~properties~~ conversion ~~been~~of ~~conducted~~shares to ~~determine~~units ~~compliance.~~of ~~The~~beneficial ~~Company~~interest, all ~~may~~ outstanding ~~incur~~shares ~~additional~~of ~~costs~~T inREIT’s ~~connection~~common ~~with~~stock ~~the~~were ~~ADA~~deemed cancelled. The rights of beneficiaries in their beneficial ~~Additional~~ interests ~~federal,~~are ~~state~~not ~~and~~represented ~~local~~by ~~laws~~any ~~also~~form ~~may~~of ~~require~~certificate or ~~modifications~~ other toinstrument. ~~the~~Shareholders ~~Company’s~~of ~~properties~~T orREIT ~~restrict~~on the Record Date were ~~Company’s~~ not ~~ability~~required to ~~renovate~~take ~~its~~any ~~properties.~~action ~~Management~~to receive units of beneficial ~~cannot~~ interests. ~~predict~~On the ~~cost~~date of ~~compliance~~the ~~with~~conversion, the ~~ADA~~economic orvalue ~~other~~of ~~legislation.~~ each Ifunit ~~the~~of ~~Company~~beneficial ~~incurs~~interest ~~substantial~~was ~~costs~~equivalent to ~~comply~~the economic value of a share of T REIT’s common stock. On July 20, 2007, T REIT filed a Form 15 with the ~~ADA~~Securities orand Exchange ~~any~~Commission, ~~other~~or ~~legislation~~the SEC, ~~its~~to ~~financial~~terminate ~~condition,~~the registration ~~results~~ of T REIT’s common stock under the Securities Exchange Act of ~~operations~~1934, ~~cash~~as ~~flow~~amended, or the Exchange Act, and ~~ability~~T toREIT ~~satisfy~~announced that ~~its~~it ~~debt~~would cease filing reports under the Exchange Act. Our ~~service~~ Trustee ~~obligations~~will issue to beneficiaries and ~~pay~~file ~~distributions~~with ~~could~~the beSEC ~~adversely~~annual ~~affected.~~ reports on Form 10-K and current reports on Form 8-K upon the occurrence of a material event relating to us.

~~Costs~~ Pursuant ofto ~~Government~~the ~~Environmental~~transfer ~~Regulation~~ of assets and ~~Private~~liabilities ~~Litigation.~~from ~~Environmental~~T REIT ~~laws~~ to ~~and~~us, ~~regulations~~we ~~hold~~acquired ~~the~~a ~~Company~~10.3% ~~liable~~interest ~~for~~in the ~~costs~~Congress ofCenter, ~~removal~~ located in Chicago, Illinois, or ~~remediation~~the ofCongress ~~certain~~Center ~~hazardous~~property or our ~~toxic~~unconsolidated ~~substances on~~property, ~~its~~and ~~properties.~~assumed ~~These~~approximately $9,828,000 ~~laws~~of ~~could~~indebtedness, ~~impose~~representing ~~liability~~the ~~without~~proportionate share ~~regard~~ of toa ~~whether~~secured ~~the~~mortgage ~~Company~~loan isoutstanding ~~responsible~~on ~~for~~ the ~~presence~~Congress orCenter ~~release~~ property. ofWe hold our interest in the ~~hazardous~~Congress ~~materials~~Center property pursuant to a 100.0% ~~Government~~membership ~~investigations~~interest in TREIT-Congress ~~and~~ Center, ~~remediation~~LLC, ~~actions~~which ~~may~~in ~~have~~turn ~~substantial~~holds ~~costs~~a ~~and~~35.5% ~~the~~membership interest in ~~presence~~ NNN ofCongress ~~hazardous~~Center, ~~substances~~LLC. onNNN Congress Center LLC holds a 28.9% interest in the Congress Center property. ~~could~~We ~~result~~may inrefer to our ~~personal~~ indirect ~~injury~~interest orin ~~similar~~the ~~claims~~Congress byCenter ~~private~~property ~~plaintiffs.~~as ~~Various~~our ~~laws~~ “unconsolidated ~~also~~property ~~impose~~interest”. ~~liability~~For more information on ~~persons~~the ~~who~~Congress ~~arrange~~Center ~~for~~property, ~~the~~see Item 2. ~~disposal~~ Properties. orAlthough ~~treatment~~we ofacquired ~~hazardous~~additional orassets ~~toxic~~from ~~substances~~T ~~for~~REIT, including ~~the~~interests in certain bank accounts, accounts ~~cost~~ receivable ofand ~~removal~~assets orfor ~~remediation~~estimated receipts in excess of estimated ~~hazardous~~costs ~~substances~~during atliquidation, our interest in the Congress ~~disposal~~ Center orproperty ~~treatment~~is ~~facility.~~our ~~These~~only ~~laws~~material ~~often~~remaining ~~impose liability~~asset. ~~whether~~We orintend to ~~not~~complete the ~~person~~plan ~~arranging~~of ~~for~~liquidation ~~the~~by ~~disposal~~either selling our ~~ever~~ unconsolidated ~~owned~~property interest or ~~operated~~participating in the ~~disposal~~sale ~~facility.~~of the AsCongress ~~the~~Center ~~owner~~property ~~and operator~~with ofthe ~~its~~other ~~properties,~~joint owners of the property. ~~Company~~In ~~may~~each becase, ~~deemed~~we refer to ~~have arranged~~such ~~for~~a sale as the ~~disposal~~sale or disposition ~~treatment~~ of ~~hazardous~~our or“remaining ~~toxic substances~~asset.”

~~Use of Hazardous Substances by Some of the~~ ~~Company’s Tenants. Some of the~~ Our ~~Company tenants routinely handle hazardous substances and wastes~~ Advisor on our properties as part of their routine operations. Environmental laws and regulations subject these tenants, and potentially the Company, to liability resulting from such activities. The Company requires its tenants, in their leases, to comply with these environmental laws and regulations and to indemnify it for any related liabilities. Management is unaware of any material noncompliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of the Company’s properties.

~~Other~~ Grubb & ~~Federal,~~Ellis ~~State~~Realty ~~and~~Investors, ~~Local Regulations.~~LLC, ~~The~~formerly ~~Company’s~~known as ~~properties~~ Triple ~~are~~Net ~~subject~~Properties, ~~to various federal~~LLC, ~~state~~or ~~and~~our ~~local regulatory requirements~~advisor, ~~such~~manages asour day-to-day business ~~state~~affairs and ~~local~~assets ~~fire~~ and ~~life safety~~carries ~~requirements.~~out If the ~~Company~~directives ~~fails to comply with these~~of ~~various~~ our ~~requirements,~~Trustee itpursuant ~~may~~to ~~incur~~an ~~governmental~~advisory ~~fines~~agreement, or ~~private damage~~the ~~awards~~Advisory Agreement. ~~While~~Our ~~management~~advisor ~~believes~~is ~~that~~a ~~its~~Virginia ~~properties~~limited ~~are~~liability company ~~currently~~ that inwas ~~material~~formed ~~compliance~~in ~~with~~April ~~all~~ of ~~these~~1998 ~~regulatory requirements, management does not know whether existing requirements will change or whether future requirements will require us~~ to ~~make~~advise ~~significant~~syndicated ~~unanticipated expenditures that~~limited ~~will~~ partnerships, ~~adversely~~limited ~~affect~~liability ~~its ability to make distributions to the Company’s shareholders. Management believes~~companies, ~~based~~and inother ~~part~~entities, on including ~~engineering~~many ~~reports~~of ~~which~~our ~~are~~affiliates, ~~generally~~regarding ~~obtained at~~ the ~~time~~acquisition, ~~the~~ management ~~properties~~and ~~are~~disposition ~~acquired, that all~~ of ~~its~~real ~~properties~~estate ~~comply in all material respects with current regulations~~assets. ~~However,~~Our ifadvisor ~~the~~ advises ~~Company~~us ~~was~~and ~~required~~certain ~~to make significant expenditures under applicable regulations, its financial condition, results~~ of ~~operations,~~ ~~cash~~our ~~flow~~affiliates ~~and~~with ~~ability~~respect to ~~satisfy its debt service~~the ~~obligations~~ management and topotential ~~pay~~disposition ~~distributions~~of ~~could~~the beCongress ~~adversely affected~~Center property.

~~Significant Tenants~~ Liquidation Update for 2008

As On ~~of December~~October 31, ~~2003~~2008, ~~none~~we, through NNN Congress Center, LLC, of which we own a 35.5% ownership interest through our subsidiary TREIT-Congress Center, LLC, entered into a purchase and sale agreement to sell the Congress Center property to FSP ~~Company’s~~ Congress ~~tenants~~Center ~~accounted~~LLC, or FSP, an unaffiliated third party, for an aggregate sales price of $130,000,000. We own, through NNN Congress Center, LLC, a 10.3% orinterest ~~more~~in ofthe Congress Center property. On January 13, 2009, FSP elected to terminate the ~~aggregate~~ agreement ~~annual~~as ~~rental~~provided ~~income~~for under its terms. Our advisor continues to market the Congress Center property for sale.

~~Employees~~ Our existence will terminate upon the earliest of (i) the distribution of all of our assets in accordance with the terms of Liquidating Trust Agreement, or (ii) the expiration of a period of three years from the date assets were first transferred to us, or July 20, 2010. Our existence may, however, be extended beyond the three-year term if our Trustee determines that an extension is reasonably necessary to fulfill our purpose and, prior to such extension, our Trustee has requested and received certain no-action assurances from the SEC. Although

The Company has no employees and the Company’s executive officers are all employees of the Company’s Advisor. Substantially all work of the Company is performed by employees of the Advisor and its affiliates.

~~Financial~~ we ~~Information~~can ~~About~~provide ~~Industry~~no assurances, we currently expect to sell our ~~Segments~~ remaining asset by December 31, 2009 and anticipate completing the plan of liquidation by March 31, 2010.

~~The Company is in the business of owning,~~ ~~managing, operating, leasing, acquiring, developing, investing~~ Current in Investment ~~and~~Objectives ~~disposing of office, industrial~~ and ~~service properties.~~Policies ~~The Company internally evaluates all properties as one industry segment and accordingly does not report segment information.~~

~~Item~~ In 2accordance with the plan of liquidation, our primary objective is to obtain the highest possible sales value for our interest in the Congress Center property, while maintaining current value and income from this investment. ~~Properties~~Due to the adoption of the plan of liquidation, we will not acquire any new properties, and we are focused on liquidating our remaining asset. However, we cannot assure our beneficiaries that we will achieve these objectives or that the capital of our beneficiaries will not decrease.

~~Real~~ In ~~Estate~~accordance ~~Investments~~with the plan of liquidation, we currently consider various factors when evaluating potential property dispositions. These factors include, without limitation, (i) the ability to sell our remaining asset at the highest possible price in order to maximize the return to our beneficiaries; and (ii) the ability of buyers to finance the acquisition of our remaining asset. Until we successfully sell our remaining asset, our primary operating strategy is to enhance the performance and value of the Congress Center property through strategies designed to address the needs of current and prospective tenants. These strategies include:

As• ofmanaging ~~December 31,~~costs ~~2003,~~and ~~the~~seeking ~~Company~~to ~~owned interests~~minimize inoperating 10expenses ~~properties~~through ~~including~~centralized ~~two~~management, ~~consolidated~~leasing, ~~properties and~~marketing, ~~eight~~financing, ~~unconsolidated~~accounting, ~~properties.~~renovation ~~The~~and ~~Company’s interests~~data inprocessing ~~the~~activities; ~~unconsolidated~~• ~~properties~~improving ~~are~~rental ~~held~~income ~~either~~and ascash ~~a tenant~~flow inby ~~common~~aggressively inmarketing ~~the~~rentable ~~property~~space orand asraising arents ~~member~~when offeasible; a• ~~limited liability~~emphasizing ~~company~~regular ~~that~~maintenance ~~owns~~and aperiodic ~~tenant~~renovation into ~~common~~meet ~~interest in~~ the ~~property.~~ ~~The~~needs ~~consolidated~~of ~~properties~~tenants ~~have~~and anto ~~aggregate~~maximize ~~GLA~~long-term ~~of approximately~~returns; ~~403,000 square~~and ~~feet.~~• ~~During~~refinancing the ~~year~~Congress ~~ended December 31,~~Center ~~2003, the Company purchased one consolidated~~ property ~~and~~when ~~two~~favorable ~~interests~~financing interms ~~unconsolidated~~are ~~properties~~available ~~and~~to ~~it sold~~increase ~~three~~the ~~consolidated~~cash ~~properties~~flow.

~~The following table presents certain additional~~ ~~information about the Company’s properties at~~ Tax ~~December 31, 2003:~~ Treatment

										Total
Property			GLA		%			Date		Purchase		Annual		% Physical			Annual Rent
Name	Property Location		(Sq Ft)		Owned			Acquired		Price		Rent(1)		Occupancy(2)			Per Sq Ft(3)
Consolidated Properties
University Heights		San Antonio, TX		68,400		100.0	%		08/22/02	$	6,750,000	$	745,500		95.8	%	$	11.37
Gateway Mall		Bismarck, ND		333,878		100.0			01/29/03		9,000,000		1,311,900		96.0			4.09
Unconsolidated Properties
Reno Trademark Building		Reno, NV		75,257		40.0			09/04/01		7,296,110		748,300		100.0			9.94
County Center Building		Temecula, CA		77,582		16.0			01/11/02		6,335,000		563,200		100.0			7.26
City Center West “A” Building		Las Vegas, NV		105,964		89.1			03/15/02		21,670,000		2,682,100		94.9			26.68
Pacific Corporate Park		Lake Forest, CA		167,486		22.8			03/25/02		23,728,000		2,168,200		84.5			15.32
Titan Building & Titan Plaza		San Antonio, TX		131,527		48.5			04/17/02		9,167,000		1,761,600		100.0			13.39
Saddleback Financial Center		Laguna Hills, CA		72,711		25.0			09/25/02		11,072,560		1,541,400		87.2			24.31
Congress Center		Chicago, IL		524,730		10.2			01/09/03		136,108,000		9,479,000		90.0			20.07
Enclave Parkway		Houston, TX		207,435		3.3			12/22/03		34,500,000		3,563,000		100.0			17.18

We issue an annual information statement to our beneficiaries with tax information for their tax returns. Beneficiaries are urged to consult with their own tax advisors as to their own filing requirements and the appropriate tax reporting of this information on their returns.

(1)	Annualized rental income based on contractual base rent from leases in force at December 31, 2003.
(2)	Physical occupancy at December 31, 2003.
(3)	Average effective annual rent per square foot at December 31, 2003.

Reports to Beneficiaries

~~The~~ Our ~~following~~Trustee ~~information~~is ~~generally~~expected ~~applies~~to issue annual reports to our beneficiaries showing our assets and liabilities at the ~~Company’s~~end ~~properties:~~of each fiscal year and our receipts and disbursements for the period. The annual reports also describe changes in our assets during the reporting period and the actions taken by our Trustee during the period. Our Trustee files with the SEC (i) an annual report on Form 10-K and (ii) a current report on Form 8-K upon the occurrence of a material event relating to us.

~~• The Company believes all~~ Meetings of ~~the~~Beneficiaries; ~~properties~~Removal ~~are adequately covered by insurance and are suitable for their intended purposes. • The Company has no plans for any material renovations, improvements or development~~ of the properties. • The Company’s properties are located in markets where it is subject to competition for attracting new and retaining current tenants. • Depreciation is provided on a straight-line basis over the estimated useful lives of the buildings and improvements, ranging primarily from 15 to 39 years.Trustee

Generally, there will be no meetings of our beneficiaries. However, our Trustee may at any time call a meeting of our beneficiaries to be held at such time and at such place as our Trustee shall determine. In addition, holders of at least 25% of the units held by all beneficiaries may require our Trustee to call a meeting of our beneficiaries. Our Trustee may be removed at any time, with cause, by beneficiaries having aggregate units of at least a majority of the total units held by all beneficiaries. Our Trustee may be removed at any time, without cause, by beneficiaries having aggregate units of at least two-thirds of the total units held by all beneficiaries.

Distributions

During the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007, we did not make any distributions to our beneficiaries. We estimate that we will make future aggregate

~~Lease~~ cash ~~Expiration~~distributions ~~Table~~of approximately $3,777,000, or $0.82 per unit, based upon estimated net proceeds from the sale of our remaining asset, the estimated timing of such sale, amounts required to settle known liabilities, the levels of reserves deemed necessary or appropriate for known and unknown liabilities, and other considerations. Because the estimate of additional cash distributions is based on various assumptions and projections, there can be no assurance that the actual amount of distributions will not differ materially from our estimate.

~~The~~ As ~~following~~of ~~schedule~~March 18, ~~presents~~2009, we estimate that the ~~sensitivity~~aggregate net proceeds from the liquidation of ~~our~~T ~~annual~~REIT ~~base~~will ~~rent~~be ~~due~~approximately $54,377,000 to(of ~~lease~~which ~~expirations~~approximately ~~for~~$50,600,000 ~~the~~has ~~next~~already been ~~ten~~ paid ~~years~~to atT REIT shareholders prior to the ~~Company~~transfer of T REIT’s ~~consolidated~~assets ~~properties~~and asliabilities ofto us) and we expect that our ~~December 31,~~ beneficiaries ~~2003,~~will byreceive ~~number,~~approximately ~~percentage~~$11.81 ofper ~~total~~unit in aggregate liquidating distributions (of which $10.99 per share ~~GLA~~ has already been paid to T REIT shareholders prior to the transfer of T REIT’s assets and ~~annual~~liabilities ~~base~~to ~~rent~~us).

						% of
				Total		Total GLA			Annual Base
		Number		Sq. Ft. of		Represented			Rent Under
		of Leases		Expiring		by Expiring			Expiring
Year Ending December 31		Expiring		Leases		Leases			Leases
2004			14		28,483		7.08	%	$	159,332
2005			5		16,531		4.11	%		97,012
2006			13		44,774		11.13	%		471,974
2007			5		14,897		3.70	%		132,157
2008			1		13,250		3.29	%		129,850
2009			1		104,975		26.10	%		305,372
2010			2		30,145		7.49	%		45,430
2011			1		42,901		10.66	%		300,307
2012			1		3,150		0.78	%		13,300
2013			1		18,000		4.47	%		95,000
Thereafter			2		23,181		5.76	%		298,663
	Total		46		340,287		84.57	%	$	2,048,397

Competition

~~Indebtedness~~ As we complete the plan of liquidation, we will be in competition with other sellers of similar properties or interests in properties to locate suitable purchasers, which may result in us receiving lower net proceeds than our estimated liquidation proceeds. Additionally, until we sell our remaining asset, we will compete with a considerable number of other real estate companies to lease office space, some of which may have greater marketing and financial resources than we do. Principal factors of competition in our business are the quality of properties (including the design and condition of improvements), leasing terms (including rent and other charges and allowances for tenant improvements), attractiveness and convenience of location, the quality and breadth of tenant services provided, and the reputation as an owner and operator of quality office properties in the relevant market. Our ability to compete also depends upon, among other factors, trends of the national and local economies, financial condition and operating results of current and prospective tenants, availability and cost of capital, including capital raised by incurring debt, construction and renovation costs, taxes, governmental regulations, legislation and population trends. The Congress Center property may face competition in Chicago and the surrounding area from such other properties owned, operated or managed by our advisor or our advisor’s affiliates. Our advisor or its affiliates have interests that may vary from ours in this geographic market.

~~At December 31, 2003, the Company had~~ ~~secured mortgage loans outstanding on its consolidated~~ Government ~~properties representing aggregate indebtedness of approximately~~ Regulations ~~$9,250,000. See Note 8 to the financial statements included with this report.~~

~~Item~~ The 3Congress Center property is subject to various federal, state and local laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. ~~Legal~~Additionally, ~~Proceedings~~under the Americans with Disabilities Act of 1990, or ADA, all public accommodations must meet federal requirements for access and use by disabled persons. Although we believe that we are in substantial compliance with present requirements of the ADA, our unconsolidated property has not been audited, nor have investigations of our unconsolidated property been conducted to determine compliance. We may incur additional costs in connection with the ADA or other federal, state and local laws which may require us to make modifications to our unconsolidated property. We cannot predict the cost of compliance with the ADA or other legislation.

~~On February 11, 2004, Clearview Properties~~ ~~filed a petition in the District Court of the 270th~~ Environmental Judicial District, Harris County, Texas against Property Texas SC One Corporation, Clarion Partners, LLC, Granite Partners I, LLC, three unaffiliated entities, and the Advisor, Realty and the Company. The complaint alleges that Property Texas breached an Agreement of Sale and Purchase to sell Clearview certain real property located in Houston, Texas. Only one of the complaint’s eight separate counts alleges the involvement of the Company, the Advisor and Realty. That count alleges that the Company, the Advisor and Realty and/or the other defendants willfully and intentionally interfered with the contract between Clearview and Property Texas and that such interference proximately caused Clearview’s injury and sufferance of actual damages. The maximum exposure to the Company is uncertain, as Clearview has failed to specifically allege a monetary amount of loss as the result of our alleged involvement. The Company believes that there is no substantive merit to the claims made by Clearview with respect to the Company, the Advisor or Realty and it intends to vigorously defend the action. However, if Clearview were to prevail in this action, it could have a material adverse effect upon the Company’s financial condition, results of operations and cash flows.

~~Other~~ As ~~than~~an ~~the~~owner ~~above~~of an interest in real estate, we are subject to various environmental laws of federal, state and local governments. Such environmental laws and regulations may hold us liable for the ~~Company’s~~costs of removal or remediation of certain ~~knowledge~~ hazardous ~~there~~or ~~are~~toxic nosubstances ~~material~~which ~~pending~~may ~~legal~~be ~~proceedings,~~on ~~other~~our unconsolidated ~~than~~ property. ~~routine~~These ~~litigation~~laws ~~incidental~~could impose liability without regard to whether we are responsible for the ~~business,~~presence toor ~~which~~release of the ~~Company~~ hazardous ismaterials. Compliance with existing laws has not had a material ~~party~~adverse toeffect on our financial condition or results of operations, ~~which~~and ~~any~~we ofdo ~~its~~not ~~properties~~believe isit ~~the~~will have such an impact in ~~subject~~ the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest.

~~Item 4. Submission of Matters to a Vote of Security Holders~~ Property Sales

No During ~~matters~~the ~~were~~year ~~submitted~~ended toDecember 31, a2008 ~~vote~~and ofthe ~~security~~period from ~~holders~~ July 20, ~~during~~2007 ~~the~~through ~~fourth~~December 31, ~~quarter~~2007, ofwe ~~2003~~did not sell any assets.

~~PART II~~ Employees

~~Item~~ We 5have no employees. ~~Market~~Substantially ~~for~~all ~~Registrant’s~~of ~~Common~~our ~~Equity~~work ~~and~~is ~~Related~~performed by ~~Stockholder~~employees ~~Matters~~of our advisor and its affiliates.

~~Market Information~~ Financial Information About Industry Segments

~~There~~ We isinternally noevaluate ~~established~~our ~~public~~unconsolidated ~~trading~~property ~~market~~and ~~for~~interest ~~the~~ therein ~~Company’s~~as ~~shares~~one ofindustry ~~common~~segment ~~stock~~and, accordingly, we do not report segment information.

~~Effective~~Item May 24, 2001 the Company adopted the Share Repurchase Plan (the “Repurchase Plan”), which provides eligible shareholders with limited liquidity by enabling them to sell their common stock back to the Company subject to the sole discretion of the Board of Directors1A. ToRisk be eligible to participate in the Repurchase Plan, a shareholder must offer for resale at least 25% of the total number of his shares of common stock and he must have owned such shares for at least one yearFactors.

~~The price paid by the Company per repurchased~~ ~~share of common stock is $9.05. Repurchases are effected by the~~ Risks ~~Company~~ Associated onWith orOur ~~about the last day of each calendar quarter.~~Liquidation ~~Funding for the Repurchase Plan comes from the proceeds received by the Company from operating revenues.~~

~~Shareholders~~ If the Congress Center property was purchased at a time when the commercial real estate market was experiencing substantial influxes of capital investment and competition for properties, the Congress Center property may not appreciate or may decrease in value.

As The commercial real estate market has experienced a substantial influx of ~~April 9~~capital from investors. This substantial flow of capital, ~~2004~~combined with significant competition for real estate, may ~~there~~result ~~were~~in 2inflated purchase prices for such assets. To the extent the Congress Center property was purchased in such an environment,~~053~~ we are subject to the risk that if the real estate ~~shareholders~~ market ceases to attract the same level of ~~record~~capital investment in the future as it has attracted, or if the number of companies seeking to acquire such assets decreases, our returns will be lower and the ~~Company.~~value of our interest in the Congress Center property may not appreciate or may decrease significantly below the amount that was paid for it.

~~Distributions~~ If we are unable to find a buyer for our unconsolidated property interest at our expected sales price, our liquidating distributions to our beneficiaries may be delayed or reduced.

~~The~~ As ~~Company~~of ~~paid~~March 18, ~~monthly~~2009, ~~distributions~~the onCongress ~~its~~Center property is not ~~common~~ subject ~~stock~~to ~~from~~a ~~August 1,~~binding ~~2000~~sales ~~through~~agreement ~~April 1~~providing for the sale of our entire interest in the property. In calculating the estimated range of liquidating distributions to our beneficiaries, ~~2001~~we assumed that we would be able to find a buyer for the Congress Center property at an ~~annual~~amount ~~rate~~based on our best estimate of ~~$0.800 per~~market ~~share~~value (8for the property.~~00%~~ ~~based~~However, onwe amay have ~~$10.00~~ overestimated ~~purchase~~the sales price) that we will ultimately be able to obtain for this asset. ~~Effective~~For ~~April 1~~example, ~~2001~~in order to find a buyer in a timely manner, ~~the~~we ~~Board~~may be required to lower our asking price below the low end of ~~Directors~~our ~~approved~~current anestimate ~~increase~~of the property’s fair value. If we are not able to find a buyer for this asset in a timely manner or if we have overestimated the ~~annual~~sales ~~distribution~~price we will receive, our liquidating distributions to our beneficiaries ~~$0.825 per~~ would ~~share~~be (8delayed and/or reduced.~~25%~~ Furthermore, the projected amount of liquidating distributions to our beneficiaries are based onupon the appraisal of our property, but real estate market values are constantly changing and fluctuate with changes in interest rates, supply and demand dynamics, occupancy percentages, lease rates, the availability of suitable buyers, the perceived quality and dependability of income flows from tenancies and a ~~$10.00~~number ~~purchase~~of other ~~price)~~factors, both local and national. The net liquidation ~~Monthly~~ proceeds ~~distributions~~from ~~were~~the ~~paid~~Congress ~~during~~Center ~~2003~~property atmay also be affected by the terms of prepayment or assumption costs associated with ~~$0.825 per~~ debt ~~share~~encumbering ~~annual~~the ~~rate~~property. In addition, co-ownership matters, transactional fees and expenses, environmental contamination at our property or unknown liabilities, if any, may adversely impact the net liquidation proceeds from the asset.

The continued payment of distributions will depend primarily on the Company’s ability to generate positive cash flow from operations. The Company cannot assure you that it will continue to pay distributions at the current rate or at all.

Equity Compensation Plan Information

The Company’s equity compensation plan information is as follows:

Number of Securities

Weighted Average

to be Issued Upon

Exercise Price of

Number of Securities

Exercise of Outstanding

Outstanding Options

Remaining Available

Plan Category

Options, Warrants and Rights

Warrants and Rights

for Future Issuance

Equity compensation plans approved by security holders(1)

165,000

9.05

635,000

Equity compensation plans not approved by security holders

—

Total

165,000

635,000

(1) Each of the Independent Director and Officer/Employee Stock Option Plans was approved at the Company’s annual shareholders meeting held on June 28, 2003.

~~Item~~ The recent 6.downturn ~~Selected~~in ~~Financial~~the ~~Data~~credit markets may increase the cost of borrowing, and may make it difficult for prospective buyers of the Congress Center property to obtain financing, which would have a material adverse effect on our liquidation.

~~SELECTED~~ Recent ~~FINANCIAL~~events ~~DATA~~in the financial markets have had an adverse impact on the credit markets and, as a result, the availability of credit may become more expensive and difficult to obtain. Some lenders are imposing more stringent restrictions on the terms of credit and there may be a general reduction in the amount of credit available in the markets in which we conduct business. The negative impact on the tightening of the credit markets may have a material adverse effect on prospective buyers of the Congress Center property resulting from, but not limited to, an inability to finance the acquisition of the Congress Center property on favorable terms, if at all, increased financing costs or financing with increasingly restrictive covenants.

T The ~~REIT~~negative impact of the recent adverse changes in the credit markets on the real estate sector generally or on prospective buyers’ inability to obtain financing on favorable terms, ~~INC~~ if at all, may have a material adverse effect on our liquidation.

	As of December 31,
Selected Financial Data(1)	2003		2002		2001
BALANCE SHEET DATA:
Total Assets	$	49,369,932	$	67,768,903	$	45,441,357
Mortgage loans payable		9,250,278		28,090,125		24,737,461
Shareholders’ equity		38,107,802		38,215,638		19,765,423

Our ability to dispose of our interest in the Congress Center property and our ability to pay liquidating distributions to our beneficiaries are subject to general economic and regulatory factors we cannot control or predict.

		Years Ended December 31,
		2003			2002			2001
OPERATING DATA:
Total revenues		$	2,645,303		$	586,814		$	197,044
Income (loss) from continuing operations before discontinued operations			1,012,352			1,037,937			(312,155	)
Net income (loss)			4,189,268			2,293,758			(463,632	)
Net income (loss) per common share, basic and diluted(2):
	Income (loss) from continuing operations	$	0.22		$	0.26		$	(0.22	)
	Income (loss) from discontinued operations		0.68			0.31			(0.11	)
	Net income (loss)		0.90			0.57			(0.33	)
OTHER DATA:
Cash flows provided by (used in) operating activities		$	2,326,966		$	2,289,548		$	(1,241,850	)
Cash flows provided by (used in) investing activities			26,752,355			(19,278,632	)		(7,491,774	)
Cash flows provided by (used in) financing activities			(23,019,465	)		19,471,393			12,132,706
Distributions declared			3,842,601			3,310,870			1,145,621
Funds from operations(2)(3)			3,222,408			2,826,049			307,943

Our liquidation is subject to the risks of a national economic slowdown or disruption, other changes in national or local economic conditions or changes in tax, real estate, environmental or zoning laws. The following factors may affect income from the Congress Center property, which would have a materially adverse effect on our ability to dispose of our interest in the Congress Center property, and subsequently our ability to pay liquidating distributions to our beneficiaries:

(1)

The selected financial data should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this report. Certain amounts in the prior years have been reclassified as discontinued operations related to properties disposed of in 2003.

(2)

Net income (loss) and distributions per share are based upon the weighted average number of common shares outstanding. Distributions by the Company of its current and accumulated earnings and profits for federal income tax purposes are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholder’s basis in the shares to the extent thereof (a return of capital for tax purposes), and thereafter as taxable gain. These distributions in excess of earnings and profits will have the effect of deferring taxation of the distributions until the sale of the shareholder’s shares. For the years ended December 31, 2003 and 2002, approximately 33% and 52%, respectively, of distributions represented a return of capital for tax purposes. In addition, for the year ended December 31, 2003, approximately 74% of distributions represented capital gain for tax purposes. In order to maintain its qualification as a REIT, the Company must make annual distributions to shareholders of at least 90% of its REIT taxable income. Under certain circumstances, the Company may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements. Distributions are determined by the Company’s Board of Directors and are dependent on a number of factors, including the amount of funds available for distribution, the Company’s financial condition,


	•	poor economic times may result in defaults by tenants at the Congress Center property. We may also be required to provide rent concessions or reduced rental rates to maintain or increase occupancy levels;

	•	job transfers and layoffs may cause vacancies to increase and a lack of future population and job growth may make it difficult to maintain or increase occupancy levels;

	•	increases in supply of competing properties or decreases in demand for the Congress Center property may impact our ability to maintain or increase occupancy levels;

	•	changes in interest rates and availability of debt financing could render the sale of the Congress Center property difficult or unattractive;

	•	periods of high interest rates may reduce cash flow from leveraged property; and

	•	increased insurance premiums, real estate taxes or energy or other expenses may reduce funds available for distribution or, to the extent such increases are passed through to tenants, may lead to tenant defaults. Also, any such increased expenses may make it difficult to increase rents to tenants on turnover, which may limit our ability to increase our returns.

We may delay or reduce our estimated liquidating distributions.

As of March 18, 2009, we estimate that our net proceeds from liquidation will be approximately $54,377,000 (of which approximately $50,600,000 has already been paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us) and we expect that our beneficiaries will receive approximately $11.81 per unit in liquidating distributions (of which $10.99 per share has already been paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us). However, our expectations about the amount of liquidating distributions that we will make and when we will make them are based on many estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of liquidating distributions we pay to our beneficiaries may be more or less than we currently estimate. In addition, the liquidating distributions may be paid later than we predict.

~~any~~ We decision by the Board of Directors to reinvest funds rather than to distribute the funds, the Company’s capital expenditures, the annual distribution required to maintain REIT status under the Code and other factors the Board of Directors may be ~~deem~~unable ~~relevant. (3) One of the Company’s objectives is~~ to ~~provide~~sell ~~cash~~our ~~distributions~~jointly toheld ~~its~~unconsolidated ~~shareholders~~property ~~from cash generated by the Company’s operations. Cash generated from operations is not equivalent to the Company’s net income~~ or our ~~loss~~unconsolidated asproperty ~~determined~~interest ~~under~~at ~~accounting~~our ~~principles generally accepted in the United States (“GAAP”)~~expected value. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a measure known as “Funds from Operations” or “FFO,” which it believes more accurately reflects the operating performance of a REIT such as the Company.

~~The~~ In ~~Company~~order ~~defines~~to ~~FFO,~~realize a ~~non-GAAP~~return ~~measure~~on our investment, we presently ~~consistent~~ intend ~~with~~to ~~the~~sell ~~NAREIT’s~~our ~~definition~~unconsolidated property interest. However, aswe may ~~net~~not ~~income~~be able to find a purchaser for such interest due to ~~available~~ market conditions or we may be unable to ~~common~~receive ~~shareholders~~our expected value for our unconsolidated property interest because we hold only a minority interest in the underlying property. As a result, ~~plus~~we ~~depreciation~~may ~~and~~be forced to attempt to sell our unconsolidated ~~amortization~~ property. Because of ~~assets~~the ~~uniquely~~nature ~~significant~~of joint ownership of our unconsolidated property, we may need to agree with our co-owners on the ~~real~~terms ~~estate~~of the sale of our unconsolidated property before ~~industry~~ such sale can be affected. There can be no assurance that we will agree with our co-owners on satisfactory sales terms. If the parties are unable to agree, ~~reduced~~the bymatter ~~gains~~could ultimately go before a court of law, and ~~increased~~a byjudicial ~~losses~~partition oncould be sought. ~~(i)~~ A failure to reach agreement with these parties regarding the sales terms of ~~investment~~our unconsolidated property ~~and~~may delay or reduce ~~(ii) extraordinary~~ our ~~items~~liquidating distributions therefrom.

~~The Company considers FFO to be an appropriate~~ ~~supplemental measure of a REIT’s operating performance as~~ Our ~~it is based on a net income analysis of property portfolio performance that excludes non~~ co-~~cash~~ownership ~~items~~arrangements ~~such~~with asaffiliated ~~depreciation. The~~entities ~~historical~~may ~~accounting convention used for real estate assets~~not ~~requires~~ reflect ~~straight-line~~solely ~~depreciation~~our ofbeneficiaries’ ~~buildings~~best ~~and improvements,~~interests ~~which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise~~ and ~~fall with market conditions, presentations~~may of subject ~~operating~~these ~~results~~investments ~~for~~to aincreased ~~REIT, using historical accounting for depreciation, could be less informative~~risks. ~~The use of FFO is~~ ~~recommended by the REIT industry as a supplemental performance measure.~~

~~Presentation~~ We ofacquired ~~this~~our ~~information~~interest isin ~~intended~~the ~~to assist~~Congress ~~the~~Center ~~reader~~property inthrough co-ownership ~~comparing~~arrangements ~~the~~with ~~operating~~one ~~performance~~or ~~of different~~more ~~REITs,~~affiliates ~~although~~of itour advisor. ~~should~~Each beco-owner ~~noted~~is ~~that~~required ~~not~~to approve all ~~REITs~~sales, ~~calculate~~ refinancing, ~~FFO~~leases ~~the~~and ~~same~~lease ~~way,~~amendments. soThis ~~comparisons~~acquisition ~~with~~was financed, ~~other~~in ~~REITs~~part, ~~may not~~by beloans ~~meaningful.~~under ~~Furthermore,~~which ~~FFO~~we isare ~~not~~jointly ~~necessarily~~and ~~indicative~~ severally ofliable ~~cash~~for ~~flow~~the ~~available~~entire toloan ~~fund~~amount ~~cash~~along ~~needs~~with ~~and~~the ~~should~~other ~~not~~ co-owners. beIn ~~considered~~addition, asinvesting anin ~~alternative~~a toproperty ~~net~~through co-ownership ~~income~~arrangements assubjects anthat investment to risks not ~~indication~~ present ofin ~~the~~a ~~Company’s~~wholly-owned ~~performance.~~property, including, among others, the following:

~~FFO~~• isthe ~~calculated~~risk that the co-owner(s) in the investment might become bankrupt; • the risk that the co-owner(s) may at any time has economic or business interests or goals which are inconsistent with our business interests or goals; • the risk that the co-owner(s) may not be able to make required payments on loans under which we are jointly and severally liable; • the risk that all the co-owners may not approve refinancing, leases and lease amendments requiring unanimous consent of co-owners that would have adverse consequences for our beneficiaries; or • the risk that the co-owner(s) may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, such as ~~follows:~~ selling a property at a time when it would have adverse consequences to us.

		Years Ended December 31,
		2003			2002			2001
Net income		$	4,189,268		$	2,293,758		$	(463,632	)
Depreciation
	Continuing operations		1,544,488			671,579			—
	Discontinued operations		102,175			74,064			593,627
(Gain) loss on sale of investments in real estate and unconsolidated real estate			(2,613,523	)		(213,352	)		177,948
Funds from operations		$	3,222,408		$	2,826,049		$	307,943

Actions by co-owner(s) requiring unanimous consent of co-owners might have the result of blocking actions that are in our best interests subjecting the unconsolidated property to liabilities in excess of those otherwise contemplated and may have the effect of reducing our cash available for distribution to our beneficiaries. It also may be difficult for us to sell our interest in any co-ownership arrangement at the time we deem best for our beneficiaries.

~~Item~~ If 7.any party ~~Management’s~~to ~~Discussion~~our ~~and~~future ~~Analysis~~sale ofagreement ~~Financial~~with ~~Condition~~respect ~~and~~to ~~Results~~our ofremaining asset ~~Operations~~defaults thereunder, or if the sale does not otherwise close, our liquidating distributions may be delayed or reduced.

The ~~following~~consummation ~~discussion~~of ~~should~~future bepotential ~~read~~sales intransactions are ~~conjunction~~ subject ~~with~~to ~~Item 6~~the satisfaction of applicable closing conditions. If the transaction contemplated by this future sale agreement does not close because of a buyer default, ~~“Selected~~failure ~~Financial~~of a closing ~~Data~~ condition or for any other reason,” ~~and~~we will need to locate a new buyer for our remaining asset, which we may be unable to do promptly or at a price or on terms that are as favorable as the failed ~~Company’s~~transaction. ~~historical~~We ~~consolidated~~will also incur additional costs involved ~~financial~~ in ~~statements~~locating a new buyer and ~~related~~negotiating ~~notes~~a ~~thereto~~new ~~included~~sale agreement for ~~elsewhere~~ our inremaining ~~this~~asset. ~~report~~These additional costs are not included in our projections. In the event that we incur these additional costs, our liquidating distributions to our beneficiaries would be delayed or reduced.

Forward-Looking Statements

Historical results and trends should not be taken as indicative of future operations. Management’s statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

~~Exchange Act of 1934, as amended. Actual results~~ ~~may differ materially from those included in the forward-looking~~ Decreases ~~statements. The Company intends these forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained~~ in ~~the~~property ~~Private~~value ~~Securities~~may ~~Litigation~~reduce Reform Act of 1995, and is including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the ~~Company,~~amount ~~are generally~~that ~~identifiable~~we byreceive ~~use~~upon of the ~~words “believe,”~~ ~~“expect,”~~ sale ~~“intend,” “anticipate,” “estimate,” “project,” “prospects,” or similar expressions. The Company’s ability to predict results or the actual effect~~ of ~~future~~our ~~plans~~remaining ~~or strategies is inherently uncertain~~asset. ~~Factors~~ which could have a material adverse affect on the operations and future prospects of the Company on a consolidated basis include, but are not limited to: changes in economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of REITs), availability of capital, interest rates, competition, supply and demand for operating properties in the Company’s current and proposed market areas and generally accepted accounting principles, policies and guidelines applicable to REITs. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included herein and in the Company’s other filings with the Securities and Exchange Commission.

~~Overview~~ The underlying value of our interest in our unconsolidated property may be reduced by a number of factors that are beyond our control, including, without limitation, the following:

~~The~~• ~~Company~~adverse ~~was~~changes ~~organized~~ in ~~December~~economic ~~1998~~conditions; ~~to acquire~~• ~~and~~the ~~manage~~financial aperformance ~~diversified portfolio~~ of ~~real~~our ~~estate composed of office~~tenants, ~~industrial, retail~~ and ~~service properties located primarily in~~ the ~~following~~ability ~~focus~~of ~~states:~~our ~~Alaska, Florida, Iowa,~~tenants ~~Michigan,~~to ~~Minnesota,~~satisfy ~~Nevada,~~their ~~North~~obligations ~~Carolina, South~~under ~~Carolina,~~their ~~South~~leases; ~~Dakota,~~• ~~Tennessee,~~terminations ~~Texas,~~and ~~Virginia, Washington,~~renewals ~~Wisconsin~~of ~~and~~leases ~~Wyoming.~~by ~~The~~our ~~Company~~tenants; ~~has~~• ~~been operating~~competition; and ~~intends~~• tochanges ~~continue~~in ~~operating~~real asestate atax ~~REIT~~rates ~~for federal~~ and ~~state~~other ~~income~~operating ~~tax purposes~~expenses. ~~The Advisor has been retained to manage, for a fee, the Company’s day to day affairs, subject to the supervision of the Company’s Board of Directors.~~

As Any ofreduction ~~December 31,~~in ~~2003,~~ the ~~Company~~value ~~owned~~of our unconsolidated property would ~~two~~ make ~~consolidated~~it ~~properties~~more ~~and~~difficult ~~interests~~for inus ~~eight~~to sell our remaining asset for ~~unconsolidated~~ the ~~properties.~~amounts ~~Comparability~~that ~~between~~we ~~2003~~have ~~and~~estimated. ~~2002~~Reductions in the amounts ~~and~~ that ~~between~~we ~~2002~~receive ~~and~~when ~~2001~~we issell ~~limited~~our ~~due~~remaining toasset could decrease or delay the ~~number~~payment of ~~acquisitions~~ ~~and~~liquidating ~~dispositions~~distributions ~~during~~to ~~these years~~our beneficiaries.

~~Acquisitions~~ If inour advisor ~~2003~~or its affiliate is unable to maintain the occupancy rates of currently leased space or lease currently available space, if tenants default under their leases or other obligations during the liquidation process or if our cash flow during the liquidation is otherwise less than we expect, our liquidating distributions may be delayed or reduced.

~~Congress~~ In ~~Center~~calculating —our ~~Chicago~~estimated liquidating distributions, ~~Illinois~~we assumed that the occupancy rates of currently-leased space at our unconsolidated property would be maintained, that our advisor would be able to rent certain currently available space at market rents and that our unconsolidated property would not experience any significant tenant defaults during the liquidation process that were not subsequently cured. Negative trends in one or more of these factors during the liquidation process may adversely affect the sales value of our remaining asset, which would reduce our liquidating distributions. To the extent that we receive less income from our unconsolidated property than we expect during the liquidation process, our liquidating distributions will be reduced. Our advisor or its affiliate may also decide in the event of a tenant default to restructure the lease, which could substantially reduce the rent payable to us under the lease, or make other modifications that are unfavorable to us, which could decrease or delay the payment of liquidating distributions to our beneficiaries.

~~On January 9, 2003, through its wholly-owned~~ ~~subsidiary,~~ If ~~TREIT — Congress Center, LLC, the Company~~we ~~purchased~~ are annot ~~approximately~~able ~~10.2%~~to ~~tenant~~sell inour ~~common~~remaining ~~interest~~asset in ~~Congress~~ ~~Center from an unaffiliated third party. Congress Center is~~ a ~~16-story~~timely ~~Class A~~manner, ~~office building of~~we ~~approximately~~ may ~~524,730 square~~experience ~~feet~~severe ~~located~~liquidity ~~in Chicago~~problems, ~~Illinois.~~ ~~Affiliated~~may ~~entities~~not ~~purchased~~be ~~the~~able ~~remaining undivided~~to ~~tenant~~ meet inour ~~common~~obligations ~~interests~~to inour ~~the~~creditors ~~property. The total purchase price for Congress Center was $136~~and,~~108,000.~~ ~~The Company’s total investment was approximately $5~~ultimately,~~000,000.~~ ~~The seller of the~~may ~~property~~ become ~~paid~~subject ~~a sales commission~~ to ~~Realty~~bankruptcy ~~of $2,000,000, or approximately 1~~proceedings.~~5% of the purchase price.~~

~~Gateway~~ In ~~Mall~~the —event ~~Bismarck~~we are not able to sell our remaining asset within a reasonable period of time and for a reasonable price, ~~North~~or ~~Dakota~~if our expenses exceed our estimates, we may experience severe liquidity problems and not be able to meet our financial obligations to our creditors in a timely manner. If we cannot meet our obligations to our creditors in a timely manner we could ultimately become subject to bankruptcy proceedings.

~~On January 29, 2003, through its~~ ~~wholly-owned~~ If ~~subsidiary, TREIT — Gateway Mall ND, LLC,~~our ~~the~~ liquidation ~~Company~~costs ~~purchased~~or ~~Gateway~~unpaid ~~Mall~~liabilities inare ~~Bismarck,~~greater ~~North~~than ~~Dakota~~we ~~from an unaffiliated third party for a purchase price of $9~~ expect,~~000,000.~~ ~~Gateway~~our ~~Mall~~liquidating isdistributions amay ~~multi-tenant~~be ~~regional~~delayed mall of approximately 333,878 square feet on a 45-acre site located in Bismarck, North Dakota. The property is subject to a ground lease expiring in 2028 with ten 5-year option periods thereafter. The seller of the property paid a sales commission to Realty of $250,000, or ~~approximately 2.8% of the purchase~~ ~~price~~ reduced.

Before making the final liquidating distribution to our beneficiaries, we will need to pay or arrange for the payment of all of our transaction costs in the liquidation, and all other costs and valid claims of our creditors. Our Trustee may also decide to acquire one or more insurance policies covering unknown or contingent claims against us, for which we would pay a premium which has not yet been determined. Our Trustee may also decide to establish a reserve fund to pay these contingent claims. The amount of transaction costs in the liquidation are not yet final, so we have used estimates of these costs in calculating the amounts of our projected liquidating distributions. To the extent that we have underestimated these costs in calculating our projections, our actual net liquidation value may be lower than our estimated range. In addition, if the claims of our creditors are greater than we have anticipated or we decide to acquire one or more insurance

~~Enclave~~ policies ~~Parkway~~covering —unknown ~~Houston~~or contingent claims against us, ~~Texas~~our liquidating distributions to our beneficiaries, may be delayed or reduced. Further, if a reserve fund is established, payment of liquidating distributions to our beneficiaries may be delayed or reduced.

~~On December 22, 2003, through its~~ ~~wholly-owned~~ There can ~~subsidiary,~~be ~~TREIT —~~no ~~Enclave~~assurance ~~Parkway,~~that ~~LLC,~~ the ~~Company~~plan ~~purchased~~of aliquidation ~~3.3%~~will ~~interest~~result in ~~Enclave Parkway in~~ ~~Houston,~~ greater ~~Texas~~returns ~~from~~to anour ~~unaffiliated~~beneficiaries ~~third~~on ~~party.~~their ~~The total purchase price for Enclave Parkway was $34,500,000. The Company’s total~~ investment ~~was $437,500. Enclave Parkway is~~within a ~~207,435 square~~reasonable ~~foot~~period ~~Class A~~of ~~office~~time, ~~building~~than ~~situated in~~our ~~Houston’s~~beneficiaries ~~energy corridor. The seller of the property~~would ~~paid~~ receive athrough ~~sales~~other ~~commission~~alternatives toreasonably ~~Realty~~available ~~of $1,000,000, or 2.9% of the~~to ~~purchase price~~ us.

~~Dispositions~~ Once our remaining asset is sold, our beneficiaries will no longer participate in ~~2003~~any future earnings or growth of our remaining asset or benefit from any increases in the value of our remaining asset. While T REIT’s board of directors and special committee each believed that a liquidation would be more likely to provide our beneficiaries with a greater return on their investment within a reasonable period of time than our beneficiaries would receive through other alternatives reasonably available to us at the time, such belief relied upon certain assumptions and judgments concerning future events which may be unreliable or incorrect.

~~Northstar~~ We have ~~Crossing~~terminated ~~Shopping~~our ~~Center~~regular —monthly ~~Garland,~~distributions ~~Texas~~and future liquidating distributions will be determined at the sole discretion of our Trustee.

On In ~~January 11,~~accordance ~~2003,~~with the ~~Company~~plan ~~sold~~of ~~the Northstar~~liquidation, ~~Crossing~~regular ~~Shopping~~monthly distributions ~~Center~~to inT ~~Garland,~~REIT ~~Texas~~shareholders towere anterminated effective ~~unaffiliated~~ August 1, ~~third~~2005. ~~party~~Future ~~for~~liquidating adistributions ~~purchase~~to ~~price of $4,200,000. In~~our ~~connection~~ beneficiaries ~~with~~will ~~the~~be ~~sale,~~made ~~the~~from ~~Company~~net ~~repaid~~proceeds areceived ~~note~~by ~~payable~~us from ~~secured~~ our byunconsolidated ~~the~~ property ~~with~~interest anand ~~outstanding~~the ~~balance~~ultimate sale of $2 our remaining asset,~~866,579~~ and ~~received~~will ~~net~~be ~~cash~~determined ~~proceeds~~at ~~totaling~~the ~~approximately~~sole ~~$1,015,000~~ discretion ~~after payment~~ of ~~closing~~our ~~costs~~Trustee. ~~and~~Liquidating ~~other~~distribution ~~transaction~~amounts will ~~expenses.~~ generally ~~The~~depend ~~sale~~on ~~resulted~~net inproceeds areceived ~~net~~from ~~loss~~the sale of ~~approximately~~our ~~$191~~ remaining asset,~~400.~~ Atour ~~closing,~~anticipated ~~the~~cash ~~Company~~needs ~~paid~~to asatisfy liquidation ~~sales~~and ~~commission~~other toexpenses, ~~an unaffiliated~~financial ~~broker~~condition ofand ~~$168~~capital requirements,~~000,~~ orand ~~approximately~~other ~~4.0%~~factors ofour ~~the selling~~Trustee ~~price~~may deem relevant. Our ~~The~~ability ~~Company~~to ~~reinvested~~pay ~~the~~distributions ~~proceeds~~to ~~from~~our ~~the~~beneficiaries ~~sale~~may be in adversely ~~other~~affected ~~income~~by ~~producing~~the ~~commercial~~risks ~~real~~described ~~estate property~~herein.

~~Thousand~~ Our Trustee ~~Oaks~~may ~~Shopping~~amend ~~Center~~the —plan ~~San~~of ~~Antonio,~~liquidation ~~Texas~~without further beneficiary approval.

On Our ~~August 11,~~Trustee ~~2003,~~may ~~the~~amend ~~Company sold~~ the ~~Thousand~~ ~~Oaks~~plan ~~Shopping~~of ~~Center~~liquidation inwithout ~~San Antonio, Texas to an~~further ~~unaffiliated~~ approval ~~third~~from ~~party~~our ~~for a purchase price of $15~~beneficiaries,~~880,000.~~ ~~In connection~~to ~~with~~ the ~~sale,~~extent ~~the~~permitted ~~Company repaid a note payable secured~~ by ~~the property with an outstanding balance of~~ ~~$8,750,000~~ Virginia ~~and received net cash proceeds totaling approximately $6,100,000 after payment of closing costs and other transaction expenses~~law. ~~The sale resulted in a net gain of approximately $2~~Thus,~~100,000.~~ Atto ~~closing,~~ the ~~Company~~extent ~~paid~~that aVirginia ~~sales~~law ~~commission~~permits tous ~~Realty~~ to ofso ~~$175~~do,~~000,~~ orwe ~~approximately~~may ~~1.1%~~decide ~~of the selling price, and a sales commission~~ to anconduct ~~unaffiliated broker of $317,600, or approximately 2.0% of~~ the ~~selling~~liquidation ~~price. The Company reinvested~~differently ~~the~~ than ~~proceeds~~previously ~~from~~disclosed ~~the~~to ~~sale in real estate property that qualifies for like-kind exchange treatment under Section 1031 of the Code~~beneficiaries.

~~Pahrump~~ We have ~~Valley~~the ~~Junction~~authority ~~Shopping~~to ~~Center~~sell —our ~~Pahrump,~~remaining ~~Nevada~~asset under terms less favorable than those assumed for the purpose of estimating our net liquidation value range.

On We ~~September 25,~~have ~~2003,~~ the ~~Company~~authority ~~sold~~to ~~the Pahrump~~sell ~~Valley~~our ~~Junction~~remaining ~~Shopping~~asset ~~Center~~on insuch ~~Pahrump,~~terms and ~~Nevada~~ to ~~an unaffiliated~~such ~~third~~parties ~~party~~as ~~for~~we adetermine, ~~sales~~in ~~price~~our ofTrustee’s ~~$18,985,000~~sole discretion. ~~In connection~~Our ~~with~~beneficiaries ~~the~~will ~~sale,~~have ~~the~~no ~~Company repaid a note payable~~subsequent ~~secured~~ opportunity byto ~~the~~vote ~~property~~on ~~with~~such anmatters ~~outstanding~~and ~~balance of approximately $11~~will,~~884,000~~ ~~and received net cash proceeds of approximately $5~~therefore,~~950,000~~ ~~after~~have ~~closing costs and other~~no ~~transaction~~ right ~~expenses.~~to ~~The~~approve ~~sale~~or ~~resulted~~disapprove inthe aterms ~~net~~of ~~gain~~such ofsale. ~~approximately $874~~ Accordingly,~~000.~~ ~~The~~our ~~Company~~beneficiaries ~~paid~~must arely ~~sales~~solely ~~commission~~on toour judgment ~~Realty~~ with ofrespect ~~$175,000,~~to ~~or approximately 1.0% of~~ the ~~sales~~sale ~~price,~~ process and ~~sales~~our ~~commissions~~judgment tomay ~~unaffiliated~~not ~~brokers of $629,700, or~~always ~~approximately~~ be ~~3.3% of~~ the ~~sales~~best ~~price.~~judgment ~~The~~when ~~Company~~evaluating ~~reinvested the proceeds from the sale~~ in ~~other income producing commercial real estate property~~hindsight.

~~Acquisitions~~ The plan of liquidation may lead to litigation which could result in substantial ~~2002~~costs and distract our Trustee.

~~County~~ Historically, ~~Center~~extraordinary ~~Building~~corporate —actions ~~Temecula~~by a company, ~~California~~such as the plan of liquidation, may sometimes lead to securities class action lawsuits being filed against that company. We may become involved in this type of litigation as a result of the plan of liquidation. As of March 18, 2009, no such lawsuits relative to the plan of liquidation have been filed. However, if such a lawsuit is filed against us, the litigation is likely to be expensive and, even if we ultimately prevail, the process will divert our Trustee’s attention from implementing the plan of liquidation and otherwise operating our business. If we do not prevail in any such lawsuit which may be filed against us in the future, we may be liable for damages. In such event, we cannot predict the amount of any such damages; however, they may be significant and may reduce our cash available for distribution to our beneficiaries.

On January 11, 2002, through its wholly-owned subsidiary, NNN County Center — 12, LLC, the Company purchased a 16.0% undivided tenant in common interest in the County Center Building from an unaffiliated third party. County Center is a 77,582 square foot office/distribution building located in Temecula, California. The total purchase price was $6,335,000. The Company’s total investment was $500,000. The seller of the property paid a sales commission to Realty of $150,000, or 2.4% of the purchase price.

~~City~~ Our advisor ~~Center~~has ~~West~~conflicts ~~“A”~~of ~~Building~~interest —that ~~Las~~differ ~~Vegas,~~from ~~Nevada~~our beneficiaries’ interests as a result of the liquidation.

On Our ~~March 15,~~advisor ~~2002,~~has ~~through~~interests ~~its wholly-owned subsidiary, T REIT — City Center West A, LLC, the Company purchased an 89.1% undivided tenant~~ in ~~common interest in~~ the ~~City~~liquidation ~~Center~~that ~~West~~are ~~“A” Building~~ different from ~~an unaffiliated~~our ~~third~~beneficiaries’ ~~party.~~interests ~~City~~as ~~Center West “A” is~~ a ~~105,964 square~~ ~~foot office building located in Las Vegas, Nevada~~beneficiary. ~~The total purchase price for the property was~~Our ~~$21,670,000.~~ Trustee ~~The~~is ~~Company’s~~aware ~~total investment was $7,727,137. The seller~~ of ~~the~~these ~~property~~actual ~~paid~~and apotential ~~sales~~conflicts ~~commission to Realty~~ of ~~$420~~ interest,~~000,~~ orsome ~~1.9%~~ of ~~the~~which ~~purchase~~are ~~price~~summarized below.

~~Pacific~~• ~~Corporate~~Our ~~Park~~advisor —or ~~Lake~~its ~~Forest~~affiliates receive compensation under an Advisory Agreement, CAincluding fees for disposing of our remaining asset. Our advisor has engaged Triple Net Properties Realty, Inc., or Realty, an affiliate of our advisor, to provide various services to us in connection with our remaining asset, including disposing of our remaining asset. In accordance with the plan of liquidation, our advisor or Realty will be paid to liquidate our remaining asset pursuant to the Advisory Agreement. If we sell the unconsolidated property, such fee will be the lesser of: (i) 3.0% of the contracted sales price of the Congress Center property; or (ii) 50.0% of the competitive, market-based real estate commission. Additionally, the property disposition fee paid to our advisor and Realty shall not exceed, when added to the sums we pay to any unaffiliated parties in connection with the disposition of the property: (i) 6.0% of the contracted sales price, or (ii) the competitive, market based real estate commission. Based on our estimated sales price as of December 31, 2008, we estimate that pursuant to the Advisory Agreement we will pay a fee to our advisor or Realty of approximately $191,000 for disposing of our unconsolidated property during liquidation. Our advisor or Realty also have agreements with certain affiliated co-owners of our property, pursuant to which our advisor will also receive fees for the disposition of the affiliated co-owners’ interests in the Congress Center property. Based on our estimated sales price as of December 31, 2008, we estimate that the total fees that will be received by our advisor or Realty from the affiliated co-owners will be approximately $1,870,500, which includes the fees to be received by our advisor or Realty under the Advisory Agreement. Moreover, if we sell our unconsolidated property to one of our affiliates or an affiliate of our advisor, our advisor or Realty may receive additional fees from the purchaser of the property. • Our Trustee owns 552 units, and, therefore, in accordance with the plan of liquidation, based on the net assets in liquidation as of December 31, 2008, plus liquidating distributions through December 31, 2008, will be entitled to receive approximately $7,000 in distributions. These estimates per unit include projections of costs and expenses expected to be incurred during the period required to complete the plan of liquidation. These projections could change favorably or unfavorably based on the timing of any sale, the performance of the asset and as a result changes in the underlying assumptions of the projected cash flows. • Pursuant to the plan of liquidation, our Trustee has discretion to pay up to an aggregate of $300,000 in retention and incentive based bonuses to some of the employees of our advisor from time to time. Prior to T REIT’s transfer of assets and liabilities to us on July 20, 2007, $245,000 in retention and incentive bonuses were paid by T REIT. We did not pay any retention or incentive bonuses for the year ended December 31, 2008 or for the period from July 20, 2007 through December 31, 2007. • The plan of liquidation provides that we may sell our remaining asset to one of our affiliates or an affiliate of our advisor, but only if the transaction is approved by our Trustee. If we enter such a transaction, we expect that our Trustee will require that Stanger, or another independent consultant, opine to us as to the fairness of the consideration to be received by us in such transaction, from a financial point of view, or conduct an appraisal of the applicable property as a condition to their approval. In no event will our Trustee approve a transaction if: (i) Stanger, or another independent consultant, concludes after a review of the information then available, including any pending offers, letters of intent, contracts for sale, appraisals or other data, that the consideration to be received by us is not fair to us from a financial point of view; (ii) Stanger, or another independent consultant, concludes that the consideration to be received is less than the appraised value of the applicable property; or (iii) we have received a higher offer for the applicable property from a credible party with whom we reasonably believe is ready, able and willing to close the transaction on the contract terms.

On March 25, 2002, through its wholly-owned subsidiary, TREIT — Pacific Corporate Park, LLC, the Company purchased a 22.8% undivided tenant in common interest in Pacific Corporate Park from an unaffiliated third party. Pacific Corporate Park is a six-building, 167,486 square foot office park located in Lake Forest, California. The total purchase price for Pacific Corporate Park was $23,728,000. The Company’s total investment was $4,937,100. The seller of the property paid a sales commission to Realty of $580,000, or 2.4% of the purchase price.

Titan Plaza, Titan Building and Titan Land — San Antonio, Texas

On April 17, 2002, through its wholly-owned subsidiary, T REIT — Titan Plaza, L.P., the Company purchased a 48.5% undivided tenant in common interest in the Titan Building and Titan Plaza located in San Antonio, Texas from an unaffiliated third party. The Titan Building is a 103,762 square foot, six-story suburban office building. Titan Plaza is an adjoining 27,765 square foot single-story Class B suburban office building. The total purchase price of the property was $9,167,000. The Company’s total investment was $1,536,000. The seller of the property paid a sales commission to Realty of $250,000, or 2.7% of the purchase price. The Company also purchased an adjoining 2.34-acre parcel of land for a purchase price of $75,000.

University Heights Business Park — San Antonio, Texas

On August 22, 2002, through its wholly-owned subsidiary, TREIT — University Heights, LP, the Company purchased the University Heights Business Park from an unaffiliated third party for a purchase price of $6,750,000. University Heights is a 68,400 square foot flex/service center consisting of two one-story buildings located in San Antonio, Texas. The seller of the property paid a sales commission to Realty of $135,000, or 2.0% of the purchase price.

Saddleback Financial Center — Laguna Hills, California

On September 25, 2002, through its wholly-owned subsidiary, T REIT — Saddleback Financial L.P., the Company purchased a 25.0% undivided tenant in common interest in the Saddleback Financial Center from an unaffiliated third party. The Saddleback Financial Center is a 72,711 square foot, four-story suburban office building located in Laguna Hills, California. The total purchase price of the property was $11,072,500. The Company’s total investment was $775,000. The seller of the property paid a sales commission to Realty of $322,500, or 2.9% of the purchase price.

Dispositions in 2002

Seguin Corners Shopping Center — Seguin Texas

On August 12, 2002, the Seguin Corners Shopping Center was sold for approximately $2,500,000 to an unaffiliated third party. The proportionate sale price of the Company’s 26.0% undivided tenant in common interest in the property was approximately $650,000. The Company realized cash proceeds of approximately $192,000 from this sale. No fees were earned by the Advisor or any affiliate from this sale.

~~Plaza~~ We ~~del~~do not ~~Rey~~have ~~Shopping~~an ~~Center~~executed —advisory ~~Seguin~~agreement, ~~Texas~~and we could lose the services of our advisor, which may increase operating expenses, and delay or reduce our liquidating distributions.

On The ~~September 23,~~Advisory ~~2002,~~Agreement ~~the~~between ~~Plaza~~our ~~del~~advisor ~~Rey~~and T REIT expired on ~~Shopping~~ February 22, ~~Center~~2005 and was ~~sold~~not renewed for ~~approximately~~a $5consecutive one-year term. However,~~403~~ our advisor continued to advise T REIT,~~000~~ and, following the transfer of assets and liabilities to anus, ~~unaffiliated~~ continues ~~third~~to ~~party.~~advise ~~The~~us, ~~proportionate~~on ~~sale~~a month-to-month basis ~~price~~under the terms of the expired Advisory Agreement. Under ~~Company’s~~ the 16terms of the expired Advisory Agreement, our advisor currently manages our day-to-day business affairs and assets and carries out the directives of our Trustee.5% ~~undivided~~If ~~tenant~~we inare ~~common~~unable ~~interest~~to incontinue to retain the services ~~property~~ of ~~was~~our ~~approximately~~advisor ~~$891,000.~~on ~~The~~terms ~~Company~~as ~~realized~~favorable ~~cash~~as our current Advisory ~~proceeds~~ Agreement, ofor ~~approximately~~at ~~$197~~all,~~000~~ ~~from~~our ~~this~~operating ~~sale~~expenses may increase. NoWe would ~~fees~~also incur additional transition costs if we were either ~~earned~~ to bybecome self-managed or enter an advisory relationship with a new advisor. Additionally, if we become self-managed or engage a new advisor, we may be unable to complete the ~~Advisor~~plan of liquidation in as expeditious a manner as might otherwise be the case or ~~any~~on ~~affiliate~~terms ~~from~~as ~~this~~favorable ~~sale.~~to us as our advisor may be able to do so, because of the loss of our advisor’s experience and familiarity with our assets and business.

~~Titan~~ If ~~Land~~our advisor —is ~~San~~unable ~~Antonio~~to retain key executives and employees sufficient to complete the plan of liquidation in a reasonably expeditious manner, ~~Texas~~our liquidating distributions might be delayed or reduced.

On Our ~~October 17,~~ability ~~2002,~~to ~~the~~locate ~~Company~~qualified ~~sold~~buyers for our remaining asset and to negotiate and complete any such sale, depends to a large ~~2.34-acre~~ extent ~~parcel~~upon the experience and abilities of ~~land~~our ~~adjacent~~advisor’s officers and employees, their familiarity with our remaining asset and any counter-parties to ~~the~~any ~~Titan~~future ~~Building~~sale agreements and ~~Titan~~ the ~~Plaza~~market for ~~approximately~~our ~~$130~~unconsolidated property,~~000~~ as well as their ability to anefficiently ~~unaffiliated~~manage ~~third~~our advisor and the professionals ~~party~~ in the sales process. NoWe ~~fees~~face ~~were~~the ~~earned~~risk bythat these individuals might resign. Our advisor’s inability to retain these individuals could adversely affect our ability to complete the plan ~~Advisor~~of orliquidation ~~any~~in ~~affiliate~~a ~~from~~reasonably expeditious manner and our ~~this~~ prospects ~~sale~~of selling our remaining asset at an expected price. Our advisor’s officers and employees may seek other employment rather than remain with our advisor throughout the process of liquidation. If our advisor is unable to retain appropriate qualified key executives and employees to complete the plan of liquidation in a reasonably expeditious manner, liquidating distributions might be delayed or reduced.

~~Critical~~ Our beneficiaries ~~Accounting~~may ~~Policies~~not receive any profits resulting from the sale of our remaining asset, or receive such profits in a timely manner, because we may provide financing to the purchaser of our remaining asset.

~~The~~ In ~~preparation~~accordance with the plan of ~~financial~~liquidation, ~~statements~~our inbeneficiaries ~~accordance~~ may ~~with~~experience ~~accounting~~a ~~principles~~delay ~~generally~~before ~~accepted~~receiving intheir share of the net ~~United~~ proceeds ~~States~~ of ~~America~~such ~~requires~~liquidation. usIn toliquidation, ~~make~~we ~~estimates~~may ~~and~~sell our ~~judgments~~ remaining ~~that~~asset ~~affect~~either ~~the~~subject ~~reported~~to ~~amounts~~or upon the assumption of ~~assets,~~any ~~liabilities,~~ then ~~revenues~~outstanding ~~and~~mortgage ~~expenses~~debt or, ~~and~~alternatively, ~~related~~may ~~disclosure~~provide financing ofto purchasers. We may take a purchase money obligation ~~contingent~~ secured ~~assets~~by ~~and~~a ~~liabilities.~~mortgage ~~The~~on ~~Company~~our ~~believes~~remaining ~~that~~asset ~~its~~as partial payment ~~critical~~ therefore. ~~accounting~~We ~~policies~~do ~~are~~not ~~those~~have ~~that~~any ~~require~~limitations ~~significant~~or restrictions on our ~~judgments~~ right ~~and~~to ~~estimates~~take such aspurchase ~~those~~money ~~related~~note toobligations. ~~revenue~~To the ~~recognition,~~ extent ~~allowance~~we ~~for~~receive ~~doubtful~~promissory ~~accounts,~~notes ~~impairment~~or ofother ~~real estate~~property ~~assets,~~in ~~purchase~~lieu ~~price~~of cash ~~allocation~~from sales, ~~deferred~~such ~~assets~~proceeds, ~~and~~other than any interest payable ~~qualification~~ on asthose aproceeds, ~~REIT.~~will ~~These~~not ~~estimates~~be ~~are~~included ~~made~~in ~~and~~net ~~evaluated~~sale proceeds on until anand ~~on-going~~to ~~basis~~the ~~using~~extent ~~information~~the ~~that~~promissory isnotes ~~currently~~or other property ~~available~~ are asactually ~~well~~paid, assold, ~~various~~refinanced ~~other~~or ~~assumptions~~otherwise ~~believed~~disposed toof. beWe ~~reasonable~~ may ~~under~~receive initial down payments in the ~~circumstances.~~year ~~Actual~~of ~~results~~sale ~~could~~in ~~vary~~an ~~from~~ amount ~~those~~less ~~estimates~~than ~~and~~the ~~those~~selling ~~estimates~~price ~~could~~and besubsequent ~~different~~payments may ~~under~~ be ~~different~~spread ~~assumptions~~over ora ~~conditions~~number of years. In such event, our beneficiaries may experience a delay in the distribution of the net proceeds of a sale until such time as the installment payments are paid and not in default.

~~Revenue~~ Beneficiaries could ~~Recognition~~be ~~and~~liable ~~Allowance~~to ~~for~~the ~~Doubtful~~extent ~~Accounts~~of liquidating distributions received from us if contingent reserves are insufficient to satisfy our liabilities.

~~Base~~ If ~~rental~~we ~~income~~fail isto ~~recognized~~create onan ~~a straight-line~~adequate ~~basis~~contingency ~~over~~reserve ~~the~~for ~~terms~~ payment of ~~the~~our ~~respective~~expenses ~~lease agreements. Differences between rental income recognized~~ and ~~amounts~~ ~~contractually~~liabilities, ~~due~~or ~~under~~if the ~~lease~~contingency ~~agreements are~~reserve ~~credited~~ and orthe ~~charged,~~assets asheld ~~applicable,~~by tous ~~rent~~are ~~receivable.~~less ~~The Company~~than ~~maintains~~the anamount ~~allowance for doubtful accounts for~~ultimately ~~estimated~~ found ~~losses~~payable ~~resulting~~in ~~from~~respect ~~the~~of ~~inability~~expenses ofand ~~tenants~~liabilities, toeach ~~make~~of ~~required~~ our ~~payments~~beneficiaries ~~under~~could ~~lease~~be ~~agreements.~~held ~~The~~liable ~~Company also maintains an allowance~~ for ~~deferred~~the ~~rent~~payment ~~receivables arising~~to ~~from~~ creditors ~~the~~of ~~straight-lining~~such ofbeneficiary’s ~~rents.~~pro ~~The~~rata ~~adequacy~~portion of ~~this~~the ~~allowance~~ excess, islimited ~~determined~~to ~~by continually evaluating individual tenant receivables considering~~ the ~~tenant’s~~amounts ~~financial condition,~~previously ~~security~~received ~~deposits,~~by ~~letters of credit, lease~~each ~~guarantees~~ beneficiary ~~and~~in ~~current~~distributions ~~economic~~from ~~conditions~~us.

Impairment

Real estate investments are stated at depreciated cost. The Company assesses the impairment of a real estate asset when events or changes in circumstances indicate that the net book value may not be recoverable. Indicators management considers important which could trigger an impairment review include the following:

• significant negative industry or economic trend; • a significant underperformance relative to historical or projected future operating results; and • a significant change in the manner in which the asset is used.

In the event that the carrying amount of a property exceeds the sum of the undiscounted cash flows (excluding interest) that are expected to result from the use and eventual disposition of the property, the Company would recognize an impairment loss to the extent the carrying amount exceeded the fair value of the property. The Company estimates the fair value using available market information or other industry valuation techniques such as present value calculations.

~~Purchase~~ If ~~Price~~a ~~Allocation~~court holds at any time that we have failed to make adequate provision for our expenses and liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeds the amount available from contingency reserve and our assets, our creditors could seek an injunction to prevent us from making distributions under the plan of liquidation on the grounds that the amounts to be distributed are needed to provide for the payment of our expenses and liabilities. Any such action could delay or substantially diminish the cash distributions to be made to beneficiaries under the plan of liquidation.

~~Property acquisitions have been accounted for in~~ ~~accordance~~ We ~~with Statement of Financial Accounting Standards~~may ~~No. 141,~~ have ~~“Business~~underestimated ~~Combinations.” The fair value of~~ the ~~real~~amount ~~estate acquired is allocated to the acquired tangible assets, consisting~~ of ~~land,~~prepayment ~~building~~fees ~~and~~or ~~tenant~~defeasance ~~improvements,~~ charges and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and value of tenant relationships, if any, based in each case on ~~their~~our ~~fair values~~mortgages.

~~The~~ In calculating our estimated fair value of ~~the~~our ~~tangible~~remaining ~~assets of an~~asset ~~acquired~~ and, ~~property~~therefore, ~~(which~~our ~~includes~~estimated ~~land,~~per ~~building~~unit ~~and~~distribution ~~tenant~~amount, we ~~improvements)~~ have isassumed ~~determined~~that byany ~~valuing~~purchaser ~~the~~of ~~property~~our asremaining ifasset itwill ~~were~~ assume ~~vacant,~~the ~~and~~mortgage on the ~~“as-if-vacant”~~underlying ~~value~~property, iswhich ~~then~~contains ~~allocated~~ penalties toin ~~land,~~the ~~building~~event ~~and~~of ~~tenant~~the ~~improvements~~prepayment ~~based~~of onthat ~~our~~mortgage. The ~~determination~~ sale of ~~the~~our ~~relative~~remaining ~~fair~~asset ~~values~~pursuant ofto ~~these~~the ~~assets.~~plan of liquidation ~~Factors~~ will ~~considered~~trigger bysubstantial ~~Management~~penalties inunless ~~performing~~the ~~these~~purchaser ~~analyses~~assumes ~~include~~ (and/or anis ~~estimate~~allowed ofto ~~carrying~~assume) ~~costs~~the ~~during~~corresponding ~~the~~mortgage. ~~expected~~We may ~~lease-up~~ be ~~periods~~unsuccessful ~~considering~~in ~~current~~negotiating ~~market~~the ~~conditions~~assumption ~~and insurance~~of ~~and~~any ~~other~~underlying mortgage ~~operating~~in ~~expenses~~connection ~~during~~with the ~~expected lease-up~~sale ~~periods~~of ~~based~~our onremaining ~~current~~asset, which ~~market~~could ~~demand.~~negatively ~~The~~affect ~~Company also~~the ~~estimates~~amount ~~costs~~of tocash ~~execute~~available ~~similar~~for distribution ~~leases~~to ~~including~~our ~~leasing commissions,~~beneficiaries ~~concessions,~~under ~~legal~~the ~~and~~plan ~~other~~of ~~related costs~~liquidation.

~~In allocating the fair value of the identified~~ ~~intangible assets and liabilities of an acquired property,~~ Other ~~above-market~~ Risks ~~and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired)~~ of ~~the difference~~Our ~~between (i) the contractual amounts to be paid~~Business pursuant to the in-place leases and (ii) our estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market and below-market lease values are amortized into rental income over the remaining non-cancelable terms of the respective leases.

~~Property~~ Due ~~held~~to the ~~for~~risks ~~sale~~involved isin ~~carried at~~ the ~~lower~~ownership of ~~cost~~ orreal ~~estimated~~estate, ~~fair~~there ~~value~~is ~~less~~no guarantee ~~cost~~of toany ~~sell~~return ~~and~~on ~~such~~our ~~property~~beneficiaries’ investments is and noour ~~longer~~beneficiaries ~~depreciated~~may lose some or all of their investments.

~~The~~ By ~~Company~~owning ~~accounts~~units ~~for its investments in unconsolidated real estate operating properties using the equity method~~ of ~~accounting.~~beneficial ~~Accordingly~~interest, ~~the~~our ~~Company~~beneficiaries ~~reports its net~~are ~~equity~~ subject into ~~its proportionate share of~~ the ~~total~~risks ~~investments~~associated ~~in unconsolidated~~with owning real estate. Ownership asof ~~“Investment in unconsolidated~~ real estate” onis ~~its~~subject ~~Consolidated~~to ~~Balance~~significant ~~Sheets~~risks. The ~~Company~~ performance ~~reports~~of ~~its~~our ~~proportionate~~beneficiaries’ ~~share~~investment ofin ~~the~~us ~~total earnings of~~is ~~its~~ subject ~~investments~~to inrisks ~~unconsolidated~~related ~~real~~to ~~estate~~the asownership ~~“Equity~~and ~~in the~~operation ~~earnings~~ of ~~unconsolidated~~ real estate”, onincluding, ~~its Consolidated~~without ~~Statements~~limitation, ofthe ~~Operations.~~following:

~~Qualification~~• changes in the general economic climate; • changes in local conditions such as aan ~~REIT~~oversupply of space or reduction in demand for real estate; • changes in interest rates and the availability of financing; and • changes in laws and governmental regulations, including those governing real estate usage, zoning and taxes.

~~The~~ If ~~Company~~our ~~has~~unconsolidated ~~been~~property ~~organized~~decreases ~~and~~in ~~operated~~value, ~~and intends~~the tovalue ~~continue to operate, so as to qualify for taxation as~~of a our ~~REIT~~beneficiaries’ ~~under~~investment ~~the~~will ~~Code.~~likewise ~~The~~decrease ~~Company’s qualification~~ and ~~taxation~~ our asbeneficiaries acould ~~REIT~~lose ~~depends~~some onor ~~its~~all ~~ability to meet, through actual annual operating results, asset diversification, distribution levels and diversity~~ of ~~stock~~their ~~ownership, numerous requirements established under highly technical and complex Code provisions subject to interpretation~~investment.

If ~~the~~our unconsolidated ~~Company~~property ~~failed~~is unable to ~~qualify~~generate assufficient ~~a REIT in any~~funds ~~taxable year, it would be subject~~ to ~~federal~~pay ~~income~~its ~~tax~~expenses, ~~including~~ ~~any~~liabilities ~~applicable~~or ~~alternative minimum tax~~distributions, ~~on its taxable~~our ~~income~~ liquidating atdistributions ~~regular corporate rates. Moreover, unless entitled~~ to ~~relief~~ ~~under~~our ~~specific~~beneficiaries ~~statutory~~may ~~provisions, the Company also would~~ be ~~disqualified as a REIT for four taxable years following~~reduced ~~the~~ and/or ~~year during which qualification was lost~~delayed.

~~Results~~ If the Congress Center property is unable to generate sufficient funds to pay its expenses, liabilities or distributions, the Congress Center property may need to borrow funds from affiliates or third parties to pay such expenses, liabilities or distributions and incur an interest expense. For example, on February 1, 2008, the Congress Center property entered into an unsecured loan with NNN Realty Advisors, evidenced by an unsecured promissory note in the principal amount of ~~Operations~~$225,000. The unsecured note provided for a maturity date of July 31, 2008, bore interest at a fixed rate of 7.64% per annum and required monthly interest-only payments for the term of the unsecured note. All principal together with all accrued interest was paid in full on June 9, 2008. The payment of interest expenses may reduce the amount available for distributions to us which may then reduce or delay the timing of our liquidating distributions to our beneficiaries since the Congress Center property is our one remaining unconsolidated property and source of revenue.

The Company’s operating results are primarily comprised of income derived from its portfolio of properties. Because of the significant property acquisitions and dispositions throughout the years ended December 31, 2003, 2002 and 2001, the comparability of financial data from period to period will be limited.

~~Comparison~~ We ofmay be ~~the~~unable ~~year~~to ~~ended~~secure ~~December~~funds 31for future capital improvements, ~~2003~~which could toadversely ~~the~~impact ~~year~~our ~~ended~~ability ~~December~~to 31attract or retain tenants, and ~~2002~~subsequently pay liquidating distributions to our beneficiaries.

~~Rental~~ In ~~income~~order ~~increased~~to byattract ~~approximately~~and retain tenants, the Congress Center $2 property may be required to expend funds for capital improvements. In addition,~~225~~ the Congress Center property may require substantial funds for renovations in order to be sold,~~000,~~ upgraded or ~~733%~~repositioned in the market. If the Congress Center property has insufficient capital reserves, it will have to obtain ~~approximately~~financing $2from other sources. The Congress Center property has established capital reserves in an amount it,~~529~~ in its discretion,~~000~~ ~~for~~believes ~~the~~is ~~year~~necessary. The lender also may ~~ended~~ require ~~December 31,~~escrow ~~2003~~of ~~compared~~capital toreserves ~~rental~~in ~~income~~excess of any established ~~approximately~~ reserves. ~~$304,000~~If these reserves or any reserves otherwise established are designated for other uses or are insufficient to meet the ~~year~~Congress ~~ended~~Center ~~December 31~~property’s cash needs, the ~~2002~~ Congress Center property may have to obtain financing from either affiliated or unaffiliated sources to fund our cash requirements. ~~Approximately~~We ~~$1,530,000~~cannot ofassure ~~this~~our ~~increase~~beneficiaries ~~was~~that ~~attributable~~sufficient financing will be available to the ~~purchase~~Congress Center property or, if inavailable, ~~January~~will ~~2003~~be available to it on economically feasible terms or on terms that would be considered acceptable. Moreover, certain ofreserves required by the ~~Gateway~~lender ~~Mall,~~may be designated for specific uses and may not be available for capital purposes such as future capital improvements. Additional borrowing for capital improvements at the Congress Center property will increase ~~remaining~~ interest ~~$695~~expense,~~000~~ ~~was~~which ~~attributable~~could tohave a ~~full~~negative ~~year’s~~impact on our ~~ownership~~ proportionate inshare ~~2003~~of the proceeds from the sale of ~~University~~the Congress ~~Heights~~Center ~~Business~~property, ~~Park.~~and therefore our ability to pay liquidating distributions to our beneficiaries may be adversely affected.

~~Interest~~ The Congress ~~income~~Center ~~decreased~~property byis ~~approximately $167,000,~~subject orto ~~59%,~~property totaxes ~~approximately~~that ~~$116,000~~may increase ~~for~~in the ~~year ended December 31~~future, ~~2003~~which ~~compared~~could ~~with~~adversely ~~interest~~affect ~~income~~our ofability ~~approximately~~ to ~~$283,000~~sell ~~for~~our ~~the~~interest ~~year~~in ~~ended~~the ~~December 31, 2002.~~Congress ~~This~~Center ~~decrease~~property ~~was~~and ~~primarily due~~ to subsequently ~~the~~pay ~~collection~~liquidating ~~of related~~distributions ~~party~~to ~~loans~~our beneficiaries.

~~Rental~~ The ~~expenses~~Congress ~~increased~~Center byproperty ~~approximately $931,000,~~is orsubject ~~913%,~~ to ~~approximately~~property ~~$1,033,000~~taxes ~~for the year~~that ~~ended~~ may ~~December 31,~~increase ~~2003~~as ~~over~~tax ~~rental~~rates ~~expense~~change ~~of approximately~~and ~~$102,000~~as ~~for~~ the ~~year~~Congress ~~ended December 31,~~Center ~~2002.~~ property ~~Approximately~~is ~~$835,000~~reassessed ofby ~~this~~taxing ~~increase~~authorities. ~~was~~If ~~attributable to~~property ~~the purchase~~taxes increase, inour ~~January~~ability ~~2003,~~to ofsell ~~the~~our ~~Gateway~~interest ~~Mall,~~in ~~and~~ the Congress ~~remaining~~ Center ~~$96,000~~property ~~was~~and ~~attributable~~subsequently topay aliquidating ~~full year’s~~distributions ~~ownership~~ to inour ~~2003~~beneficiaries ofcould ~~University~~be ~~Heights~~adversely ~~Business Park~~affected.

~~General and administrative expenses consist~~ ~~primarily of third party professional legal and accounting fees~~ Our ~~and~~ unconsolidated ~~the~~property ~~cost~~faces ~~of computerized information services and related~~significant ~~office expenses required to maintain the Company’s accounting and investor records~~ competition. ~~General and administrative~~ expenses increased approximately $356,000, or 66%, to approximately $895,000 for the year ended December 31, 2003 over general and administrative expense of approximately $539,000 for the year ended December 31, 2002, as a result of increased professional fees and other administrative costs.

~~Interest~~ We ~~expense~~face ~~increased~~significant competition from other owners, operators and developers of office properties. Our unconsolidated property faces competition from similar properties owned by ~~approximately~~others in the ~~$474,000,~~ same ormarkets. ~~3,646%~~Such competition may affect our advisor’s ability to ~~approximately~~attract ~~$487,000~~and ~~for~~retain ~~the~~tenants ~~year~~and ~~ended~~may reduce the rents ~~December 31,~~ our ~~2003~~advisor ~~compared~~is able to ~~interest~~charge. ~~expense~~These ofcompeting properties may ~~approximately~~ have ~~$13,000~~vacancy ~~for~~rates ~~the~~higher ~~year~~than ~~ended~~the ~~December 31~~unconsolidated property, which ~~2002.~~may cause their owners to rent space at lower rental rates ~~This~~ than ~~increase~~those ~~was~~charged ~~attributable~~by our advisor or to ~~interest~~provide ~~expense~~greater ~~related~~tenant improvement allowances or other leasing concessions than provided to tenants at our unconsolidated property. As a result, ~~mortgage~~ our ~~loan~~advisor inmay ~~the~~be ~~approximate~~required ~~amount~~to ofprovide $5rent concessions,~~000~~ incur charges for tenant improvements and other inducements,~~000~~ ~~entered~~or our ~~into~~ advisor ~~pursuant~~may not be able to timely lease the ~~purchase~~space, all of ~~the~~which would ~~Gateway~~adversely ~~Mall~~impact inour ~~January~~liquidity and net assets in ~~2003~~ liquidation, ~~and~~which could reduce distributions to aour beneficiaries. ~~full~~If ~~year’s~~we ~~interest~~attempt ~~expense~~to ~~related~~dispose of our unconsolidated property with the other joint owners, we will be in competition with sellers of similar properties to alocate suitable ~~mortgage~~ purchasers, ~~loan~~which may result in us receiving lower proceeds from the ~~approximate~~sale ~~amount~~or ofresult ~~$4,345,000,~~in ~~secured~~us not being able to dispose of the by property ~~University~~due ~~Heights~~to ~~Business~~the ~~Park~~lack of an acceptable return.

~~Depreciation and amortization expense increased~~ by We depend ~~approximately~~upon ~~$357,000~~our ortenants ~~1,700%~~ to ~~approximately~~pay ~~$378~~rent,~~000 for~~ ~~the year ended December 31, 2003, compared to depreciation~~ and ~~amortization~~their ~~expense~~inability ~~for the year ended December 31, 2002 of approximately $21,000. Approximately $219,000 of this increase was attributable~~ to ~~the purchase, in~~pay ~~January~~ rent ~~2003,~~may ofsubstantially ~~the~~reduce ~~Gateway~~our ~~Mall,~~revenues and ~~the~~cash ~~remaining $138,000~~available ~~was~~ for ~~attributable~~distribution to aour ~~full year’s ownership of University Heights Business Park~~beneficiaries.

~~Comparison~~ Our investment in the Congress Center property is subject to varying degrees of risk that generally arise from the ~~year~~ownership of ~~ended~~real ~~December~~estate. ~~31,~~The ~~2002~~value of our property interest and the ability to make distributions to our beneficiaries depend upon the ~~year~~ability ~~ended~~of ~~December~~the 31tenants at our property to generate enough income in excess of applicable operating expenses to make their lease payments to us. Changes beyond our control may adversely affect the tenants’ ability to make their lease payments to us and, ~~2001~~in such event, would substantially reduce

Interest income increased by approximately $86,000 or 15% to approximately $283,000 for the year ended December 31, 2002, compared to interest income of approximately $197,000 for the year ended December 31, 2001. This increase was due primarily to an increase in funds held in short-term interest bearing instruments awaiting investment during 2002.

General and administrative expenses decreased by $32,000, or 6%, to approximately $539,000 for the year ended December 31, 2002, compared with general and administrative expenses of approximately $571,000 for the year ended December 31, 2001. This decrease was primarily the result of decreased professional fees for regulatory compliance and acquisition audits.

Liquidity and Capital Resources

Cash Flows

Cash flows provided by operating activities were approximately $2,300,000 for the year ended December 31, 2003, approximately 1% greater than cash flows provided by operating activities for the year ended December 31, 2002.

~~Cash~~ both ~~flows~~our ~~provided~~income byfrom ~~investing~~operations ~~activities~~and ~~for the~~our ~~year~~ability ~~ended~~to ~~December 31, 2003 were approximately~~make ~~$24,000,000,~~ distributions ~~compared~~to ~~with~~our ~~cash flows used in investing activities of approximately $19,000,000 for the year ended December 31, 2002~~beneficiaries. ~~The~~These ~~increase~~changes ~~in cash flows provided by investing activities of $43~~include,~~000,000~~ ~~was substantially~~among ~~attributable to an increase of $34~~ others,~~500,000~~ ~~in proceeds from~~ the ~~sale~~ ~~of property in 2003 compared with 2002, and a reduction in~~following: ~~investments in consolidated and unconsolidated real estate of $6,200,000.~~

~~Cash~~• ~~flows~~downturns ~~used~~ in ~~financing~~national, ~~activities~~regional ~~for~~or ~~the year~~local ~~ended~~economic ~~December 31,~~conditions ~~2003~~where ~~was~~our ~~approximately~~property ~~$27~~is located,~~000,000, compared~~ ~~with~~which ~~cash~~generally ~~flows~~will ~~provided~~negatively byimpact ~~financing~~the ~~activities~~demand for office space and rental rates; • changes in local market conditions such as an oversupply of ~~approximately~~ ~~$19~~office properties,~~000~~ including space available by sublease,~~000~~ or a reduction in demand for the ~~year~~lease ~~ended~~of ~~December 31~~office properties, ~~2002.~~ ~~The~~making ~~increase~~it inmore ~~cash~~difficult ~~flows~~for ~~used~~us into ~~financing~~lease ~~activities~~space ~~of $46~~at attractive rental rates or at all; • competition from other available office properties owned by others,~~000,000~~ ~~was~~which ~~substantially~~could ~~attributable~~cause us to ~~the~~lose ~~repayment~~current ~~of $23~~or prospective tenants or cause us to reduce rental rates to competitive levels; • our ability to pay for adequate maintenance,~~000~~ insurance,~~000~~ ofutility, ~~notes~~security ~~payable~~and ~~secured~~other byoperating ~~properties~~costs, including real estate taxes and debt service payments, that ~~were sold~~are not necessarily reduced when circumstances such as market factors and competition cause a reduction in ~~2003.~~income Infrom ~~addition,~~a ~~approximately~~property; ~~$19~~and • changes in federal,~~000,000~~ ~~was generated~~state ~~from~~or ~~the~~local ~~issuance~~regulations and controls affecting rents, prices of ~~common~~goods, ~~shares~~interest inrates, ~~2002~~fuel and energy consumption.

~~Liquidity~~ Due to these changes, among others, tenants and lease guarantors, if any, may be unable to make their lease payments. A default by a tenant or the failure of a tenant’s guarantor to fulfill its obligations to us, or an early termination of a lease as a result of a tenant default or otherwise could, depending upon the size of the leased premises and our Manager’s ability to successfully find a substitute tenant, have an adverse effect on our revenues and cash available for distribution to our beneficiaries.

At Our use ~~December 31,~~of ~~2003,~~borrowings on the ~~Company~~Congress ~~had approximately~~Center ~~$12,000,000~~property could result in ~~cash~~its foreclosure and ~~cash~~unexpected ~~equivalents.~~debt ~~The~~service expenses upon ~~Company~~ refinancing, ~~intends~~both toof ~~acquire~~which ~~additional~~could ~~properties~~have ~~and~~an ~~will~~adverse ~~seek to~~impact ~~fund~~on ~~these~~our operations ~~acquisitions~~and ~~through~~cash ~~utilization~~flow. ofAdditionally, ~~the~~restrictive ~~current~~covenants in ~~cash~~ our ~~balances,~~loan ~~debt~~documents ~~financings~~may ~~and/or~~restrict ~~asset~~our ~~dispositions~~operating activities.

~~The~~ We ~~Company~~rely ~~operates~~on asborrowings ato ~~real~~partially ~~estate~~fund ~~investment trust~~capital ~~for~~expenditures ~~federal~~and other ~~income tax purposes~~items. As aof ~~REIT~~December 31, ~~the~~2008, ~~Company~~there iswas $94,839,000 ~~generally~~ of ~~not~~debt ~~subject~~outstanding related to ~~income~~the ~~taxes.~~Congress ToCenter ~~maintain~~property, ~~its REIT~~our ~~status,~~ proportionate ~~the~~share ~~Company~~of iswhich ~~required~~was to$9,699,000. ~~distribute~~Accordingly, ~~annually~~we asare ~~dividends~~ subject atto ~~least~~the ~~90%~~risks ofnormally ~~its~~associated ~~REIT~~with ~~taxable~~debt ~~income~~financing, including, aswithout ~~defined~~limitation, by the ~~Code,~~risk that our cash flow may not be sufficient to ~~its~~cover ~~shareholders,~~required ~~among~~debt ~~other~~service ~~requirements~~payments. ~~The~~There ~~Company~~ is ~~expects~~also toa ~~continue~~risk tothat, ~~use~~if ~~its~~necessary, ~~cash~~existing ~~flow~~indebtedness ~~from operating~~will ~~activities~~ not be able to ~~pay~~be ~~distributions~~refinanced toor ~~shareholders~~that ~~and~~the toterms ~~support~~of such ~~the~~ refinancing ~~operating~~will ~~activities~~not be as favorable as the terms of the existing ~~Company~~indebtedness.

~~Distributions~~ In ~~are~~addition, ~~determined~~if bywe cannot meet our required mortgage payment obligations, the property subject to such mortgage indebtedness ~~Company’s~~ could ~~Board~~be offoreclosed ~~Directors~~upon ~~and~~by, ~~are~~or ~~dependent~~otherwise ontransferred ato, ~~number~~our ~~of factors~~ lender, ~~including~~with ~~the~~a ~~amount~~consequent loss of ~~funds~~income ~~available~~and ~~for~~asset value to us. ~~distribution~~ For tax purposes, ~~the~~a ~~Company’s~~foreclosure ~~financial~~on ~~condition,~~our ~~any~~property would be treated ~~decision~~ as bya sale of the ~~Board~~property offor ~~Directors~~a topurchase ~~reinvest~~price ~~funds~~equal ~~rather~~to ~~than~~the to outstanding ~~distribute~~balance of the ~~funds,~~debt secured by the ~~Company’s~~mortgage. ~~capital~~If the ~~expenditures,~~ outstanding balance of the ~~annual~~debt ~~distribution~~secured ~~required~~by tothe ~~maintain~~mortgage ~~REIT~~exceeds ~~status~~ our ~~under~~tax ~~the~~basis ~~Internal~~in ~~Revenue~~the ~~Code~~property, ofwe ~~1986,~~would asrecognize ~~amended,~~taxable ~~and~~income ~~other~~ on ~~factors~~foreclosure, ~~the~~but ~~Board~~we ofmay ~~Directors~~not ~~may~~receive ~~deem~~any ~~relevant~~cash proceeds.

~~Contractual~~ The ~~Obligations~~mortgage on the Congress Center property contains customary restrictive covenants, including provisions that limit the borrowing subsidiary’s ability, without the prior consent of the lender, to incur additional indebtedness, further mortgage or transfer the applicable property, discontinue insurance coverage, change the conduct of its business or make loans or advances to, enter into any transaction of merger or consolidation with any third party. In addition, any future lines of credit or loans may contain financial covenants, further restrictive covenants and other obligations.

~~The~~ If ~~following~~we ~~table~~materially ~~provides~~breach ~~information~~such ~~with~~covenants or obligations under the ~~respect~~ Congress toCenter loan agreement, the ~~maturities~~lender ~~and~~may ~~scheduled~~have ~~principal~~the ~~repayments~~right ofto ~~the~~ seize ~~Company’s~~our ~~secured~~income ~~debt~~from ~~and~~the ~~scheduled~~property ~~interest~~or ~~payments~~legally declare a default of on the ~~Company’s~~loan ~~fixed~~obligation, ~~rate~~require us to repay the debt atimmediately and ~~December 31~~foreclose on the property, ~~2003~~among other remedies. If we were It to ~~also~~breach ~~provides~~such ~~information~~covenants ~~about~~or ~~the~~obligations, ~~minimum~~we ~~commitments~~may ~~due in~~then ~~connection~~have ~~with~~to sell the ~~Company’s~~Congress ~~ground~~Center ~~lease~~property ~~obligation and~~either ~~lease~~at ~~guarantee~~a loss or at ~~December 31,~~a ~~2003~~time that prevents us from achieving a higher price. Any failure to pay our indebtedness

		Payments Due by Period
		Less Than						More than
		1 Year		1-3 Years		4-5 Years		5 Years
		(2004)		(2005-2006)		(2007-2008)		(After 2008)		Total
Principal payments — secured debt		$	161,271	$	343,157	$	369,597	$	8,376,253	$	9,250,278
Lease guarantee(1)			219,671		421,036		—		—		640,707
Ground lease obligation			40,000		80,000		80,000		806,663		1,006,663
	Total	$	420,942	$	844,193	$	449,597	$	9,182,916	$	10,897,648

(1) The lease guarantee relates to the Company’s obligation on the Christie Street Office Building sold in 2001. The Company’s Advisor agreed to indemnify the Company for the full amount of its obligation.

Off-Balance Sheet Arrangements

There are no off-balance sheet transactions, arrangements or obligations (including contingent obligations) that have, or are reasonably likely to have a current or future material effect on the

~~Company’s~~ when ~~financial~~due ~~condition,~~or ~~changes~~failure to cure events of default could result in higher interest rates during the ~~financial~~period ~~condition,~~of ~~revenues~~the orloan ~~expenses,~~default ~~results~~and could ultimately result in the loss of the property through ~~operations~~ foreclosure. Additionally, ~~liquidity~~if the lender were to seize our income from the property, ~~capital~~we ~~expenditures~~would orno ~~capital~~longer ~~resources.~~have any discretion over the use of the income, which may adversely impact our ability to make liquidating distributions to our beneficiaries.

~~Subsequent~~ Due ~~Events~~to our ownership of only an unconsolidated property interest in the Congress Center property, we are dependent upon those tenants that generate significant rental income at the Congress Center property, which may have a negative impact on our financial condition if these tenants are unable to meet their rental obligations to us.

~~Acquisitions~~ As of March 18, 2009, rent paid by the tenants at the Congress Center property represented 100.0% of our annualized revenues. Four of the tenants at the Congress Center property accounted for 10.0% or more of the aggregate annual rental income at that property in 2008. The revenues generated by our unconsolidated property is substantially dependent on the financial condition of these tenants at the property and, accordingly, any event of bankruptcy, insolvency or a general downturn in the business of any of these significant tenants may result in the failure or delay of such tenants’ rental payments to us which may have an adverse impact on our financial performance and our ability to pay distributions to our beneficiaries.

On ~~January~~December 2021, ~~2004~~2006, ~~the~~Realty ~~Company,~~received ~~through~~a termination notice ~~its~~ from ~~wholly-owned~~Employer’s ~~subsidiary,~~Reinsurance ~~TREIT —~~Corporation notifying Realty of ~~AmberOaks~~ their intent to exercise their option to terminate their lease effective January LP1, ~~purchased~~2008 aat 75the Congress Center property.0% Effective ~~undivided~~January 1, ~~tenant~~2008, inEmployer’s ~~common~~Reinsurance ~~interest~~ Corporation’s inlease ~~three~~was ~~buildings~~terminated. atPursuant ~~AmberOaks~~to ~~Corporate~~a ~~Center~~property ~~located~~ reserves inagreement ~~Austin~~with the lender, ~~Texas~~the ~~from~~lender is entitled to receive an ~~unaffiliated~~early ~~third~~termination ~~party.~~fee ~~Three~~penalty of $3,800,000 from the ~~unaffiliated~~ borrower ~~entities~~(all ~~purchased~~the co-owners of the ~~remaining~~Congress ~~25.0%~~Center ~~tenant~~property) into ~~common~~ be ~~interests~~placed in a reserve account controlled by the ~~property~~lender. ~~The~~In addition, ~~total~~the ~~purchase~~lender ~~price~~is ~~for AmberOaks~~entitled ~~was~~to ~~approximately~~receive $22225,~~965,~~000 on a monthly basis beginning January 1, 2007 and continuing through and including the payment date occurring on December 1, 2007 from the borrower. ~~The~~Beginning January 1, ~~Company’s~~2008 and continuing through and including the ~~total~~ payment ~~investment~~date ~~was~~occurring ~~approximately~~on $6December 1,~~462~~ 2011, the lender is entitled to receive $83,000 on a monthly basis from the borrower. ~~The~~In ~~purchase~~the event that the Congress Center property does ~~price~~ not ~~included~~generate asufficient ~~sales~~funds ~~commission~~from ~~payable~~operations to ~~Realty~~satisfy the monthly reserve payments to the lender, it is anticipated that the borrower will obtain an unsecured loan from our advisor or its affiliates or NNN 2002 Value Fund, LLC, or our affiliate co-owner, or we will advance the required amounts to the lender on behalf of the borrower. In January 2007, Employer’s Reinsurance Corporation paid $~~585~~3,773,000 to the lender as an early termination fee penalty pursuant to their lease agreement. We, along with G REIT Liquidating Trust (successor of or G REIT, 2Inc.6%) and our affiliate co-owner paid the remaining $27,000 of the ~~purchase~~early ~~price.~~termination ~~AmberOaks~~fee ispenalty aowed ~~Class A~~to the lender. ~~three-building~~ As ~~office~~of ~~portfolio~~December 31, ~~totaling~~2008, ~~approximately~~we ~~206~~have advanced $93,~~770~~000 to the ~~square~~ lender ~~feet~~for ~~that~~the reserves associated with the early lease termination. It is ~~part~~anticipated that upon the sale of anthe Congress ~~eight-building~~Center ~~complex~~property, ~~built~~we, along with G REIT Liquidating ~~during~~ Trust ~~1999-2001~~(successor of G REIT, Inc.) Anand our affiliate co-owner will receive repayment of any advances made to the lender ~~Company’s~~for ~~advisor~~reserves. All payments to the lender are to be placed ~~purchased~~ in a reserve account to be held by the ~~remaining~~lender ~~five~~for ~~buildings~~reimbursement to the borrower for tenant improvement and leasing commissions incurred in connection with re-leasing the space. Marketing efforts are continuing to re-lease the space. Our failure to re-lease this space may reduce or delay our liquidating distributions to our beneficiaries.

~~Dispositions~~ We may not have sufficient cash flow to cover our required debt service payments which could result in foreclosures and unexpected debt service expenses upon refinancing, both of which could have an adverse impact on our operations and cash flow. Additionally, restrictive covenants in our loan documents may restrict our disposition activities.

On As ~~March~~of December 1831, ~~2004~~2008, ~~the~~we ~~Company~~had ~~sold~~approximately ~~Gateway Mall to an unaffiliated third party for a purchase price of~~ $1194,~~600~~839,000~~. On February 27, 2004, the Company purchased~~ ~~approximately 43 acres~~ of ~~land,~~debt ~~including~~outstanding ~~approximately 36 acres~~related ofto ~~land~~our ~~situated~~unconsolidated ~~under Gateway Mall from another~~property. ~~unaffiliated~~ Based ~~third~~upon ~~party~~our ~~for~~interest ain ~~purchase~~our ~~price~~unconsolidated ~~including~~property, ~~closing~~our ~~costs~~ aggregate ofdebt approximates $19,~~631~~699,000. ~~Prior~~(on toa ~~the~~liquidation ~~land acquisition, the property~~basis) ~~had~~ as ~~been~~of ~~subject~~December 31, ~~to a ground lease~~2008. ~~The~~Accordingly, ~~sale~~we ofare ~~Gateway~~subject ~~Mall included~~to the risks ~~underlying~~normally ~~36 acres~~associated ofwith ~~land.~~debt ~~Sales~~financing, ~~proceeds~~including, ~~included~~ without ~~cash of approximately $3~~limitation,~~032,500~~ ~~and a note receivable in~~ the ~~amount~~risk ofthat ~~$8,700,000.~~our ~~The~~cash ~~note~~flow ismay ~~secured~~not ~~by a pledge~~be ~~agreement,~~ sufficient ~~bears~~to ~~interest~~cover atrequired ~~6% per~~debt ~~annum~~service ~~and~~payments. isThere ~~due~~is ~~June 14,~~ also ~~2004.~~a Inrisk ~~connection~~that, ~~with~~if ~~the~~necessary, ~~sale~~existing ofindebtedness ~~Gateway~~will ~~Mall,~~not ~~the~~ be ~~Company~~able ~~repaid~~to abe ~~note~~refinanced ~~payable~~or ~~secured~~that by the ~~property~~terms ~~with an outstanding balance~~ of ~~$4,876,000.~~such ~~At closing, the Company~~refinancing ~~paid~~ will anot ~~sales~~be ~~commission~~as tofavorable ~~Realty~~as ofthe ~~$339,000,~~terms ~~or approximately 2.9%~~ of the ~~selling price~~existing indebtedness.

Other

Effective April 22, 2004, Diana M. Laing has resigned her position as the Company’s Chief Financial Officer and the Board of Directors has appointed Richard Hutton as interim Chief Financial Officer. Mr. Hutton has served as the Chief Investment Officer of the Advisor since August 2003, overseeing all financial operations of the Advisor, and previously served as our interim Chief Financial Officer. From April 1999 to August 2003, Mr. Hutton served as Senior Vice President — Real Estate Acquisitions and Vice President — Property Management for the Advisor. In that position, Mr. Hutton oversaw the management of the real estate portfolios and property management of the Advisor and its affiliates. Mr. Hutton holds a BA in psychology from Claremont McKenna College and has been licensed as a Certified Public Accountant in California since 1984.

Impact of Accounting Principles

On January 1, 2003, the Company adopted the provisions of SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS 145”). The most significant provisions of this statement relate to the rescission of Statement No. 4 “Reporting Gains and Losses from Extinguishment of Debt.” SFAS 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. Under SFAS 145, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet certain defined criteria must be reclassified. The adoption of this statement did not have a material effect on the Company’s results of operations or financial condition.

On In ~~January 1~~addition, ~~2003,~~if ~~the~~we ~~Company~~cannot ~~adopted~~meet ~~the provisions~~our ofrequired ~~SFAS 146~~mortgage payment obligations, ~~“Accounting~~the ~~for~~property ~~Costs Associated~~subject ~~with~~to ~~Exit~~such ormortgage ~~Disposal Activities”~~indebtedness ~~(“SFAS 146”).~~ could ~~SFAS 146~~be ~~addresses~~foreclosed ~~financial accounting~~upon ~~and~~by, ~~reporting~~or ~~for~~otherwise ~~costs~~transferred ~~associated~~to, our lender, with ~~exit~~a ~~or disposal~~consequent ~~activities~~loss ~~and~~of ~~nullifies~~income ~~Emerging~~and ~~Issues~~asset ~~Task~~value ~~Force Issue~~to Nous. ~~94-3~~ For ~~“Liability~~tax ~~Recognition~~purposes, ~~for~~a ~~Certain Employee~~foreclosure ~~Termination~~of ~~Benefits~~our ~~and~~unconsolidated ~~Other~~property would ~~Costs~~be totreated ~~Exit~~as ~~an Activity”.~~a ~~SFAS 146~~sale ~~requires~~of ~~that~~the aunconsolidated ~~liability~~property for a ~~cost~~ purchase ~~associated~~price ~~with~~equal anto ~~exit~~the oroutstanding ~~disposal~~balance ~~activity~~of bethe ~~recognized~~debt ~~when~~ secured by the ~~liability~~mortgage. isIf ~~incurred.~~the ~~The~~outstanding ~~adoption~~balance of ~~this~~the ~~statement~~debt ~~did~~ secured ~~not~~by ~~have~~the amortgage ~~material~~exceeds ~~effect~~our ontax basis in the unconsolidated ~~Company’s~~property, ~~results~~we ofwould recognize taxable income on ~~operations~~ foreclosure, orbut ~~financial~~we ~~condition~~may not receive any cash proceeds.

On The ~~January 1,~~mortgage ~~2003,~~on ~~the~~our ~~Company~~unconsolidated ~~adopted~~property ~~the~~contains customary ~~initial~~ restrictive ~~recognition~~covenants, ~~and~~including ~~measurement~~ provisions ofthat ~~Interpretation No. 45,~~may ~~“Guarantor’s~~limit ~~Accounting and Disclosure~~the ~~Requirements~~ our ~~for Guarantees~~ability, ~~Including~~ ~~Indirect~~without ~~Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 significantly changes~~ the ~~current~~prior ~~practice~~consent inof the ~~accounting~~ ~~for~~lender, ~~and~~to ~~disclosure~~incur additional ofindebtedness, ~~guarantees.~~further ~~Guarantees~~mortgage ~~and indemnification~~or ~~agreements~~transfer ~~meeting~~ the ~~characteristics described~~ in applicable ~~FIN 45~~property, ~~are~~discontinue ~~required~~insurance tocoverage, bechange ~~initially recorded as a~~the ~~liability~~ conduct atof ~~fair~~its ~~value.~~business ~~FIN 45~~or ~~also requires a guarantor to~~ make ~~significant~~loans ~~new~~or ~~disclosures~~advances ~~for~~to, ~~virtually~~enter ~~all guarantees~~into ~~even~~ any iftransaction ~~the likelihood~~ of ~~the~~merger ~~guarantor~~or ~~having~~consolidation towith, ~~make~~or ~~payment under~~acquire the ~~guarantee is remote. The Company adopted the~~ ~~disclosure~~ business, ~~provisions~~assets ofor ~~FIN 45~~equity as of ~~December 31~~, ~~2002.~~ ~~The~~any ~~adoption~~third ofparty. ~~the~~In ~~provisions~~addition, ~~of this interpretation did~~any ~~not~~ future ~~have~~lines aof ~~material~~credit ~~effect~~or onloans ~~the~~may ~~Company’s~~contain ~~results~~financial ofcovenants, ~~operations~~ further orrestrictive ~~financial~~covenants ~~condition~~and other obligations.

In If ~~January~~we ~~2003,~~materially ~~the~~breach ~~FASB~~such ~~issued~~covenants ~~FASB Interpretation~~or ~~No. 46,~~obligations ~~“Consolidation~~in ~~of Variable~~our ~~Interest~~ debt ~~Entities”~~agreements, ~~(“FIN 46”).~~the ~~FIN 46 clarifies~~lender ~~the~~may ~~application~~have ofthe ~~Accounting~~right ~~Research~~to, ~~Bulletin~~including, ~~No. 51~~ without limitation, ~~“Consolidated~~seize ~~Financial~~our ~~Statements”~~income ~~and provides~~from ~~guidance~~the onproperty securing the ~~identification~~loan ofor ~~entities~~legally ~~for~~declare ~~which control~~a isdefault ~~achieved~~on ~~through~~the ~~means~~loan ~~other than voting rights~~obligation, ~~(“variable~~ require ~~interest~~us ~~entities”~~to orrepay ~~“VIEs”)~~the ~~and how~~debt toimmediately ~~determine when~~ and ~~which~~foreclose ~~business~~on ~~enterprise should~~the ~~consolidate~~ property securing the ~~VIE~~loan. ~~This~~If ~~new~~we ~~model~~were ~~for~~to ~~consolidation~~breach ~~applies~~such tocovenants an or ~~entity~~obligations, inwe ~~which~~may ~~either:~~then ~~(1)~~ have to sell the ~~equity~~property ~~investors~~either ~~(if~~at ~~any)~~ a ~~lack~~loss ~~one~~ or ~~more~~at ~~characteristics~~a ~~deemed~~time ~~essential~~that toprevents us from achieving a higher ~~controlling~~ price. ~~financial~~Any ~~interest~~failure orto ~~(2) the~~pay ~~equity~~our ~~investment at~~indebtedness ~~risk~~when isdue ~~insufficient~~or failure to ~~finance~~cure ~~that~~events ~~entity’s~~of ~~activities without~~default ~~receiving~~could ~~additional~~result ~~subordinated~~in ~~financial~~higher ~~support~~interest ~~from~~rates ~~other~~ during ~~parties.~~the ~~The~~period ~~provisions~~ of ~~this~~the ~~interpretation~~loan ~~are applicable~~default toand ~~VIEs~~could ~~formed~~ultimately result ~~after~~in ~~January 31,~~the ~~2003.~~loss ~~For~~of ~~VIEs formed~~our ~~prior~~unconsolidated toproperty ~~January 31,~~through foreclosure. ~~2003~~Additionally, if the ~~provisions~~lender ofwere ~~this interpretation apply~~ to ~~the~~seize ~~first~~our income ~~fiscal~~from ~~year~~the orproperty ~~interim~~securing ~~period beginning~~the ~~after December 15~~loan, ~~2003.~~we Onwould ~~February 1,~~no longer ~~2003,~~ have ~~the~~any ~~Company~~discretion ~~adopted~~over the ~~provisions~~use of ~~this~~the ~~interpretation~~income, which ~~did~~may adversely ~~not~~impact ~~have~~our aability ~~material~~to ~~effect~~make onliquidating ~~the Company’s results of operations or financial condition~~distributions.

~~In April 2003, the FASB issued~~ ~~SFAS No. 149, “Amendment~~ Lack of ~~Statement 133~~diversification ~~on Derivative Instruments~~ and ~~Hedging~~illiquidity ~~Activities” (“SFAS 149”).~~of ~~SFAS 149~~real ~~amends~~estate ~~and~~may ~~clarifies financial~~make ~~accounting and reporting for derivative instruments,~~it ~~including~~ difficult ~~certain derivative instruments imbedded in other contracts and~~ for ~~hedging~~us ~~activities~~to ~~under SFAS No. 133~~sell ~~“Accounting~~an ~~for~~underperforming ~~Derivative Instruments~~property ~~and Hedging Activities.” The provisions of SFAS 149 are generally effective for contracts entered into~~ or ~~modified after June 30, 2003 and for hedging~~recover ~~relationships~~ our ~~designated~~investment ~~after~~in ~~June 30, 2003. The adoption of this statement did not have~~ a ~~material effect on the Company’s results of operations or financial condition~~property.

In Our ~~May~~business ~~2003,~~is ~~the~~subject ~~FASB~~to ~~issued SFAS No. 150,~~risks ~~“Accounting~~associated ~~for~~with ~~Certain Financial~~investment ~~Instruments~~ solely ~~with~~in ~~Characteristics~~real ofestate. ~~both~~Real ~~Liabilities~~estate ~~and Equity”~~investments ~~(“SFAS 150”).~~are ~~SFAS 150~~relatively ~~establishes~~ illiquid. ~~standards~~Pursuant ~~for~~to ~~how~~the anplan ~~issuer~~of ~~classifies~~liquidation, ~~and~~we ~~measures~~expect to ~~certain~~ liquidate ~~financial~~our ~~instruments~~remaining ~~with~~asset ~~characteristics~~by ofDecember 31, ~~both~~2009; ~~liabilities~~ however, ~~and~~due ~~equity.~~to ~~The~~the ~~statement~~illiquid isnature ~~effective~~of ~~for~~real ~~financial~~estate and the short ~~instruments~~ timeframe ~~entered~~that ~~into~~we orhave ~~modified~~to ~~after~~sell ~~May 31,~~our ~~2003~~remaining asset, ~~and~~ ~~otherwise~~we ismay ~~effective~~not recoup at the ~~beginning~~estimated offair ~~the~~value ~~first~~we ~~interim~~have recorded as of ~~period~~ December 31, ~~beginning~~2008 ~~after~~by ~~June~~December 1531, ~~2003~~2009. ~~The~~We ~~adoption~~cannot provide assurance that we will be able to dispose of ~~this~~our ~~statement~~ remaining ~~did~~asset ~~not~~by ~~have~~December 31, a2009 ~~material~~which ~~effect~~could onadversely impact the ~~Company’s results~~timing ofand ~~operations~~amount orof ~~financial condition~~distributions.

~~Inflation~~ Lack of geographic diversity may expose us to regional economic downturns that could adversely impact our operations or our ability to recover our investment in our unconsolidated property.

We Our ~~will~~portfolio belacks ~~exposed~~geographic todiversity ~~inflation~~due ~~risk~~to asits ~~income~~limited size ~~from~~ and ~~long-term~~the ~~leases~~fact isthat ~~expected~~we tohave beonly ~~the~~one ~~primary~~remaining ~~source~~asset of(with an ~~our~~ underlying ~~cash~~interest ~~flows~~in ~~from~~one ~~operations~~real property) as of December 31, 2008. WeThis ~~expect~~geographic ~~that~~concentration ~~there~~of ~~will~~our remaining beasset exposes us to economic downturns in this region. ~~provisions~~ A regional recession in Illinois could adversely affect the Congress ~~majority~~Center ofproperty’s ~~our~~ability ~~tenant~~to ~~leases~~generate ~~that~~or ~~would~~increase ~~protect~~ operating usrevenues, ~~from~~attract ~~the~~new ~~impact~~tenants or dispose of ~~inflation~~our unconsolidated property. ~~These~~In ~~provisions~~addition, our unconsolidated ~~include~~ property ~~rent~~may ~~steps,~~face ~~reimbursement~~competition ~~billings~~in ~~for~~these ~~operating~~geographic ~~expense~~regions from ~~pass-through~~ other ~~charges~~properties owned, ~~real~~operated ~~estate~~or ~~tax~~managed ~~and~~by ~~insurance~~our advisor or its affiliates or third parties. Our advisor or its affiliates have interests that may vary from ours in such geographic markets.

We are currently involved in litigation, which could reduce the amount of our liquidation distributions.

On February 11, 2004, Clearview Properties, or Clearview, filed a petition in the District Court of the 270th Judicial District, Harris County, Texas against Property Texas SC One Corporation, Clarion Partners, LLC, and Granite Partners I, LLC, three unaffiliated entities, and T REIT, our advisor and Realty, or collectively, the Triple Net Entities. The complaint alleged that the Triple Net Entities willfully and intentionally interfered with an agreement between Property One and Clearview for the sale of certain real

~~reimbursements~~ property onlocated in Houston, Texas by Property One to Clearview. On January 7, 2005, Clearview filed an amended complaint which also alleged that the Triple Net Entities breached a contract ~~per~~between ~~square~~Clearview ~~foot~~and ~~allowance~~the Triple Net Entities for the sale of the Houston, Texas property by Clearview to the Triple Net Entities and for conspiracy with Property One to breach this contract. On March 25, 2005, Clearview filed a further ~~However~~ amended complaint which named T REIT, ~~due~~L.P. as an additional Triple Net Entity defendant and dropped Realty as a defendant. On May 4, 2005, the court denied a motion for summary judgment filed by the Triple Net Entities. On July 28, 2005, the Triple Net Entities filed their second amended motion for summary judgment to dismiss the ~~long~~claims against them, which amended motion was granted in favor of the Triple Net Entities by the court on August 8, 2005. On December 12, 2005, a one-~~term~~day trial ~~nature~~was held to determine the Triple Net Entities’ ability to recover from Clearview, attorneys’ fees, expenses and costs incurred in this case as provided for pursuant to the terms of the ~~leases~~agreements underlying Clearview’s breach of contract claims against the Triple Net Entities. On May 17, 2006, the ~~leases~~court entered a final ~~may~~ judgment ~~not~~awarding ~~re-set~~T REIT, ~~frequently~~L.P. ~~enough~~$212,000 in attorneys’ fees for services rendered, $25,000 for attorneys’ fees if Clearview unsuccessfully appeals the case to ~~cover~~the ~~inflation~~court of appeals, and $13,000 for attorneys’ fees if Clearview unsuccessfully appeals the case to the Texas Supreme Court. Clearview is in the process of proceeding with an appeal, and we are proceeding with our collection efforts. On January 29, 2009, the Fourteenth Court of Appeals affirmed the trial court’s summary judgment, reversed T REIT, L.P.’s attorneys’ fees award, and remanded the attorneys’ fee issue for a further proceeding. Clearview has asked the appellate court to reconsider its decision. We are unable to determine the probability of the outcome or the amount or range of any potential recovery. If Clearview prevails in this action, it could have a material adverse effect upon the funds available for distributions to our beneficiaries.

~~Item~~ The failure ~~7A.~~of ~~Quantitative~~any ~~and~~bank ~~Qualitative~~in ~~Disclosures~~which ~~About~~we ~~Market~~deposit ~~Risk~~our funds could reduce the amount of cash we have available to pay liquidating distributions.

~~The~~ Through ~~Company~~2009, isthe ~~exposed~~Federal toDeposit ~~interest~~Insurance ~~rate~~Corporation, ~~changes~~or ~~primarily~~ FDIC, asinsures aamounts ~~result~~up ~~of its long-term debt used~~ to ~~maintain liquidity~~$250,000 ~~and~~per ~~fund~~depositor ~~capital~~per ~~expenditures and expansion of its~~insured ~~real~~ bank ~~estate investment portfolio~~ and ~~operations.~~after ~~The Company’s~~2009, ~~interest~~the ~~rate~~FDIC ~~risk~~will ~~management~~only ~~objectives~~insure ~~are~~up to $100,000 ~~limit~~ per ~~the~~depositor ~~impact~~per ofinsured ~~interest~~bank. ~~rate~~We ~~changes~~currently onhave ~~earnings~~cash and cash ~~flows~~ equivalents ~~and~~deposited toin ~~lower~~certain ~~its~~financial ~~overall~~institutions ~~borrowing~~in excess ~~costs~~of federally insured levels. ToIf ~~achieve~~any of the banking ~~Company’s~~ institutions ~~objectives~~in itwhich ~~borrows~~we ~~primarily~~have atdeposited ~~fixed~~funds ~~rates~~ultimately orfails, ~~variable~~ we ~~rates~~may ~~with~~lose the ~~lowest~~amount ~~margins~~of ~~available~~our ~~and~~deposits inover ~~some~~any ~~cases,~~ federally-insured ~~with~~amount. ~~the~~The ~~ability~~loss toof ~~convert~~our ~~variable~~deposits ~~rates~~could ~~to fixed~~reduce ~~rates.~~ the ~~The~~amount ~~Company~~of ~~may~~cash ~~enter~~we ~~into~~have ~~derivative~~available ~~financial instruments~~to ~~such~~repay asdebt ~~interest rate swaps~~obligations, fund ~~caps~~operations and ~~treasury~~distribute ~~locks in order~~ to ~~mitigate~~beneficiaries, ~~its~~which ~~interest~~could result ~~rate~~in ~~risk on~~ a ~~related financial~~decline ~~instrument.~~in ~~The~~the ~~Company~~value ~~does~~of ~~not~~our ~~enter into derivative~~beneficiaries’ ~~or interest rate transactions for speculative purposes~~ investments.

~~The Company’s interest rate risk is~~ ~~monitored~~ If ~~using a variety~~ one of ~~techniques.~~our ~~The~~insurance ~~table~~carriers ~~below presents~~does ~~the~~not ~~principal~~remain ~~amounts~~solvent, ~~and~~we ~~weighted~~may ~~average~~not ~~interest~~be ~~rates~~ able ~~by year of expected maturity~~ to ~~evaluate~~fully ~~the~~recover ~~expected~~on ~~cash flows~~our ~~and sensitivity to interest rate changes~~claims.

	2004			2005			2006			2007			2008			Thereafter			Total
Variable rate debt	$	161,271		$	168,402		$	174,755		$	181,362		$	188,235		$	8,376,253		$	9,250,278
Average interest rate on maturing debt		4.02	%		4.04	%		4.04	%		4.05	%		4.06	%		4.22	%		4.20	%

An insurance subsidiary of American International Group, or AIG, provides coverage under an umbrella insurance policy we have obtained that covers the Congress Center property. During 2008, AIG announced that it suffered from severe liquidity problems. Although the U.S. Treasury and Federal Reserve have provided measures to assist AIG with its liquidity problems, such measures may not be successful. If AIG were to become insolvent, it could have a material adverse impact on AIG’s insurance subsidiaries. In the event that AIG’s insurance subsidiary that provides coverage under our policy is not able to cover our claims, it could have a material adverse impact on the value of the Congress Center property and our financial condition.

~~The~~ Losses for ~~fair~~which ~~estimated~~we ~~value~~either ofcould ~~the~~not ~~Company’s~~or did not obtain insurance will ~~debt~~ adversely ~~approximates~~affect ~~its~~our ~~December 31,~~earnings ~~2003~~and ~~carrying~~we ~~amount.~~may be unable to comply with insurance requirements contained in mortgage or other agreements due to high insurance costs.

An We ~~increase~~and our advisor endeavor to maintain comprehensive insurance on our unconsolidated property, including liability and fire and extended coverage, in ~~interest~~amounts ~~rates~~sufficient to permit the replacement of ~~0.25%~~the onunconsolidated property in the event of a ~~Company’s~~ total ~~variable~~loss, ~~rate~~subject ~~mortgage~~to ~~loans~~applicable ~~would~~deductibles. ~~have~~However, ~~increased~~we could still suffer a loss due to the ~~Company’s~~cost ~~overall~~to ~~annual~~repair ~~interest~~any ~~expense~~damage byto our ~~approximately~~ unconsolidated ~~$76,000~~property that is not insured or 6%is underinsured. There are types of losses, generally of a catastrophic nature, such as losses due to terrorism, wars, earthquakes, floods or acts of God that are either uninsurable or not economically insurable. If such a

The table below presents, as of December 31, 2002, the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.

	2003			2004			2005			2006			2007			Thereafter
Fixed rate debt	$	275,842		$	297,189		$	320,191		$	344,977		$	371,686		$	13,330,240
Average interest rate on maturing debt		7.43	%		7.43	%		7.43	%		7.43	%		7.43	%		7.43	%
Variable rate debt	$	58,810		$	8,812,018		$	65,401		$	68,969		$	72,731		$	4,072,071
Average interest rate on maturing debt		6.75	%		6.75	%		6.75	%		6.75	%		6.75	%		6.75	%

The fair estimated value of the Company’s debt approximates its December 31, 2002 carrying amount.

Approximately $13,150,000 or 47% of the Company’s mortgages payable at December 31, 2002, have variable interest rates averaging 6.8%. In comparison, approximately $9,550,875 or 39% of the Company’s mortgages payable at December 31, 2001 had variable interest rates averaging 6.8%. An increase in interest rates of 0.25% on the Company’s variable rate mortgage loans would not significantly impact earnings due to current market interest rates being substantially below the floor interest rates on these mortgage loans.

~~INDEX~~ catastrophic TOevent ~~CONSOLIDATED~~were ~~FINANCIAL~~to occur, or cause the destruction of ~~STATEMENTS~~ our unconsolidated property, we could lose both our invested capital and anticipated profits from such unconsolidated property. Additionally, we could default under debt or other agreements if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with covenants relating to the insurance we are required to maintain under such agreements. In such instances, we may be required to self-insure against certain losses or seek other forms of financial assurance. Additionally, inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property if it is damaged or destroyed. Under such circumstances, the insurance proceeds received by us might not be adequate to restore our economic position with respect to the affected property.

	Pages
Independent Auditors Report — 2003		21
Report of Independent Certified Public Accountants — 2002		22
Report of Independent Certified Public Accountants — 2001		23
Consolidated Balance Sheets		24
Consolidated Statements of Operations		25
Consolidated Statements of Shareholders’ Equity		26
Consolidated Statements of Cash Flows		27
Notes to Consolidated Financial Statements		28
Schedule III (Real Estate and Accumulated Depreciation)		47

There is currently no public market for our units of beneficial interest and the units of beneficial interest may not be transferred except by operation of law or upon the death of a beneficiary.

Our beneficiaries will not be able to transfer their units other than in limited circumstances. The units of beneficial interest are not and will not be listed on any exchange, quoted by a securities broker or dealer, nor admitted for trading in any market, including the over-the-counter market. The units of beneficial interest are not transferable except by operation of law or upon the death of a beneficiary.

The conflicts of interest of our advisor’s executives with us mean we may not be managed by our advisor solely in the best interests of our beneficiaries.

Our advisor’s executives have conflicts of interest relating to the management of our business and property. Accordingly, those parties may make decisions or take actions based on factors other than in the best interest of our beneficiaries.

Our advisor also advises G REIT Liquidating Trust, is the managing member of the advisor of Grubb & Ellis Healthcare REIT, Inc. and manages NNN 2002 Value Fund, LLC, NNN 2003 Value Fund, LLC as well as other private tenant-in-common programs and other real estate programs, all of which may compete with us or otherwise have similar business interests and/or investment objectives. Some of the executive officers of our advisor also serve as officers and directors of NNN 2003 Value Fund, LLC and Grubb & Ellis Healthcare REIT, Inc. Our advisor is a wholly owned indirect subsidiary of Grubb & Ellis and executive officers of our advisor collectively own approximately 4.1% of Grubb & Ellis. As officers, directors, and partial owners of entities that do business with us or that have interests in competition with our own interests, these individuals will experience conflicts between their obligations to us and their obligations to, and pecuniary interests in, our advisor, Grubb & Ellis and its affiliated entities. These conflicts of interest could:


	•	limit the time and services that our advisor devotes to us, because it will be providing similar services to G REIT Liquidating Trust, NNN 2002 Value Fund, LLC, NNN 2003 Value Fund, LLC and Grubb & Ellis Healthcare REIT, Inc. and other real estate programs and properties;

	•	impair our ability to compete for tenants in geographic areas where other properties are advised by our advisor and its affiliates; and

	•	impair our ability to compete for the disposition of properties with other real estate entities that are also advised by our advisor and its affiliates and seeking to dispose of properties at or about the same time as us.

If our advisor or its affiliates breach their fiduciary obligations to us, we may not meet our investment objectives, which could reduce the expected cash available for distribution to our beneficiaries.


Item 1B.	Unresolved Staff Comments.

Not applicable.

~~INDEPENDENT~~Item ~~AUDITORS~~2. ~~REPORT~~ Properties.

~~To the Board of Directors and Shareholders~~ Real Estate Investments

T As ~~REIT,~~of December ~~Inc~~31, 2008, we had no consolidated properties, however, we owned a 10.3% interest in the Congress Center property. Our interest in the Congress Center property is held as a member of a limited liability company that owns a tenant-in-common interest in the property. The Congress Center property has an aggregate gross leasable area, or GLA, of approximately 520,000 square feet.

We With ~~have~~respect ~~audited~~to the ~~accompanying~~Congress ~~consolidated balance~~Center ~~sheet of T REIT~~property, ~~Inc.~~ (~~the “Company”~~i)~~, as~~ we of believe ~~December 31,~~the ~~2003,~~property ~~and~~is ~~the~~adequately ~~related~~covered ~~consolidated~~by insurance; ~~statements~~ (ii) we ofhave ~~operations,~~no ~~shareholders’~~plans ~~equity~~for ~~and~~any ~~cash~~material renovations, ~~flows~~ improvements ~~for~~or development of the ~~year~~property, ~~then~~except ~~ended.~~in accordance ~~Our~~with ~~audits~~planned ~~also~~budgets; ~~included~~and (iii) the property is ~~financial~~ located ~~statement~~in ~~schedule~~a ~~(“Schedule~~market ~~III”)~~where ~~listed in~~we ~~the~~are ~~index~~subject to ~~the~~competition ~~consolidated~~for attracting ~~financial~~new ~~statements~~tenants and retaining current tenants. ~~These~~We are ~~financial~~ subject ~~statements~~to ~~and~~a ~~financial~~concentration ~~statement~~of ~~schedule~~regional ~~are~~economic ~~the~~exposure as our ~~responsibility~~ interest ofin the ~~Company’s~~Congress ~~management.~~Center ~~Our responsibility~~property is toour ~~express~~only anremaining asset. ~~opinion~~Regional oneconomic ~~these~~downturns ~~financial statements~~in ~~based~~Illinois oncould adversely impact our ~~audit~~operations.

We The ~~conducted~~following ~~our~~table ~~audit~~presents incertain ~~accordance~~additional ~~with~~information ~~auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance~~ about ~~whether~~ the ~~financial statements~~Congress ~~are~~Center ~~free~~property as of ~~material misstatement. An audit includes examining~~December 31, ~~on a test basis, evidence supporting the amounts and~~2008: disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of T REIT, Inc. as of December 31, 2003, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.

Annual

Rent

Property

GLA

Date

Annual

% Physical

per Leased

Unconsolidated Property Name

Location

(Sq Ft)

Owned

Acquired

Rent(1)

Occupancy(2)

Sq Ft(3)

Congress Center — LLC

Chicago, IL

520,000

10.3

01/09/03

12,081,000

79.2

29.44

/s/ DELOITTE & TOUCHE, LLP


(1)		Annualized rental income is based on contractual base rent from leases in effect as of December 31, 2008.

(2)		Physical occupancy as of December 31, 2008.

(3)		Average effective annual rent per leased square foot as of December 31, 2008.

~~Los Angeles, California~~ Significant Tenants

~~April~~ Four of the tenants at the Congress Center property accounted for 10.0% or more of the aggregate annual rental income at that property for the year ended December 2131, ~~2004~~2008, as follows:


			Percentage of					Lease
	2008 Annual		2008 Annual			Square Footage		Expiration
Tenant	Base Rent*		Base Rent			(Approximate)		Date

Department of Homeland Security	$	3,473,000		28.8	%		76,000		April 2012
North American Co. Life and Health Ins.	$	2,421,000		20.0	%		101,000		Feb. 2012
Akzo Nobel, Inc.	$	2,073,000		17.2	%		91,000		Dec. 2013
United States Treasury Department	$	1,645,000		13.6	%		37,000		Feb. 2013


*		Annualized rental income is based on contractual base rent from leases in effect as of December 31, 2008.

~~REPORT~~ Ownership of OFCongress ~~INDEPENDENT CERTIFIED PUBLIC~~Center ~~ACCOUNTANTS~~

To The ~~the~~following ~~Board~~is a summary of ~~Directors~~our ~~and~~relationship ~~Shareholders~~with entities with ownership interests in the Congress Center property as of December 31, 2008:

~~T REIT, Inc.~~ Indebtedness

We Our ~~have~~proportionate ~~audited~~share of the ~~accompanying~~secured ~~consolidated~~mortgage loan outstanding ~~balance~~ on ~~sheet~~the ofCongress TCenter ~~REIT~~property, ~~Inc.~~ ~~(the~~based ~~“Company”)~~on our ownership percentage, is approximately $9,699,000 as of December 31, ~~2002, and the related consolidated~~ ~~statements~~ 2008. ofSee ~~operations,~~Item 7. ~~shareholders~~“Management’s ~~equity~~Discussion and ~~cash~~ ~~flows~~ Analysis ~~for~~of ~~the~~Financial ~~year~~Condition ~~then~~and ~~ended.~~Results ~~These~~of ~~financial statements are~~Operations,” ~~the~~ and ~~responsibility~~Note 7 — of“Commitments ~~the Company’s management. Our~~and ~~responsibility~~ Contingencies,” is to ~~express~~the anconsolidated ~~opinion on these~~ financial statements included ~~based~~with onthis ~~our audit~~report.

WeItem ~~conducted our audit in accordance with auditing standards generally accepted in the United States of America~~3. ~~Those~~Legal ~~standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement~~Proceedings. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

~~In our opinion, the financial statements referred~~ ~~to above present fairly, in all material respects, the~~ Clearview ~~consolidated financial position of T REIT, Inc. as of~~ Litigation ~~December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.~~

/ On February 11, 2004, Clearview Properties, or Clearview, filed a petition in the District Court of the 270th Judicial District, Harris County, Texas against Property Texas SC One Corporation, Clarion Partners, LLC, and Granite Partners I, LLC, three unaffiliated entities, and T REIT, our advisor and Realty, or collectively, the Triple Net Entities. The complaint alleged that the Triple Net Entities willfully and intentionally interfered with an agreement between Property One and Clearview for the sale of certain real property located in Houston, Texas by Property One to Clearview. On January 7, 2005, Clearview filed an amended complaint which also alleged that the Triple Net Entities breached a contract between Clearview and the Triple Net Entities for the sale of the Houston, Texas property by Clearview to the Triple Net Entities and for conspiracy with Property One to breach this contract. On March 25, 2005, Clearview filed a further amended complaint which named T REIT, L.P. as an additional Triple Net Entity defendant and dropped Realty as a defendant. On May 4, 2005, the court denied a motion for summary judgment filed by the Triple Net Entities. On July 28, 2005, the Triple Net Entities filed their second amended motion for summary judgment to dismiss the claims against them, which amended motion was granted in favor of the Triple Net Entities by the court on August 8, 2005. On December 12, 2005, a one-day trial was held to determine the Triple Net Entities’ ability to recover from Clearview, attorneys’ fees, expenses and costs incurred in this case as provided for pursuant to the terms of the agreements underlying Clearview’s/ ~~GRANT~~breach ~~THORNTON~~of ~~LLP~~contract claims against the Triple Net Entities. On May 17, 2006, the court entered a final judgment awarding T REIT, L.P. $212,000 in attorneys’ fees for services rendered, $25,000 for attorneys’ fees if Clearview unsuccessfully appeals the case to the court of appeals, and $13,000 for attorneys’ fees if Clearview

Irvine, California

March 19, 2003

~~INDEPENDENT~~ unsuccessfully ~~AUDITORS~~appeals the case to the Texas Supreme Court. Clearview is in the process of proceeding with an appeal, and we are proceeding with our collection efforts. On January 29, 2009, the Fourteenth Court of Appeals affirmed the trial court’s ~~REPORT~~summary judgment, reversed T REIT, L.P.’s attorneys’ fees award, and remanded the attorneys’ fee issue for a further proceeding. Clearview has asked the appellate court to reconsider its decision. We are unable to determine the probability of the outcome or the amount or range of any potential recovery.

~~To the Board of Directors and Shareholders~~ Prior Performance Tables

In connection with T REIT’s initial public offering of common stock conducted through a best efforts offering from February 22, 2000 through June ~~Inc~~1, 2002, T REIT disclosed the prior performance of all public and private investment programs sponsored by our advisor. T REIT later determined that there were certain errors in those prior performance tables. In particular, the financial information in the tables was stated to be presented according to accounting principles generally accepted in the United States of America, or GAAP. Generally, the tables for the public programs were not presented on a GAAP basis and the tables for the private programs were prepared and presented on a tax or cash accounting basis. Moreover, a number of the prior performance data figures were themselves erroneous, even as presented on a tax or cash basis. In particular, certain programs sponsored by our advisor have invested either along side or in other programs sponsored by our advisor. The nature and results of these investments were not fully and accurately disclosed in the tables. In addition, certain calculations of depreciation and amortization were not on an income tax basis for a limited liability company investment; certain operating expenses were not reflected in the operating results; and monthly mortgage and principal payments were not reported. In general, the resulting effect is an overstatement of our advisor’s program and aggregate portfolio operating results. At this time there is no litigation related to the prior performance tables.

We Other ~~have~~than ~~audited~~ the ~~consolidated statements of operations~~above, ~~shareholders’~~to ~~equity~~our ~~and cash flows of T REIT~~knowledge, ~~Inc.,~~ athere ~~Virginia~~is ~~corporation,~~no ~~and subsidiary~~material ~~(the~~ pending ~~“Company”),~~legal asproceedings. ofWe ~~December 31,~~also ~~2001,~~have ~~and~~routine ~~for~~litigation ~~the~~ incidental ~~year~~to ~~ended~~the ~~December 31,~~business ~~2001.~~to ~~These~~which ~~financial statements~~we are ~~the~~a ~~responsibility~~party or of ~~the Company’s~~which ~~management.~~ certain ~~Our~~of ~~responsibility~~our isproperties toare ~~express an opinion on these financial statements based on our audits~~subject.

WeItem ~~conducted our audits in accordance with auditing standards generally accepted in the United States~~4. ~~Those~~ ~~standards~~Submission ~~require~~of ~~that~~Matters ~~we plan and perform the audits~~ to ~~obtain~~ ~~reasonable~~a ~~assurance~~Vote ~~about whether the financial statements are free~~ of ~~material~~Security ~~misstatement~~Holders. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In No ~~our~~matters ~~opinion,~~were ~~the~~submitted ~~consolidated financial statements referred~~ to ~~above~~a ~~present~~vote ~~fairly,~~of inour ~~all~~beneficiaries ~~material~~during ~~respects,~~ the ~~results of their operations and cash flows for the~~ year ended December 31, ~~2001 in conformity with accounting principles generally accepted in the United States~~2008.

/s/ SQUAR, MILNER, REEHL & WILLIAMSON, LLP

Newport Beach, California

March 15, 2002

~~T REIT,~~ PART ~~INC.~~II

~~CONSOLIDATED~~Item ~~BALANCE~~5. ~~SHEETS~~ Market for Registrant’s Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities.

~~December 31, 2003 and 2002~~ Market Information

		2003			2002
ASSETS
Real estate investments:
	Operating properties, net	$	15,746,627		$	36,262,924
	Property held for sale, net		—			3,917,239
	Investments in unconsolidated real estate		19,331,447			14,499,831
			35,078,074			54,679,994
Cash and cash equivalents			12,189,324			6,129,468
Accounts receivable, net			36,908			242,587
Accounts receivable from related parties			537,915			593,670
Real estate deposits			10,753			3,918,743
Other assets, net			869,850			1,617,263
Note receivable			647,108			587,178
Total assets		$	49,369,932		$	67,768,903
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued liabilities		$	1,634,577		$	997,870
Distributions payable			317,948			321,252
Security deposits and prepaid rent			59,327			144,018
Notes payable			9,250,278			25,221,036
Notes payable secured by property held for sale			—			2,869,089
			11,262,130			29,553,265
Commitments and contingencies
Shareholders’ equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 4,720,176 shares issued, 4,646,085 and 4,696,300 outstanding at December 31, 2003 and 2002, respectively			47,202			47,202
Additional paid-in capital			41,265,443			41,265,443
Treasury stock, 74,091 and 23,876 shares at December 31, 2003 and 2002, respectively			(675,155	)		(220,653	)
Distributions in excess of earnings			(2,529,688	)		(2,876,354	)
Total shareholders’ equity			38,107,802			38,215,638
Total liabilities and shareholders’ equity		$	49,369,932		$	67,768,903

There is no public market for the units of beneficial interest in T REIT Liquidating Trust. The units of beneficial interest are not and will not be listed on any exchange, quoted by a securities broker or dealer, nor admitted for trading in any market, including the over-the-counter market. The units of beneficial interests are not transferable except by operation of law or upon the death of a beneficiary.

~~The accompanying notes are an integral part of~~ ~~these consolidated financial statements.~~ Beneficiaries

As of March 5, 2009, we had 1,991 beneficiaries.

Distributions

During the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007, we did not make any distributions to our beneficiaries.

Equity Compensation Plan Information

In accordance with the plan of liquidation, all outstanding options under T REIT’s equity compensation plans were forfeited and the plans were terminated. We do not have an equity compensation plan in place.


Item 6.	Selected Financial Data.

The following selected financial data should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto. The results for the period from July 20, 2007 through December 31, 2007 are not comparable to any prior period because we began operations as of July 20, 2007.


	December 31,		December 31,
Selected Financial Data(1)	2008		2007

STATEMENT OF NET ASSETS:
Total assets	$	3,777,000	$	6,007,000
Mortgage loans payable secured by property held for sale	$	—	$	—
Net assets in liquidation(1)	$	3,777,000	$	6,007,000
Net asset value per unit(1)	$	0.82	$	1.30


				Period from
				July 20,
				2007
	Year Ended			through
	December 31,			December 31,
	2008			2007

STATEMENT OF CHANGES IN NET ASSETS:
Net assets in liquidation, beginning of period	$	6,007,000		$	—
Net assets contributed to T REIT Liquidating Trust on July 20, 2007		—			6,861,000

Change in estimated receipts in excess of estimated costs during liquidation		46,000			(134,000	)
Net decrease in fair value		(2,276,000	)		(720,000	)

Change in net assets in liquidation		(2,230,000	)		(854,000	)

Net assets in liquidation, end of period	$	3,777,000		$	6,007,000

(1) The net assets in liquidation as of December 31, 2008 of $3,777,000 plus the cumulative liquidating distributions through December 31, 2008 of approximately $50,600,000 (which were paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us) would result in liquidating distributions per unit of approximately $11.81 as of December 31, ~~INC~~ 2008.

~~CONSOLIDATED~~Item ~~STATEMENTS~~7. ~~OF OPERATIONS~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~For~~ The ~~the~~following ~~Years~~discussion ~~Ended~~should ~~December~~be read in conjunction with Item ~~31,~~6. ~~2003~~“Selected Financial Data,” and our ~~2002~~ historical consolidated financial statements and ~~2001~~related notes thereto included elsewhere in this report.

		2003			2002			2001
Revenues
	Rental income	$	2,529,077		$	303,502		$	—
	Interest income		116,226			283,312			197,044
			2,645,303			586,814			197,044
Expenses
	Rental expenses		1,032,814			102,294			—
	General and administrative		895,446			538,600			571,157
	Depreciation and amortization		378,323			20,888			—
	Interest (including amortization of deferred financing fees)		486,782			12,596			—
			2,793,365			674,378			571,157
Loss before equity in earnings of unconsolidated real estate			(148,062	)		(87,564	)		(374,113	)
Equity in earnings of unconsolidated real estate			1,160,414			1,125,501			61,958
Income (loss) from continuing operations before discontinued operations and gain (loss) on sale of real estate investments			1,012,352			1,037,937			(312,155	)
Gain (loss) on sale of real estate investments			2,613,523			213,351			(177,948	)
Income from discontinued operations			563,393			1,042,470			26,471
Net income (loss)		$	4,189,268		$	2,293,758		$	(463,632	)
Net income (loss) per common share:
	Continuing operations — basic and diluted	$	.22		$	.26		$	(.22	)
	Discontinued operations — basic and diluted		.68			.31			(.11	)
Total net income (loss) per common share — basic and diluted			.90			.57			(.33	)
Weighted average common shares outstanding — basic and diluted			4,676,026			4,013,175			1,398,104
Distributions declared per share		$	0.82		$	0.83		$	0.82
Distributions declared		$	3,842,601		$	3,310,870		$	1,145,621

Forward-Looking Statements

~~The~~ Historical ~~accompanying~~results ~~notes~~and trends should not be taken as indicative of future operations. Our statements contained in this report that are annot ~~integral~~historical ~~part~~facts are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual results may differ materially from those included in the forward-looking statements. We intend these ~~consolidated~~forward-looking ~~financial~~statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on our assumptions and describe future plans, strategies and expectations for ourselves, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “prospects,” or similar expressions. Our ability to predict results or the actual effect of our future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and our future prospects on a consolidated basis include, without limitation, the following: changes in economic conditions generally and the real estate market specifically; legislative/regulatory changes; availability of capital; changes in interest rates; competition in the real estate industry; supply and demand for operating properties in our current market areas and changes in accounting principles generally accepted in the United States of America, or GAAP; predictions of the amount of liquidating distributions to be received by our beneficiaries; statements regarding the timing of asset dispositions and the sales price we will receive for assets; the effect of the liquidation; the availability of buyers to acquire our properties we make available for sale; the availability of financing; the absence of material litigation; our ongoing relationship with our advisor; litigation, including, without limitation, the investigation of our advisor by the United Stated Securities and Exchange Commission, or the SEC; and the implementation and completion of the plan of liquidation.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We make no representations or warranties (express or implied) about the accuracy of any such forward-looking statements contained in this report, and, unless otherwise required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview and Background

We were organized on July 16, 2007, as a liquidating trust pursuant to a plan of liquidation of T REIT, Inc., or T REIT, or the plan of liquidation. Pursuant to the Liquidating Trust Agreement, dated as of July 16, 2007, by and between T REIT and W. Brand Inlow, or our Trustee, T REIT transferred its then remaining assets and liabilities to us to hold. Mr. Inlow previously served as an independent director of T REIT and the chairman of T REIT’s board of directors. Upon the transfer of the assets and liabilities to us, each shareholder of T REIT as of the July 16, 2007 Record Date automatically became the holder of one unit of beneficial interests in T REIT Liquidating Trust for each share of T REIT’s common stock then currently held of record by such shareholder. Our purpose is to wind up the affairs of T REIT by liquidating our remaining assets, distributing the proceeds from the liquidation of our remaining assets to our beneficiaries, and paying all liabilities, costs and expenses of T REIT and T REIT Liquidating Trust.

T Our ~~REIT~~existence will terminate upon the earliest of (i) the distribution of all of its assets in accordance with the terms of Liquidating Trust Agreement, or (ii) ~~INC~~the expiration of a period of three years from the date assets were first transferred to us, or July 20, 2010. Our existence may, however, be extended beyond the three-year term if our Trustee then determines that an extension is reasonably necessary to fulfill our purpose and, prior to such extension, our Trustee has requested and received certain no-action assurances from the SEC.

~~CONSOLIDATED~~ Upon ~~STATEMENTS~~the OFtransfer ~~SHAREHOLDERS’~~of assets and liabilities from T REIT to us on ~~EQUITY~~ July 16, 2007, we acquired a 10.3% interest in the Congress Center, located in Chicago, Illinois, or the Congress Center property, or our unconsolidated property, and assumed approximately $9,828,000 of indebtedness, representing the proportionate shares of the secured mortgage loan outstanding on the Congress Center property. We refer to the sale of our unconsolidated property interest or the sale of the Congress Center property as the sale or disposition of our “remaining asset.” Although we can provide no assurances, we currently expect to sell our remaining asset by December 31, 2009 and anticipate completing the plan of liquidation by March 31, 2010.

~~For~~ On October 31, 2008, we, through NNN Congress Center, LLC, of which we own a 35.5% ownership interest through our subsidiary TREIT-Congress Center, LLC, entered into a purchase and sale agreement to sell the ~~Years~~Congress ~~Ended~~Center ~~December~~property to FSP Congress Center LLC, or FSP, an unaffiliated third party, for an aggregate sales price of $130,000,000. We own, through NNN Congress Center, LLC, a 10.3% interest in the Congress Center property. On January 3113, ~~2003~~2009, FSP elected to terminate the ~~2002~~ agreement ~~and~~as ~~2001~~provided for under its terms. Our advisor continues to market the Congress Center property for sale.

				Common		Additional					Distributions
	Number of			Stock		Paid-In		Treasury			in Excess of
	Shares			Par Value		Capital		Stock			Earnings			Total
BALANCE — January 1, 2001		664,271		$	6,643	$	5,336,522	$	—		$	(249,989	)	$	5,093,176
Issuance of common stock		1,807,216			18,072		16,272,478		—			—			16,290,550
Distributions		—			—		—		—			(1,145,621	)		(1,145,621	)
Repurchase of Shares		(1,000	)		—		—		(9,050	)		—			(9,050	)
Net loss		—			—		—		—			(463,632	)		(463,632	)
BALANCE — December 31, 2001		2,470,487			24,715		21,609,000		(9,050	)		(1,859,242	)		19,765,423
Issuance of common stock		2,248,689			22,487		19,656,443		—			—			19,678,930
Distributions		—			—		—		—			(3,310,870	)		(3,310,870	)
Repurchase of Shares		(22,876	)		—		—		(211,603	)		—			(211,603	)
Net income		—			—		—		—			2,293,758			2,293,758
BALANCE — December 31, 2002		4,696,300			47,202		41,265,443		(220,653	)		(2,876,354	)	$	38,215,638
Issuance of common stock		—			—		—		—			—			—
Distributions		—			—		—		—			(3,842,602	)		(3,842,602	)
Repurchase of Shares		(50,215	)		—		—		(454,502	)		—			(454,502	)
Net income		—			—		—		—			4,189,268			4,189,268
BALANCE — December 31, 2003		4,646,085		$	47,202	$	41,265,443	$	(675,155	)	$	(2,529,688	)	$	38,107,802

Critical Accounting Policies

~~The~~ Use ~~accompanying notes are an integral part~~ of ~~these consolidated financial statements.~~ Estimates

The preparation of financial statements in accordance with GAAP and under the liquidation basis of accounting requires us to make estimates and judgments that affect the reported amounts of assets (including net assets in liquidation), liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that our critical accounting policies are those that require significant judgments and estimates. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could vary from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

Liquidation Basis of Accounting

Under the liquidation basis of accounting, all assets have been adjusted to their estimated fair value (on an undiscounted basis) and liabilities, including estimated costs associated with implementing the plan of liquidation, were adjusted to their estimated settlement amounts. Minority liabilities due to interests in properties held through tenant-in-common interests were offset against the respective properties. The valuation of real estate held for sale and investments in unconsolidated real estate is based on current contracts, estimates and other indications of sales value net of estimated selling costs. Actual values realized for assets and settlement of liabilities may differ materially from the amounts estimated. Estimated future cash flows from property operations were made based on the anticipated sales date of our remaining asset. Due to the uncertainty in the timing of the anticipated sales dates and the cash flows therefrom, results of operations may differ materially from amounts estimated. These amounts are presented in the accompanying consolidated statement of net assets. The net assets represent the estimated liquidation value of our remaining asset available to our beneficiaries upon liquidation. The actual settlement amounts realized for assets and settlement of liabilities may differ materially, perhaps in adverse ways, from the amounts estimated.

We continually evaluate our existing portfolio and adjust our net real estate liquidation value accordingly. It is our policy that when we execute a purchase and sale agreement or become aware of market conditions or other circumstances that indicate that our present value materially differs from our expected net sales price, we will adjust our liquidation value accordingly.

T Asset for ~~REIT, INC.~~Estimated Receipts in Excess of Estimated Costs during Liquidation

~~CONSOLIDATED~~ Under ~~STATEMENTS~~the OFliquidation ~~CASH~~basis of accounting, we are required to ~~FLOWS~~ estimate the cash flows from operations and accrue the costs associated with implementing and completing the plan of liquidation. We currently estimate that we will have operating cash inflows from our unconsolidated property in excess of the estimated costs of liquidation. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, along with the estimates of tenant improvements incurred and paid, the timing of the sale of our remaining asset, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of our operations. These costs are estimated and are expected to be paid out over the estimated liquidation period.

~~For~~ The change in the ~~Years~~asset ~~Ended~~for estimated receipts in excess of estimated costs during liquidation for the year ended December 31, ~~2003, 2002~~2008 ~~and~~is ~~2001~~as follows:

					2003				2002				2001
		December 31,				Cash Payments				Change in				December 31,
CASH FLOWS FROM OPERATING ACTIVITIES
		2007				and (Receipts)				Estimates				2008
Net income (loss)					$	4,189,268			$	2,293,758			$	(463,632	)
Assets:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Estimated net inflows from consolidated and unconsolidated operating activities		$	1,001,000			$	(164,000	)		$	96,000			$	933,000
		Equity in earnings of unconsolidated real estate				(1,160,414	)			(450,215	)			(61,958	)
Liabilities:
		(Gain) loss on sale of real estate investments				(2,613,523	)			(213,352	)			177,948
Liquidation costs			(304,000	)			333,000				(224,000	)			(195,000	)
		Depreciation — continuing operations				369,084				74,064				—
Total asset for estimated receipts in excess of estimated costs during liquidation		$	697,000			$	169,000			$	(128,000	)		$	738,000
		Depreciation — discontinued operations				102,478				671,579				593,627
	Change in operating assets and liabilities:
		Accounts receivable				205,679				50,576				(189,694	)
		Accounts receivable from related parties				55,755				33,330				(627,000	)
		Other assets				626,623				(582,367	)			(420,993	)
		Accounts payable and accrued liabilities				636,707				458,313				(344,911	)
		Security deposits and prepaid rent				(84,691	)			(46,138	)			94,763
			Net cash provided by (used in) operating activities			2,326,966				2,289,548				(1,241,850	)
CASH FLOWS FROM INVESTING ACTIVITIES
		Purchase of real estate operating properties				(9,167,223	)			(6,885,437	)			(4,984,856	)
		Purchase of investments in unconsolidated real estate				(3,671,202	)			(12,171,579	)			(1,663,657	)
		Real estate property improvements				(197,704	)			(231,971	)			(152,422	)
		Proceeds from disposition of property held for sale				35,940,424				1,502,197				1,050,000
		Issuance of notes receivable				—				—				(595,000	)
		Issuance of notes receivable from related parties				—				—				(837,579	)
		(Increase) decrease in notes receivable				(59,930	)			7,822				—
		Collections of notes receivable from related parties				—				1,787,579				—
		Real estate deposits applied to purchases				3,907,990				(3,287,243	)			(308,260	)
			Net cash provided by (used in) investing activities			26,752,355				(19,278,632	)			(7,491,774	)
CASH FLOWS FROM FINANCING ACTIVITIES
		Issuance of common shares				—				19,343,151				16,007,566
		Borrowings under notes payable				5,000,000				4,400,000				13,150,000
		Principal payments on notes payable				(23,839,847	)			(1,047,336	)			(15,925,965	)
		Repurchase of shares				(454,502	)			(211,603	)			(9,050	)
		Distributions paid				(3,845,906	)			(2,862,599	)			(862,637	)
		Deferred financing costs				120,790				(150,220	)			(227,208	)
			Net cash (used in) provided by financing activities			(23,019,465	)			19,471,393				12,132,706
NET INCREASE IN CASH AND CASH EQUIVALENTS						6,059,856				2,482,309				3,399,082
CASH AND CASH EQUIVALENTS — beginning of year						6,129,468				3,647,159				248,077
CASH AND CASH EQUIVALENTS — end of year					$	12,189,324			$	6,129,468			$	3,647,159
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
		Interest			$	1,779,852			$	1,820,223			$	2,216,120
		Income taxes			$	30,224			$	68,796			$	30,674
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
		Issuance of common stock for distributions reinvested			$	—			$	335,003			$	292,984

The ~~accompanying~~change ~~notes~~in ~~are~~the anasset ~~integral~~for ~~part~~estimated receipts in excess of ~~these~~ estimated ~~consolidated~~costs ~~financial~~during ~~statements.~~liquidation for the period from July 20, 2007 through December 31, 2007 is as follows:


	As of July 20,			Cash Payments			Change in			December 31,
	2007			and (Receipts)			Estimates			2007

Assets:
Estimated net inflows from consolidated and unconsolidated operating activities	$	1,202,000		$	(125,000	)	$	(76,000	)	$	1,001,000
Liabilities:
Liquidation costs		(371,000	)		318,000			(251,000	)		(304,000	)

Total asset for estimated receipts in excess of estimated costs during liquidation	$	831,000		$	193,000		$	(327,000	)	$	697,000

Net Assets in Liquidation

The net assets in liquidation as of December 31, 2008 of $3,777,000 plus cumulative liquidating distributions through December 31, 2008 of $50,600,000 (which were paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us) would result in liquidating distributions to our beneficiaries per unit of approximately $11.81 per unit (of which $10.99 per share was paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us). These estimates for liquidation distributions per unit include projections of costs and expenses expected to be incurred during the period required to complete the plan of liquidation. These projections could change materially based on the timing of any sale, the performance of the underlying asset and change in the underlying assumptions of the projected cash flows.

T Factors Which ~~REIT, INC.~~May Influence Future Changes in Net Assets in Liquidation

~~NOTES TO CONSOLIDATED FINANCIAL~~ ~~STATEMENTS~~ Rental Income

~~For~~ The amount of rental income generated by our unconsolidated property depends principally on our ability to maintain the occupancy ~~Years~~rates ~~Ended~~of ~~December 31,~~currently ~~2003~~leased space, to lease currently ~~2002~~ available space and ~~2001~~space available from unscheduled lease terminations at the existing rental rates and the timing of the disposition of our remaining asset. Negative trends in one or more of these factors could adversely affect our rental income in future periods.

1. Scheduled Lease ~~Organization~~Expirations

T As ~~REIT,~~of December ~~Inc.~~31, ~~(the~~2008, ~~“Company”)~~our unconsolidated property was ~~formed~~ 79.2% inleased ~~December~~to ~~1998~~12 intenants. ~~the~~None ~~Commonwealth~~ of ~~Virginia~~the ~~and operates~~leases asfor athe ~~real estate investment trust (“REIT”)~~existing ~~under~~ gross ~~the~~leaseable ~~Internal~~area, ~~Revenue~~or ~~Code~~GLA ofexpire ~~1986,~~during as2009. ~~amended~~Our ~~(the~~leasing ~~“Code”).~~ strategy ~~The~~through ~~Company is in~~ the ~~business~~plan of ~~acquiring existing~~liquidation ~~office,~~focuses ~~industrial,~~on ~~retail and service properties~~negotiating ~~located~~ renewals infor ~~several~~leases ~~states.~~scheduled Asto ofexpire ~~December 31,~~and ~~2003,~~identifying ~~the~~new ~~Company~~ tenants ~~owned~~or ~~two~~existing ~~consolidated~~tenants ~~properties~~seeking ~~and~~additional ~~interests~~space into ~~eight~~occupy ~~unconsolidated~~ the ~~properties.~~GLA ~~The~~for ~~Company~~which ~~acquires~~we ~~properties through~~are ~~its~~unable ~~operating~~to ~~partnership,~~negotiate ~~T REIT,~~such Lrenewals.~~P., which is~~ ~~wholly owned by the Company.~~

~~The Company is externally advised by an~~ ~~affiliated company, Triple Net Properties, LLC (the “Advisor”), which is primarily responsible for managing the day~~ Sarbanes-~~to-day operations and assets of the Company.~~Oxley ~~The Advisory Agreement dated February 22, 2000, between the~~ Act ~~Company and the Advisor is for a one-year term, subject to successive renewals. (See Note 11).~~

2 The Sarbanes-Oxley Act of 2002, as amended, and related laws, regulations and standards relating to corporate governance and disclosure requirements applicable to public companies have increased the costs of compliance with corporate governance, reporting and disclosure practices which are now required of us. In ~~Summary~~addition, these laws, rules and regulations create new legal bases for administrative enforcement, and civil and criminal proceedings against us in case of ~~Significant~~non-compliance, ~~Accounting~~thereby increasing ~~Policies~~our risk of liability and potential sanctions. If we are unable to complete the plan of liquidation by March 31, 2010, we expect that our efforts to continue to comply with these laws and regulations will involve significant costs, and any failure on our part to comply could result in fees, fines, penalties or administrative remedies against us, which could reduce and/or delay the amount of liquidating distributions to our beneficiaries under the plan of liquidation.

~~The summary of significant accounting policies~~ ~~presented below is designed to assist in understanding the~~ Changes Company’s consolidated financial statements. Such financial statements and accompanying notes are the representations of Company management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in ~~the~~Net ~~United~~Assets ~~States of America (“GAAP”)~~ in ~~all material respects, and have been~~Liquidation ~~consistently applied in preparing the accompanying consolidated financial statements.~~

~~Principles~~ For the ofyear ~~Consolidation~~ended December 31, 2008

~~The~~ Net ~~accompanying~~assets ~~consolidated~~in ~~financial statements~~liquidation ~~include~~decreased ~~the~~$2,230,000, ~~accounts~~or of$0.48 per unit, during the ~~Company~~year ~~and~~ended TDecember ~~REIT~~31, L 2008.P. ~~All~~The ~~significant~~primary reason ~~intercompany~~for ~~accounts~~the ~~and~~decrease ~~transactions~~in ~~have~~our net assets is a decrease in the ~~been~~ value ~~eliminated~~of our unconsolidated property of $2,107,000, or $0.46 per unit, as a result of a decrease in ~~consolidation~~the anticipated sales price.

~~Real~~ The ~~Estate~~net ~~Investments~~assets in liquidation as of December 31, 2008 of $3,777,000 plus cumulative liquidating distributions through December 31, 2008 of $50,600,000 (which were paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us) would result in liquidating distributions to our beneficiaries per unit of approximately $11.81 per unit (of which $10.99 per share was paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us). These estimates for liquidation distributions per unit include projections of costs and expenses expected to be incurred during the period required to complete the plan of liquidation. These projections could change materially based on the timing of any sale, the performance of the underlying asset and change in the underlying assumptions of the projected cash flows.

~~Operating~~ For the ~~Properties~~period from July 20, 2007 through December 31, 2007

~~Operating~~ Net ~~properties~~assets ~~are~~in ~~held~~liquidation ~~for~~decreased ~~investment~~$854,000, ~~and~~or $0.19 per unit, ~~carried~~ during atthe ~~cost~~period ~~less~~from ~~accumulated~~July 20, ~~depreciation~~2007 through December 31, 2007. ~~Cost~~The ~~includes~~primary reasons for the decrease in ~~cost~~ our ofnet ~~land~~assets ~~and~~include ~~completed~~a ~~buildings~~decrease ~~and~~in ~~related~~the ~~improvements~~value of our unconsolidated property of $527,000, or $0.11 per unit, as a ~~Expenditures~~ result ~~that~~of ~~increase~~a decrease in the ~~service~~anticipated ~~life~~sales ofprice ~~properties~~along ~~are~~with a ~~capitalized;~~ decrease in the ~~cost~~asset for estimated receipts in excess of estimated ~~maintenance~~costs ~~and~~of ~~repairs~~$134,000, isor ~~charged~~$0.03 per unit, as a result of a change in estimate primarily due to the change in the projected ~~expense~~ sales asdate ~~incurred~~of our remaining asset.

Depreciation is generally provided on a straight-line basis over the estimated useful lives of the buildings and improvements, ranging primarily from 15 to 39 years. When depreciable property is retired or disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations.

Property acquisitions have been accounted for in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” The fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and value of tenant relationships, if any, based in each case on their fair values.

The net assets in liquidation as of December 31, 2007 of $6,007,000 plus cumulative liquidating distributions through December 31, 2007 of $50,600,000 (which were paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us) would result in liquidating distributions to our beneficiaries per unit of approximately $12.29 per unit (of which $10.99 per share was paid to T REIT shareholders prior to the transfer of T REIT’s assets and liabilities to us). These estimates for liquidation distributions per unit include projections of costs and expenses expected to be incurred during the period required to complete the plan of liquidation. These projections could change materially based on the timing of any sale, ~~INC~~ the performance of the underlying asset and change in the underlying assumptions of the projected cash flows.

~~NOTES~~ Liquidity and TOCapital ~~CONSOLIDATED FINANCIAL~~Resources ~~STATEMENTS — (Continued)~~

~~The~~ As ~~fair~~of ~~value~~December 31, of2008, ~~the~~our ~~tangible~~total assets ofand ~~an acquired~~net ~~property~~assets ~~(which~~in liquidation ~~includes~~were ~~land~~$3,777,000, ~~building~~or ~~and~~$0.82 ~~tenant improvements)~~per isunit. ~~determined~~Our byability ~~valuing~~to meet ~~the~~our ~~property~~obligations asis ifcontingent ~~it were~~upon ~~vacant, and~~ the ~~“as-if-vacant”~~disposition ~~value~~of ~~is then~~our ~~allocated~~ remaining toasset ~~land,~~in ~~building~~accordance ~~and~~with ~~tenant~~the ~~improvements~~plan ~~based~~of onliquidation. ~~our~~We ~~determination~~ estimate ofthat the ~~relative~~net ~~fair~~proceeds ~~values~~from the sale of ~~these~~our ~~assets.~~remaining ~~Factors~~ asset ~~considered~~pursuant byto usthe inplan ~~performing these analyses include an estimate~~ of ~~carrying~~liquidation ~~costs~~will ~~during~~be ~~the~~adequate ~~expected~~to pay ~~lease-up~~our ~~periods considering~~obligations; ~~current~~however, ~~market~~we ~~conditions~~cannot ~~and~~provide ~~insurance~~any ~~and~~assurance ~~other~~as ~~operating~~ to ~~expenses during~~ the ~~expected~~prices ~~lease-up~~we ~~periods~~will ~~based~~receive ~~on current~~for ~~market~~the ~~demand.~~disposition Weof ~~also estimate costs to execute similar~~our ~~leases~~ remaining ~~including~~asset ~~leasing~~or ~~commissions,~~the ~~concessions,~~net ~~legal~~proceeds ~~and other related costs~~therefrom.

~~In allocating the fair value of the identified~~ ~~intangible assets and liabilities of an acquired property,~~ Current ~~above-market~~ Sources ~~and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired)~~ of ~~the difference~~Capital ~~between (i) the contractual amounts to be paid pursuant to the in-place leases~~ and ~~(ii) our estimate of~~Liquidity fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market and below-market lease values are amortized into rental income over the remaining non-cancelable terms of the respective leases.

~~Property~~ We ~~Held~~anticipate, but cannot assure, that our cash flow from operations and sale of our remaining asset will be sufficient during the liquidation period to fund our cash needs for ~~Sale~~payment of expenses, capital expenditures, recurring debt service payments and repayment of debt maturities.

~~Property~~ The ~~held~~plan ~~for~~of ~~sale~~liquidation isgives ~~carried~~our atTrustee the ~~lower~~power ~~of carrying~~to ~~amount~~sell orour remaining ~~fair~~asset ~~value~~without ~~less~~further ~~costs~~approval toby ~~sell~~our beneficiaries and ~~such property~~provides isthat noliquidating ~~longer~~distributions ~~depreciated.~~be ~~The~~made ~~Company~~to ~~classifies~~our ~~operating~~ beneficiaries ~~properties~~ as ~~property~~determined ~~held~~at ~~for~~the ~~sale~~discretion inof ~~the~~our ~~period~~Trustee. Although inwe can provide no assurances, we currently expect to ~~which~~ sell all of our assets by December 31, 2009 and anticipate completing the ~~following~~plan ~~criteria~~of ~~are~~liquidation ~~met:~~by March 31, 2010.

• Other Liquidity management, having the authority to approve the action, commits to a plan to sell the asset; • the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; • an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; • the sale of the asset is probable and the transfer of the asset is expected to qualify for recognition as a completed sale within one year; • the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and • actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.Needs

~~Investments~~ We inbelieve ~~Unconsolidated~~that ~~Real~~we ~~Estate~~will have sufficient capital resources to satisfy our liquidity needs during the liquidation period. We did not make any cash distributions to our beneficiaries during the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007. On July 9, 2007, prior to the transfer of T REIT’s assets and liabilities to us, T REIT made cash distributions to its shareholders of approximately $2,600,000, or $0.56 per share. The source for payment of these distributions was funds from operating activities and net proceeds from the sale of properties.

~~Variable~~ As ~~interest~~of ~~investments~~December 31, in2008, ~~real~~we ~~estate~~estimate that do ~~not~~we ~~meet~~will ~~consolidation~~have $195,000 ~~criteria~~of ~~are~~commitments ~~reflected~~and inexpenditures during the liquidation ~~financial~~ period ~~statements~~comprised ~~using~~of $195,000 of liquidation costs. However, there can be no assurance that we will not exceed the ~~equity~~amounts ~~method~~of these estimated expenditures or that we will be able to obtain additional sources of ~~accounting~~financing on commercially favorable terms, or at all.

~~Cash~~ A material adverse change in the net cash provided by operating activities or net proceeds expected from the liquidation of our remaining asset may affect our ability to fund these items and may ~~Cash~~affect ~~Equivalents~~our ability to satisfy the financial performance covenants under our mortgages and unsecured notes. If we fail to meet our financial performance covenants and are unable to reach a satisfactory resolution with the lenders, the maturity dates for the secured and unsecured notes could be accelerated. Any of these circumstances could adversely affect our ability to fund working capital, liquidation costs and unanticipated cash needs.

~~Certificates~~ Liquidating distributions will be determined in our Trustee’s sole discretion and are dependent on a number of factors, ~~deposit~~including the amount of funds available for distribution, our financial condition, our capital expenditures, and ~~short-term~~other factors our Trustee may deem relevant. The stated ~~investments~~ range ~~with~~of ~~remaining~~beneficiary ~~maturities~~distributions disclosed in the plan of liquidation ~~three~~is ~~months~~an estimate only and actual results may be higher or ~~less~~lower than estimated. The potential for variance on either ~~when~~ end ~~acquired~~of ~~are~~the ~~considered~~range ~~cash~~could ~~equivalents.~~occur for reasons including, but not limited to: (i) unanticipated costs could reduce net assets actually realized; (ii) if we wind up our business

Allowance for Uncollectible Billed and Unbilled Receivables

Tenant receivables and unbilled deferred rent receivables are carried net of the allowances for uncollectible current tenant receivables and unbilled deferred rent. Management’s determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, individual

T significantly ~~REIT~~faster than anticipated, some of the anticipated costs may not be necessary and net liquidation proceeds could be higher; (iii) ~~INC~~a delay in our liquidation could result in higher than anticipated costs and net liquidation proceeds could be lower; and (iv) circumstances may change and the actual net proceeds realized from the sale of our remaining asset might be less, or significantly less, than currently estimated, including, for among other reasons, the discovery of new environmental issues or loss of a tenant or tenants.

~~NOTES~~ Subject TOto ~~CONSOLIDATED~~our ~~FINANCIAL~~Trustee’s actions and in accordance with the ~~STATEMENTS — (Continued)~~ plan of liquidation, we expect to meet our liquidity requirements through the completion of the liquidation, through retained cash flow, disposition of our remaining asset, and additional unsecured borrowings. We do not intend to reserve funds to retire existing debt upon maturity. We will instead seek to refinance such debt at maturity or retire such debt through the disposition of our remaining asset.

~~tenant~~ If ~~receivables~~we ~~considering~~experience ~~the~~lower ~~tenant’s financial~~occupancy ~~condition,~~levels ~~security~~and ~~deposits,~~reduced ~~letters~~rental ofrates at ~~credit,~~our ~~lease guarantees~~unconsolidated property increased capital expenditures and ~~current~~leasing ~~economic~~costs ~~conditions~~at ~~and~~our ~~other~~unconsolidated ~~relevant~~property compared to ~~factors.~~ historical ~~Management~~levels ~~has~~due ~~established~~to ancompetitive ~~allowance~~market conditions for new ~~uncollectible~~ and ~~accounts~~renewal ~~of $40~~leases,~~889~~ ~~and~~the ~~$67,759~~effect atwould be a reduction of our net ~~December 31,~~ assets ~~2003~~in liquidation and ~~2002,~~could ~~respectively,~~adversely toimpact ~~reduce~~our financial ~~receivables~~ results, our ability to ~~its~~pay ~~estimate~~current ofliabilities ~~the~~as ~~amount~~they ~~recoverable~~come due and our other unanticipated cash needs.

~~Concentration of Credit Risk~~ Capital Resources

~~Financial instruments that potentially subject~~ ~~the Company to a concentration of credit risk are primarily cash~~ General and accounts receivable from tenants. Cash is generally placed in money market accounts and the amount of credit exposure to any one party is limited. The Company has cash in financial institutions which is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $100,000 per institution. At December 31, 2003 and 2002, the Company had cash accounts in excess of FDIC insured limits. Concentration of credit risk with respect to accounts receivable from tenants is limited. The Company performs credit evaluations of prospective tenants, and security deposits are obtained.

As We derive substantially all of ~~December 31,~~our ~~2003,~~revenues ~~the~~from ~~Company~~tenants ~~has~~under ~~investments~~ leases inat ~~three~~our ~~properties~~unconsolidated ~~located~~property. inOur ~~the~~operating ~~state~~cash ~~of Texas~~flow, ~~three properties located in the state of California~~ therefore, ~~two properties~~depends ~~located~~materially inon the ~~state~~rents ofthat ~~Nevada,~~we ~~one~~are ~~property~~able ~~located~~to in charge ~~the~~to ~~state~~our oftenants ~~Illinois,~~ and ~~one property located in~~ the ~~state of~~ability ~~North Dakota. Accordingly, there is a geographic concentration~~ of ~~risk~~these ~~subject~~tenants to ~~fluctuations in each~~make ~~State’s~~ their ~~economy.~~rental Nopayments ~~single~~to ~~tenant accounted for a significant portion of the Company’s rental income~~us.

~~Fair~~ The ~~Value~~primary uses of ~~Financial~~cash ~~Instruments~~are to fund distributions to our beneficiaries and for debt service. We may also regularly require capital to invest in our unconsolidated property in connection with routine capital improvements and leasing activities, including funding tenant improvements, allowances and leasing commissions. The amounts of the leasing-related expenditures can vary significantly depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the life of the leases.

~~The~~ In ~~Company~~accordance ~~believes~~with ~~that~~ the ~~December 31, 2003~~plan ~~and~~of ~~2002~~liquidation, ~~interest~~we ~~rates~~anticipate ~~associated~~our source ~~with~~for ~~mortgages~~the ~~payable approximate~~payment ~~the~~of ~~market~~liquidating ~~interest~~distributions ~~rates~~to ~~for~~our beneficiaries ~~these~~to ~~types~~be ofprimarily ~~debt instruments~~from ~~and~~the asnet ~~such,~~proceeds from the sale ~~carrying~~of ~~amount~~our ofremaining ~~the~~asset ~~mortgages payable~~and ~~approximate~~funds ~~their~~from ~~fair~~operating ~~value~~activities.

~~The carrying amount of, cash and cash~~ ~~equivalents, restricted cash, accounts receivable, notes~~ Financing ~~receivable and accounts payable and accrued liabilities, approximate fair value because of the relatively short maturity of these instruments.~~

~~Derivative~~ As ~~financial~~of ~~instruments~~December 31, 2008, there are no consolidated mortgage loan payables outstanding.

~~The~~ We ~~Company~~did isnot ~~exposed~~have toany ~~the~~consolidated ~~effect~~restricted ofcash ~~interest rate~~balances ~~changes~~as ~~in the normal course~~ of ~~business. The Company~~ ~~mitigates~~ December 31, ~~these~~2008 ~~risks~~that byare ~~following~~held ~~established~~as ~~risk~~credit ~~management policies~~enhancements and ~~procedures which include the periodic use of~~ derivatives. The Company’s primary strategy in entering into derivative contracts is to minimize the volatility that changes in interest rates could have on its future cash flows. The Company employs derivative instruments that are designated as ~~cash~~reserves ~~flow~~for ~~hedges~~property taxes, ~~including~~capital ~~interest~~expenditures ~~rate swaps~~ and ~~caps, to~~capital ~~effectively convert a portion of its variable-rate debt to fixed-rate debt~~ improvements. ~~The Company does not enter into derivative~~ ~~instruments for speculative purposes.~~

~~Real~~ We ~~Estate~~believe ~~Deposits~~that our net cash provided by operating activities and net proceeds from the anticipated asset sale will together provide sufficient liquidity to meet our cash needs through the anticipated completion of our plan of liquidation by March 31, 2010.

~~Real estate deposits are paid on properties the~~ ~~Company is evaluating for purchase. Real estate deposits are~~ Unconsolidated ~~capitalized when paid and may become nonrefundable under certain~~ Debt circumstances. When properties are acquired, the purchase price is reduced by the amounts of deposits paid by the Company. At December 31, 2003, management believes all real estate deposits are refundable.

~~Financing~~ Total ~~Costs~~mortgage debt of our unconsolidated property was $94,839,000 and our proportionate share of unconsolidated debt was $9,699,000 as of December 31, 2008.

~~Financing~~ The ~~costs~~Congress ~~are~~Center ~~included~~property inis ~~other~~required ~~assets~~by ~~and consist~~the terms of the applicable loan ~~fees~~documents ~~and~~to ~~other~~meet certain minimum loan ~~costs.~~to ~~Loan~~value, performance ~~fees~~covenants and other ~~loan~~ ~~costs~~requirements. ~~are~~As ~~amortized~~of December 31, ~~over~~2008, the ~~term~~Congress ofCenter ~~the~~property ~~respective~~was ~~loan.~~in ~~Amortization~~ compliance ofwith ~~financing~~all ~~costs~~such ~~is included in interest expense~~covenants.

T Commitments and ~~REIT, INC.~~Contingencies

~~NOTES TO CONSOLIDATED FINANCIAL~~ ~~STATEMENTS — (Continued)~~ Insurance Coverage

~~Rental~~ Property Damage, ~~Income~~Business Interruption, Earthquake and Terrorism

~~Rental~~ The ~~income~~insurance iscoverage ~~recognized~~provided ~~when~~through ~~earned~~third-party ~~under~~insurance ~~contractual~~ carriers ~~lease~~is ~~agreements~~subject onto acoverage ~~straight-line~~limitations. ~~basis~~Should ~~over~~an ~~the~~uninsured ~~associated~~ or ~~lease~~underinsured ~~term.~~loss ~~Deferred~~occur, ~~rent~~we ~~receivable~~could islose ~~included~~all ~~in other~~or ~~assets~~a inportion ~~the consolidated balance sheets. Tenant~~of ~~reimbursement~~ our ~~revenue~~investment in, ~~which~~and isanticipated ~~comprised~~cash offlows ~~additional~~from, ~~amounts~~our ~~recoverable~~ unconsolidated ~~from~~property. ~~tenants~~In ~~for~~addition, ~~common~~there ~~area~~can ~~maintenance~~be ~~expenses~~no assurance ~~and~~ that ~~certain~~third-party ~~other~~insurance ~~recoverable~~carriers ~~expenses~~will isbe ~~recognized~~able asto ~~revenue~~maintain in reinsurance ~~the~~sufficient ~~period~~to incover ~~which~~any ~~the~~losses ~~related~~that ~~expenses~~may ~~are~~be incurred.

~~Income~~ Debt Service ~~Taxes~~Requirements

~~The Company operates as a real estate investment trust for federal income tax purposes.~~ As ~~a REIT, the Company is generally not subject to income taxes. To maintain its REIT status, the Company is required to distribute annually as dividends at least 90%~~ of its REIT taxable income, as defined by the Internal Revenue Code (“IRC”), to its shareholders, among other requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax on its taxable income at regular corporate tax rates. Although the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property and Federal income and excise taxes on its undistributed income. The Company believes that it has met all of the REIT distribution and technical requirements for the years ended December 31, ~~2003~~2008, ~~2002~~all ~~and~~consolidated ~~2001~~debt ~~and was~~has ~~not subject to any federal income taxes. Management intends~~been to repaid ~~continue~~in ~~to adhere to these requirements and maintain the Company’s REIT status~~full.

~~Per Share Data~~ Contractual Obligations

~~The~~ As ~~Company reports earnings per share pursuant to Statement~~ of ~~Financial Accounting Standards No.~~December ~~128~~31, ~~“Earnings~~ ~~Per~~2008, ~~Share”. Basic earnings (loss) per share attributable for~~ all ~~periods~~consolidated ~~presented is computed by dividing~~contractual ~~the~~ obligations ~~earnings~~have ~~(loss)~~been torepaid ~~common~~in ~~shareholders by the weighted average number of common shares outstanding during the period~~full. ~~Potentially dilutive securities consist of 101,490, 101,490 and 53,529 warrants at December 31, 2003, 2002 and 2001.~~

~~Use~~ Off-Balance Sheet ~~of Estimates~~Arrangements

~~The~~ There ~~preparation~~are ofno ~~the~~off-balance ~~Company’s~~sheet ~~financial statements~~transactions, inarrangements ~~conformity with accounting principles generally~~or ~~accepted~~ obligations in(including ~~the~~contingent ~~United~~obligations) ~~States~~that ofhave, ~~America~~or ~~requires~~are reasonably ~~management~~likely to ~~make~~ ~~estimates~~have ~~and~~a ~~assumptions~~current ~~that~~or ~~affect~~future ~~the~~material ~~reported~~effect ~~amounts~~on of our ~~the~~financial ~~assets~~condition, ~~and~~changes ~~liabilities~~in asour offinancial ~~December 31~~condition, ~~2003 and~~ ~~2002, and the~~ revenues ~~and~~or expenses, ~~for~~results ~~each~~ of ~~the~~operations, ~~years in the three year period ended December 31~~liquidity, ~~2003. Actual results~~capital ~~could~~ expenditures ~~differ~~or ~~from~~capital ~~those estimates~~resources.

~~Segments~~ Inflation

~~The~~ Until ~~Company~~we ~~internally~~complete ~~evaluates~~the ~~all~~plan ~~properties~~of liquidation, we will be exposed to inflation risk as ~~one~~income ~~industry~~from ~~segment~~long-term ~~and~~leases ~~accordingly~~at ~~does~~our unconsolidated ~~not~~property ~~report~~is ~~segment~~expected to be the primary source of ~~information~~ cash flows from operations. The majority of our tenant leases provide some protection from the impact of inflation. These provisions include rent steps, reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements on a per square foot allowance. However, due to the long-term nature of the leases, the leases may not re-set frequently enough to cover inflation.

Recently Issued Accounting Pronouncements

On In ~~January 1,~~September ~~2003~~2006, the ~~Company~~Financial ~~adopted~~Accounting ~~the~~Standards Board, or ~~provisions~~ FASB, issued Statement of Financial Accounting Standards, or SFAS, No. ~~145~~157, ~~Rescission~~Fair ofValue ~~FASB~~Measurements, ~~Statements~~or SFAS No. 4157. SFAS No. 157, 44which will be applied to other accounting pronouncements that require or permit fair value measurements, ~~and~~defines 64fair value, ~~Amendment~~establishes a offramework ~~FASB~~for ~~Statement~~measuring ~~No. 13,~~fair value in generally accepted accounting principles and ~~Technical~~provides ~~Corrections~~for (“expanded disclosure about fair value measurements. SFAS ~~145”)~~No. 157 ~~The~~was ~~most~~issued to ~~significant~~ increase ~~provisions~~consistency ofand ~~this~~comparability ~~statement~~in ~~relate~~fair value measurements and to expand disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff ~~rescission~~ Position, or FSP, SFAS No. 157-1, Application of FASB Statement No. 4157 ~~“Reporting~~to ~~Gains~~FASB Statement No. 13 and Other Accounting Pronouncements That Address ~~Losses~~ Fair Value Measurements for Purposes of Lease Classification or Measurement Under Statement 13, or FSP SFAS No. 157-1. FSP SFAS No. 157-1 excludes from ~~Extinguishment~~the scope of ~~Debt~~SFAS No.” 157 certain leasing transactions accounted for under SFAS ~~145~~No. 13, Accounting for Leases. In February 2008, the FASB also ~~amends~~ issued ~~other~~FSP SFAS No. 157-2, Effective ~~existing~~Date ~~authoritative~~of ~~pronouncements~~FASB toStatement ~~make~~No. 157, or FSP ~~various~~ SFAS No. 157-2. FSP SFAS No. 157-2 defers ~~technical~~the ~~corrections~~effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, ~~clarify~~except ~~meanings~~those that are recognized or ~~describe~~disclosed at fair value in the financial ~~their~~ statements ~~applicability~~on ~~under~~a ~~changed~~recurring ~~conditions~~basis, to fiscal years beginning after November 1, 2008. ~~Under~~In October 2008, the FASB issued FSP SFAS ~~145~~No. 157-3, Determining ~~any~~the ~~gain~~Fair orValue ~~loss~~of ona ~~extinguishment~~Financial ofAsset ~~debt~~When ~~that~~the ~~was~~ Market ~~classified~~for asThat Asset Is Not Active, or FSP SFAS No. 157-3. FSP SFAS No. 157-3 amends SFAS No. 157 by providing an ~~extraordinary~~example ~~item~~to illustrate inkey ~~prior~~considerations ~~periods~~and the emphasis on measurement ~~presented~~ principles ~~that~~when ~~does~~applying SFAS No. 157 to financial assets when the market for those financial assets is not ~~meet~~active. We ~~certain~~adopted ~~defined~~SFAS No. 157 ~~criteria~~and FSP SFAS No. 157-1 on a prospective

T basis ~~REIT~~on January 1, 2008. The adoption of SFAS ~~INC~~No. 157 and FSP SFAS No. 157-1 did not have a material impact on our consolidated financial statements. We adopted FSP SFAS No. 157-3 upon issuance, which did not have a material impact on our consolidated financial statements. We adopted FSP SFAS No. 157-2 on a prospective basis on January 1, 2009. The adoption of FSP SFAS No. 157 is not expected to have a material impact on our consolidated financial statements.

~~NOTES~~ In TOFebruary ~~CONSOLIDATED~~2007, ~~FINANCIAL~~the FASB issued SFAS No. 159, The ~~STATEMENTS~~ Fair Value Option for Financial Assets and Financial Liabilities, or SFAS —No. ~~(Continued)~~159. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the fiscal year beginning on or before November 15, 2007, provided the provisions of SFAS No. 157 are applied. We adopted SFAS No. 159 on a prospective basis on January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on our consolidated financial statements.

~~must~~ In beMarch ~~reclassified~~2008, the FASB issued SFAS No. 161, Disclosures ~~The~~about ~~adoption~~Derivative ofInstruments ~~this~~and Hedging ~~statement~~ Activities, ~~did~~or ~~not~~SFAS No. 161. SFAS No. 161 ~~have~~is aintended ~~material~~to ~~effect~~improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on ~~the~~an ~~Company~~entity’s financial position, ~~results~~ financial performance, and cash flows. SFAS No. 161 achieves these improvements by requiring disclosure of ~~operations~~the orfair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk related. Finally, it requires cross-referencing within notes to enable financial ~~condition~~statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We will adopt SFAS No. 161 on January 1, 2009. The adoption of SFAS No. 161 is not expected to have a material impact on our consolidated financial statements.

OnItem ~~January 1, 2003, the Company adopted the provisions of SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”)~~7A. ~~SFAS 146~~Quantitative ~~addresses financial accounting~~ and ~~reporting~~Qualitative ~~for~~Disclosures ~~costs~~About ~~associated~~Market ~~with exit or disposal activities and nullifies Emerging Issues Task Force Issue No~~Risk. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity”. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The adoption of this statement did not have a material effect on the Company’s results of operations or financial condition.

On As ~~January~~of December 131, ~~2003~~2008, ~~the~~all ~~Company~~consolidated ~~adopted~~debt ~~the~~has been ~~initial~~ repaid ~~recognition~~in ~~and~~full. ~~measurement~~As ~~provisions~~ of ~~Interpretation No.~~December 4531, ~~“Guarantor’s Accounting and Disclosure Requirements for Guarantees~~2008, ~~Including~~ ~~Indirect~~a ~~Guarantees of Indebtedness of Others” (“FIN 45”)~~1.00% increase ~~FIN 45~~ or ~~significantly~~decrease ~~changes the current practice~~ in ~~the accounting~~interest ~~for,~~rates ~~and~~would ~~disclosure~~have ~~of,~~no ~~guarantees.~~effect ~~Guarantees~~on ~~and~~our ~~indemnification~~ interest ~~agreements~~expense ~~meeting~~as ~~the~~we ~~characteristics~~had ~~described in~~no ~~FIN 45~~outstanding ~~are~~consolidated ~~required~~debt ~~to be initially recorded~~ as a ~~liability~~ of atthat ~~fair value~~date. ~~FIN 45~~Additionally, ~~also~~our ~~requires~~proportionate ashare ~~guarantor~~of to unconsolidated ~~make~~debt ~~significant~~related ~~new disclosures for virtually all guarantees even if the likelihood of the guarantor having~~ to ~~make~~our ~~payment under~~unconsolidated ~~the~~property ~~guarantee~~ is ~~remote. The Company adopted the~~at ~~disclosure provisions of FIN 45 as of December 31, 2002. The adoption of the provisions of this interpretation did not have~~ a ~~material~~fixed ~~effect~~interest ~~on the Company’s results of operations or financial condition~~rate.

InItem ~~January 2003, the FASB issued FASB Interpretation No~~8. ~~46,~~ ~~“Consolidation of Variable Interest Entities” (“FIN 46”). FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated~~ Financial Statements” and ~~provides~~ ~~guidance~~Supplementary on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and how to determine when and which business enterprise should consolidate the VIEData. This new model for consolidation applies to an entity in which either: (1) the equity investors (if any) lack one or more characteristics deemed essential to a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. The provisions of this interpretation are applicable to VIEs formed after January 31, 2003. For VIEs formed prior to January 31, 2003, the provisions of this interpretation apply to the first fiscal year or interim period beginning after December 15, 2003. On February 1, 2003, the Company adopted the provisions of this interpretation, which did not have a material effect on the Company’s results of operations or financial condition.

In See ~~April 2003,~~ the ~~FASB~~index ~~issued SFAS No. 149,~~at “~~Amendment of Statement~~Item ~~133 on Derivative Instruments and Hedging Activities” (“SFAS 149”)~~15. ~~SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments~~Exhibits, ~~including~~ ~~certain derivative instruments imbedded in other~~Financial ~~contracts~~ Statement ~~and for hedging activities under SFAS No~~Schedules. ~~133 “Accounting for Derivative Instruments and Hedging Activities.~~” ~~The provisions of~~ SFAS 149 are generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this statement did not have a material effect on the Company’s results of operations or financial condition.

InItem ~~May 2003, the FASB issued SFAS No~~9. ~~150,~~ ~~“Accounting~~Changes ~~for~~in ~~Certain Financial Instruments with Characteristics of both Liabilities~~ and ~~Equity”~~ ~~(“SFAS 150”).~~Disagreements ~~SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments~~ with ~~characteristics~~Accountants ofon ~~both liabilities~~Accounting and ~~equity.~~Financial The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003Disclosure. ~~The adoption of this statement did not have a material effect on the Company’s results of operations or financial condition.~~

We did not employ independent accountants to perform an audit on the financial statements contained in this Form 10-K.


Item 9A(T)	Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC, rules and forms, and that such information is accumulated and communicated to us, including our Trustee, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

T As ~~REIT~~of December 31, 2008, an evaluation was conducted under the supervision and with the participation of our Trustee of the effectiveness of our disclosure controls and procedures (as defined in Rules ~~INC~~13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our Trustee concluded that our disclosure controls and procedures were effective.

~~NOTES~~ (b) Management’s TOReport ~~CONSOLIDATED~~on ~~FINANCIAL~~Internal Control over ~~STATEMENTS~~ Financial Reporting. Our Trustee is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules — 13a-15(~~Continued~~f) and 15d-15(f). Under the supervision of our Trustee and with the participation of our Trustee and advisor, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

~~Reclassifications~~ Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial statement preparation and presentation.

~~Certain~~ Based ~~reclassifications~~on ~~have~~our ~~been~~evaluation ~~made~~under tothe ~~prior~~Internal Control-Integrated ~~year~~ Framework, ~~amounts~~our inTrustee ~~order~~concluded tothat ~~conform~~our tointernal ~~the~~control ~~current year~~over ~~presentation~~ financial reporting was effective as of December 31, 2008.

3 (c) Changes in internal control over financial reporting. There ~~Real~~were ~~Estate~~no ~~Investments~~changes in our internal control over financial reporting that occurred during the year ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~The~~ This ~~Company~~Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our Trustee’s ~~real~~report ~~estate~~was ~~investments~~not subject ~~are~~to attestation by our independent registered public ~~comprised~~ accounting offirm ~~(i) consolidated~~pursuant ~~properties~~to ~~excluding~~temporary ~~property~~rules of the SEC that ~~held~~ permit ~~for~~us ~~sale~~to ~~and~~provide ~~(ii) investments~~only our Trustee’s report in ~~unconsolidated~~this Annual ~~real~~Report on ~~estate~~ Form 10-K.

~~Operating~~Item ~~Properties~~9B. Other Information.

~~The Company’s consolidated properties~~ None. ~~consist of the following at December 31:~~

	2003			2002
Buildings and tenant improvements	$	15,159,952		$	28,790,880
Land		1,011,262			8,583,900
		16,171,214			37,374,780
Less: accumulated depreciation		(424,587	)		(1,111,856	)
	$	15,746,627		$	36,262,924

PART III

AtItem ~~December 31,~~10. ~~2003~~Directors, ~~the~~Executive ~~Company~~Officers ~~owned~~and ~~two consolidated~~Corporate ~~properties:~~ Governance.

~~Gateway~~ As ~~Mall~~of March 18, ~~Bismark~~2009, ~~North~~we ~~Dakota~~have no directors or executive officers. Our advisor manages our day-to-day business affairs and assets, and carries out the directives of our Trustee.

~~University~~ The ~~Heights~~following ~~Business~~biographical ~~park,~~description sets forth information ~~San~~ with respect to our Trustee as of March ~~Antonio~~18, ~~Texas~~2009.

W. Brand Inlow, age 55, has served as our Trustee since July 2007, having previously served as an independent director of T REIT, Inc. from May 2002 to July 2007. He is a Principal, Co-Founder, and serves as Director of Acquisitions for McCann Realty Partners, LLC, an apartment investment company focusing on garden apartment communities in the Southeast formed in October 2004. Since October 2003, Mr. Inlow has provided professional consulting services to the multifamily industry on matters related to acquisitions, dispositions, asset management and property management operations, and through an affiliation with LAS Realty in Richmond, Virginia conducts commercial real estate brokerage. Mr. Inlow also is President of Jessie’s Wish, Inc., a Virginia non-profit corporation dedicated to awareness, education and financial assistance for patients and families dealing with eating disorders. Mr. Inlow served as President of Summit Realty Group, Inc. in Richmond, Virginia, from September 2001 through October 2003. Prior to joining Summit Realty, from November 1999 to September 2001 he was Vice President of Acquisitions for EEA Realty, LLC in Alexandria, Virginia where he was responsible for the acquisition, disposition and financing of company assets, which were primarily garden apartment properties. Prior to joining EEA Realty, from November 1991 to November 1999, Mr. Inlow worked for United Dominion Realty Trust, Inc., a publicly traded real estate investment trust, as Assistant Vice President and Senior Acquisition Analyst, where he was responsible for the

Gateway Mall — Bismarck, North Dakota

On January 29, 2003, through its wholly-owned subsidiary, TREIT — Gateway Mall ND, LLC, the Company purchased Gateway Mall in Bismarck, North Dakota from an unaffiliated third party for a purchase price of $9,000,000. Gateway Mall is a multi-tenant regional mall of approximately 333,878 square feet on a 45-acre site located in Bismarck, North Dakota. The property is subject to a ground lease expiring in 2028 with ten 5-year option periods thereafter. The seller of the property paid a sales commission to Realty of $250,000, or approximately 2.8% of the purchase price.

University Heights Business Park — San Antonio, Texas

Dispositions

Pahrump Valley Junction Shopping Center — Pahrump, Nevada

On September 25, 2003, the Company sold the Pahrump Valley Junction Shopping Center in Pahrump, Nevada to an unaffiliated third party for a sales price of $18,985,000. In connection with the sale, the Company repaid a note payable secured by the property with an outstanding balance of approximately $11,884,000 and received net cash proceeds of approximately $5,950,000 after closing costs

T acquisition of garden apartment communities. Mr. Inlow also serves as a trustee of G REIT, Liquidating Trust and a director and audit committee member of Grubb ~~INC~~& Ellis Apartment REIT, Inc.

~~NOTES TO CONSOLIDATED FINANCIAL~~ ~~STATEMENTS — (Continued)~~ Audit Committee

~~and~~ We ~~other~~do ~~transaction~~not ~~expenses.~~have ~~The~~an ~~sale~~audit ~~resulted in~~committee aor ~~net~~other ~~gain~~committee ofthat performs ~~approximately~~similar ~~$874~~functions and,~~000.~~ ~~The~~consequently, ~~Company~~have ~~paid a~~not ~~sales~~ designated ~~commission~~an ~~fee~~audit tocommittee ~~Realty~~financial ofexpert. ~~$175,000,~~Due orto ~~approximately~~our ~~1.0%~~ limited ofoperations ~~the~~and ~~sales~~level ~~price~~of activity, ~~and~~which ~~sales~~primarily includes ~~commissions~~the tosale ~~unaffiliated brokers~~ of ~~$629,700,~~the orremaining ~~approximately~~asset ~~3.3%~~and of the ~~sales~~payment ~~price.~~of ~~The~~ outstanding ~~Company~~obligations, ~~reinvested~~our ~~the~~Trustee ~~proceeds~~believes ~~from~~that the ~~sale~~services of inan ~~other income~~audit ~~producing~~committee ~~commercial~~financial ~~real~~expert ~~estate~~are ~~property~~not warranted.

~~Thousand~~ Fiduciary Relationship ~~Oaks~~of ~~Shopping~~our ~~Center~~Advisor —to ~~San Antonio, Texas~~Us

On Our ~~August 11,~~advisor ~~2003,~~is ~~the~~deemed ~~Company~~to ~~sold~~be ~~the Thousand Oaks Shopping Center~~ in ~~San Antonio, Texas to an unaffiliated third party for~~ a ~~purchase~~fiduciary ~~price~~relationship ofwith ~~$15,880,000. In~~us ~~connection~~ pursuant ~~with~~to the ~~sale,~~Advisory ~~the~~Agreement ~~Company~~and ~~repaid~~under aapplicable ~~note~~law. ~~payable~~Our ~~secured~~ advisor’s byfiduciary ~~the~~duties ~~property~~include ~~with~~responsibility anfor ~~outstanding balance of~~our ~~$8,750,000~~ control and ~~received~~management ~~net~~and ~~cash~~exercising ~~proceeds~~good ~~totaling~~faith ~~approximately $6,100,000 after payment of closing costs~~ and ~~other transaction~~integrity ~~expenses. The sale resulted~~ in ahandling ~~net~~our ~~gain of approximately $2,100,000~~affairs. AtOur ~~closing,~~advisor ~~the~~has ~~Company paid~~ a ~~sales commission to~~fiduciary ~~Realty~~ responsibility offor ~~$175,000,~~the orsafekeeping ~~approximately~~and ~~1.1%~~use of ~~the~~all ~~selling~~of ~~price,~~our funds and aassets, ~~sales~~whether ~~commission~~or tonot anthey ~~unaffiliated~~are ~~broker~~in ofits ~~$317,600,~~immediate orpossession ~~approximately~~ and ~~2.0%~~control, ofand ~~the~~may ~~selling~~not ~~price.~~use ~~The~~or ~~Company~~permit ~~reinvested the~~another ~~proceeds~~to ~~from~~use ~~the~~such ~~sale~~funds or assets in ~~real~~any ~~estate~~manner ~~property~~except ~~that qualifies~~ for ~~like-kind~~our ~~exchange~~exclusive ~~treatment under Section 1031 of the Code~~benefit.

~~Northstar~~ Our ~~Crossing~~funds ~~Shopping~~will ~~Center~~not —be ~~Garland,~~commingled ~~Texas~~with the funds of any other person or entity except for operating revenue from our properties.

On Our ~~January 11,~~advisor ~~2003,~~may ~~the~~employ ~~Company~~persons ~~sold~~or ~~the Northstar~~firms ~~Crossing~~to ~~Shopping~~carry ~~Center~~out inall ~~Garland,~~or ~~Texas to an~~any ~~unaffiliated~~ portion ~~third party for a purchase price~~ of ~~$4,200,000~~our business. ~~In connection~~Some ~~with~~or ~~the~~all ~~sale,~~such ~~the~~persons ~~Company~~or ~~repaid a note payable~~entities ~~secured~~ employed bymay ~~the~~be ~~property~~affiliates ~~with an outstanding balance~~ of ~~$2,866,579~~ ~~and~~our ~~received~~advisor. ~~net~~It ~~cash~~is ~~proceeds~~not ~~totaling~~clear ~~approximately~~under ~~$1,015,000~~ current ~~after~~law ~~payment~~the ofextent, ~~closing~~if ~~costs~~any, ~~and~~that ~~other~~such ~~transaction expenses.~~parties ~~The~~will ~~sale~~have ~~resulted in~~ a ~~net loss of approximately~~ ~~$191,400.~~ fiduciary Atduty ~~closing, the Company paid a sales commission~~ to ~~an unaffiliated~~us ~~broker of $168,000,~~ or ~~approximately~~our 4beneficiaries.0% ofInvestors ~~the~~who have ~~selling~~ questions ~~price.~~concerning ~~The~~the ~~Company~~fiduciary ~~reinvested~~duties ~~the~~of ~~proceeds~~our ~~from~~advisor ~~the sale~~should in consult ~~other~~with ~~income~~their ~~producing~~own ~~commercial~~legal ~~real estate property~~counsel.

~~Property~~ Section 16(a) Beneficial ~~Held~~Ownership ~~for~~Reporting ~~Sale~~Compliance

~~There~~ Not ~~was no property held for sale at December 31, 2003~~applicable.

~~Property held for sale at December 31, 2002~~ ~~consisted~~ Code of ~~the Northstar Crossing Shopping Center. As~~ ~~discussed above, this property was sold in January, 2003.~~ Ethics

~~The~~ We ~~results~~have not adopted a code of ~~operations~~ethics ~~for~~nor ~~the~~do ~~property~~we ~~held~~currently intend ~~for~~ to ~~disposition~~due asto ofthe ~~December 31,~~fact ~~2002~~that we have no employees and ~~the~~our ~~three~~Trustee ~~properties~~ manages ~~sold~~our ~~during~~business ~~2003~~and ~~classified~~affairs. asNonetheless, ~~discontinued~~our Trustee ~~operations~~ intends ~~for~~to ~~the~~promote ~~years~~honest ~~ended~~and ~~December 31,~~ethical ~~2003~~conduct, ~~2002~~full and fair ~~2001~~ disclosure ~~are~~in asour ~~follows:~~reports to the SEC, and compliance with applicable governmental laws and regulations.

	For the Years Ended December 31,
	2003		2002		2001
Rental income	$	2,677,673	$	5,087,069	$	3,945,738
Rental expenses		647,821		1,311,038		1,190,376
Depreciation and amortization		203,211		911,010		611,764
Interest Expense		1,263,248		1,822,551		2,117,127
Income (loss) from discontinued operations — property held for sale, net	$	563,393	$	1,042,470	$	26,471


Item 11.	Executive Compensation.

Trustee

Pursuant to the Liquidating Trust Agreement, Mr. Inlow receives $250 per month for services rendered as our Trustee. For services rendered for the year ended December 31, 2008 and for the period from July 20, 2007 through December 31, 2007, Mr. W. Brand Inlow was paid approximately $3,000 and $1,000, respectively.


Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Principal Beneficiaries

There is no public market for our units of beneficial interest. On July 16, 2007, T REIT formally closed its stock transfer books. The units are not and will not be listed on any exchange, quoted by a securities broker or dealer, nor admitted for trading in any market, including the over-the-counter market. The units of beneficial interests are not transferable except by operation of law or upon the death of a beneficiary.

T The ~~REIT~~following table sets forth the beneficial ownership of units as of March 18, 2009, as to (i) ~~INC~~each beneficiary that is known by us to have beneficially owned more than five percent of the units as of March 18, 2009; and (ii) our Trustee. All such information was provided by the person listed. All percentages have been calculated as of and are based upon 4,605,000 units outstanding at the close of business on such date.

~~NOTES~~ The TOperson ~~CONSOLIDATED~~in ~~FINANCIAL~~the table below has indicated that it has sole ~~STATEMENTS — (Continued)~~ voting and investment power over the units listed.

Investments in Unconsolidated Real Estate


	Number of
	Units of
	Beneficial
	Interest		Percent of
Name and Address of Beneficial Owner	Owned		Class

W. Brand Inlow, Trustee(1)		552		*

Investments in unconsolidated real estate consist of the Company’s investments in undivided tenant in common interests and limited liability companies. The Company had the following investments in unconsolidated real estate at December 31:


*		Represents less than 1.0% of our outstanding units of beneficial interest.

(1)		Mr. Inlow’s address is c/o T REIT Liquidating Trust, 1551 N. Tustin Avenue, Suite 200, Santa Ana CA 92705

	Percentage Owned			2003		2002
Reno Trademark Building		40.0	%	$	1,151,334	$	1,075,370
County Center Building		16.0	%		444,627		535,762
City Center West “A” Building		89.1	%		7,878,315		7,954,296
Pacific Corporate Park		22.8	%		1,973,807		2,283,092
Titan Building and Titan Plaza		48.5	%		1,793,547		1,788,356
Saddleback Financial Center		25.0	%		811,053		862,955
Congress Center		10.2	%		4,838,700		—
Enclave Parkway		3.3	%		440,064		—
				$	19,331,447	$	14,499,831


Item 13.	Certain Relationships and Related Transactions, and Director Independence.

~~Condensed~~ Our ~~combined~~advisor ~~historical~~manages ~~financial~~our ~~information~~ day-to-day business affairs and assets and carries out the directives of our ~~investments~~Trustee. inOur ~~unconsolidated~~advisor ~~real~~is ~~estate~~a asVirginia limited liability company that was formed in April of 1998 to advise syndicated limited ~~December 31~~ partnerships, ~~2003~~limited liability companies, and ~~2002~~other isentities regarding asthe ~~follows:~~acquisition, management and disposition of real estate assets. Prior to our formation, our advisor held 22,100 shares of common stock of T REIT, which were converted into 22,100 units. Our advisor intends to retain such units while serving as our advisor.

	2003		2002
Assets (primarily real estate)	$	246,975,115	$	76,941,458
Mortgage notes payable	$	159,962,007	$	44,083,700
Other liabilities		3,713,144		1,790,392
Equity		83,299,964		31,067,366
	$	246,975,115	$	76,941,458
Company’s share of equity	$	19,331,447	$	14,499,831
Revenues	$	25,325,576	$	14,859,847
Expenses		22,775,057		12,347,640
	$	2,550,519	$	2,512,207
Company’s equity in earnings	$	1,160,414	$	1,125,501

Advisory Agreement

~~Acquisitions~~ The Advisory Agreement between our advisor and T REIT expired on February 22, 2005 and was not renewed for a consecutive one-year term. However, our advisor continued to advise T REIT, and, following the transfer of assets to us, continues to advise us, on a month-to-month basis under the terms of the expired Advisory Agreement. Under the terms of the Advisory Agreement, our advisor has responsibility for our day-to-day operations, administers our accounting and bookkeeping functions, serves as a consultant in connection with policy decisions to be made by our Trustee, manages our unconsolidated property interest and renders other services deemed appropriate by our Trustee. Our advisor is entitled to reimbursement from us for expenses incurred in rendering its services, subject to certain limitations. Fees and costs reimbursed to our advisor cannot exceed the greater of 2.0% of average invested assets, as defined in the Advisory Agreement, or 25.0% of net income for the previous four quarters. For the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007, such reimbursement had not exceeded these limitations. We paid our advisor approximately $18,000 and $57,000, for services provided to us for the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007, respectively.

~~Enclave~~ Our ~~Parkway~~advisor —may ~~Houston~~receive an annual asset management fee of up to 1.5% of our Average Invested Assets, ~~Texas~~as defined in the Advisory Agreement. This fee will be paid or accrued quarterly, but will not be paid until our beneficiaries have received distributions equal to a cumulative non-compounded rate of 8.0% per annum on their investment in us. We incurred $62,000 in asset management fees in the year ended December 31, 2008, and we paid our advisor $71,000 in asset management fees in the year ended December 31, 2008, of which $19,000 was for services provided in 2007. In the period July 20, 2007 to December 31, 2007, we incurred $39,000 in asset management fees, of which we paid our advisor $20,000.

~~On December 22, 2003, through its~~ ~~wholly-owned subsidiary, TREIT — Enclave Parkway, LLC,~~ Property ~~the~~ Management ~~Company purchased a 3.3% interest in Enclave Parkway in~~Fees Houston, Texas from an unaffiliated third party. The total purchase price for Enclave Parkway was $34,500,000. The Company’s total investment was $437,500. Enclave Parkway is a 207,435 square foot Class A office building situated in Houston’s energy corridor. The seller of the property paid a sales commission to Realty of $1,000,000, or 2.9% of the purchase price.

~~Congress~~ We ~~Center~~pay —our ~~Chicago~~advisor or its affiliate a property management fee equal to 5.0% of the gross revenue from our properties. For the year ended December 31, ~~Illinois~~2008 and the period from July 20, 2007 through December 31, 2007, we did not incur property management fees to our advisor or its affiliate.

On January 9, 2003, through its wholly-owned subsidiary, TREIT — Congress Center, LLC, the Company purchased an approximately 10.2% tenant in common interest in Congress Center from an

T Real Estate ~~REIT, INC.~~Acquisition and Disposition Fees

~~NOTES~~ Under TOthe ~~CONSOLIDATED~~terms ~~FINANCIAL~~of the Advisory Agreement, our advisor or its ~~STATEMENTS~~ affiliate may receive acquisition and disposition fees in connection with the acquisition or disposition of our properties. We did not pay our advisor or its affiliate any real estate acquisition or disposition fees for the year ended December —31, 2008 and the period from July ~~(Continued)~~20, 2007 through December 31, 2007.

~~unaffiliated third party. Congress Center is a~~ ~~16-story Class A office building of approximately~~ Incentive ~~524,730 square feet located in Chicago, Illinois.~~ Distributions Affiliated entities purchased the remaining undivided tenant in common interests in the property. The total purchase price for Congress Center was $136,108,000. The Company’s total investment was approximately $5,000,000. The seller of the property paid a sales commission to Realty of $2,000,000, or approximately 1.5% of the purchase price.

~~Saddleback~~ Our ~~Financial~~advisor ~~Center~~owned —100 ~~Laguna~~non-voting ~~Hills~~incentive performance units in T REIT, ~~California~~L.P. (T REIT’s operating partnership) and would have been entitled to incentive distributions of operating cash flow, as defined in the T REIT Limited Partnership Agreement, after our beneficiaries have received an 8.0% annual return on their invested capital. Pursuant to the approval of the plan of liquidation by our beneficiaries, our advisor permanently waived any distributions that our advisor is or may be entitled to receive in connection with its incentive performance units.

~~On September 25, 2002, through its~~ ~~wholly-owned subsidiary, T REIT — Saddleback~~ Incentive ~~Financial~~ Bonuses ~~L.P.,~~and ~~the~~Milestone ~~Company purchased a 25.0% undivided tenant~~Payments in common interest in the Saddleback Financial Center from an unaffiliated third party. The Saddleback Financial Center is a 72,711 square foot, four-story suburban office building located in Laguna Hills, California. The total purchase price of the property was $11,072,500. The Company’s total investment was $775,000. The seller of the property paid a sales commission to Realty of $322,500, or 2.9% of the purchase price.

~~Titan~~ Our ~~Plaza~~Trustee has discretion to pay up to an aggregate of $300,000 in ~~Titan~~retention ~~Building~~and incentive based bonuses to some of the employees of our advisor from time to time. Prior to July 20, 2007, $245,000 in retention and ~~Titan~~incentive ~~Land~~bonuses were —paid ~~San~~by ~~Antonio~~T REIT. We did not pay any retention or incentive bonuses for the year ended December 31, ~~Texas~~2008 and the period from July 20, 2007 through December 31, 2007.

~~On April 17, 2002, through its wholly-owned~~ ~~subsidiary~~ Review, ~~T REIT — Titan Plaza, L.P., the Company~~ ~~purchased~~ Approval a 48.5% undivided tenant in common interest in the Titan Building and Titan Plaza located in San Antonio, Texas from an unaffiliated third party. The Titan Building is a 103,762 square foot, six-story suburban office building. Titan Plaza is an adjoining 27,765 square foot single-story Class B suburban office building. The total purchase price of the property was $9,167,000. The Company’s total investment was $1,536,000. The seller of the property paid a sales commission to Realty of $250,000, or ~~2.7%~~Ratification of ~~the~~Transactions ~~purchase price.~~with ~~The Company also purchased an adjoining 2.34-acre parcel~~Related ~~of land for a purchase price of $75,000.~~ Persons

~~Pacific~~ All ~~Corporate~~transactions ~~Park~~between —us ~~Lake~~and ~~Forest~~any related person, CAincluding our advisor and its affiliates, are reviewed and approved by our Trustee. Additionally, the plan of liquidation provides that we may sell our remaining asset to one of our affiliates or an affiliate of our advisor. If we enter such a transaction, we expect that our Trustee will require that Stanger, or another independent consultant, opine to us as to the fairness of the consideration to be received by us in such transaction, from a financial point of view, or conduct an appraisal of the applicable property as a condition to their approval. In no event will our Trustee approve a transaction if: (i) Stanger, or another independent consultant, concludes after a review of the information then available, including any pending offers, letters of intent, contracts for sale, appraisals or other data, that the consideration to be received by us is not fair to us from a financial point of view; (ii) Stanger, or another independent consultant, concludes that the consideration to be received is less than the appraised value of the applicable property; or (iii) we have received a higher offer for the applicable property from a credible party with whom we reasonably believe is ready, able and willing to close the transaction on the contract terms.

OnItem ~~March 25, 2002, through its wholly-owned subsidiary, TREIT — Pacific Corporate Park, LLC, the Company purchased a 22~~14.8% ~~undivided~~Principal ~~tenant~~Accounting inFees ~~common~~and ~~interest in Pacific Corporate Park from an unaffiliated third party~~Services. Pacific Corporate Park is a six-building, 167,486 square foot office park located in Lake Forest, California. The total purchase price for Pacific Corporate Park was $23,728,000. The Company’s total investment was $4,937,100. The seller of the property paid a sales commission to Realty of $580,000, or 2.4% of the purchase price.

~~City Center West “A” Building — Las Vegas, Nevada~~ None.

On March 15, 2002, through its wholly-owned subsidiary, T REIT — City Center West A, LLC, the Company purchased an 89.1% undivided tenant in common interest in the City Center West “A” Building from an unaffiliated third party. City Center West “A” is a 105,964 square foot office building located in Las Vegas, Nevada. The total purchase price for the property was $21,670,000. The Company’s total investment was $7,727,137. The seller of the property paid a sales commission to Realty of $420,000, or 1.9% of the purchase price.

County Center Building — Temecula, California

~~T REIT,~~ PART ~~INC.~~IV

~~NOTES~~Item TO15. ~~CONSOLIDATED~~Exhibits, ~~FINANCIAL STATEMENTS — (Continued)~~ Financial Statement Schedules.

~~Dispositions~~ (a)(1) Financial Statements:

~~Titan~~ INDEX ~~Land~~TO CONSOLIDATED —FINANCIAL ~~San Antonio, Texas~~STATEMENTS

On October 17, 2002, the Company sold a 2.34-acre parcel of land adjacent to the Titan Building and Titan Plaza for approximately $130,000 to an unaffiliated third party. No fees were earned by the Advisor or any affiliate from this sale.


	Pages

Unaudited Consolidated Statements of Net Assets as of December 31, 2008 and 2007 (Liquidation Basis)		38
Unaudited Consolidated Statements of Changes in Net Assets (Liquidation Basis) For the Year Ended December 31, 2008 and for the Period from July 20, 2007 through December 31, 2007		39
Notes to Unaudited Consolidated Financial Statements		40

~~Plaza~~ (a)(2) ~~del~~Financial ~~Rey~~Statement ~~Shopping Center — Seguin, Texas~~Schedules:

On All ~~September 23,~~schedules ~~2002,~~have ~~the~~been ~~Plaza~~omitted ~~del~~as ~~Rey Shopping~~the ~~Center~~required ~~was~~information ~~sold for approximately $5,403,000 to an~~is ~~unaffiliated~~ inapplicable ~~third~~or ~~party. The proportionate sale price of~~ the ~~Company’s~~ ~~16.5%~~information ~~undivided~~is ~~tenant~~presented in ~~common interest in~~ the ~~property~~ ~~was approximately $891,000. The Company realized cash~~consolidated ~~proceeds~~ financial ofstatements ~~approximately $197,000 from this sale. No fees were earned by the Advisor~~ or ~~any~~related ~~affiliate from this sale~~notes.

~~Seguin~~ (a)(3) ~~Corners Shopping Center — Seguin Texas~~Exhibits:

~~On August 12, 2002, the Seguin Corners Shopping Center was sold for approximately $2,500,000 to an unaffiliated third party.~~ The ~~proportionate~~exhibits ~~sale~~listed ~~price~~on of the ~~Company’s~~ ~~26.0%~~Exhibit Index ~~undivided~~(following ~~tenant in common interest in~~ the ~~property~~ signatures ~~was~~section ~~approximately $650,000. The Company realized cash proceeds~~ of ~~approximately $192,000 from~~ this ~~sale.~~report) Noare ~~fees~~included, ~~were earned~~or incorporated by ~~the~~reference, ~~Advisor~~in ~~or any affiliate from~~ this ~~sale~~annual report.

~~4. Accounts Receivable from Related Parties~~ (b) Exhibits:

At See ~~December~~item 31, 2002, the Advisor owed the Company approximately $120,000 related to offering costs paid. Per the terms of the Advisory Agreement, the Company reimburses the Advisor for offering costs incurred up to 15(a)(3) ~~maximum of 2~~above.5% ~~of the gross offering proceeds. The Advisor must pay for any offering costs incurred that, in the aggregate, are greater than the maximum.~~

~~At December 31, 2003 and 2002, the Advisor owed the Company $520,431 and $440,000 for amounts due under an indemnification agreement~~ (~~See Note~~c) ~~11,~~Financial ~~Commitments~~Statement ~~and~~Schedules: ~~Contingencies).~~

5. All ~~Other~~schedules ~~Assets~~have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.

Other assets consist of the following at December 31:

		2003		2002
Loan impounds and reserves		$	574,162	$	568,297
Deferred rent receivable			75,233		436,622
Lease commissions, net of accumulated amortization of $8,935 and $0 at 2003 and 2002, respectively			74,936		117,372
Loan fees, net of accumulated amortization of $47,847 and 1,578 at 2003 and 2002, respectively			144,909		417,480
Prepaid expenses			—		77,142
Other assets			610		350
	Total other assets	$	869,850	$	1,617,263

6. Note Receivable

As of December 31, 2003 and 2002, the Company was owed $647,108 and $587,178, respectively, under the terms of a note receivable. The note is secured by a first deed of trust on a real estate property, with interest at 8.5% per annum. All accrued, unpaid interest and principal is due December 2006.

T REIT, LIQUIDATING TRUST CONSOLIDATED STATEMENTS OF NET ASSETS (Liquidation Basis) As of December ~~INC.~~31, 2008 and 2007 (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	December 31,
	2008		2007

ASSETS
Investment in unconsolidated real estate	$	2,631,000	$	4,738,000
Cash and cash equivalents		405,000		569,000
Accounts receivable, net		3,000		3,000
Asset for estimated receipts in excess of estimated costs during liquidation		738,000		697,000

Total assets		3,777,000		6,007,000


LIABILITIES
Reserve for estimated costs in excess of estimated receipts during liquidation		—		—

Total liabilities		—		—

Commitments and contingencies (Note 7) Net assets in liquidation	$	3,777,000	$	6,007,000

7. The ~~Line~~accompanying notes are an integral part of ~~Credit~~these consolidated financial statements.

On September 3, 2003, the Company entered into an agreement with Fleet National Bank for a line of credit in the amount of $1,000,000 which bears interest at Fleet’s prime rate plus fifty basis points (4.5% at December 31, 2003). The credit facility matures on September 2, 2004 and has two one-year extensions. The credit facility is subject to a fee of 1% to be paid one-third on each of the effective date, the first anniversary and the second anniversary. As of December 31, 2003, the Company had not borrowed any amounts from the line of credit.

8. Notes Payable

Notes payable consisted of the following at December 31:

	2003		2002
Note payable to a mortgage company, secured by a deed of trust, rate per annum equal to an initial benchmark floor rate of 3% based on the 10-year Treasury note plus 2.25%. At December 31, 2003 and 2002, the interest rate was 5.25% and 5.25%, respectively. Matures in January 1, 2008. Equal principal and interest payments are payable monthly until repayment in full.	$	4,345,840	$	4,400,000
Note payable to a mortgage company, secured by a first deed of trust, interest at six-month LIBOR plus 2.15%. Principal and interest payable in monthly installments of $25,165. Matures on February 1, 2006.		4,904,438		—
Note payable to a life insurance company, secured by a deed of trust, fixed interest at 6.0%; principal and accrued interest due in January 2009. Principal and interest payable in monthly installments of $93,242. The note was repaid in September 2003.		—		12,071,036
Note payable to a mortgage company, secured by a first deed of trust, fixed interest at 8.2%; principal and accrued interest due in January 2012(d)(g). Principal and interest payable in monthly installments of $36,105. The note was repaid in January 2003.		—		2,869,089
Note payable to a mortgage company, secured by the a first deed of trust, interest at the greater of 6.5% or a 30-day LIBOR plus 3.5% floor for the first ninety days. After the ninety days rate will be the greater of 7.5% or 30-day LIBOR plus 3.5% (4.88% and 4.68% at December 31, 2003 and 2002, respectively); principal and accrued interest are due in January 2004. The note was repaid in August 2003.		—		8,750,000
		9,250,278		28,090,125
Less notes payable secured by property held for sale(a)		—		(2,869,089	)
	$	9,250,278	$	25,221,036

(a) In November 2002, the Board of Directors of the Company approved the sale of Northstar Crossing Shopping Center. Such property is classified as held for sale at December 31, 2002 (See Note 3).

T REIT LIQUIDATING TRUST CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Liquidation Basis) For the Year Ended December 31, 2008 and For the Period from July ~~INC.~~20, 2007 through December 31, 2007 (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


				Period from
				July 20,
				2007
	Year Ended			through
	December 31,			December 31,
	2008			2007

Net assets in liquidation, beginning of period	$	6,007,000		$	—

Changes in net assets in liquidation:
Net assets contributed to T REIT Liquidating Trust on July 20, 2007		—			6,861,000

Changes to asset for estimated receipts in excess of estimated costs during liquidation:
Operating income		(25,000	)		(6,000	)
Distributions received from unconsolidated property		(143,000	)		(119,000	)
Payments of liquidation costs and other amounts		337,000			318,000
Change in estimated receipts in excess of estimated costs during liquidation		(123,000	)		(327,000	)

Changes to asset for estimated receipts in excess of estimated costs during liquidation		46,000			(134,000	)

Change in fair value of assets and liabilities:
Change in fair value of real estate investments		(2,107,000	)		(527,000	)
Change in assets and liabilities due to activity in asset or estimated receipts in excess of estimated costs during liquidation		(169,000	)		(193,000	)

Net decrease in fair value		(2,276,000	)		(720,000	)

Change in net assets in liquidation		(2,230,000	)		(854,000	)

Net assets in liquidation, end of period	$	3,777,000		$	6,007,000

The ~~principal~~accompanying ~~payments~~notes ~~due~~are onan ~~notes~~integral ~~payable~~part ~~for each~~ of ~~the next five years ending December 31, 2003 and~~these ~~thereafter~~ consolidated ~~are~~financial ~~summarized as follows:~~statements.

2004	$	161,271
2005		168,402
2006		174,755
2007		181,362
2008		188,235
Thereafter		8,376,253
	$	9,250,278

9. Shareholders’ Equity

Common Stock

Pursuant to a registration statement on Form S-11 (the “Registration Statement”) under the Securities Act of 1933, as amended, the Company offered for sale up to 10,000,000 shares of its common stock (the “Shares”), and (collectively the “Offering”) at an Offering price of $10.00 per Share and up to 700,000 Shares under the Company’s Dividend Reinvestment Plan (the “DRIP”). The Registration Statement was declared effective on February 22, 2000. By May 31, 2002, when the Offering was terminated, the Company had sold approximately 4,720,176 shares of common stock and 69,676 shares issued under the DRIP. Aggregate gross proceeds before Offering costs and selling commissions were approximately $46,395,000. The Offering and the DRIP were terminated May 31, 2002.

Through December 31, 2002, the Company sold 4,696,300 shares of common stock including 22,100 shares issued to the Advisor at $9.05 per share and 69,676 shares issued under the DRIP.

Share Repurchase Program

Effective May 24, 2001 the Company adopted the Share Repurchase Plan (the “Repurchase Plan”), which provides eligible shareholders with limited liquidity by enabling them to sell their common stock back to the Company at the sole discretion of the Board of Directors. To be eligible to participate in the Repurchase Plan, a shareholder must offer for resale at least 25% of the total number of his shares of Common Stock and must have owned such Shares for at least one year.

The price paid by the Company per repurchased Share of common stock varies based on the terms of the Repurchase Plan. Repurchases are effected by the Company on or about the last day of each calendar quarter. Funding for the Repurchase Plan currently comes from operating revenues. The Company repurchased 50,215, 22,876 and 1,000 shares of common stock for $454,502, $211,603 and $9,050 during the years ended December 31, 2003, 2002 and 2001, respectively.

Warrants

The Company agreed to sell to the dealer manager, NNN Capital Corp. (a related party, wholly owned by Chief Executive Officer, Anthony Thompson), one warrant to purchase one share of common stock for every 40 shares of common stock sold by the dealer manager in any state other than Arizona, Missouri, Ohio, or Tennessee, up to a maximum of 250,000 warrants to purchase an equivalent number of shares. The dealer manager has agreed to pay the Company $0.0008 for each warrant. The warrants were issued on a quarterly basis commencing 60 days after the date the shares are first sold under the Offering. Except where prohibited by securities laws, the dealer manager may retain or distribute such warrants to broker-dealers participating in the offering.

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007

~~NOTES~~1. TOPurpose ~~CONSOLIDATED~~of ~~FINANCIAL STATEMENTS — (Continued)~~ T REIT Liquidating Trust

The ~~holder~~use of ~~a warrant is entitled to purchase one share of common stock from~~ the ~~Company~~words ~~at a price of $12.00 per share~~“we,” ~~at any time from February 22~~us,” ~~2001 to February 2005. A warrant may not be exercised unless the shares to be issued upon the exercise of the warrant have been registered~~ or ~~are exempt from registration in the state of~~ ~~residence~~ “our” ofrefers ~~the warrant owner, or if a prospectus required under the laws of such state cannot be delivered~~ to ~~the~~T ~~buyer~~REIT ~~by the~~Liquidating ~~Company.~~Trust ~~Warrants~~and ~~are not exercisable until one year from~~its ~~the date of issuance. In addition~~ subsidiaries, ~~holders~~except ofwhere ~~warrants may not exercise~~ the ~~warrants~~context tootherwise ~~the extent such exercise would jeopardize the Company’s status as REIT under the federal tax laws~~requires. ~~Warrant holders who are not shareholders may not vote~~ ~~on Company matters and are not entitled to receive distributions.~~

~~The~~ On ~~terms~~June 3, of2005, the ~~warrants~~board ~~(including~~of ~~the~~directors ~~exercise price~~of T REIT, ~~the~~Inc., ~~number~~or T ~~and~~REIT, ~~type~~approved a plan of ~~securities~~liquidation ~~issuable~~which ~~upon~~was ~~their~~thereafter ~~exercise,~~ approved ~~and~~by shareholders of T REIT at the ~~number~~2005 Annual Meeting of Shareholders ~~such~~held ~~warrants)~~on ~~may~~July 27, be2005. ~~adjusted~~The T REIT plan of ~~pro-rata~~ liquidation, inor the ~~event~~plan of ~~stock dividends~~liquidation, ~~subdivisions,~~contemplates the ~~combinations~~ orderly ~~and~~sale ~~reclassification~~of all of ~~shares~~T orREIT’s assets, the ~~issuance~~payment toof its ~~stockholders~~ liabilities, the winding up of ~~securities~~operations ~~entitling~~and ~~them~~the dissolution of T REIT. The board of director’s decision to ~~purchase~~adopt ~~shares~~the orplan ~~securities~~ of ~~convertible~~liquidation ~~into~~followed ~~shares.~~a ~~The~~lengthy ~~terms~~process ofin which the ~~warrants~~board of ~~also~~ directors ~~may~~and bemanagement ~~adjusted~~reviewed ifdifferent strategic alternatives with the ~~Company~~goal ~~engages~~of inmaximizing ashareholder ~~merger~~value. orT ~~consolidation~~ REIT ~~transaction~~engaged orRobert ifA. ~~all~~Stanger & Co., Inc., or Stanger, ~~substantially~~to ~~all~~perform financial advisory services in connection with T REIT’s plan of ~~the~~liquidation, including rendering ~~assets~~ opinion ~~are~~as ~~sold.~~to ~~Warrants~~whether ~~are~~the ~~not~~net ~~transferable~~real orestate ~~assignable~~liquidation value ~~except~~ range byestimate ~~the~~and ~~dealer~~T ~~manager,~~REIT’s ~~the~~estimated ~~broker-dealers~~per ~~participating~~share in distribution ~~the~~range ~~offering~~were reasonable. In June 2005, orStanger toopined that ~~individuals~~T ~~who~~REIT’s ~~are~~net ~~both~~real ~~officers~~estate ~~and~~liquidation value range ~~directors~~ estimate orand ~~licensed~~T ~~representatives~~REIT’s ofestimated ~~such~~per ~~entities.~~share ~~Exercise~~distribution of range ~~the~~were ~~warrants~~reasonable isfrom ~~governed~~a byfinancial ~~the~~point ~~terms~~of view. Actual values realized for assets and ~~conditions~~settlement ~~set~~of liabilities may ~~forth~~ differ inmaterially from the ~~dealer~~amounts ~~manager~~estimated ~~agreement~~by ~~and~~T REIT or reflected in ~~the~~Stanger’s ~~warrant~~opinion.

As The plan of ~~December 31,~~liquidation ~~2003~~gave ~~and~~T ~~2002,~~REIT’s ~~there~~board ~~were~~of directors ~~101,490~~ the ~~outstanding~~power ~~warrants~~to ~~held~~sell any and all of its assets without further approval by ~~soliciting~~its ~~dealers~~shareholders and provided that liquidating ~~sold~~ distributions ~~the~~be ~~Company~~made to its shareholders as determined by T REIT’s ~~shares~~board of directors. NoThe ~~warrants~~plan ~~had~~of ~~been~~liquidation ~~exercised~~also provided for the transfer of T REIT’s remaining assets and liabilities to ~~date.~~a ~~The~~liquidating ~~Company~~trust ~~applies~~if ~~the~~T ~~fair~~REIT ~~value~~was ~~method~~unable to sell its assets and pay its liabilities within 24 months of ~~accounting~~its ~~for~~ shareholders’ approval of the ~~warrants~~plan inof ~~accordance~~liquidation ~~with~~(which was ~~SFAS~~July ~~123~~27, 2007). On May 10, 2007, T REIT’s board of directors approved the transfer and assignment of T REIT’s assets to a liquidating trust.

~~Stock~~ On ~~Option~~July 16, ~~Plans~~2007, T REIT and W. Brand Inlow, or our Trustee, entered into an Agreement and Declaration of Trust, or the Liquidating Trust Agreement, in connection with our formation. Mr. Inlow previously served as an independent director of T REIT and the chairman of T REIT’s board of directors. The Liquidating Trust Agreement was executed and T REIT Liquidating Trust was formed for the purpose of completing the liquidation and dissolution of T REIT. On July 20, 2007, T REIT transferred its remaining assets to, and its remaining liabilities were assumed by, us in accordance with T REIT’s plan of liquidation and the Liquidating Trust Agreement. In connection with our formation, the stock transfer books of T REIT were closed as of the close of business on July 16, 2007, or the Record Date. Each share of T REIT’s common stock outstanding on the Record Date was converted automatically into a beneficial interest in us when the assets and liabilities of T REIT were transferred to us on July 20, 2007. Also on July 20, 2007, T REIT filed a Form 15 with the Securities and Exchange Commission to terminate the registration of T REIT’s common stock under the Securities Exchange Act of 1934, and T REIT announced that it would cease filing reports under that act. However, our Trustee will issue to our beneficiaries and file with the Securities and Exchange Commission annual reports on Form 10-K and current reports on Form 8-K upon the occurrence of a material event relating to us.

~~The~~ Pursuant ~~Company~~to ~~follows~~ the ~~disclosure~~transfer ~~only provisions~~ of ~~Statement~~assets ofand ~~Financial~~liabilities ~~Accounting~~from ~~Standards~~T REIT ~~No. 123~~ to us, ~~“Accounting~~we ~~for~~acquired ~~Stock-Based Compensation”~~a ~~(“SFAS 123”)~~10.3% ~~For~~interest ~~employee compensatory~~in ~~stock~~the ~~options~~Congress ~~that will eventually vest~~Center, ~~compensation~~ located ~~expense~~in isChicago, ~~recognized~~Illinois, ~~during~~or the ~~periods~~Congress inCenter ~~which~~property, ~~the~~ or ~~related~~our ~~employee~~unconsolidated ~~services~~property, ~~are~~and ~~rendered.~~assumed ~~Such expense is~~approximately ~~generally measured by determining the excess~~ $9, ~~if any~~828,000 of ~~the grant~~indebtedness, ~~date~~representing ~~estimated fair market value of~~ the ~~underlying~~proportionate ~~stock~~share ~~over~~ of ~~the~~a ~~amount~~secured tomortgage beloan ~~paid~~outstanding byon the ~~employee~~Congress ~~in conformity with~~Center ~~Accounting~~ property. ~~Principles~~We ~~Board~~hold ~~Opinion~~our ~~No. 25, “Accounting~~interest ~~for~~in ~~Stock~~the ~~Issued~~Congress toCenter ~~Employees.”~~property ~~Compensatory~~ pursuant ~~stock~~to ~~options~~a ~~and~~100.0% ~~similar~~membership ~~equity~~interest ~~instruments~~in ~~issued~~TREIT-Congress to Center, ~~non-employees~~LLC, which in ~~exchange~~turn ~~for~~holds ~~goods~~a or35.5% ~~services~~membership ~~are~~interest ~~accounted~~in ~~for~~ NNN ~~based~~Congress onCenter, ~~the~~LLC. ~~estimated~~NNN ~~fair~~Congress ~~market~~Center ~~value~~LLC ofholds ~~(1) the~~a 28.9% ~~goods~~ interest orin ~~services received or (2)~~ the ~~equity~~Congress ~~instrument issued,~~Center ~~whichever~~property. isWe ~~more~~refer ~~reliably~~to ~~measurable. This accounting~~our ~~policy~~ indirect isinterest in ~~conformity~~the ~~with~~Congress ~~SFAS 123.~~Center property as

Concurrent with commencement of the Offering, the Company adopted stock option plans for (1) independent and outside directors and (2) its officers and employees. Shares of common stock issued upon the exercise of such options will have certain transferability restrictions. The unregistered public sale of restricted stock, which is governed by Rule 144 of the Securities Act of 1933, as amended, is prohibited during the first year of ownership and limited as set forth in such rule during the second year of ownership.

Stock options granted pursuant to the Plans will expire ten years from the grant date and will be exercisable in whole or in part upon the second anniversary of the grant date; provided, however, that if the exercise of any stock option would cause the aggregate of all Company stock owned by the Advisor, the Dealer Manager of the Offering (NNN Capital Corp., an affiliate of the Company and the Advisor), their affiliates, and the Company’s officers and directors to exceed 10.0% of the total outstanding shares of the Company’s common stock, such exercise would be delayed until the first date on which the exercise would not cause such limit to be exceeded. The Company has authorized and reserved a total of 100,000 shares and 700,000 shares for issuance under the Director Plan and the Officer/ Employee Plan,

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007 — (Continued)

~~NOTES~~ our TO“unconsolidated ~~CONSOLIDATED~~property ~~FINANCIAL~~interest”. Although we ~~STATEMENTS — (Continued)~~ acquired additional assets from T REIT, including interests in certain bank accounts, accounts receivable and assets for estimated receipts in excess of estimated costs during liquidation, our interest in the Congress Center property is our only material remaining asset. We intend to complete the plan of liquidation by either selling our unconsolidated property interest or participating in the sale of the Congress Center property with the other joint owners of the property. In each case, we refer to such a sale as the sale or disposition of our “remaining asset.”

~~respectively.~~ Under ~~Options~~the ~~grants~~terms ~~are~~of ~~subject~~the ~~to shareholder~~Liquidating ~~approval~~Trust Agreement and the plan of liquidation, upon the ~~Plans.~~transfer ~~Each~~of T REIT’s assets and liabilities to us on July 20, 2007, each shareholder of T REIT on the ~~Plans~~Record ~~was~~Date (each, a “beneficiary”) ~~approved~~ automatically became the holder of one unit of beneficial interest in T REIT Liquidating Trust for each share of T REIT’s common stock then held of record by ~~shareholders~~such shareholder. atAfter the ~~Annual~~conversion ~~Meeting~~of shares to units of beneficial ~~Shareholders~~interest, all outstanding shares of T REIT’s ~~held~~ common ~~June 28~~stock were deemed cancelled, ~~2003~~and the rights of beneficiaries in their beneficial interests are not represented by any form of certificate or other instrument. Shareholders of T REIT on the Record Date were not required to take any action to receive beneficial interests. On the date of the conversion, the economic value of each unit of beneficial interest was equivalent to the economic value of a share of T REIT’s common stock.

As Our existence will terminate upon the earliest of ~~December~~(i) ~~31,~~the distribution ~~2003,~~of ~~options~~all ~~for~~of aour ~~total~~assets in accordance with the terms of ~~165~~Liquidating Trust Agreement,~~000~~ or (ii) ~~shares~~the expiration of a period of three years from the date assets are ~~outstanding~~first transferred ~~under~~to us, or July 20, 2010. Our existence may, however, be extended beyond the ~~Officer~~three-year ~~and~~term if our Trustee ~~Employee~~ then ~~Stock~~determines ~~Option~~that ~~Plan~~an extension is reasonably necessary to fulfill our purpose and, ~~Independent~~prior ~~Director~~to ~~Stock~~such ~~Option~~extension, our Trustee ~~Plan~~ has requested and received certain no-action assurances from the United States Securities and Exchange Commission.

		Number		Range of		Weighted Average
Options Outstanding at		of Shares		Exercise Prices		Exercise Price
January 1, 2001			105,000	$	9.05	$	9.05
	Granted		60,000		9.05		9.05
	Exercised		—		—		—
	Cancelled		55,000		9.05		9.05
	Expired		—		—		—
December 31, 2001			110,000		9.05		9.05
	Granted		65,000		9.05		9.05
	Exercised		—		—		—
	Cancelled		20,000		9.05		9.05
	Expired		—		—		—
December 31, 2002			155,000		9.05		9.05
	Granted		10,000
	Exercised				—		—
	Cancelled		—		—		—
	Expired		—		—		—
December 31, 2003			165,000	$	9.05	$	9.05

Although we can provide no assurances, we currently expect to sell our interest in our unconsolidated property by December 31, 2009 and anticipate completing the plan of liquidation by March 31, 2010.

A2. ~~summary~~Summary of ~~outstanding~~Significant ~~options~~Accounting ~~exercisable under the Plans is presented in the schedule below.~~ Policies

Wtd Avg

Remaining

Wtd Avg

Range of

Number

Contractual

Exercise Price —

Number

Exercise Price —

Exercise Prices

Outstanding

Life (Years)

Outstanding Options

Exercisable

Exercisable Options

$9.05

165,000

8.84

9.05

90,000

9.05

The summary of significant accounting policies presented below is designed to assist in understanding our consolidated financial statements. Such financial statements and accompanying notes are the representations of our Trustee, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements.

~~The fair value of the options are calculated~~ ~~using~~ Use ~~the Black-Scholes option-pricing model. Assumptions used in the calculation included a 7.50% dividend yield, a 3.53% risk-free interest rate based on the 10-year U.S. Treasury Bond, an expected life~~ of ~~9.25 years, and a 0% volatility~~ ~~rate.~~ Estimates

The ~~weighted~~preparation ~~average~~of ~~remaining~~financial ~~contractual~~statements ~~life~~in accordance with GAAP and under the liquidation basis of ~~all~~accounting ~~options~~requires ~~outstanding~~us atto make ~~December 31~~estimates and judgments that affect the reported amounts of assets (including net assets in liquidation), ~~2003~~liabilities, revenues ~~was~~and expenses, and related disclosure of contingent ~~approximately~~ assets 8and liabilities.~~84 years~~ We believe that our critical accounting policies are those that require significant judgments and estimates. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could vary from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

Principles of Consolidation

The accompanying consolidated financial statements include our accounts and those of the our subsidiaries and any variable interest entities, as defined in Financial Accounting Standards Board, or FASB,

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007 — (Continued)

~~NOTES~~ Interpretation, TOor ~~CONSOLIDATED~~FIN, ~~FINANCIAL~~No. 46, Consolidation of ~~STATEMENTS~~ Variable Interest Entities, an Interpretation of Accounting Research Bulletin —No. 51, as revised, or FIN No. 46(~~Continued~~R), that we have concluded should be consolidated. All material intercompany transactions and account balances have been eliminated in consolidation.

~~10.~~ Liquidation Basis ~~Future~~of ~~Minimum Rent~~Accounting

~~The~~ Under ~~Company~~the ~~has~~liquidation ~~operating~~basis ~~leases~~of ~~with~~accounting, ~~tenants~~all assets have been ~~that~~ adjusted ~~expire~~to attheir ~~various~~estimated ~~dates~~fair ~~through~~value ~~2019~~(on an undiscounted basis) and ~~are~~liabilities, ~~either~~including ~~subject~~estimated costs associated with implementing the plan of liquidation, were adjusted to their ~~scheduled~~estimated ~~fixed~~settlement ~~increases~~amounts. Minority interest liabilities due to interests in properties held by tenants-in-common, or ~~adjustments~~TICs, ~~based~~were onoffset against the ~~Consumer~~ ~~Price~~respective ~~Index~~assets and liabilities. ~~Generally~~The valuation of real estate held for sale and investments in unconsolidated real estate is based on current contracts, ~~the~~estimates ~~leases~~and ~~grant~~other ~~tenants~~indications of sales value net of ~~renewal~~ estimated ~~options~~selling costs. ~~Leases~~Actual ~~also~~values ~~provide~~realized for ~~additional~~assets ~~rents~~and settlement ~~based~~of liabilities may differ materially from the amounts estimated. Estimated future cash flows from property operations were made based on ~~certain~~the ~~operating~~anticipated ~~expenses.~~sales ~~Future~~date ~~minimum~~of ~~rent~~our ~~contractually~~remaining ~~due~~ asset. ~~under~~Due ~~operating~~to ~~leases,~~the ~~excluding~~uncertainty ~~tenant~~in ~~reimbursements~~the timing of the anticipated ~~certain~~ sales ~~costs~~date and the cash flows there from, asresults of ~~December 31,~~operations may ~~2003,~~differ materially from amounts estimated. These amounts are presented ~~summarized~~in asthe accompanying consolidated statement of net ~~follows:~~ assets. The net assets represent the estimated liquidation value of our remaining asset available to our beneficiaries upon liquidation. The actual settlement amounts realized for assets and settlement of liabilities may differ materially, perhaps in adverse ways, from the amounts estimated.

Year Ending
2004		$	1,994,034
2005			1,976,510
2006			1,827,303
2007			1,645,965
2008			1,471,946
Thereafter			4,379,807
	Total	$	13,295,565

Cash and Cash Equivalents

A Cash ~~certain~~and ~~amount~~cash ofequivalents ~~the~~consist ~~Company’s rental income is from tenants with leases which are subject to contingent rent provisions. These contingent rents are subject to the tenant achieving periodic revenues in excess~~ of ~~specified levels.~~highly ~~For~~liquid ~~the years ended December 31, 2003, 2002 and~~investments ~~2001,~~ with ~~the~~a ~~amount~~maturity of ~~contingent~~three ~~rent~~months ~~earned~~or byless ~~the~~when ~~Company was not significant~~purchased.

~~11.~~ Concentration of ~~Advisory~~Credit ~~Fees and Other Related Party Transactions~~Risk

~~Advisory~~ Financial ~~Fees~~instruments that potentially subject us to a concentration of credit risk are primarily cash investments and accounts receivable from tenants. Cash is generally placed in money market accounts and the amount of credit exposure to any one party is limited. We have cash in financial institutions which is insured by the Federal Deposit Insurance Corporation, or FDIC, up to $250,000 per depositor per insured bank. As of December 31, 2008, we had cash accounts in excess of FDIC insured limits. We believe this risk is not significant. Concentration of credit risk with respect to accounts receivable from tenants is limited. We perform credit evaluations of prospective tenants and security deposits are obtained upon lease execution.

~~The~~ As ~~Advisory Agreement between the Company and the Advisor, as amended, was renewed by the Board~~ of ~~Directors on June~~December 2831, ~~2003 for an additional one-year term effective February 22~~2008, ~~2003.~~we ~~The~~owned ~~Company compensates the Advisor for its services through~~ a ~~series of fees pursuant to the Advisory Agreement~~10.3% Nointerest ~~amounts~~in ~~are currently due~~ the ~~Advisor under this~~ ~~agreement.~~ Congress ~~The~~Center ~~Company~~property ~~paid~~located ~~the~~in ~~Advisor approximately $1~~Chicago,~~000,~~ Illinois. ~~$620~~ Accordingly,~~000~~ ~~and~~there ~~$153,000~~is ~~for~~a ~~services~~geographic ~~provided~~concentration ~~during~~of ~~the~~risk ~~years~~subject ~~ended~~ to ~~December 31,~~fluctuations ~~2003,~~in ~~2002~~that ~~and~~State’s ~~2001, respectively~~economy.

~~The~~ As ~~Advisor~~of ~~bears the expenses incurred in connection with supervising~~December 31, monitoring and inspecting real property or other assets owned by the Company (excluding proposed acquisitions) or otherwise relating to its duties under the Advisory Agreement. Such expenses include employing its personnel2008, ~~rent,~~we ~~telephone,~~had ~~equipment,~~no ~~and~~consolidated ~~other administrative expenses. The Company reimburses the Advisor for certain expenses incurred~~properties, ~~including those related to proposed~~ ~~acquisitions and travel expenses. However~~ however, ~~the Company will not reimburse the Advisor for any operating expenses that, in any~~ four ~~consecutive~~tenants ~~fiscal~~at ~~quarters, exceed~~ the ~~greater~~Congress ofCenter 2%property ofaccounted ~~Average Invested Assets (as defined) or 25% of net income~~ for ~~such~~ ~~year~~10. ~~If the Advisor receives an incentive distribution, net income (for purposes of calculating operating expenses) excludes any gain from the sale of assets. Any amount exceeding the greater of 2~~0% ~~of Average Invested Assets~~ or ~~25%~~more of ~~net income paid to~~ the ~~Advisor~~aggregate ~~during~~annual arental ~~fiscal~~income ~~quarter~~at ~~will be~~that ~~repaid~~ property tofor the ~~Company within 60 days after the end of the fiscal~~ year. ~~The~~ended ~~Company bears its own expenses for functions not required to be performed by the Advisor under the Advisory Agreement~~December 31, ~~which generally include capital raising and financing activities~~2008, ~~corporate~~as ~~governance matters, and other activities~~follows: ~~not directly related to real estate properties and other assets.~~


			Percentage of			Square		Lease
	2008 Annual		2008 Annual			Footage		Expiration
Tenant	Base Rent*		Base Rent			(Approximate)		Date

Department of Homeland Security	$	3,473,000		28.8	%		76,000		April 2012
North American Co. Life and Health Ins	$	2,421,000		20.0	%		101,000		Feb. 2012
Akzo Nobel, Inc.	$	2,073,000		17.2	%		91,000		Dec. 2013
United States Treasury Department	$	1,645,000		13.6	%		37,000		Feb. 2013


*		Annualized rental income is based on contractual base rent from leases in effect as of December 31, 2008.

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007 — (Continued)

~~NOTES~~ As TOof ~~CONSOLIDATED~~December 31, ~~FINANCIAL~~2007, we had no consolidated properties, ~~STATEMENTS~~ however, five tenants at the Congress Center property accounted for 10.0% or more of the aggregate annual rental income at that property for the period July —20, 2007 to December ~~(Continued)~~31, 2007, as follows:

received a cumulative 8.25% return. The Advisor is also entitled to receive property management fees for management and leasing services. Such fees may not exceed 5% of the gross revenue earned by the Company on properties managed.


			Percentage of			Square		Lease
	2007 Annual		2007 Annual			Footage		Expiration
Tenant	Base Rent()**		Base Rent			(Approximate)		Date

Department of Homeland Security	$	3,408,000		27.6	%		76,000		April 2012
North American Co. Life and Health Ins	$	2,371,000		17.8	%		101,000		Feb. 2012
Akzo Nobel, Inc.	$	2,028,000		15.3	%		90,000		Dec. 2013
United States Treasury Department	$	1,614,000		12.1	%		37,000		Feb. 2013
Employer’s Reinsurance Corporation	$	1,513,000		11.4	%		67,000		Jan. 2008	(1)

Property Management Fees


(**)		Annualized rental income is based on contractual base rent from leases in effect as of December 31, 2007.

(1)		On December 21, 2006, Triple Net Properties Realty, Inc., or Realty, an affiliate of our advisor, received a termination notice from Employer’s Reinsurance Corporation notifying Realty of their intent to exercise their option to terminate their lease effective January 1, 2008 at the Congress Center property. Effective January 1, 2008, Employer’s Reinsurance Corporation’s lease was terminated.

~~The Company pays Realty property management fees~~ ~~equal to 5% of the gross income of each property managed by~~ Income ~~Realty. All of the Company’s properties are managed by~~ Taxes ~~Realty. The Company paid Realty approximately $195,300, $225,000 and $106,000 for services provided during the years ended December 31, 2003, 2002 and 2001, respectively.~~

~~Real~~ We ~~Estate~~will ~~Commissions~~be treated as a grantor trust for income tax purposes and accordingly, will not be subject to federal or state income tax on any income earned or gain recognized by us. We will recognize taxable gain or loss when an asset is disposed of for an amount greater or less than the fair market value of such asset at the time it was transferred from T REIT to us. Our beneficiaries will be treated as the owner of a pro rata portion of each asset, including cash, received by and held by us and will be required to report on his or her federal and state income tax return his or her pro rata share of taxable income, including gains and losses recognized by us. Accordingly, there is no provision for federal or state income taxes in the accompanying consolidated financial statements.

~~Realty earns sales commissions from acquisitions~~ ~~and dispositions of the Company’s properties. For the year~~ Segments ended December 31, 2003, the Company paid sales commissions to Realty of $350,000. For the years ended December 31, 2003 and 2002, unaffiliated sellers paid sales commissions to Realty of $3,380,000 and $1,857,500, respectively, related to consolidated and unconsolidated properties purchased by the Company.

~~Incentive~~ We ~~Distributions~~internally evaluate our unconsolidated property and interest therein as one industry segment and, accordingly, we do not report segment information.

~~The Advisor owns 100 non-voting incentive~~ ~~performance units in T REIT, L.P., the Company’s Operating~~ Recently ~~Partnership~~ Issued ~~and~~Accounting ~~is entitled to incentive distributions of~~Pronouncements ~~operating cash flow after the Company’s shareholders have received an 8.00% annual return on their invested capital. No incentive distributions were made to the Advisor as of December 31, 2003.~~

~~Investment~~ In September 2006, the FASB issued Statement of Financial Accounting Standards, or SFAS, No. 157, Fair Value Measurements, or SFAS No. 157. SFAS No. 157, which will be applied to other accounting pronouncements that require or permit fair value measurements, defines fair value, establishes a framework for measuring fair value in ~~unconsolidated~~generally ~~real~~accepted ~~estate~~accounting principles and provides for expanded disclosure about fair value measurements. SFAS No. 157 was issued to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position, or FSP, SFAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement Under Statement 13, or FSP SFAS No. 157-1. FSP SFAS No. 157-1 excludes from the scope of SFAS No. 157 certain leasing transactions accounted for under SFAS No. 13, Accounting for Leases. In February 2008, the FASB also issued FSP SFAS No. 157-2, Effective Date of FASB Statement No. 157, or FSP SFAS No. 157-2. FSP SFAS No. 157-2 defers the effective date of SFAS No. 157 for all non-

The Company has purchased certain tenant in common interests in properties where the other tenants in common were participating in a tax-free exchange arranged by the Advisor. Such transactions earn the Advisor or its affiliates commissions on the tax-free exchanges, however, the Board of Directors of the Company evaluates the extent to which the Company participates in such acquisitions.

12. Commitments and Contingencies

Operating leases

The Company has a noncancelable ground lease obligation related to its Gateway Mall property. The lease expires in 2028, with ten options to extend the lease for an additional five years each. During the years ended December 31, 2003, 2002 and 2001, ground lease expenses totalled $36,700, $0, and $0, respectively.

The minimum commitment under these leases at December 31, 2003 was as follows:

Year Ending
2004		$	40,000
2005			40,000
2006			40,000
2007			40,000
2008			40,000
Thereafter			806,663
	Total	$	1,006,663

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007 — (Continued)

~~NOTES~~ financial TOassets ~~CONSOLIDATED~~and ~~FINANCIAL~~non-financial liabilities, except those ~~STATEMENTS~~ that are recognized or disclosed at fair value in the financial statements on a recurring basis, to fiscal years beginning after November —1, 2008. In October 2008, the FASB issued FSP SFAS ~~(Continued)~~No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active, or FSP SFAS No. 157-3. FSP SFAS No. 157-3 amends SFAS No. 157 by providing an example to illustrate key considerations and the emphasis on measurement principles when applying SFAS No. 157 to financial assets when the market for those financial assets is not active. We adopted SFAS No. 157 and FSP SFAS No. 157-1 on a prospective basis on January 1, 2008. The adoption of SFAS No. 157 and FSP SFAS No. 157-1 did not have a material impact on our consolidated financial statements. We adopted FSP SFAS No. 157-3 upon issuance, which did not have a material impact on our consolidated financial statements. We adopted FSP SFAS No. 157-2 on a prospective basis on January 1, 2009. The adoption of FSP SFAS No. 157 is not expected to have a material impact on our consolidated financial statements.

~~Litigation~~ In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, or SFAS No. 159. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the fiscal year beginning on or before November 15, 2007, provided the provisions of SFAS No. 157 are applied. We adopted SFAS No. 159 on a prospective basis on January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on our consolidated financial statements.

On In ~~February 11,~~March ~~2004~~2008, ~~Clearview Properties filed a petition in~~ the ~~District~~FASB ~~Court~~issued ~~of the 270th~~SFAS ~~Judicial District~~No. 161, ~~Harris County, Texas against~~ ~~Property~~ Disclosures ~~Texas~~about SCDerivative ~~One~~Instruments ~~Corporation,~~and ~~Clarion Partners~~Hedging Activities, ~~LLC, Granite~~or ~~Partners~~SFAS I,No. 161. SFAS No. 161 ~~LLC,~~is ~~three~~intended ~~unaffiliated~~to ~~entities,~~improve ~~and~~financial ~~the~~ reporting ~~Advisor,~~about ~~Realty~~derivative instruments and ~~the~~hedging ~~Company.~~activities ~~The complaint alleges that~~by ~~Property~~ requiring ~~Texas~~enhanced ~~breached~~disclosures anto ~~Agreement~~enable ofinvestors ~~Sale and Purchase~~ to ~~sell~~ ~~Clearview certain real property located in Houston, Texas.~~better ~~Only~~ understand ~~one~~their ofeffects ~~the~~on ~~complaint~~an entity’s ~~eight~~financial ~~separate counts alleges~~position, ~~the~~ financial ~~involvement of the Company~~performance, ~~the Advisor~~ and ~~Realty~~cash flows. ~~That~~SFAS No. 161 ~~count~~ achieves ~~alleges~~these ~~that~~improvements ~~the~~by ~~Company,~~requiring ~~the~~disclosure ~~Advisor~~of ~~and~~the ~~Realty and/or~~fair ~~the~~ values ~~other~~of ~~defendants~~derivative ~~willfully~~instruments and ~~intentionally~~their ~~interfered~~gains ~~with the~~and ~~contract~~losses ~~between~~in ~~Clearview~~a tabular ~~and~~format. ~~Property~~It ~~Texas~~also ~~and~~provides ~~that~~more ~~such interference~~information ~~proximately~~about ~~caused Clearview~~an entity’s ~~injury~~liquidity ~~and sufferance~~by ofrequiring ~~actual~~disclosure ~~damages.~~of ~~The~~derivative features ~~maximum~~that ~~exposure~~are tocredit ~~the Company~~risk isrelated. ~~uncertain~~Finally, asit ~~Clearview~~requires cross-referencing ~~has~~within ~~failed~~notes to ~~specifically allege~~enable afinancial ~~monetary~~statement users ~~amount~~to oflocate ~~loss~~important asinformation ~~the~~about ~~result of our alleged~~derivative ~~involvement~~ instruments. ~~The~~SFAS No. 161 ~~Company believes that there~~ is noeffective ~~substantive~~for financial ~~merit~~ statements toissued ~~the~~for ~~claims~~fiscal ~~made~~years byand ~~Clearview~~interim ~~with~~periods ~~respect~~beginning after toNovember 15, ~~the Company~~2008, ~~the~~with ~~Advisor~~early orapplication ~~Realty~~encouraged. We ~~and~~will itadopt ~~intends~~SFAS No. 161 toon ~~vigorously~~January 1, 2009. ~~defend~~ The ~~the~~adoption ~~action~~of SFAS No. 161 ~~However,~~is ifnot ~~Clearview~~expected ~~were~~ to ~~prevail in this action, it could~~ have a material ~~adverse~~impact ~~effect~~on ~~upon~~our ~~the Company’s~~consolidated financial ~~condition, results of operations and cash flows~~statements.

~~Other~~3. ~~than~~Asset ~~the~~for ~~above,~~Estimated toReceipts ~~the~~in ~~Company’s knowledge~~Excess ~~there are no material pending legal proceedings, other than routine litigation incidental to the business, to which the Company is a party to or~~ of ~~which~~Estimated ~~any~~Costs ofduring ~~its properties is the subject.~~ Liquidation

~~Environmental~~ Under ~~Matters~~the liquidation basis of accounting, we are required to estimate the cash flows from operations and accrue the costs associated with implementing and completing the plan of liquidation. We currently estimate that we will have operating cash inflows from our properties in excess of the estimated costs of liquidation. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, along with the estimates of tenant improvements incurred and paid, the timing of the sale of our remaining asset, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of our operations. These costs are estimated and are expected to be paid out over the estimated liquidation period.

The Company follows the policy of monitoring its properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, the Company is not currently aware of any environmental liability with respect to the properties that would have a material effect on the Company’s financial condition, results of operations and cash flows. Further, the Company is not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that the Company believes would require additional disclosure or the recording of a loss contingency.

Lease

In connection with the sale of the Christie Building in November 2001, the Company agreed as part of the sale transaction, to guarantee the lease payment in the amount $20,000 per month for a period of five years under a master lease agreement. Under this agreement, the Company is obligated to make lease payments to the lessor only in the event the sub-lessee fails to make the lease payments. In addition, the Company is also obligated to pay a pro rata share of lease commissions and tenant improvements in the event the premises are re-leased prior to November 13, 2006. Concurrent with the issuance of the guaranty, the Advisor agreed to indemnify the Company against any future losses under the master lease agreement with the indemnification evidenced by an indemnity agreement dated November 13, 2001. The Christie Building is a single tenant office building with the current tenant’s lease which expired on August 31, 2002. In October 2002, the tenant vacated the property. Accordingly, the Company has accrued $640,707 related to its obligations under the guaranty at December 31, 2003. The Company has no collateral, however it has recourse against the Advisor under the indemnity agreement. At April 19, 2004, the Company has been reimbursed by the Advisor for all amounts paid under the guarantee and expects to be reimbursed in the future by the Advisor in connection with the indemnity agreement for the full amount of its obligation.

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007 — (Continued)

~~NOTES~~ The TOchange ~~CONSOLIDATED~~in ~~FINANCIAL~~the asset for estimated receipts in excess of ~~STATEMENTS~~ estimated costs during liquidation for the year ended December ~~— (Continued)~~31, 2008 is as follows:

Investments at Risk


	December 31,			Cash Payments			Change in			December 31,
	2007			and (Receipts)			Estimates			2008

Assets:
Estimated net inflows from consolidated and unconsolidated operating activities	$	1,001,000		$	(164,000	)	$	96,000		$	933,000
Liabilities:
Liquidation costs		(304,000	)		333,000			(224,000	)		(195,000	)

Total asset for estimated receipts in excess of estimated costs during liquidation	$	697,000		$	169,000		$	(128,000	)	$	738,000

As The ofchange ~~December 31,~~in ~~2003,~~ the ~~Company~~asset ~~had contingent~~for ~~loan~~estimated ~~obligations~~receipts ~~associated with its investments~~ in ~~unconsolidated~~ ~~real~~excess ~~estate which it discloses under FIN 45. None~~ of ~~these liabilities are carried on the consolidated~~ ~~balance~~ estimated ~~sheets~~costs asduring ~~the~~liquidation ~~Company accounts~~ for ~~related real estate investments using~~ the ~~equity~~period ~~method of accounting. The~~from ~~Company’s liability for the debt of its unconsolidated properties is limited to the amount of its investment at each property.~~

~~Other~~ July 20, 2007 through December 31, 2007 is as follows:

The Company’s other commitments and contingencies include the usual obligations of a real estate company in the normal course of business. In the opinion of management, these matters are not expected to have a material adverse effect on the Company’s financial position and/or results of operations.


	July 20,			Cash Payments			Change in			December 31,
	2007			and (Receipts)			Estimates			2007

Assets:
Estimated net inflows from consolidated and unconsolidated operating activities	$	1,202,000		$	(125,000	)	$	(76,000	)	$	1,001,000
Liabilities:
Liquidation costs		(371,000	)		318,000			(251,000	)		(304,000	)

Total asset for estimated receipts in excess of estimated costs during liquidation	$	831,000		$	193,000		$	(327,000	)	$	697,000

134. ~~Selected~~Net ~~Quarterly~~Assets ~~Data~~in ~~(Unaudited)~~Liquidation

~~Set~~ Net ~~forth~~assets ~~below~~in isliquidation ~~certain~~decreased ~~unaudited~~$2,230,000, ~~quarterly information~~or $0.48 ~~The~~per unit, ~~Company~~during ~~believes~~the ~~that~~year ~~all~~ended ~~necessary adjustments~~December 31, ~~consisting~~2008. ~~only~~The ofprimary reason ~~normal~~for ~~recurring~~the ~~adjustments, have~~decrease ~~been~~in ~~included~~our innet ~~the~~assets ~~amounts~~is ~~stated~~a ~~below~~decrease toin ~~present~~the ~~fairly,~~ value ~~and~~of inour ~~accordance~~unconsolidated ~~with~~property ~~generally~~of ~~accepted~~$2,107,000, ~~accounting~~or $0.46 per ~~principles~~ unit, ~~the~~as ~~selected~~a ~~quarterly~~result ~~information~~of ~~when~~a ~~read~~decrease in ~~conjunction~~ ~~with~~ the ~~financial~~anticipated ~~statements~~sales price.

		Year Ended December 31, 2003
		4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
Revenues		$	892,230		$	559,055		$	676,698		$	517,320
Expenses			714,556			824,288			688,945			565,576
Income (loss) before equity in earnings of unconsolidated real estate			177,674			(265,233	)		(12,247	)		(48,256	)
Gain (loss) on sale of real estate investments			(223,644	)		2,813,550			—			23,617
Equity in earnings of unconsolidated real estate			(70,768	)		267,125			405,896			558,161
Income from continuing operations			(116,738	)		2,815,442			393,649			533,522
Income (loss) from discontinued operations			(59,681	)		(118,809	)		488,498			253,385
Net income (loss)		$	(176,419	)	$	2,696,633		$	882,147		$	786,907
	Earnings (loss) per share-basic and diluted
	Continuing operations	$	0.02		$	0.60		$	0.08		$	0.11
	Discontinued operations	$	(0.01	)	$	(0.03	)	$	0.10		$	0.06
	Total net income (loss) per common share	$	0.02		$	0.57		$	0.18		$	0.17

Net assets in liquidation decreased $854,000, or $0.19 per unit, during the period from July 20, 2007 through December 31, 2007. The primary reasons for the decrease in our net assets includes a decrease in the value of our unconsolidated property of $527,000, or $0.11 per unit, as a result of a decrease in the anticipated sales price along with a decrease in the asset for estimated receipts in excess of estimated costs of $134,000, or $0.03 per unit, as a result of a change in estimate primarily due to the change in the projected sales date of our remaining asset.

T REIT LIQUIDATING TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July ~~INC.~~20, 2007 to December 31, 2007 — (Continued)

~~NOTES~~ include TOprojections ~~CONSOLIDATED~~of ~~FINANCIAL~~costs and expenses expected to be ~~STATEMENTS — (Continued)~~ incurred during the period required to complete the plan of liquidation. These projections could change materially based on the timing of any sale, the performance of the underlying asset and change in the underlying assumptions of the projected cash flows.

	Year Ended December 31, 2002
	4th Quarter		3rd Quarter		2nd Quarter			1st Quarter
Revenues	$	92,577	$	305,790	$	77,397		$	111,050
Expenses		73,579		219,450		265,065			116,284
Income (loss) before equity in earnings of unconsolidated real estate		18,998		86,340		(187,668	)		(5,234	)
Gain on sale of real estate investments		68,935		144,417		—			—
Equity in earnings of unconsolidated real estate		523,776		191,442		356,150			54,133
Income from continuing operations		611,709		422,199		168,482			48,899
Income (loss) from discontinued operations		359,467		138,018		263,060			281,925
Net income (loss)	$	971,176	$	560,217	$	431,542		$	330,824
Earnings (loss) per share-basic and diluted
Continuing operations	$	0.14	$	0.09	$	0.04		$	0.02
Discontinued operations	$	0.08	$	0.03	$	0.07		$	.10
Total net income (loss) per common share	$	0.23	$	0.12	$	0.11		$	.12


5.	Real Estate Investments

14 As of December 31, 2008 and 2007, our real estate investment is comprised of a 10.3% ~~Subsequent~~interest ~~Events~~in one unconsolidated property, the Congress Center property, located in Chicago, Illinois. Under the liquidation basis of accounting, our investment in the Congress Center property is recorded at fair value less costs to sell.

On January 20, 2004, the Company, through its wholly-owned subsidiary, TREIT — AmberOaks LP, a Texas limited partnership, purchased a 75% undivided tenant in common interest in three buildings at AmberOaks Corporate Center located in Austin, Texas from an unaffiliated third party. Three unaffiliated entities purchased the remaining 25% tenant in common interest in the property. The total purchase price for AmberOaks was approximately $22,965,000. The Company’s total investment was approximately $6~~,462,000~~. ~~The~~Related ~~seller~~Party paid a sales commission to Realty of $585,000, or 2.3% of the purchase price. AmberOaks is a Class A three-building office portfolio totaling approximately 206,770 square feet that is part of an eight-building complex built during 1999-2001. An affiliate of the Company’s advisor purchased the remaining five buildings. Transactions

~~On March 18, 2004, the Company sold Gateway~~ ~~Mall to an unaffiliated third party for a purchase price of~~ Advisory ~~$11,600,000. On February 27, 2004, the Company purchased~~ Agreement approximately 43 acres of land, including approximately 36 acres of land situated under Gateway Mall from another unaffiliated third party for a purchase price including closing costs of $1,631,000. Prior to the land acquisition, the property had been subject to a ground lease. The sale of Gateway Mall included the underlying 36 acres of land. Sales proceeds included cash of approximately $3,032,500 and a note receivable in the amount of $8,700,000. The note is secured by a pledge agreement, bears interest at 6% per annum and is due June 14, 2004. In connection with the sale of Gateway Mall, the Company repaid a note payable secured by the property with an outstanding balance of $4,876,000. At closing, the Company paid a sales commission to Realty of $339,000, or approximately 2.9% of the selling price.

~~Effective April 22, 2004, Diana M. Laing has~~ ~~resigned her position as the Company’s Chief Financial~~ Advisory ~~Officer and the Board of Directors has appointed Richard Hutton~~ Fees as interim Chief Financial Officer. Mr. Hutton has served as the Chief Investment Officer of the Advisor since August 2003, overseeing all financial operations of the Advisor, and previously served as our interim Chief Financial Officer. From April 1999 to August 2003, Mr. Hutton served as Senior Vice President — Real Estate Acquisitions and Vice President — Property Management for the Advisor. In that position, Mr. Hutton oversaw the management of the real estate portfolios and property management of the Advisor and its affiliates. Mr. Hutton holds a BA in psychology from Claremont McKenna College and has been licensed as a Certified Public Accountant in California since 1984.

Grubb & Ellis Realty Investors (formerly known as Triple Net Properties, LLC), or our advisor, manages us on a month-to-month basis pursuant to the terms of the expired Advisory Agreement between our advisor and T REIT. Under the terms of the Advisory Agreement, our advisor has responsibility for our day-to-day operations, administers our accounting and bookkeeping functions, serves as a consultant in connection with policy decisions to be made by our board of directors, manages our properties and renders other services deemed appropriate by our Trustee. Our advisor is entitled to reimbursement from us for expenses incurred in rendering its services, subject to certain limitations. Fees and costs reimbursed to our advisor cannot exceed the greater of 2.0% of average invested assets, as defined in the Advisory Agreement, or 25.0% of net income for the previous four quarters. For the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007, such reimbursement had not exceeded these limitations. We paid our advisor approximately $18,000 and $57,000, for services provided to us for the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007, respectively.

Our advisor may receive an annual asset management fee of up to 1.5% of our Average Invested Assets, as defined in the Advisory Agreement. This fee will be paid or accrued quarterly, but will not be paid until our beneficiaries have received distributions equal to a cumulative non-compounded rate of 8.0% per annum on their investment in us. We incurred $62,000 in asset management fees in the year ended December 31, 2008, and we paid our advisor $71,000 in asset management fees in the year ended December 31, 2008, of which $19,000 was for services provided in 2007. In the period July 20, 2007 to December 31, 2007, we incurred $39,000 in asset management fees, of which we paid our advisor $20,000.

Property Management Fees

We pay our advisor or its affiliate a property management fee equal to 5.0% of the gross revenue from our properties. We did not incur and did not pay our advisor or its affiliate any property management fees for the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007.

Real Estate Acquisition and Disposition Fees

Under the terms of the Advisory Agreement, our advisor or its affiliate may receive acquisition and disposition fees in connection with the acquisition or disposition of our properties. We did not pay our advisor or its affiliate any real estate acquisition or disposition fees for the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007.

~~SCHEDULE~~ T REIT LIQUIDATING TRUST NOTES ~~III~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Year Ended December 31, 2008 and the Period from July 20, 2007 to December 31, 2007 — (Continued)

~~T REIT, INC.~~ Incentive Distributions

~~REAL~~ Our ~~ESTATE~~advisor ~~OPERATING~~owned ~~PROPERTIES~~100 ~~AND~~non-voting incentive performance units in ~~ACCUMULATED~~ T ~~DEPRECIATION~~REIT, L.P. (T REIT’s operating partnership) and would have been entitled to incentive distributions of operating cash flow, as defined in the T REIT Limited Partnership Agreement, after our beneficiaries have received an 8.0% annual return on their invested capital. Pursuant to the approval of the plan of liquidation by our beneficiaries, our advisor permanently waived any distributions that our advisor is or may be entitled to receive in connection with its incentive performance units.

	Initial Costs to Company						Gross Amount at Which Carried at Close of Period
					Buildings and				Buildings and				Accumulated
	Encumbrances		Land		Improvements		Land		Improvements		Total		Depreciation			Date Constructed
Gateway Mall, ND	$	5,000,000	$	—	$	9,167,223	$	—	$	9,363,501	$	9,363,501	$	(219,133	)		1979
University Heights, TX		4,400,000		1,011,262		5,724,750		1,011,262		5,796,451		6,807,713		(205,454	)		2000
Total	$	9,400,000	$	1,011,262	$	14,891,973	$	1,011,262	$	15,159,952	$	16,171,214	$	(424,587	)

Incentive Bonuses and Milestone Payments

			Maximum Life on Which Depreciation in
Description	Date Acquired		Latest Income Statement is Computed
Gateway Mall, ND		2003		39
University Heights, TX		2002		39

Our Trustee has discretion to pay up to an aggregate of $300,000 in retention and incentive based bonuses to some of the employees of our advisor from time to time. Prior to July 20, 2007, $245,000 in retention and incentive bonuses were paid by T REIT. We did not pay any retention or incentive bonuses for the year ended December 31, 2008 and the period from July 20, 2007 through December 31, 2007.

~~(a)~~ Review, Approval ~~The~~or ~~changes~~Ratification inof ~~wholly-owned~~Transactions ~~real~~with ~~estate for the year ended December 31, 2003 are as follows:~~Related Persons

	2003
Balance at beginning of period	$	37,374,781
Acquisitions		9,364,624
Dispositions		(30,568,191	)
Balance at end of period	$	16,171,214

All transactions between us and any related person, including our advisor and its affiliates, are reviewed and approved by our Trustee. Additionally, the plan of liquidation provides that we may sell our remaining asset to one of our affiliates or an affiliate of our advisor. If we enter such a transaction, we expect that our Trustee will require that Stanger, or another independent consultant, opine to us as to the fairness of the consideration to be received by us in such transaction, from a financial point of view, or conduct an appraisal of the applicable property as a condition to their approval. In no event will our Trustee approve a transaction if: (i) Stanger, or another independent consultant, concludes after a review of the information then available, including any pending offers, letters of intent, contracts for sale, appraisals or other data, that the consideration to be received by us is not fair to us from a financial point of view; (ii) Stanger, or another independent consultant, concludes that the consideration to be received is less than the appraised value of the applicable property; or (iii) we have received a higher offer for the applicable property from a credible party with whom we reasonably believe is ready, able and willing to close the transaction on the contract terms.

~~(b) The~~7. ~~changes~~Commitments inand ~~accumulated depreciation for the year ended December 31, 2003 are as follows:~~ Contingencies

	2003
Balance at beginning of period	$	1,111,856
Additions		369,084
Deletions		(1,056,353	)
Balance at end of period	$	424,587

Prior Performance Tables

In connection with T REIT’s initial public offering of common stock conducted through a best efforts offering from February 22, 2000 through June 1, 2002, T REIT disclosed the prior performance of all public and private investment programs sponsored by our advisor. T REIT later determined that there were certain errors in those prior performance tables. In particular, the financial information in the tables was stated to be presented according to accounting principles generally accepted in the United States of America, or GAAP. Generally, the tables for the public programs were not presented on a GAAP basis and the tables for the private programs were prepared and presented on a tax or cash accounting basis. Moreover, a number of the prior performance data figures were themselves erroneous, even as presented on a tax or cash basis. In particular, certain programs sponsored by our advisor have invested either along side or in other programs sponsored by our advisor. The nature and results of these investments were not fully and accurately disclosed in the tables. In addition, certain calculations of depreciation and amortization were not on an income tax basis for a limited liability company investment; certain operating expenses were not reflected in the operating results; and monthly mortgage and principal payments were not reported. In general, the resulting effect is an overstatement of our advisor’s program and aggregate portfolio operating results. At this time there is no litigation related to the prior performance tables.

~~Item~~ T 9.REIT LIQUIDATING ~~Changes~~TRUST NOTES TO inCONSOLIDATED ~~and~~FINANCIAL ~~Disagreements~~STATEMENTS ~~with~~(Unaudited) For ~~Accountants~~the onYear ~~Accounting~~Ended December 31, 2008 and the ~~Financial~~Period ~~Disclosure~~from July 20, 2007 to December 31, 2007 — (Continued)

~~Dismissal of Squar, Milner, Reehl &~~ ~~Williamson, LLP and Engagement of Grant Thornton LLP~~ Unconsolidated Debt

~~Effective~~ As of December 331, ~~2002~~2008, the ~~Company’s~~ ~~Board~~total ofmortgage ~~Directors~~debt ~~dismissed~~of ~~the~~our unconsolidated ~~accounting~~property ~~firm of~~was ~~Squar~~$94, ~~Milner~~839,000 ~~Reehl & Williamson, LLP~~ and ~~approved~~our proportionate ~~the~~ share ~~engagement~~ of ~~Grant~~unconsolidated ~~Thornton~~debt ~~LLP~~was $9,699,000. asThe ~~its~~Congress ~~independent~~Center ~~certified~~ property ~~public~~is ~~accountants~~required ~~for~~by the ~~year~~terms ~~ending December 31,~~of ~~2002.~~the ~~The~~applicable ~~decision~~loan documents to ~~engage~~meet ~~Grant~~certain ~~Thornton was~~minimum ~~approved~~loan byto ~~the~~value, ~~Board~~performance covenants ofand ~~Directors~~other onrequirements. ~~the~~As ~~recommendation~~ of December 31, 2008, the ~~Audit~~Congress ~~Committee~~Center property was in compliance with all such covenants.

~~Squar~~ On ~~Milner~~December 21, 2006, Realty received a termination notice from Employer’s ~~reports~~Reinsurance onCorporation notifying Realty of their intent to exercise their option to terminate their lease effective January 1, 2008 at the ~~Company~~Congress Center property. Effective January 1, 2008, Employer’s Reinsurance ~~financial~~ Corporation’s ~~statements~~lease ~~for~~was terminated. Pursuant to a property reserves agreement with the ~~years~~lender ~~ended~~under ~~December 31~~our mortgage debt, ~~2001~~the ~~and~~ lender ~~2000~~was ~~contained~~entitled noto ~~adverse~~receive ~~opinion~~an orearly ~~disclaimer~~termination fee penalty of ~~opinion~~$3,800,000 from the borrower (all the co-owners of the ~~and~~ Congress ~~were~~Center ~~not~~property) ~~qualified~~to orbe ~~modified~~placed asin a reserve account controlled by the lender. In addition, the lender was entitled to ~~uncertainty~~receive $225,000 ~~audit~~on a monthly basis beginning January 1, ~~scope~~ 2007 orand ~~accounting~~continuing ~~principles~~through and including the payment date occurring on December 1, 2007 from the borrower. ~~During~~Beginning January 1, 2008 and continuing through and including the payment ~~period~~date ofoccurring ~~Squar~~on December 1, 2011, the lender is ~~Milner’s~~ entitled ~~engagement~~to receive $83,000 on a monthly basis from the borrower. ~~Company~~In ~~had~~the noevent ~~disagreements~~that ~~with~~the Congress Center property does ~~Squar~~ not ~~Milner~~generate onsufficient ~~any~~funds ~~matter~~from ofoperations ~~accounting~~to ~~principles~~satisfy ofthe ~~practices~~ monthly reserve payments to the lender, ~~financial~~it ~~statement~~is ~~disclosure~~anticipated that the borrower will obtain an unsecured loan from our advisor or its ~~auditing~~affiliates ~~scope~~or NNN 2002 Value Fund, LLC, or our affiliate co-owner, will advance the required amounts to the lender on behalf of the borrower. In January 2007, Employer’s ~~procedure~~ Reinsurance Corporation paid $3,773,000 ~~which~~to ~~disagreement~~the lender as an early termination fee penalty pursuant to their lease agreement. We, along with G REIT Liquidating Trust (ssuccessor of G REIT, Inc.) and our affiliate co-owner paid the remaining $27,000 ifof ~~not~~the ~~resolved~~early termination fee penalty owed to the lender. ~~satisfaction~~ As of ~~Squar~~December 31, ~~Milner~~2008, ~~would~~we have ~~caused~~advanced it$93,000 to ~~make~~the ~~reference~~ lender tofor the ~~subject~~reserves ~~matter~~associated with the early lease termination. It is anticipated that upon the sale of the Congress ~~disagreement~~Center property, we, along with G REIT Liquidating Trust (ssuccessor of G REIT, Inc.) and our affiliate co-owner will receive repayment of any advances made to the lender for reserves. All payments to the lender are to be placed in a reserve account to be held by the lender for reimbursement to the borrower for tenant improvement and leasing commissions incurred in connection with ~~its~~re-leasing ~~report~~the space. NoRealty ~~reportable~~has begun ~~event~~marketing (efforts to re-lease the space as ~~defined~~a inresult of the ~~Item~~ lease termination on January ~~304(a)(~~1~~)(v)~~, of2008, ~~Regulation S-K)~~however, ~~occurred~~the ~~since~~failure ~~the~~ to ~~date~~replace ofthis ~~Squar~~tenant ~~Milner’s~~may ~~engagement~~reduce or delay liquidating distributions to our beneficiaries.

~~Squar Milner provided the Company with a letter~~ ~~addressed to the Securities and Exchange Commission (the~~ Litigation “Commission”) stating that it had reviewed the statements included in the Company’s Current Report on Form 8-K/ A, dated December 3, 2002, and filed with the Commission on December 18, 2002, and that it agreed with statements made by the Company regarding Squar Milner. A copy of this letter, dated as of December 18, 2002, was filed as Exhibit 16.1 to the Current Report on Form 8-K/ A.

~~Prior~~ On toFebruary 11, 2004, Clearview Properties, or Clearview, filed a petition in the ~~Company’s~~District ~~engagement~~Court of ~~Grant~~the ~~Thornton~~ 270th Judicial District, itHarris ~~did~~County, ~~not~~Texas ~~consult~~against Property ~~with~~Texas ~~Grant~~SC ~~Thornton~~One ~~regarding~~Corporation, Clarion Partners, LLC, and ~~(1)~~ Granite Partners ~~the~~I, ~~application~~LLC, ofthree ~~accounting~~unaffiliated ~~principles~~entities, toand TREIT, aour ~~specified~~advisor and Triple Net Properties Realty, Inc., or ~~transaction~~ collectively, ~~either~~the ~~completed~~Triple orNet ~~proposed,~~Entities. ~~(2)~~ The complaint alleged that the ~~type~~Triple ofNet Entities willfully and intentionally ~~audit~~ interfered ~~opinion~~with ~~that~~an ~~might~~agreement bebetween ~~rendered~~Property onOne and Clearview for the ~~Company’s~~sale of certain real property located in Houston, Texas ~~financial~~ by ~~statements~~Property orOne ~~(3)~~to Clearview. On January ~~any~~7, ~~other~~2005, ~~matter~~Clearview filed an amended complaint which also alleged that ~~was~~the Triple ~~either~~ Net Entities breached a contract between Clearview and the Triple ~~subject~~Net Entities for the sale of the Houston, Texas property by Clearview to the Triple Net Entities and for conspiracy with Property One to breach this contract. On March 25, 2005, Clearview filed a ~~disagreement~~further (amended complaint which named T REIT, L.P. as ~~defined~~an inadditional Triple Net Entity defendant and dropped ~~paragraph 304(~~ Realty as a~~)(1)(iv)~~ ofdefendant. ~~Regulation~~On May ~~S-K~~4, ~~and~~2005, the court denied our ~~related~~ motion ~~instructions~~for summary judgment. On July 28, 2005, the Triple Net Entities filed their second amended motion for summary judgment to ~~this~~dismiss ~~item)~~the orclaims aagainst ~~reportable~~us, ~~event~~which ~~(as~~amended motion ~~described~~ was granted in ~~paragraph~~our favor by the court on August ~~304(a)(1)(v)~~8, of2005. ~~Regulation~~On December S12, 2005, a one-~~K).~~day trial was held to determine our ability to recover from Clearview,

Dismissal of Grant Thornton LLP and Engagement of Deloitte & Touche, LLP

Effective February 8, 2004, the Board of Directors dismissed Grant Thornton LLP as the Company’s independent certified public accountant based on the recommendation of the Audit Committee of the Board of Directors. Effective February 8, 2004, the Board of Directors retained Deloitte & Touche, LLP as its independent certified public accountant, based on the recommendation of the Audit Committee.

The report of Grant Thornton on our financial statements for the fiscal year ended December 31, 2002 contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period of Grant Thornton’s engagement, there were no disagreements with Grant Thornton on any matter of accounting principles or practice, financial statement disclosure or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Grant Thornton, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report.

There were no “reportable events” (as defined in Item 304 (a) (1) (v) of Regulation S-K) that occurred during the period of Grant Thornton’s engagement.

Grant Thornton provided the Company with a letter addressed to the Commission stating that it had reviewed the statements included in our Current Report on Form 8-K, dated February 8, 2004, and filed with the Commission on February 12, 2004, and that it agreed with the Company’s statement regarding Grant Thornton. A copy of this letter was filed as Exhibit 16.1 to the Current Report on Form 8-K.

~~Prior to the Company’s engagement of~~ ~~Deloitte~~ T ~~& Touche, LLP, it did not consult with Deloitte~~REIT & LIQUIDATING ~~Touche, LLP regarding (1) the application of~~TRUST ~~accounting principles to a specified transaction, either~~ ~~completed or proposed, (2)~~ NOTES ~~the~~TO ~~type~~CONSOLIDATED ofFINANCIAL ~~audit~~STATEMENTS ~~opinion that might be rendered by Deloitte & Touche, LLP on the Company’s financial statements, or~~ (3Unaudited) ~~any other~~ ~~matter~~ For ~~that was~~ the ~~subject~~Year ofEnded aDecember 31, ~~disagreement~~2008 ~~between the~~and ~~Company~~ the ~~and~~Period ~~its~~from ~~auditor~~July 20, ~~(as~~2007 ~~defined~~to ~~in Item~~December ~~304(a)(1)(iv)~~31, ~~of Regulation~~ 2007 ~~S-K and its related instructions) or a reportable event (as described in Item~~— ~~304~~(aContinued) ~~(1)(v) of~~ ~~Regulation S-K).~~

~~Item~~ attorneys’ 9Afees, expenses and costs incurred in this case as provided for pursuant to the terms of the agreements underlying Clearview’s breach of contract claims against us. ~~Controls~~On May 17, 2006, the Court entered a final judgment awarding T REIT, L.P. $212,000 in attorneys’ fees for services rendered, $25,000 for attorneys’ fees if Clearview unsuccessfully appeals the case to the court of appeals, and $13,000 ~~Procedures~~for attorneys’ fees if Clearview unsuccessfully appeals the case to the Texas Supreme Court. Clearview is in the process of proceeding with an appeal, and we are proceeding with our collection efforts. On January 29, 2009, the Fourteenth Court of Appeals affirmed the trial court’s summary judgment, reversed T REIT, L.P.’s attorneys’ fees award, and remanded the attorneys’ fee issue for a further proceeding. Clearview has asked the appellate court to reconsider its decision. We are unable to determine the probability of the outcome or the amount or range of any potential recovery.

~~(a) Evaluation~~ Other ofthan ~~disclosure~~as ~~controls~~set ~~and procedures.~~forth ~~The~~above, ~~Company maintains disclosure controls and procedures that are designed~~ to ~~ensure~~our ~~that information required to be disclosed in its Exchange Act reports is recorded~~knowledge, ~~processed,~~ ~~summarized~~there ~~and~~are ~~reported within the time periods~~no ~~specified~~ material inpending ~~the~~legal ~~Commission’s~~proceedings. ~~rules~~We ~~and~~also ~~forms,~~have ~~and that~~routine ~~such~~ litigation ~~information~~incidental ~~is accumulated and communicated~~ to ~~our management,~~the ~~including~~business ~~our Chief Executive Officer and Chief Financial Officer, as appropriate,~~ to ~~allow~~which ~~timely~~we ~~decisions regarding~~are ~~required~~a ~~disclosure.~~party ~~In designing and evaluating the~~or ~~disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance~~ of ~~achieving~~which ~~the desired~~certain ~~control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship~~ of ~~possible~~ ~~controls~~our ~~and~~properties ~~procedures~~are subject.

~~As of December 31, 2003, the end of the~~ ~~fiscal year covered by this report, the Company carried out an~~ Environmental ~~evaluation, under the supervision and with the participation of~~ Matters the Company’s management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

~~(b) Changes~~ We infollow ~~internal~~the ~~control~~policy ~~over~~of monitoring our properties for the ~~financial~~ presence ~~reporting.~~of ~~There~~hazardous ~~have~~or ~~been~~toxic nosubstances. ~~significant~~While ~~changes~~there can be no in assurance ~~the~~that ~~Company’s~~a ~~internal~~material ~~control~~environmental ~~over~~liability ~~financial~~does ~~reporting~~not exist ~~that~~ at ~~occurred~~our ~~subsequent~~properties, towe ~~the~~are ~~date~~not currently aware of ~~their~~any environmental ~~evaluation~~liability with respect to our properties that would have ~~materially~~a ~~affected~~material oreffect on our financial condition, results of operations and cash flows. Further, we are ~~reasonably~~not ~~likely~~aware of any environmental liability or any unasserted claim or assessment with respect to ~~materially~~an environmental liability that we believe would ~~affect~~ require ~~the~~additional ~~Company’s~~disclosure ~~internal~~or ~~control~~the ~~over~~recording ~~financial~~of a loss ~~reporting~~ contingency.

~~PART III~~ Other

~~Item~~ Our ~~10.~~other ~~Directors~~commitments and ~~Executive~~contingencies ~~Officers~~include the usual obligations of real estate owners and operators in the ~~Registrant~~normal course of business. In our opinion, these matters are not expected to have a material adverse impact on our consolidated financial position and results of operations.

The following table and biographical descriptions set forth information with respect to the Company’s officers and Directors.

Name	Age		Position	Term of Office
Anthony W. Thompson		57	Chairman of the Board of Directors, Chief Executive Officer and President		Since 1999
D. Fleet Wallace		36	Director		Since 2002
W. Brand Inlow		50	Director		Since 2002
Diana M. Laing		49	Chief Financial Officer		Since 2004
Jack R. Maurer		60	Secretary and Treasurer		Since 1999

There are no family relationships between any Directors, executive officers or between any Director and executive officer.

Anthony W. (“Tony”) Thompson has served as Chairman of the Company’s Board of Directors, Chief Executive Officer, President and a Director of the Company since December 1999. Mr. Thompson has also been Chief Executive Officer, President and a Director of G REIT, Inc., an affiliate, since December 2001. In addition, he is a co-founder of the Advisor, Triple Net Properties, LLC, and has been

~~its President since inception in April of 1998.~~ ~~He is also President and 100% owner of Triple Net Properties~~ SIGNATURE Realty, Inc., an affiliated real estate brokerage and management company that will provide certain real estate brokerage and management services to the Company. Prior to April of 1998, Mr. Thompson was co-founder, co-owner, director and officer of a number of real estate investment entities trading under the name The TMP Companies, including the TMP Group, Inc., a full-service real estate investment firm founded in 1978. Mr. Thompson has been the President and 100% owner of our dealer manager, NNN Capital Corp., since 1986 and is a registered securities principal with the NASD. He is a 1969 graduate of Sterling College with a BS in Economics. He is a member of the Sterling College Board of Trustees and various other charitable and civic organizations.

~~D. Fleet~~ Pursuant ~~Wallace has~~to ~~served~~the asrequirements ~~a Director~~ of the ~~Company~~ ~~since~~Section 13 ~~May~~or ~~2002.~~15(d) ~~He is a principal and co-founder~~ of ~~Greystone~~ the ~~Fund,~~Securities ~~L.P.~~Exchange ~~and~~Act ~~Greystone~~of ~~Capital Management~~1934, LLC, Greystone Fund’s general partner. Greystone Fund, L.P. is a professionally managed opportunity fund formed in September 2001 that invests primarily in promising venture capital opportunities and distressed assets in the ~~form~~registrant ofhas ~~real estate,~~duly ~~notes~~ caused ~~and~~this ~~accounts~~report ~~receivable, inventory and other assets. Prior~~ to ~~founding~~be ~~Greystone~~signed Fund and Greystone Capital Management, from April 1998 to August 2001, Mr. Wallace served as corporate counsel and Assistant Secretary of United Dominion Realty Trust, Inc., a publicly-traded real estate investment trust. At United Dominion, he managed general corporate matters for over 150 affiliated entities, negotiated and executed numerous real estate acquisitions and dispositions, and provided legal support on ~~over~~its ~~$1 billion~~behalf inby ~~financing transactions. From September 1994 to April 1998, Mr. Wallace was in~~ the ~~private practice of law with the~~ ~~firm of McGuire Woods in Richmond~~ undersigned, ~~Virginia.~~thereunto ~~Mr. Wallace also~~duly ~~serves as a Director of G REIT, Inc~~authorized.~~, an affiliate.~~

W. Brand Inlow has served as a Director of the Company since May 2002. Mr. Inlow currently provides professional consulting services to the multifamily industry on matters related to acquisitions, dispositions, asset management and property management operations. Mr. Inlow also is President of Jessie’s Wish, Inc., a Virginia non-profit corporation dedicated to awareness, education and financial assistance for patients and families dealing with eating disorders. Mr. Inlow served as President of Summit Realty Group, Inc. in Richmond, Virginia, from September 2001 through October 2003. Prior to joining Summit Realty, from November 1999 to September 2001 he was Vice President of Acquisitions for EEA Realty, LLC in Alexandria, Virginia where he was responsible for acquisition, disposition, and financing of company assets, which were primarily garden apartment properties. Prior to joining EEA Realty, from November 1991 to November 1999, Mr. Inlow worked for United Dominion Realty Trust, Inc. a publicly-traded real estate investment trust, as Assistant Vice President and Senior Acquisition Analyst, where he was responsible for the acquisition of garden apartment communities. Mr. Wallace also serves as a Director of G REIT, Inc., an affiliate.


		T REIT LIQUIDATING TRUST (Registrant)

March 18, 2009		By: /s/ W. Brand Inlow
Date		W. Brand Inlow Trustee

~~Diana~~ Pursuant M.to ~~Laing has served as~~ the ~~Company’s~~requirements ~~Chief Financial Officer since January 2004 and is responsible for all areas~~ of ~~finance, including~~the ~~accounting~~Securities ~~and~~Exchange ~~financial~~Act ~~reporting, as well as a liaison for institutional investors, lenders and investment banks. Ms. Laing served as a Principal and Chief Financial Officer~~ of ~~New Pacific Realty Corporation, a private real estate~~ ~~investment company from December 2001 to December 2003 and as Executive Vice President and Chief Financial Officer of Firstsource Corp.~~ 1934, athis ~~private~~report ~~technology~~has ~~company,~~been ~~from~~signed ~~July~~below ~~2000 to~~by ~~May~~the ~~2001.~~following ~~From August 1996 to July 2000, she was the~~persons ~~Executive~~ on ~~Vice~~behalf ~~President and Chief Financial Officer~~ of ~~Arden Realty, Inc., a NYSE publicly traded real estate investment trust and~~ the ~~largest~~registrant ~~owner~~ and ~~operator of commercial office properties~~ in the ~~Southern~~capacities ~~California region. Ms. Laing received a BS in accounting from Oklahoma State University~~ and is aon ~~Texas Certified Public Accountant. Ms. Laing currently serves as~~ the ~~Chairman of the Audit Committee of the Board of~~ ~~Directors~~ dates ~~of The Macerich Company, a publicly traded real estate investment trust which owns and operates regional malls~~indicated. In ~~addition, Ms. Laing is the Chief Financial Officer of our advisor and of G REIT, Inc., an affiliate. Ms. Laing has resigned her position as Chief Financial Officer effective April 22, 2004.~~

~~Jack~~By R/s/ W. ~~Maurer~~Brand ~~has served~~Inlow ~~as Secretary and Treasurer of the Company since December 1999~~W. HeBrand ~~has~~Inlow ~~served~~Trustee asDate ~~Chief~~March ~~Financial Officer of the Advisor from April 1998 to December 2001~~18, ~~when he became Financial Principal of NNN Capital Corp., our dealer manager and has served as Executive Vice President~~ 2009

of G REIT, Inc., an affiliate, since December 2001. Mr. Maurer has over 29 years of real estate financial management experience, including Chief Financial Officer and Controller positions in residential and commercial development and the banking industry. From 1986 to April 1998, he was a General Partner and CEO of Wescon Properties, where he was involved in finance, accounting and forecasting. His previous experience also includes the national accounting firm of Kenneth Leventhal & Company. Mr. Maurer received a BS from California University at Northridge in 1973 and is a Registered Operations and Financial Principal with the NASD.

Committees of Our Board of Directors

Acquisition Committee

Each of the Company’s acquisitions must be approved by the Acquisition Committee, a majority of whom are independent Directors, or a majority of the Board of Directors, including a majority of the independent Directors, as being fair and reasonable to the Company and consistent with our investment objectives. Currently the Acquisition Committee is comprised of all members of the Board of Directors. The Board of Directors may establish additional acquisition committees from time to time based on property type or other relevant factors. The Advisor will recommend suitable properties for consideration by the appropriate acquisition committee or the Board of Directors from time to time. If the members of the Acquisition Committee unanimously approve a given acquisition, then the Advisor will be directed to acquire the property on our behalf, if such acquisition can be completed on terms approved by the Committee. In the event we appoint an Acquisition Committee in the future, and if the Acquisition Committee does not approve a proposed acquisition, then the property may be presented to our full Board of Directors for consideration, who, by majority vote, may elect to acquire or reject the property. Properties may be acquired from the Advisor or its affiliates or our officers and Directors, provided that any interested or affiliated Directors shall not vote on such an acquisition.

Audit Committee

The Company’s Audit Committee is comprised of the two independent Directors, Messrs. Inlow and Wallace. The Board of Directors has determined that Mr. Inlow qualifies as an “audit committee financial expert” under the rules of the Securities and Exchange Commission. The Audit Committee:

• makes recommendations to the Board of Directors concerning the engagement of independent public accountants; • reviews the plans and results of the audit engagement with the independent public accountants; • approves professional services provided by, and the independence of, the independent public accountants; • considers the range of audit and non-audit fees; and • consults with the independent public accountants regarding the adequacy of our internal accounting controls.

Executive Compensation Committee

The Board of Directors has established an Executive Compensation Committee consisting of up to three Directors, including at least two independent Directors, to establish compensation policies and programs for our Directors and executive officers. The members of our Executive Compensation Committee are Messrs. Thompson, Wallace and Inlow. At present, our Executive Compensation Committee serves only to determine the stock option grants under our two stock option plans. However, at a later date, the Executive Compensation Committee may exercise all powers of our Board of Directors in connection with establishing and implementing compensation matters, including incentive compensation and benefit plans, except for those which require actions by all of the Directors under our articles of incorporation, bylaws or applicable law. Stock-based compensation plans will be administered by the Board

of Directors if the members of the Executive Compensation Committee do not qualify as “non-employee directors” within the meaning of the Exchange Act.

Director Compensation

We pay each independent Director a fee of $1,000 for attending, in person or by telephone, each meeting of the Board or Committee thereof; however, such compensation, including fees for attending meetings, may not exceed $12,000 annually. The independent and outside Directors also qualify for the independent director stock option plan.

Independent Director Stock Option Plan

In February 2000 the Company adopted the Independent Director Stock Option Plan (the “Director Plan”). Only outside and independent Directors are eligible to participate in the Director Plan. We have authorized and reserved a total of 100,000 shares of common stock for issuance under the Director Plan.

The Director Plan provides for the grant of initial and subsequent options. Initial options are non-qualified stock options to purchase 5,000 shares of common stock at the applicable option exercise price described below granted to each independent Director and each outside Director as of the date such individual becomes an independent or outside Director. Subsequent options to purchase 5,000 shares of common stock at the applicable option exercise price may be granted on the date of each annual shareholders’ meeting to each independent and outside Director so long as the individual is still in office. In 2003, the Company granted options to purchase 5,000 shares at $9.05 per share to each of the two independent Directors. As of December 31, 2003, the Company has granted options to purchase 30,000 shares in accordance with the Director Plan. The Director Plan was approved at the annual shareholder meeting on June 28, 2003.

Officer and Employee Stock Option Plan

In February 2000 we adopted the Officer and Employee Stock Option Plan (the “Officer Plan”). All of our officers and employees are eligible to participate in the Officer Plan.

The Company has authorized and reserved a total of 700,000 shares of common stock for issuance under the Officer Plan. The Board of Directors, acting on the recommendation of the Compensation Committee, has discretion to grant options to officers and employees effective as of each annual meeting of our shareholders. No options were granted in 2003. As of December 31, 2003, the Company has granted options to purchase 135,000 shares to officers of the Company. The Officer Plan was approved at the annual shareholder meeting on June 28, 2003.

Item 11. Executive Compensation

Compensation of Executive Officers

The Company has no employees and the Company’s executive officers are all employees of the Advisor and/or its affiliates. The executive officers are compensated by the Advisor and/or its affiliates and will not receive any compensation from the Company for their services.

Option/ SAR Grants in Last Fiscal Year

No option grants were made to officers and directors in the last fiscal year ended December 31, 2003.

Aggregated Option/ SAR Exercises and Fiscal Year-End Option/ SAR Value Table

Value of Unexercised

Number of Securities

In-the-Money

Value

Underlying Unexercised

Options /SARs at

Acquired on

Realized

Options/SARs at FY-End

FY-End ($)

Name

Exercise($)

($)

Exercisable/Unexercisable

Anthony Thompson

-0-

0/135,000

0/$224,454

Compensation Committee Interlocks and Insider Participation

During 2003, the following Directors served on the Compensation Committee: Messrs. Thompson, Wallace and Inlow. Mr. Thompson also served as Chief Executive Officer and President.

Board Compensation Committee Report on Executive Compensation

The Compensation Committee may recommend awards of stock options to officers and other employees under the Officer Plan.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table shows, as of March 30, 2004, the number and percentage of shares of our common stock owned by (1) any person who is known by the Company to be the beneficial owner of more than 5% of the outstanding shares of the Company’s common stock, (2) the Chief Executive Officer and each of the Company’s four most highly compensated executive officers if such officer’s salary and bonus for 2003 exceeded $100,000, (3) each Director and (4) all Directors and executive officers as a group.

	Number of
	Shares
	Beneficially		Percent of
Name of Beneficial Owner	Owned(1)		Class
Anthony W. Thompson(2)		112,203		2.4%
D. Fleet Wallace		552		*
W. Brand Inlow		552		*
All Directors and Executive Officers as a group		113,307		2.4%

* Represents less than 1% of the Company’s outstanding common stock.

(1)	Beneficial ownership includes outstanding shares and shares that any person has the right to acquire within 60 days after the date of this table. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them.
(2)	Includes 103 Shares owned by AWT LP, a Limited partnership controlled by Mr. Thompson and 22,100 shares owned by Triple Net Properties, LLC a limited liability company controlled by Mr. Thompson.

Item 13. Certain Relationships and Related Transactions

The Advisory Agreement between the Company and the Advisor, as amended, was renewed by the Board of Directors on June 28, 2003 for an additional one-year term effective February 22, 2003. The Company compensates the Advisor for its services through a series of fees pursuant to the Advisory Agreement. No amounts are currently due the Advisor under this agreement. The Company paid the

Advisor $1,000, $620,000 and $153,000 for services provided during the years ended December 31, 2003, 2002 and 2001, respectively.

The Advisor bears the expenses incurred in connection with supervising, monitoring and inspecting real property or other assets owned by the Company (excluding proposed acquisitions) or otherwise relating to its duties under the Advisory Agreement. Such expenses include employing its personnel, rent, telephone, equipment, and other administrative expenses. The Company reimburses the Advisor for certain expenses incurred, including those related to proposed acquisitions and travel expenses. However, the Company will not reimburse the Advisor for any operating expenses that, in any four consecutive fiscal quarters, exceed the greater of 2% of Average Invested Assets (as defined) or 25% of net income for such year. If the Advisor receives an incentive distribution, net income (for purposes of calculating operating expenses) excludes any gain from the sale of assets. Any amount exceeding the greater of 2% of Average Invested Assets or 25% of net income paid to the Advisor during a fiscal quarter will be repaid to the Company within 60 days after the end of the fiscal year. The Company bears its own expenses for functions not required to be performed by the Advisor under the Advisory Agreement, which generally include capital raising and financing activities, corporate governance matters, and other activities not directly related to real estate properties and other assets.

The Advisor may receive an annual Asset Management Fee of up to 1.5% of the Average Invested Assets. This fee will be paid or accrue quarterly, but will not be paid until the Shareholders have received distributions equal to a cumulative non-compounded rate of 8.25% per annum on their investment in the Company. If the fee is not paid in any quarter, it will accrue and be paid once the Shareholders have received a cumulative 8.25% return. The Advisor is also entitled to receive property management fees for management and leasing services. Such fees may not exceed 5% of the gross revenue earned by the Company on properties managed.

Property Management Fees

The Company pays Realty property management fees equal to 5% of the gross income of each property managed by Realty. All of the Company’s properties are managed by Realty. The Company paid Realty $195,300, $225,000 and $106,000 for services provided during the years ended December 31, 2003, 2002 and 2001, respectively.

Incentive Distributions

The Advisor owns 100 non-voting incentive performance units in T REIT, L.P., the Company’s Operating Partnership and is entitled to incentive distributions of operating cash flow after the Company’s shareholders have received an 8.00% annual return on their invested capital. No incentive distributions were made to the Advisor

Investment in Unconsolidated Real Estate

Item 14. Principal Accounting Fees and Services

Squar Milner Reehl & Williamson, LLP served as the Company’s independent auditors from our formation in 2001 until they were dismissed by us on August 22, 2002. Grant Thornton LLP served as our independent auditors from December 3, 2002 until they were dismissed by us on February 8, 2004. Effective February 8, 2004, the Board of Directors, based on the approval and recommendation of the Audit Committee, has selected Deloitte & Touche, LLP as our independent auditors. Deloitte & Touche, LLP will audit our financial statements for the year ended December 31, 2003.

The following table lists the fees for services rendered by our independent auditors for 2003 and 2002:

Services	2003		2002
Audit Fees(1)	$	226,700	$	222,305
Audit-Related Fees(2)		—		—
Tax Fees(3)		10,000		20,136
All Other Fees(4)		—		—
Total	$	236,700	$	242,441

(1)	Audit fees billed in 2003 and 2002 consisted of audit of the Company’s annual financial statements, acquisition audits, reviews of the Company’s quarterly financial statements, and statutory and regulatory audits, consents and other services related to filings with the Securities and Exchange Commission.
(2)	Audit-related fees billed in 2003 and 2002 consisted of financial accounting and reporting consultations.
(3)	Tax services billed in 2003 and 2002 consisted of tax compliance and tax planning and advice.
(4)	There were no fees billed for other services in 2003 or 2002.

The Audit Committee has determined that the provision by Grant Thornton LLP of non-audit services for us in 2003 is compatible with Grant Thornton’s maintaining its independence.

The Audit Committee has approved Deloitte & Touche, LLP and Grant Thornton LLP to perform the following non-audit services for us during 2004:

• Consultations and consents related to SEC filings and registration statements

• Consultation of accounting matters

• Tax planning and tax compliance for the U.S. income and other taxes

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) List of documents filed:

(1) The consolidated financial statements of the Company included in this report are set forth in Item 8. (2) Financial Statement Schedules:

The following financial statement schedule for the year ended December 31, 2002 is submitted herewith:

Page Real Estate Operating Properties and Accumulated Depreciation (Schedule III) 47

All schedules other than the one listed above have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.

(3) Exhibits. The following exhibits are filed as part of this document:

Item
No.			Description
	1	.1	Dealer Manager Agreement between T REIT, Inc. and NNN Capital Corp. (included as Exhibit 1.1 to Amendment No. 2 the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	1	.2	Form of Participating Broker-Dealer Agreement (included as Exhibit 1.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.1	Articles of Incorporation of the Company (included as Exhibit 3.1 to the Company’s Registration Statement on Form S-11 filed on April 28, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.2	Form of Amended and Restated Articles of Incorporation of the Company (included as Exhibit 3.2 to Amendment No. 3 to the Company’s Registration Statement on Form S-11 filed on November 22, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.3	Form of By-Laws of the Company (included as Exhibit 3.3 to the Company’s Registration Statement on Form S-11 filed on April 28, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.4	Form of Amended By-Laws of the Company (included as Exhibit 3.4 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on July 17, 2001 (File No. 333-77229) and incorporated herein by reference.)
	4	.1	Form of Share Certificate (included as Exhibit 4.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 filed on February 3, 2000 (File No. 333-77229) and incorporated herein by this reference)
	10	.1	Form of Agreement of Limited Partnership of T REIT, L.P. (included as Exhibit 10.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	10	.2	Dividend Reinvestment Program (included as Exhibit C to the Company’s Prospectus filed as part of the Company’s Registration Statement on Form S-11 on April 28, 1999 (File No. 333-77229) and incorporated herein by this reference)
	10	.3	Independent Director Stock Option Plan (included as Exhibit 10.3 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 filed on February 3, 2000 (File No. 333-77229) and incorporated herein by this reference)
	10	.4	Employee and Officer Stock Option Plan (included as Exhibit 10.4 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 filed on February 3, 2000 (File No. 333-77229) and incorporated herein by this reference)
	10	.5	Advisory Agreement between the Company and the Advisor (included as Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	10	.6	Purchase and Sale Agreement, dated June 5, 2000, by and between Robert C. Parker and Carolyn De La Fuente Parker and Triple Net Properties, LLC (included as Exhibit 10.1 to Form 10-Q filed by the Registrant with the SEC on November 14, 2000 and incorporated herein by this reference)
	10	.7	Purchase and Sale Agreement, dated October 25, 2000, by and between CMF Capital Company LLC and TREIT, L.P. (included as Exhibit 10.1 to Form 8-K filed by the Registrant with the SEC on November 13, 2000 and incorporated herein by this reference)
	10	.8	Purchase and Sale Agreement, dated October 26, 2000, by and between CMF Capital Company LLC and TREIT L.P. (included as exhibit 10.1 to Form 8-K filed by the Registrant with the SEC on December 20, 2000 and incorporated herein by this reference)
	10	.9	Purchase and Sale Agreement, dated August 24, 2000, as amended, by and between Drummer Boy Holdings, LLC and Triple Net Properties, LLC (included as Exhibit 10.9 to Post Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on July 17, 2001 (File No. 333-772229) and incorporated herein by this reference)

Item
No.			Description
	10	.10	First Amendment to Advisory Agreement between the Company and the Advisor (included as Exhibit 10.10 to Post-Effective Amendment No. 1 to the Company’s Registration Statement filed on Form S-11 on July 17, 2001 (File No. 333-772229) and incorporated herein by this reference)
	10	.11	Purchase and Sale Agreement, dated April 16, 2001, by and between Kilroy Realty, L.P. and Triple Net Properties LLC (included as Exhibit 10.11 to Post Effective Amendment No. 3 to the Company’s Registration Statement no Form S-11 filed on October 19, 2001 (File No. 333-772229) and incorporated herein by reference)
	10	.12	Purchase and Sale Agreement dated October 30, 2001, by and between Triple Net Properties, LLC and City Center West Development, LLC (included as Exhibit 10.1 to Form 8-K/ A filed by the Company on May 14, 2002 and incorporated herein by reference)
	10	.13	Purchase and Sale Agreement dated November [ ], 2001, by and between Triple Net Properties, LLC and United States Fidelity and Guaranty Company (included as Exhibit 10.1 to Form 8-K/ A filed by the Company on May 14, 2002 and incorporated herein by reference)
	10	.14	Amended and Restated Real Estate Purchase and Sale Agreement dated as of July 24, 2002 by and between Transwestern Heights, L.P. as seller and Triple Net Properties, LLC, as assigned to TREIT — University Heights, LP, a Texas limited partnership (included as Exhibit 10.14 to the Form 8-K filed by the Company on September 5, 2002 and incorporated herein by reference).
	10	.15	Purchase Agreement dated October 10, 2002 between Congress Center, LLC and Triple Net Properties, LLC as assigned to NNN Congress Center, LLC, GREIT — Congress Center, LLC, and WREIT — Congress Center, LLC (included as Exhibit 10.14 to the Form 8-K filed by the Company on January 24, 2003 and incorporated herein by reference).
	31	.1	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K:

The following reports on Form 8-K were filed during the last quarter of the period covered by this annual report.

Current Report on Form 8-K, dated September 23, 2003 and filed with the Commission on September, 2003, reporting under Item 5 the resignation of the Company’s Chief Financial Officer and the appointment of an interim Chief Financial Officer.

Current Report on Form 8-K, dated September 25, 2003 and filed with the Commission on October 9, 2003, reporting under Items 2 and 7 the disposition of the Pahrump Valley Junction Shopping Center property.

(d) None

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf on April 22, 2004 by the undersigned, thereunto duly authorized.

T-REIT, INC.

By: /s/ ANTHONY W. THOMPSON

Anthony W. Thompson Chief Executive Officer, President and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ ANTHONY W. THOMPSON Anthony W. Thompson	Chief Executive Officer, President and Director	April 22, 2004
/s/ DIANA M. LAING Diana M. Laing	Chief Financial and Accounting Officer	April 22, 2004
/s/ D. FLEET WALLACE D. Fleet Wallace	Director	April 22, 2004
/s/ W. BRAND INLOW W. Brand Inlow	Director	April 22, 2004

EXHIBIT INDEX

Item
No.			Description
	1	.1	Dealer Manager Agreement between T REIT, Inc. and NNN Capital Corp. (included as Exhibit 1.1 to Amendment No. 2 the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	1	.2	Form of Participating Broker-Dealer Agreement (included as Exhibit 1.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.1	Articles of Incorporation of the Company (included as Exhibit 3.1 to the Company’s Registration Statement on Form S-11 filed on April 28, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.2	Form of Amended and Restated Articles of Incorporation of the Company (included as Exhibit 3.2 to Amendment No. 3 to the Company’s Registration Statement on Form S-11 filed on November 22, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.3	Form of By-Laws of the Company (included as Exhibit 3.3 to the Company’s Registration Statement on Form S-11 filed on April 28, 1999 (File No. 333-77229) and incorporated herein by this reference)
	3	.4	Form of Amended By-Laws of the Company (included as Exhibit 3.4 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on July 17, 2001 (File No. 333-77229) and incorporated herein by reference.)
	4	.1	Form of Share Certificate (included as Exhibit 4.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 filed on February 3, 2000 (File No. 333-77229) and incorporated herein by this reference)
	10	.1	Form of Agreement of Limited Partnership of T REIT, L.P. (included as Exhibit 10.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	10	.2	Dividend Reinvestment Program (included as Exhibit C to the Company’s Prospectus filed as part of the Company’s Registration Statement on Form S-11 on April 28, 1999 (File No. 333-77229) and incorporated herein by this reference)
	10	.3	Independent Director Stock Option Plan (included as Exhibit 10.3 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 filed on February 3, 2000 (File No. 333-77229) and incorporated herein by this reference)
	10	.4	Employee and Officer Stock Option Plan (included as Exhibit 10.4 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 filed on February 3, 2000 (File No. 333-77229) and incorporated herein by this reference)
	10	.5	Advisory Agreement between the Company and the Advisor (included as Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by this reference)
	10	.6	Purchase and Sale Agreement, dated June 5, 2000, by and between Robert C. Parker and Carolyn De La Fuente Parker and Triple Net Properties, LLC (included as Exhibit 10.1 to Form 10-Q filed by the Registrant with the SEC on November 14, 2000 and incorporated herein by this reference)
	10	.7	Purchase and Sale Agreement, dated October 25, 2000, by and between CMF Capital Company LLC and TREIT, L.P. (included as Exhibit 10.1 to Form 8-K filed by the Registrant with the SEC on November 13, 2000 and incorporated herein by this reference)
	10	.8	Purchase and Sale Agreement, dated October 26, 2000, by and between CMF Capital Company LLC and TREIT L.P. (included as exhibit 10.1 to Form 8-K filed by the Registrant with the SEC on December 20, 2000 and incorporated herein by this reference)

Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index immediately precedes the exhibits.

59 The following exhibits are included, or incorporated by reference, in the Annual Report on Form 10-K for the fiscal year 2008 (and are numbered in accordance with Item 601 of Regulation S-K).


Item
No.			Description

	2	.1	T REIT, Inc. Plan of Liquidation and Dissolution, as approved by shareholders on July 27, 2005 and as currently in effect (included as Exhibit A to T REIT’s Definitive Proxy Statement for the Annual Meeting of Shareholders filed on June 15, 2005 and incorporated herein by reference)
	10	.1	Advisory Agreement between T REIT, Inc. and our advisor (included as Exhibit 10.5 to Amendment No. 2 to T REIT’s Registration Statement on Form S-11 filed on October 13, 1999 (File No. 333-77229) and incorporated herein by reference)
	10	.2	Liquidating Trust Agreement, dated as of July 16, 2007, by and between T REIT, Inc. and W. Brand Inlow, Trustee (included as Exhibit 10.1 to our Current Report on Form 8-K filed July 20, 2007 and incorporated herein by reference)
	21	.1*	Subsidiaries of T REIT Liquidating Trust
	31	.1*	Certification of Trustee, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1*	Certification of Trustee, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002

Item
No.			Description
	10	.9	Purchase and Sale Agreement, dated August 24, 2000, as amended, by and between Drummer Boy Holdings, LLC and Triple Net Properties, LLC (included as Exhibit 10.9 to Post Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 filed on July 17, 2001 (File No. 333-772229) and incorporated herein by this reference)
	10	.10	First Amendment to Advisory Agreement between the Company and the Advisor (included as Exhibit 10.10 to Post-Effective Amendment No. 1 to the Company’s Registration Statement filed on Form S-11 on July 17, 2001 (File No. 333-772229) and incorporated herein by this reference)
	10	.11	Purchase and Sale Agreement, dated April 16, 2001, by and between Kilroy Realty, L.P. and Triple Net Properties LLC (included as Exhibit 10.11 to Post Effective Amendment No. 3 to the Company’s Registration Statement no Form S-11 filed on October 19, 2001 (File No. 333-772229) and incorporated herein by reference)
	10	.12	Purchase and Sale Agreement dated October 30, 2001, by and between Triple Net Properties, LLC and City Center West Development, LLC (included as Exhibit 10.1 to Form 8-K/A filed by the Company on May 14, 2002 and incorporated herein by reference)
	10	.13	Purchase and Sale Agreement dated November [ ], 2001, by and between Triple Net Properties, LLC and United States Fidelity and Guaranty Company (included as Exhibit 10.1 to Form 8-K/A filed by the Company on May 14, 2002 and incorporated herein by reference)
	10	.14	Amended and Restated Real Estate Purchase and Sale Agreement dated as of July 24, 2002 by and between Transwestern Heights, L.P. as seller and Triple Net Properties, LLC, as assigned to TREIT — University Heights, LP, a Texas limited partnership (included as Exhibit 10.14 to the Form 8-K filed by the Company on September 5, 2002 and incorporated herein by reference).
	10	.15	Purchase Agreement dated October 10, 2002 between Congress Center, LLC and Triple Net Properties, LLC as assigned to NNN Congress Center, LLC, GREIT — Congress Center, LLC, and WREIT — Congress Center, LLC (included as Exhibit 10.14 to the Form 8-K filed by the Company on January 24, 2003 and incorporated herein by reference).
	31	.1	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith.

60 51

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Filing Compare · T REIT LIQUIDATING TRUST