UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One) ~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934~~

~~For~~x QUARTERLY REPORT ~~the~~PURSUANT ~~quarterly~~TO ~~period~~SECTION ~~ended~~13 ~~September~~OR ~~30,~~15(d) ~~2013~~OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ~~SECURITIESEXCHANGE~~SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 000-53203

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

Delaware	20-5685431	~~20-5685431~~
(State or Other Jurisdiction of Incorporation orOrganization)		(I.R.S. Employer Identification No.)
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
8 Greenway Plaza, Suite 1000Houston, Texas(Address of Principal Executive Offices)		77046(Zip Code)
8 Greenway Plaza, Suite 1000
713-850-1400(Registrant’s Telephone Number, Including Area Code)
Houston, Texas	77046
Not applicable(Former Name, Former Address and Formal Fiscal Year, if Changed Since Last Report)
(Address of Principal Executive Offices)	(Zip Code)


713-850-1400
(Registrant’s Telephone Number, Including Area Code)

Not applicable
(Former Name, Former Address and Formal Fiscal Year, if Changed Since Last Report)

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

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

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


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

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

TABLE OF CONTENTS

				Page	~~Page~~
Definitions				ii	ii
Part I – Financial Information
	Item 1.	Financial Statements.	~~Financial Statements.~~	1	1
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~	13	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	~~Quantitative and Qualitative Disclosures About Market Risk.~~	17	20
	Item 4.	Controls and Procedures.	~~Controls and Procedures.~~	17	20
Part II – Other Information
	Item 1.	Legal Proceedings.	~~Legal Proceedings.~~	18	20
	Item 1A.	Risk Factors.	~~Risk Factors.~~	18	20
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	~~Unregistered Sales of Equity Securities and Use of Proceeds.~~	18	21
	Item 3.	Defaults Upon Senior Securities.	~~Defaults Upon Senior Securities.~~	18	21
	Item 4.	Mine Safety Disclosures.	~~Mine Safety Disclosures.~~	18	21
	Item 5.	Other Information.	~~Other Information.~~	18	21
	Item 6.	Exhibits.	~~Exhibits.~~	18	21
Signatures				19	22
Exhibit Index				20	23

Table of Contents

DEFINITIONS

As used in this Quarterly Report, the following abbreviations and terms have the meanings as listed below. Additionally, the terms “we,” “our,” “MIG IV,” the “Partnership” and “us” refer collectively to AmREIT Monthly Income & Growth Fund IV, L.P. and its subsidiaries, including joint ventures, unless the context clearly indicates otherwise.

ABBREVIATION		DEFINITION
AmREIT		AmREIT, Inc., a Maryland corporation and parent of our General Partner.
Annual Report		Annual report on Form 10-K filed with the SEC for the year ended December 31, 2013.
ARIC		AmREIT Realty Investment Corporation and its consolidated subsidiaries, a wholly-owned taxable REIT subsidiary of AmREIT.
CEO		Chief Executive Officer.
CFO		Chief Financial Officer.
Exchange Act		Securities Exchange Act of 1934, as amended.
FASB		Financial Accounting Standards Board.
GAAP		U.S. generally accepted accounting principles.
General Partner		AmREIT Monthly Income & Growth IV Corporation, a wholly-owned subsidiary of AmREIT.
GLA		Gross leasable area.
LIBOR		London interbank offered rate.
Limited Partners		Owners / holders of our Units.
MIG III		AmREIT Monthly Income & Growth Fund III, Ltd., an affiliated entity.
NYSE		New York Stock Exchange.
Offering		Both the issuance and sale of our initial 40 Units pursuant to the terms of a private placement memorandum dated November 15, 2006, and the subsequent sale of Units through March 31, 2008 (a total of 1,991 Units).
Partners		Collectively our General Partner and Limited Partners.
REIT		Real Estate Investment Trust.
SEC		Securities and Exchange Commission.
Securities Act		Securities Act of 1933, as amended.
Units		Limited partnership units sold in our Offering.
Quarterly Report		Quarterly Report on Form 10-Q filed with the SEC for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014.

Table of Contents

PART I – FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS.

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

	September 30, 2013			December 31, 2012
	June 30, 2014			December 31, 2013
	~~(unaudited)~~	(unaudited)
ASSETS
Real estate investments at cost:
Land	$	7,~~561~~458		$	127,~~613~~505
Buildings		12,~~924~~925			1412,~~483~~925
Tenant improvements		~~345~~330			~~4,678~~360
		20,830			31,774
		20,713			20,790
Less accumulated depreciation and amortization		(2,~~694~~981	)		(2,~~408~~814	)
		18,136			29,366
		17,732			17,976
Investment in non-consolidated entities		78,~~166~~240			98,~~222~~211
Acquired lease intangibles, net		24—			3521
Net real estate investments		25,~~326~~972			3826,~~623~~208
Cash and cash equivalents		~~5,495~~271			~~129~~403
Tenant and accounts receivables, net		9366			~~295~~83
Accounts receivable - related party		~~304~~19			75419
Notes receivable, net		83			—9
Deferred costs, net		5361			~~576~~73
Other assets		~~291~~274			~~138~~160
TOTAL ASSETS	$	3126,~~570~~666		$	3927,~~836~~355
LIABILITIES AND CAPITAL
Liabilities:
Notes payable	$	5,~~820~~745		$	125,~~140~~795
Notes payable - related party		21,~~907~~366			31,~~658~~091
Accounts payable and other liabilities		~~447~~307			~~459~~301
Accounts payable - related party		~~301~~338			~~405~~241
Acquired below-market lease intangibles, net		4—			64
Security deposits		4342			4143
TOTAL LIABILITIES		97,~~522~~798			167,~~709~~475
Capital:
Partners’ capital:
General partner		—			—
Limited partners, 1,988 Units outstanding at
September 30, 2013 and December 31, 2012		15,987			16,333
June 30, 2014 and December 31, 2013		14,849			15,829
TOTAL PARTNERS’ CAPITAL		1514,~~987~~849			1615,~~333~~829
Non-controlling interests		64,~~061~~019			64,~~794~~051
TOTAL CAPITAL		2218,~~048~~868			2319,~~127~~880
TOTAL LIABILITIES AND CAPITAL	$	3126,~~570~~666		$	3927,~~836~~355

See Notes to Consolidated Financial Statements.

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

	Three months ended September 30,						Nine months ended September 30,
	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
Revenues:
Rental income from operating leases	$	~~265~~222		$	~~255~~244		$	~~761~~466		$	~~817~~496
Total revenues		~~265~~222			~~255~~244			~~761~~466			~~817~~496
Expenses:
General and administrative		3032			2715			6740			6837
General and administrative - related party		7572			7869			~~208~~142			~~213~~133
Asset management fees - related party		3864			3839			~~115~~128			~~115~~77
Property expense		~~158~~78			~~139~~76			~~349~~260			~~389~~191
Property management fees - related party		1210			12			3521			3423
Legal and professional		4252			4459			~~158~~123			~~198~~116
Depreciation and amortization		~~147~~119			~~128~~130			~~406~~287			~~387~~259
Total operating expenses		~~502~~427			~~466~~400			1,~~338~~001			~~1,404~~836
Operating loss		(~~237~~205	)		(~~211~~156	)		(~~577~~535	)		(~~587~~340	)
Other income (expense):
Interest and other income		11			—			12			—
Interest expense		(90	)		(116	)		(179	)		(228	)
Interest expense		(115	)		(127	)		(344	)		(358	)
Income (loss) from non-consolidated entities		(83	)		(115	)		(235	)		(315	)
Income (loss) from non-consolidated entities		1,565			(324	)		1,250			(876	)
Total other income (expense)		(173	)		(231	)		(414	)		(543	)
Margin tax benefit (expense)		6			—			6			—
Income (loss) from continuing operations		(378	)		(387	)		(949	)		(883	)
Total other income (expense)		1,467			(451	)		924			(1,234	)
Income (loss) from discontinued operations:
Income (loss) from continuing operations		1,230			(662	)		347			(1,821	)
Income (loss) from real estate operations		(17	)		164			(27	)		189
Loss from discontinued operations:
Income (loss) from discontinued operations		(17	)		164			(27	)		189
Income (loss) from real estate operations		170			(8	)		359			(25	)
Net income (loss), including non-controlling interests		(395	)		(223	)		(976	)		(694	)
Loss on sale of real estate		(576	)		—			(576	)		—
Net (income) loss attributable to non-controlling interests		(4	)		(27	)		(4	)		25
Loss from discontinued operations		(406	)		(8	)		(217	)		(25	)
Net income (loss) attributable to partners	$	(399	)	$	(250	)	$	(980	)	$	(669	)
Net income (loss), including non-controlling interests		824			(670	)		130			(1,846	)
Net (income) loss attributable to non-controlling interests		(501	)		42			(476	)		131
Net income (loss) attributable to partners	$	323		$	(628	)	$	(346	)	$	(1,715	)
Weighted average Units outstanding		1,988			1,988			1,988			1,988
Net loss per Unit
Net income (loss) per Unit
Income (loss) from continuing operations	$	~~618~~(190.7114	)	$	(~~333~~194.0067	)	$	~~174~~(477.5536	)	$	(~~916~~444.0017	)
Loss from discontinued opertations	$	(204.23	)	$	(4.02	)	$	(109.15	)	$	(12.58	)
Income (loss) from discontinued operations	$	(8.55	)	$	82.49			(13.58	)		95.07
(Income) loss attributable to non-controlling interests	$	(~~252~~2.01	)	$	~~21.~~(13.58	)	$	(~~239~~2.4401	)	$	6512.9058
Net income (loss) attributable to partners	$	~~162~~(200.4770	)	$	(~~315~~125.9075	)	$	(~~174~~492.0495	)	$	(~~862~~336.6852	)

See Notes to Consolidated Financial Statements.

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AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CAPITAL For the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 (in thousands) (unaudited)

	Partners’ Capital
	General Partner		Limited Partners			Non-Controlling Interests			Total
Balance at December 31, 2012	$	—	$	16,333		$	6,794		$	23,127
Balance at December 31, 2013	$	—	$	15,829		$	4,051		$	19,880
Net income (loss) attributable to partners (1)		—		(~~346~~980	)		~~476~~4			~~130~~(976	)
Contributions from non-controlling interests		—		—			146			146
Distributions to non-controlling interests		—		—			(36	)		(36	)
Distributions to non-controlling interests		—		—			(1,355	)		(1,355	)
Balance at June 30, 2014	$	—	$	14,849		$	4,019		$	18,868
Balance at September 30, 2013	$	—	$	15,987		$	6,061		$	22,048

(1) The allocation of net income includes a curative allocation to increase the General Partner’s capital account by $310 for the period. The cumulative curative allocation since inception of the Partnership is $~~276~~287. The Partnership Agreement provides that no Partner shall be required to fund a deficit balance in their capital account.

See Notes to Consolidated Financial Statements.

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

	Nine months ended September 30,
	Six months ended June 30,
	2013			2012
	2014			2013
Cash flows from operating activities:
Net income (loss), including non-controlling interests	$	~~130~~(976	)	$	(~~1,846~~694	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Loss on sale of property		576			—
Bad debt expense		12			(23	)
Bad debt expense		16			30
Loss from non-consolidated entities		235			315
Loss (income) from non-consolidated entities		(1,250	)		876
Depreciation and amortization		291			361
Depreciation and amortization		508			400
Decrease (increase) in tenant and accounts receivable		5			(351	)
Decrease (increase) in tenant and accounts receivable		(342	)		92
(Increase) in accounts receivable - related party		—			(224	)
(Increase) decrease in accounts receivable - related party		(92	)		(85	)
(Increase) in other assets		(114	)		(143	)
(Increase) decrease in other assets		(153	)		(123	)
(Decrease) in accounts payable and other liabilities		(19	)		(5	)
Increase (decrease) in accounts payable and other liabilities		38			(309	)
Increase (decrease) in accounts payable - related party		298			162
Increase in accounts payable - related party		171			583
Increase (decrease) in security deposits		(1	)		7
Increase (decrease) in security deposits		2			(2	)
Net cash provided by (used in) operating activities		(269	)		(595	)
Net cash used in operating activities		(396	)		(384	)
Cash flows from investing activities:
Improvements to real estate		(~~558~~65	)		(~~3,785~~511	)
Payments received on notes receivable		146			—8
Investment in non-consolidated entities		(240	)		(938	)
Repayments from related party		474			—
Distributions from non-consolidated entities		3,573			94
Investment in non-consolidated entities		(364	)		(240	)
Net proceeds from sale of interest in an investment property		11,584			—
Distributions from non-consolidated entities		100			146
Net proceeds applied to land basis		~~108~~72			~~108~~72
Net cash provided by (used in) investing activities		~~14,481~~223			(~~4,521~~525	)
Cash flows from financing activities:
Proceeds from notes payable		~~460~~—			~~3,694~~460
Payments on notes payable		(~~6,780~~50	)		(6769	)
Proceeds from notes payable - related party		~~860~~—			~~892~~860
Payments on notes payable - related party		(2,050	)		—
Contributions from non-controlling interests		—			146
Contributions from non-controlling interests		146			97
Distributions to non-controlling interests		(36	)		—
Distributions to non-controlling interests		(1,355	)		—
Net cash provided by (used in) financing activities		(86	)		1,397
Net cash provided by (used) in financing activities		(8,719	)		4,616
Net increase (decrease) in cash and cash equivalents		(132	)		277
Net increase (decrease) in cash and cash equivalents		5,366			(289	)
Cash and cash equivalents, beginning of period		403			129
Cash and cash equivalents, beginning of period		129			422
Cash and cash equivalents, end of period	$	271		$	406
Cash and cash equivalents, end of period	$	5,495		$	133
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest	$	~~415~~162		$	~~251~~270
Taxes	$	610		$	6
Supplemental schedule of noncash investing and financing activities:
Capitalization of accrued property taxes into the basis of our land at Woodlake Pointe	$	192		$	144
Capitalization of accrued property taxes into the basis of our land at	$	(25	)	$	124
Reclassification from accounts payable - related party to notes payable - related party	$	439		$	580
Woodlake Pointe
Reclassification from accounts receivable to notes receivable	$	137		$	—
Reclassification from accounts payable - related party to notes payable -	$	275		$	273
Construction fees included in accounts payable	$	27		$	95
related party
Reclassification from accounts receivable to notes receivable	$	—		$	55
Construction fees included in accounts payable	$	—		$	21

See Notes to Consolidated Financial Statements.

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AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~September~~June 30, ~~2013~~2014 (unaudited)


1.	DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

General

We are a ~~Delaware~~Texas limited partnership formed on October 10, 2006, to acquire, ~~develop~~ develop and operate, directly or indirectly through joint venture arrangements, a a portfolio of commercial real estate consisting primarily of multi-tenant shopping centers and mixed-use developments. Our General Partner is a subsidiary of AmREIT, an SEC reporting, Maryland corporation ~~that~~whose iscommon ~~publicly~~stock ~~traded~~is listed on the NYSE and that has elected to be taxed as a REIT. As of ~~September~~June 30, ~~2013~~2014, our investments included a wholly-owned property ~~comprised~~comprising ~~of approximately~~ 36,306 square feet of GLA, aone property in which we own a controlling interest comprising ~~comprised of approximately~~ 82,120 square feet of GLA and three properties in which we own a non-controlling interest through joint ventures ~~comprised~~comprising ~~of approximately 938~~937,~~000~~678 square feet of GLA.

Our operating period ~~will~~ended ~~continue~~in ~~until~~ November 152013, ~~2013~~and ~~(our~~we ~~scheduled~~have entered into our liquidation ~~commencement~~period. ~~date); however~~However, ~~the~~an ~~operating~~orderly ~~period~~liquidation ~~may~~of beall ~~extended to~~of ~~November~~our ~~15,~~properties will ~~2015~~likely ~~with~~take ~~the~~years ~~consent~~for ofour ~~holders~~General ofPartner ~~the~~to ~~majority~~complete ofand ~~Units~~wind ~~held by~~up our operations. ~~Limited~~Because ~~Partners.~~we ~~Once~~have ~~the~~entered into our liquidation period ~~commences~~, we will not invest in any new real estate without approval of our limited partners. ~~An orderly~~Because liquidation ~~of all of our properties and wind-down of our operations will likely take years for our General Partner to complete. Because liquidation~~ was not imminent as of ~~September~~June 30, ~~2013~~ 2014, the financial statements are presented assuming we continue as a going concern.

Economic Conditions and Liquidity

~~Over~~As of ~~the~~June ~~past~~30, ~~several~~2014, ~~years~~we have $271,000 ~~our~~in cash on hand, and we continue to face liquidity challenges. Our results of operations and valuations of our real estate assets have been negatively impacted by overall economic conditions from the ~~recent, severe~~ recession. Most of our retail properties were purchased prior to 2008 when retail real estate market prices were much higher, and our property ~~valuations~~ valuations were negatively impacted by these market dynamics. The United States has experienced recent improvements in the general economy; however, ~~high~~it ~~levels of unemployment have persisted, and rental rates and valuations for retail space have not fully recovered~~is difficult to ~~pre-recession~~determine ~~levels~~if ~~and may not for a number of years. As a result, we have faced significant liquidity challenges over~~ the ~~last~~ ~~several~~improvements ~~years.~~experienced ~~However, we have been successful~~ in ~~meeting~~2013 ~~our~~will ~~historic cash shortfalls~~ continue through ~~(1)~~2014 ~~managing the timing of forecasted capital expenditures related to the lease-up of properties, (2) managing the timing of operating expense payments~~ and, tointo the extent possible, accelerating cash collections, (3) deferring the payment of fees owed to our General Partner and its affiliates, (4) selling certain of our properties and investments in non-consolidated entities (see Notes 3 and 4) and/or (5) obtaining funds through additional borrowings from AmREITfuture.

AsOur continuing ofshort-term ~~September~~liquidity ~~30,~~requirements ~~2013,~~consist weprimarily ~~have~~of ~~$5.5~~operating expenses ~~million~~and ~~in cash~~other onexpenditures ~~hand~~associated ~~and~~with our ~~liquidity~~properties, ~~has~~regular ~~improved~~debt service ~~due~~requirements toand ~~the~~capital ~~sale~~expenditures. ofWe ~~Woodlake~~anticipate ~~Square~~that ~~and~~ our ~~Woodlake~~primary long-term ~~Pointe~~liquidity ~~joint~~requirements ~~venture’s sale~~will ofinclude, abut ~~portion~~will ofnot ~~its~~be ~~Woodlake~~limited ~~Pointe~~to, operating ~~property.~~expenses, ~~During~~making ~~2013~~scheduled debt service payments, wefunding renovations, ~~have~~expansions, ~~repaid~~and ~~approximately~~other ~~$4.0~~significant ~~million~~capital ofexpenditures ~~our~~for ~~notes~~our ~~payable~~existing ~~–related~~portfolio ~~party~~of (properties including athose ~~payment~~of ~~made~~with ~~October~~our 1,joint ~~2013)~~ventures.

We ~~expect~~have tobeen ~~fund~~successful ~~approximately $1.5 million~~ in ~~capital~~meeting ~~expenditures over the next two years at~~ our ~~Casa~~historic ~~Linda~~cash ~~property~~shortfalls (athrough ~~50% joint venture between us and MIG III~~(1) ~~representing our 50% share of a lease-up strategy at this property. The $38.0 million~~ ~~mortgage~~managing on the ~~property~~timing ~~matures~~of inforecasted ~~January~~capital ~~2014.We~~expenditures ~~have~~related ~~engaged a mortgage broker~~ to ~~assist~~ usthe ~~with refinancing this loan and have recently selected a lender based upon preliminary terms for a non~~lease-~~recourse loan with an initial funding of $38.0~~up ~~million and a future funding~~ of ~~approximately~~properties, ~~$4.5~~(2) ~~million~~managing ~~for~~ the ~~potential acquisition~~timing of anoperating ~~adjacent~~expense ~~property.~~payments ~~The~~and, ~~proposed terms of~~ to the ~~loan~~extent ~~are~~possible, aaccelerating ~~term~~cash ~~of four years with a one-year extension~~collections, ~~interest~~(3) atdeferring the ~~3-Month LIBOR plus a spread~~ payment of ~~3.50% and~~fees ~~interest-only~~owed ~~payments~~to ~~for~~our ~~the~~General ~~first~~Partner ~~two~~and ~~years~~its ~~with~~affiliates, ~~monthly~~(4) ~~payments~~selling ofcertain ~~interest~~of ~~and~~our ~~principal~~properties ~~based~~and ~~upon~~investments ain 30non-~~year~~consolidated ~~amortization~~entities ~~thereafter,~~(see ~~with~~Note ~~the~~3) ~~balance due~~and/or ~~upon~~(5) ~~maturity.~~obtaining Wefunds ~~expect~~through ~~the~~additional ~~joint~~borrowings ~~venture~~from ~~to close on the loan during the fourth quarter of 2013~~AmREIT.

Our Cambridge and Holcombe property, in which we own a 50% interest, is secured by a $6.4 million mortgage loan that matures in March 2015. There is also a joint and several guaranty by us and our joint venture partner of up to 60% of the loan balance. We have reached an agreement with a third party to contribute the land into a multi-family development joint venture that would fully repay the debt outstanding and is estimated to yield a return that would allow us to recoup our investment in the site plus a nominal return. The due diligence period has expired and we expect to close this transaction during the third quarter of 2014.

During 2013, our Woodlake Square joint venture sold its Woodlake Square property and our Woodlake Pointe joint venture also sold a single tenant building and land parcel at our Woodlake Pointe property. Together, these transactions allowed us to repay approximately $4.0 million of our notes payable –related party.

During 2012, we and MIG III initiated a lease-up strategy at our Casa Linda property (a 50% joint venture between us and MIG III). We expect to fund a total of approximately $1.5 million in capital expenditures representing our 50% share of a lease-up strategy at this property. The lease-up strategy includes certain tenant build-out and site improvements. As of June 30, 2014, the joint venture has incurred approximately $1.4 million of the planned capital expenditures. Additionally, the joint venture refinanced the $38.0 million mortgage on the property on December 27, 2013, with a four-year, non-recourse loan with the opportunity for an additional funding of approximately $4.5 million related to the potential acquisition of an adjacent property.

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OnAlthough ~~September~~no ~~30,~~assurance ~~2013,~~can ~~our~~be ~~Woodlake~~given, ~~Pointe~~we ~~joint~~believe ~~venture~~that ~~sold~~we awill ~~portion~~be ofable ~~the~~to generate ~~land~~liquidity ~~and~~sufficient ato ~~single~~continue ~~tenant~~to ~~building~~execute at our ~~Woodlake~~strategic ~~Pointe~~plan; ~~property~~however, ~~for $12.0~~there ~~million~~is tono anguarantee ~~unrelated~~that ~~third~~we ~~party.~~and ~~The~~our ~~sale~~joint ~~resulted~~ventures inwill ~~net~~be ~~proceeds~~successful ofwith ~~$4.9~~the ~~million~~above ~~after~~liquidity ~~payoff~~initiatives, ofand awe ~~$6.6~~may ~~million~~continue ~~mortgage~~to ~~and~~look ~~other~~to ~~closing~~AmREIT ~~costs.~~to ~~Our~~provide ~~portion~~additional offinancial ~~the~~support ~~net~~to us to meet our operating cash ~~proceeds~~needs. Historically, ~~which~~AmREIT ~~was~~has ~~60%,~~deferred ~~was~~payment ~~$3.0~~of ~~million.~~advisory Wefees ~~plan~~and topayment of notes ~~use~~payable ~~the~~– ~~proceeds~~related party to ~~fund~~ the ~~Casa~~extent ~~Linda~~such ~~lease-up~~deferral ~~strategy,~~of ~~pay~~payments ~~down~~were ~~a portion~~necessary offor our ~~note~~continued ~~payable~~operation. toIn ~~AmREIT~~the ~~and~~event ~~for~~our ~~working~~liquidity ~~capital~~is ~~needs.~~not Wesufficient ~~recorded a loss~~to onexecute ~~sale~~our ~~of $576~~strategy,~~000~~ ~~primarily~~AmREIT ~~related~~has agreed to ~~bad~~defer ~~debt~~payments, ~~expense~~subject ~~associated~~to ~~with~~its continued ~~the~~ability ~~write-off~~to ofdo ~~accrued rent~~so.

On September 18, 2013, VIF II/AmREIT Woodlake, LP (“Woodlake LP”), sold Woodlake Square, a grocery-anchored, multi-tenant retail shopping center, to AmREIT for $41.6 million. We received approximately $2.0 million representing our proportional share, which is 6% of the net proceeds once the final distribution is made.

There is no guarantee that we and our joint ventures will be successful with the above liquidity initiatives, and we may continue to look to AmREIT to provide additional financial support to us to meet our operating cash needs. We can provide no assurance that AmREIT will be able to provide additional support, if needed. Historically, AmREIT has deferred payment of advisory fees earned to the extent such deferrals of fees were necessary for our continued operation. Such fees included property management, asset management, development fees, interest expense on amounts owed to AmREIT and reimbursements of certain of AmREIT’s general and administrative costs. Additionally, AmREIT has agreed that it will not require us to repay the remaining balance of our notes payable – related party to it until a date subsequent to January 1, 2014 if such repayment were to prevent the execution of our strategy or present an unnecessary financial hardship to us. AmREIT’s agreement to provide such financial support and defer payment is limited to its continued ability to do so.

Strategic Plan

WeTo navigate these challenging market conditions during our liquidation period, we and our General Partner have created a strategic plan to maximize the potential value ~~prior~~of toour ~~and~~real ~~during~~estate ~~our upcoming~~portfolio ~~liquidation~~and ~~period.~~execute ~~The~~an ~~components~~orderly, ofbut ~~our~~opportunistic liquidation. ~~strategic~~We plan ~~are as follows~~to:

• Complete our development and redevelopment projects with a goal to stabilize these projects over the next 6-12 months. We believe that completing our development and redevelopment projects including their lease-up and stabilization will allow us to maximize the return on these properties upon sale. Our investment in Cambridge & Holcombe represents our only investment property ~~currently~~that ~~under~~is planned for development~~/redevelopment~~. See Note 43 of the Notes to Consolidated Financial Statements for further discussion of the ~~redevelopment~~development plans at this property. • Continue to operate our projects in a first-class manner with a goal to generate operating cash flow in order to re-commence distributions. We believe that the stabilization of our development and redevelopment properties, coupled with the continued and intense oversight of our operating properties, will generate liquidity that could allow us to re-commence distributions to our Limited Partners; however, ~~we expect~~ this ~~will~~ most likely ~~occur~~will ~~during~~not ~~the~~occur ~~liquidation~~until ~~phase. Once~~ we begin ~~our~~to ~~liquidation~~sell ~~period, an orderly liquidation of~~ our ~~assets~~real ~~and~~estate ~~wind-down of our operations will likely take several years for our General Partner to complete~~assets. • Sell our properties opportunistically, aslikely ~~the~~beginning ~~market~~in ~~continues to recover. Our recent sales by our joint venture of Woodlake Square and~~ the ~~portion~~next oftwelve ~~land and single tenant building at Woodlake Pointe are recent examples of our execution of this strategy~~months. ~~However,~~Once ~~once~~ a property is marketed for sale, it may take several months to receive offers and complete due diligence by both parties. Our General Partner ~~will~~continues ~~in good faith begin~~ to review market ~~sales~~ opportunities ~~for~~to ~~our~~sell ~~operating properties at the conclusion of~~ our operating ~~period, but retail property valuations may continue to be challenged, and, accordingly, attractive sales opportunities may not exist in the near term~~properties. When deciding whether or when to sell properties, our General Partner will consider factors such as potential appreciation of value, and timing of cash flows. ~~During~~As we have now entered the liquidation period, we will not be acquiring new real estate investments. We will be completing our development and redevelopment projects and distributing net proceeds generated from property sales to our Limited Partners unless the General Partner has identified attractive acquisition opportunities and obtained a majority vote of the Limited Partners to re-invest such proceeds.

6 Although we believe that our strategic plan maximizes the value of our properties and is in the best interests of our Limited Partners, no assurances can be given that this strategy will be successful, and it is possible that investors may not recover all of their original investment.

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Although we believe that our strategic plan maximizes the value of our properties and is in the best interest of our Limited Partners, no assurances can be given that this strategy will be successful, and it is possible that investors may not recover all of their original investment.

The above steps may not be sufficient, and we could incur individual setbacks and possibly significant losses. Additional deterioration in the United States economy or the bankruptcy or insolvency of one or more of our significant tenants could cause our current plans to meet our projected cash shortfalls to be insufficient. Even with the above strategic plan and liquidity initiatives, we still may incur cash shortfalls if we are required to perform under certain guarantees (see Note 5) of our joint ventures or are unable to refinance certain debt as it comes due, which could result in lender repossession of one or more properties owned by us and/or our joint ventures or be forced to sell one or more properties at a time when it is disadvantageous to do so, potentially resulting in losses on the disposition of those properties.


2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred. The consolidated financial statements include our accounts as well as the accounts of any wholly- or majority-owned subsidiaries in which we have a controlling financial interest. Investments in joint ventures and partnerships in which we have the ability to exercise significant influence but do not exercise financial and operating control are accounted for using the equity method (see Note 43). The significant accounting policies of our non-consolidated entities are consistent with those of our subsidiaries in which we have a controlling financial interest. As of ~~September~~June 30, ~~2013~~2014, we do not have any interests in variable interest entities. All significant inter-company ~~accounts~~ accounts and transactions have been eliminated in consolidation.

The consolidated financial statements included in this Quarterly Report have been prepared pursuant to the rules and regulations of the SEC and are unaudited. In our opinion, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted of normal recurring items. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the SEC rules and regulations and, accordingly, these financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2012~~2013.

~~Reclassifications~~ 6

~~Certain immaterial~~Table ~~reclassfications from have been made to our our Consolidated Statements~~ of Operations for the three and nine months ended September 30, 2012 to conform to current period presentation. The items had no impact on previously reported net income (loss), our Consolidated Balance Sheet or Consolidated Statement of Cash Flow. See also Note 3 for a discussion of our presentation of discontinued operations.Contents

Use of Estimates

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

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Cash and Cash Equivalents

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

Revenue Recognition

Rental income from operating leases – We lease space to tenants under agreements with varying terms. Our leases are accounted for as operating leases, and, although certain leases of the properties provide for tenant occupancy during periods for which no rent is due and/or for changes in the minimum lease payments over the terms of the leases, revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, possession or control occurs on the lease commencement date. In cases where significant tenant improvements are made prior to lease commencement, the leased asset is considered to be the finished space, and revenue recognition therefore begins when the improvements are substantially complete. Revenue from tenant reimbursements of taxes, maintenance expenses and insurance is recognized in the period the related expense is recorded. Additionally, certain of our lease agreements contain provisions that grant additional rents based upon tenants’ sales volumes (contingent or percentage rent). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Accrued rents are included in tenant and accounts receivable, net.

~~Receivables and~~Redevelopment ~~Allowance~~Properties ~~for Uncollectible Accounts~~

~~Tenant~~Expenditures ~~and~~related ~~Accounts~~to ~~Receivable,~~the ~~net~~redevelopment -of ~~Included~~real inestate ~~tenant and accounts receivable~~ are ~~base~~capitalized ~~rents,~~as ~~tenant~~part ~~reimbursements and adjustments~~of ~~related~~construction toin ~~recording~~progress, ~~rents~~which onincludes acarrying ~~straight-line~~charges, ~~basis.~~primarily Aninterest, real ~~allowance~~estate ~~for~~taxes ~~the uncollectible~~and ~~portion~~loan ofacquisition ~~accrued~~costs, ~~rents~~ and ~~accounts~~direct ~~receivable~~and ~~is determined~~indirect ~~based~~development ~~upon~~costs ~~customer~~related ~~credit-worthiness~~to ~~(including~~buildings ~~expected~~under ~~recovery~~construction. The capitalization of ~~our~~such ~~claim with~~costs ~~respect~~ceases toat ~~any~~the ~~tenants~~earlier inof ~~bankruptcy),~~completion ~~historical~~of ~~bad~~major ~~debt~~construction ~~levels,~~or ~~and~~when ~~current~~the ~~economic~~property, ~~trends.~~or ~~Bad debt expenses and~~ any ~~related~~completed ~~recoveries~~portion, ~~related to~~becomes ~~tenant~~available ~~receivables~~for ~~are included in property expense~~occupancy. ~~As of September 30,~~We ~~2013,~~capitalize ~~and~~costs ~~December~~associated ~~31,~~with ~~2012,~~pending ~~our~~acquisitions ~~allowance~~of ~~for~~raw ~~uncollectible~~land ~~accounts~~once ~~related~~the toacquisition ~~our~~of ~~tenant~~the ~~receivables~~property ~~was~~is ~~$11,000~~determined ~~and~~to ~~$32,000,~~be ~~respectively~~probable.

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

Development Properties

Expenditures related to the development of real estate are capitalized as part of construction in progress, which includes carrying charges, primarily interest, real estate taxes and loan acquisition costs, and direct and indirect development costs related to buildings under construction. The capitalization of such costs ceases at the earlier of one year from the date of completion of major construction or when the property, or any completed portion, becomes available for occupancy. We capitalize costs associated with pending acquisitions of raw land as incurred and expense such costs if and when the acquisition of the property becomes no longer probable. During the nine months ended September 30, 2013 and 2012, we capitalized interest and property taxes in the amount of $192,000 and $172,000, respectively.

Depreciation

Depreciation is computed using the straight-line method over an estimated useful life of up to 39 years for buildings, upand ~~to 11 years for~~ site improvements and over the ~~term~~ life of the ~~lease~~respective leases for tenant improvements. We re-evaluate the useful lives of our buildings and improvements as warranted by changing conditions at our properties. As part of this re-evaluation, we may also consider whether such changing conditions indicate a potential impairment, and we perform an impairment analysis, as necessary, at the property level. In the case of a property redevelopment, we reassess the useful lives of specific buildings or other improvements to be demolished as part of that redevelopment once the redevelopment is probable of occurring.

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Impairment

We review our properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including acquired lease intangibles and accrued rental income, may not be recoverable through operations. We determine whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the property, with the carrying value of the individual property. If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its fair value. Both the estimated undiscounted cash flow analysis and fair value determination are based upon various factors that require complex and subjective judgments to be made by management. Such assumptions include projecting lease-up periods, holding periods, cap rates, rental rates, operating expenses, lease terms, ~~tenant~~ tenant creditworthiness, tenant improvement allowances, terminal sales value ~~and~~ and certain macroeconomic factors among other assumptions to be made for each property. For our multi-building retail centers, we consider the entire retail center as the asset group for purposes of our impairment analysis. We review our investments in non-consolidated entities for impairment based on a similar review of the properties held by the investee entity. No impairment charges were recognized during the ~~nine~~three and six months ended ~~September~~June 30, ~~2013~~2014 ~~and~~or ~~2012~~2013.

~~Fair Value Measurements~~ 7

~~GAAP emphasizes~~Table that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. GAAP requires the use of observable market data, when available, in making fair value measurements. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of ours. When market data inputs are unobservable, we utilize inputs that we believe reflect our best estimate of the assumptions market participants would use in pricing the asset or liability. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs that are classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:Contents

•New ~~Level~~Accounting 1 Inputs – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access. • Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 Inputs – Unobservable inputs for the asset or liability, which are typically based on the Partnership’s own assumptions, as there is little, if any, related market activity.Pronouncements:

~~Recurring~~In ~~Fair~~May ~~Value~~2014, ~~Measurements~~the ~~and~~FASB ~~Financial~~issued ~~Instruments~~“Accounting –Standards ~~Our~~Update No. 2014-09: Revenue ~~consolidated~~from ~~financial~~Contracts ~~instruments~~with ~~consist~~Customers” ofthat ~~cash~~will ~~and~~supersede ~~cash~~the ~~equivalents,~~existing ~~tenant~~revenue ~~and~~recognition ~~accounts~~guidance ~~receivable,~~under ~~accounts~~GAAP. ~~receivable~~The –accounting ~~related~~update ~~party,~~states ~~notes~~that ~~payable,~~a company ~~notes~~should ~~payable~~recognize –revenue ~~related~~to ~~party,~~depict ~~accounts~~the ~~payable~~transfer –of ~~related~~promised ~~party,~~goods ~~and~~or ~~accounts~~services ~~payable~~to ~~and~~customers ~~other~~in ~~liabilities.~~an ~~The~~amount ~~carrying~~that ~~values~~reflects ofthe ~~all~~consideration ofto which the ~~financial~~company ~~instruments,~~expects ~~except~~to ~~for~~be ~~our~~entitled ~~notes~~in ~~payable~~exchange ~~are~~for ~~representative~~those ofgoods ~~the~~or ~~fair~~services. ~~values~~It also ~~due~~establishes a five-step model that requires companies to ~~the~~exercise ~~short-term~~judgment ~~nature~~when considering the terms of ~~the~~a ~~instruments.~~contract ~~See~~and ~~Note~~all 5relevant facts and circumstances. It is effective for ~~fair~~annual ~~value~~reporting periods beginning after December 15, 2016, ~~disclosures~~including ofinterim periods within that reporting period. We are currently evaluating this accounting update and our ~~notes~~existing ~~payable~~revenue recognition policies to determine what impact, if any, this new guidance could have on our consolidated financial statements as well as what transition method we would utilize, if any, upon adoption.

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” Under the update, discontinued operations as defined as either 1) A component of and entity (or group of components) that (i) has been disposed of or meets the criteria to be classified as held-for-sale and (ii) represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results, or 2) is a business or nonprofit activity that on acquisition, meets the criteria to be classified as held-for-sale. The accounting update is effective on a prospective basis for disposals or assets meeting the definition as held-for-sale for accounting periods beginning on or after December 15, 2014. Early application is permitted, but only for those disposals that have not been reported in previously issued financial statements. Historically, we have classified and reported disposals of our operating properties for which operations and cash flows are clearly distinguished as discontinued operations. See Note 9. Upon adoption of this standard, we expect that future disposals of operating real estate assets will not qualify for discontinued operations reporting treatment depending on circumstances.

Subsequent Events

OnWe ~~October~~identified 1,no ~~2013,~~material wesubsequent ~~repaid~~events ~~$1.9~~as ~~million~~of on the ~~note~~date ~~payable~~of –this ~~related~~filing ~~party to~~that ~~AmREIT~~materially impacted our consolidated financial statements.

~~Except as~~3. ~~disclosed~~INVESTMENT ~~above,~~IN weNON-CONSOLIDATED ~~did not have any additional material subsequent events as of the date of this filing that impacted our consolidated financial statements.~~ENTITIES

9 As of June 30, 2014, we have investments in four entities that are accounted for using the equity method of accounting due to our ability to exercise significant influence over them. Our investment balances as reported on our consolidated balance sheets are as follows (in thousands):


Investment	Ownership		June 30, 2014		December 31, 2013
Casa Linda		50%	$	2,950	$	3,104
Cambridge & Holcombe		50%		1,112		894
Shadow Creek Ranch		10%		3,869		3,996
Woodlake Square		6%		309		217
Total			$	8,240	$	8,211

Casa Linda - We own a 50% interest in AmREIT Casa Linda, LP, which owns a 325,000 square foot retail shopping center located in Dallas, Texas.. The remaining 50% is owned by MIG III, an affiliate of our General Partner. During 2012, we and MIG III initiated a lease-up strategy at Casa Linda. We expect to fund a total of approximately $1.5 million in capital expenditures representing our 50% share of a lease-up strategy at this property. The lease-up strategy includes certain tenant build-out and site improvements. As of June 30, 2014, the joint venture has incurred approximately $1.4 million of the planned capital expenditures. The property is secured by a $38.0 million mortgage loan that was refinanced on December 27, 2013, with a four-year, non-recourse mortgage on the property that includes additional funding of approximately $4.5 million for the potential acquisition of an adjacent property. The mortgage matures in December 2017.

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The mortgage bears interest at a variable rate, but includes an interest rate cap of 3% per annum. ~~ASSET~~The ~~DISPOSITIONS~~interest ~~AND~~rate ~~DISCONTINUED~~cap ~~OPERATIONS~~was not designated as a hedge for financial reporting purposes, and our portion of the change in fair value is recognized in income (loss) from non-consolidated entities. For the six months ended June 30, 2014 and 2013, our portion of the decrease in fair value totaled $47,000 and $0, respectively, and is included in income (loss) from non-consolidated entities on our Consolidated Statements of Operations.

OnCambridge & ~~September~~Holcombe ~~30,~~- ~~2013,~~We ~~our~~own ~~Woodlake~~a ~~Pointe~~50% ~~joint~~interest in ~~venture~~Cambridge ~~sold~~& aHolcombe, ~~portion~~LP, ofwhich ~~the~~owns ~~Woodlake~~2.02 ~~Pointe~~acres ~~property consisting~~ of raw land ~~and~~adjacent ato ~~building~~the Texas ~~for~~Medical ~~$12~~Center in Houston, Texas.0 ~~million~~The toremaining an50% ~~unrelated~~is owned by an unaffiliated third party. ~~The~~In ~~sale~~June ~~resulted~~2011, inthe ~~net~~$8.1 ~~proceeds~~million ofloan $4matured unpaid.9 On ~~million~~April ~~after~~26, ~~payoff~~2012, ofwe successfully extended this debt until March 27, 2013 in exchange for a ~~$6.6~~10% ~~million~~principal ~~mortgage~~reduction on the note and ~~other~~payment ~~closing~~of accrued ~~costs~~interest. Our 6050% portion of ~~the~~this ~~net~~payment ~~cash~~was ~~proceeds~~$536,000, which was ~~$3.0~~funded through ~~million~~a loan from AmREIT. We ~~plan~~closed on a second extension of the loan on May 17, 2013. The extended loan matures in March 2015. In connection with this extension, we and our joint venture partner entered into a joint and several guaranty of up to ~~use~~60% of the ~~proceeds~~loan balance. We have reached an agreement with a third party to ~~fund~~contribute the ~~Casa~~land ~~Linda~~into ~~lease~~a multi-upfamily development joint ~~strategy,~~venture ~~pay~~that ~~down~~would fully repay the debt outstanding and is estimated to yield a return ~~portion~~that ofwould allow us to recoup our ~~note~~investment ~~payable~~in the site plus a nominal return. The due diligence period has expired and we expect to ~~AmREIT~~close on this transaction during the third quarter of 2014. However, we can provide no assurances that this transaction will close on the terms and ~~for~~timeline ~~working~~described herein ~~capital~~or ~~needs~~at all.

We have presented the operating results of this property as discontinued operations in the accompanying consolidated statements of operations for all periods presented. A summary of our discontinued operations for the periods presented is detailed below:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues:
Rental income from operating leases	$	263		$	—		$	882		$	—
Total revenues		263			—			882			—
Expenses:
Property expense		2			2			190			3
Legal and professional		30			1			56			8
Depreciation and amortization		—			—			94			—
Total operating expenses		32			3			340			11
Operating income (loss)		231			(3	)		542			(11	)
Other expense:
Interest expense		(61	)		(5	)		(183	)		(14	)
Total other expense		(61	)		(5	)		(183	)		(14	)
Income (loss) from real estate operations		170			(8	)		359			(25	)
Loss on sale of real estate(1)		(576	)		—			(576	)		—
Loss from discontinued operations	$	(406	)	$	(8	)	$	(217	)	$	(25	)

(1) The loss on sale primarily relates to bad debt expense associated with the write-off of accrued rent.

4. INVESTMENT IN NON-CONSOLIDATED ENTITIES

As of September 30, 2013, we have investments in three entities that are accounted for using the equity method of accounting due to our ability to exercise significant influence over them. Our investment balances as reported on our consolidated balance sheet are as follows (in thousands):

Investment	Ownership		September 30, 2013		December 31, 2012
Casa Linda	50	%	$	2,329	$	2,707
Cambridge & Holcombe	50	%		838		675
Shadow Creek Ranch	10	%		3,999		4,214
Woodlake Square	6	%		—		1,626
Total			$	7,166	$	9,222

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Casa Linda - We own a 50% interest in AmREIT Casa Linda, LP, which owns Casa Linda Plaza, a multi-tenant retail property located in Dallas, Texas with a combined GLA of approximately 325,000 square feet. The remaining 50% is owned by MIG III. The property is secured by a $38.0 million, seven-year mortgage loan that matures January 2014. The loan bears an annual interest rate of 5.48% and is interest-only until maturity. We have engaged a mortgage broker to assist us with refinancing this loan and have recently selected a lender based upon preliminary terms for a non-recourse loan with an initial funding of $38.0 million and a future funding of approximately $4.5 million for the potential acquisition of an adjacent property. The proposed terms of the loan are a term of four years with a one-year extension, interest at the 3-Month LIBOR plus a spread of 3.50% and interest-only payments for the first two years with monthly payments of interest and principal based upon a 30-year amortization thereafter, with the balance due upon maturity. We expect the joint venture to close on the loan during the fourth quarter of 2013. We expect to fund approximately $1.5 million in capital expenditures over the next two years at our Casa Linda property (a 50% joint venture between us and MIG III) representing our 50% share of a lease-up strategy at this property.

Cambridge & Holcombe - We own a 50% interest in Cambridge & Holcombe, LP, which owns 2.02 acres of raw land that may be developed, sold or contributed to a joint venture in the future. The property is located adjacent to the Texas Medical Center in Houston, Texas. The remaining 50% is owned by an unaffiliated third party. In June 2011, the $8.1 million loan matured unpaid. On April 26, 2012, we successfully extended this debt until March 27, 2013 in exchange for a 10% principal reduction on the note and payment of accrued interest, which expired. Our 50% portion of this payment was $536,000, which was funded through a loan from AmREIT. We closed on a second extension of the loan on May 17, 2013. The extended loan matures in March 2015. In connection with this extension, we and our joint venture partner entered into a joint and several guaranty of up to 60% of the loan balance. The joint venture entered into a contract to sell one acre of the property to a third party, subject to a due diligence period that expired in December 2012. The third party elected not to purchase the land, and the contract expired. Approximately $325,000 in escrow deposits was forfeited by the third party, which we used to fund debt service on the loan for the past several months. We are currently marketing the property for sale and have received offers for the purchase of all or a portion of the property.

Shadow Creek Ranch - We own a 10% interest in Shadow Creek Holding Company LLC, which owns Shadow Creek Ranch, a multi-tenant retail property located in Pearland, Texas with a combined GLA of approximately 613,000 square feet. The remaining 90% is owned by an unaffiliated third party (80%) and AmREIT (10%). The property is secured by a loan in the amount of $65.0 million at an annual interest rate of 5.48% until its maturity in March 2015.

Woodlake Square – AsWe ofpreviously ~~December 31, 2012, we~~ owned a 6% interest in the Woodlake ~~LP,~~Square ~~which~~property ~~owned~~through ~~Woodlake Square,~~ a ~~grocery-anchored,~~joint ~~multi-tenant retail~~venture ~~property~~arrangement ~~located~~with ataffiliates ~~the corner~~ of our ~~Westheimer~~General ~~and Gessner in Houston~~Partner, ~~Texas~~ ~~with~~MIG aIII ~~combined~~(3% ~~GLA~~ownership ~~of approximately 161~~interest),~~000~~ ~~square~~ARIC ~~feet.~~(1% ~~The remaining~~ownership ~~94%~~interest) ~~was~~and ~~owned~~an byunaffiliated ~~the~~ third- party institutional partner (the remaining 90%), ~~ARIC~~ownership ~~(1%~~interest) ~~and by MIG III (3%)~~. On September 18, 2013, ~~Woodlake~~VIF LPII/AmREIT Woodlake L.P. sold Woodlake Square to AmREIT for $41.6 million based on arms-length negotiations between AmREIT and our third party institutional partner that owned a 90% interest in the property. ~~The~~Our ~~joint~~remaining ~~venture~~interest ~~recorded~~at aJune ~~gain~~30, ~~on sale of $10.4 million. Our~~2014 ~~share~~and ofDecember ~~this~~31, ~~gain~~2013 isrepresents ~~included~~undistributed insales ~~our~~proceeds ~~income~~as ~~(loss)~~the ~~from non-consolidated entities. We received approximately $2.0 million representing our~~joint ~~proportional~~venture ~~share~~winds ofup ~~the~~its ~~net proceeds~~operations.

Combined condensed financial information for the underlying investee entities (at 100%) is summarized for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, as as follows (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
Revenue	$	4,~~545~~016		$	45,~~247~~017		$	147,~~251~~912		$	129,~~841~~706
Gain on sale of real estate		10,532			—			10,532			528
Depreciation and amortization		(1,481	)		(1,710	)		(2,991	)		(3,427	)
Depreciation and amortization		(1,661	)		(1,738	)		(5,088	)		(5,297	)
Interese expense		(1,341	)		(1,639	)		(2,650	)		(3,273	)
Interese expense		(1,588	)		(1,657	)		(4,862	)		(5,012	)
Net income (loss)		(312	)		(253	)		(669	)		(762	)
Net income (loss)		10,177			(930	)		9,415			(2,084	)

54. NOTES PAYABLE

Our outstanding debt consolidated as of ~~September~~June 30, ~~2013,~~2014 and December 31, ~~2012,~~2013 ~~was~~relates to asour mortgage loan securing our Village on the Green property. The mortgage ~~follows~~loan (bears interest at 5.5% and matures in ~~thousands)~~April 2017. It may be prepaid, but is subject to a yield-maintenance premium or prepayment penalty.

Notes payable	September 30, 2013		December 31, 2012
Village on the Green	$	5,820	$	5,891
Woodlake Pointe		—		6,249
Total	$	5,820	$	12,140

As of June 30, 2014, we serve as the guarantor of debt in the amount of $23.9 million that is the primary obligation of our non-consolidated joint ventures. The debt for which we serve as guarantors matures in March 2015. We have not accrued any liability with respect to this debt as we believe it is unlikely we would be required to perform and, therefore, the fair value of any obligation would be insignificant.

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~~The Village on the Green note payable is a fixed rate mortgage loan that bears interest at~~ 5.5% ~~and~~FAIR ~~matures~~VALUE in April 2017. It may be prepaid, but is subject to a yield-maintenance premium or prepayment penalty. Our Woodlake Pointe construction loan was paid in full upon the sale of the property on September 30, 2013. See Note 3. As of September 30, 2013, we serve as the guarantor of debt in the amount of $24.2 million that is the primary obligation of our non-consolidated joint ventures. The debt for which we serve as guarantor matures in 2014 and 2015. We have not accrued any liability with respect to these guarantees as we believe it is unlikely we would be required to perform and, therefore, the fair value of any obligation would be insignificant. MEASUREMENTS

~~Notes~~GAAP ~~Payable~~emphasizes –that ~~Related~~fair ~~Party~~value –is Asa ofmarket-based ~~September 30~~measurement, ~~2013~~not an entity-specific measurement. Therefore, ~~and~~a fair value measurement should be ~~December~~determined 31based on the assumptions that market participants would use in pricing the asset or liability. GAAP requires the use of observable market data, ~~2012~~when available, in making fair value measurements. Observable inputs are inputs that the ~~balance~~market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of ours. When market data inputs are unobservable, we utilize inputs that we believe reflect our ~~notes~~best ~~payable~~estimate –of ~~related~~the ~~party~~assumptions ~~was~~market ~~$2.9~~participants would use in pricing ~~million~~the ~~and~~asset $3or liability.7 ~~million~~When inputs used to measure fair value fall within different levels of the hierarchy, ~~respectively.~~the ~~The~~level ~~note~~within ~~accrues~~which ~~interest~~the ~~monthly~~fair atvalue ~~2.78%~~measurement ~~and~~is categorized is ~~secured~~based byon ~~our~~the ~~investment~~lowest ~~interest~~level ininput that is significant to the ~~Woodlake~~fair ~~Pointe property~~value measurement. OnAs ~~October~~a 1,basis ~~2013~~for considering market participant assumptions in fair value measurements, weGAAP ~~made~~establishes a ~~payment~~fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of $the reporting entity (observable inputs that are classified within Levels 1.9 ~~million~~and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs that are classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:

~~Fair Value~~• ofLevel ~~Notes~~1 ~~Payable~~Inputs – WeQuoted ~~record~~prices ~~our~~(unadjusted) ~~debt~~in ~~instruments based~~active onmarkets ~~contractual terms, net of any applicable premium or discount on our consolidated balance sheet. We did not elect to apply the alternative GAAP provisions of the fair value option~~ for ~~recording~~identical ~~financial~~ assets ~~and financial~~or liabilities. ~~The~~that ~~fair value of our variable-rate notes payable approximate their carrying value. In determining~~ the ~~fair~~Partnership ~~value~~has ~~of our fixed-rate debt instruments, we determine~~ the ~~appropriate~~ability ~~treasury note rate based on the remaining time~~ to ~~maturity for each of the debt instruments~~access. ~~We then~~• ~~add~~Level ~~the~~2 ~~appropriate~~Inputs ~~yield~~– ~~spread~~Inputs toother ~~the~~than ~~treasury~~quoted ~~note~~prices ~~rate.~~included ~~The~~in ~~yield spread~~Level is1 athat ~~risk~~are ~~premium~~observable ~~estimated by investors to account~~ for ~~credit risk involved in debt financing. The spread is typically estimated based on~~ the ~~property~~ ~~type~~asset ~~and~~or ~~loan-to-value~~liability, ~~ratio~~either ofdirectly ~~the~~or ~~debt instrument~~indirectly. ~~The~~• ~~result~~Level is3 ~~an estimate~~Inputs of– ~~the~~Unobservable ~~market~~inputs ~~interest~~for ~~rate a typical investor would expect to receive given~~ the ~~underlying subject~~ asset ~~(property~~or ~~type)~~liability, ~~and~~which ~~remaining~~are ~~time~~typically ~~to maturity.~~based ~~The~~on ~~fair value of our fixed-rate notes payable is classified in Level 2 of~~ the ~~fair~~Partnership’s ~~value~~own ~~hierarchy. Based on these estimates~~assumptions, ~~the fair value of fixed-rate notes payable was approximately $6.3 million~~ as ofthere ~~September~~is 30little, ~~2013,~~ ~~and~~if ~~December 31~~any, ~~2012.~~related market activity.

Our consolidated financial instruments consist of cash and cash equivalents, tenant and accounts receivable, accounts receivable – related party, notes payable, notes payable – related party, accounts payable – related party, and accounts payable and other liabilities. The carrying values of all of the financial instruments, except for our notes payable are representative of the fair values due to the short-term nature of the instruments. In determining the fair value of our fixed-rate debt instruments, we determine the appropriate treasury note rate based on the remaining time to maturity for each of the debt instruments. We then add the appropriate yield spread to the treasury note rate. The yield spread is a risk premium estimated by investors to account for credit risk involved in debt financing. The spread is typically estimated based on the property type and loan-to-value ratio of the debt instrument. The result is an estimate of the market interest rate a typical investor would expect to receive given the underlying subject asset (property type) and remaining time to maturity. The fair value of our fixed-rate notes payable is classified in Level 2 of the fair value hierarchy. As of June 30, 2014 and December 31, 2013, the fair value of fixed-rate notes payable was approximately $6.2 million and $6.3 million, respectively.


6.	CONCENTRATIONS

As of ~~September~~June 30, 2014 ~~2013,~~ and December 31, ~~2012~~2013, each of our two consolidated ~~properties~~ properties individually comprised greater than 10% of our consolidated total assets. Consistent with our strategy of investing in areas that we know well, ~~both~~ both properties are located in Texas metropolitan areas. These Texas properties represent 100% of our rental income for the ~~nine~~three and six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013. The following table details the base rents generated by our top tenants during the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	Three months ended June 30,				Six months ended June 30,
Tenant	~~2013~~2014		~~2012~~2013		~~2013~~2014		~~2012~~2013
LA Fitness (1)	$	241	$	—	$	720	$	—
Paesano’s	$	55	$	54	$	109	$	109
Paesano’s		39		49		148		148
Rouse Dental		22		14		45		28
Alamo Heights Pediatrics		18		18		53		53
Eurodesign Kitchen		9		8		16		16
Rouse Dental		20		14		48		42
The Mutual Fund Store		8		9		17		17
Café Salsita		7		9		26		28
KT Nails and Spa		8		8		16		16
Total	$	~~325~~102	$	9093	$	~~995~~203	$	~~271~~186

(1) LA Fitness occupied the newly constructed building at our Woodlake Pointe property, which was sold on September 30, 2013. See Note 3. We will receive no further rent from this tenant in future reporting periods.

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7.	PARTNERS’ CAPITAL AND NON-CONTROLLING INTEREST

Distributions –We suspended all distribution payments in July 2009 and do not anticipate reinstating distributions until we have stabilized our properties and we generate liquidity that could allow us to re-commence distributions. See Note 1. All distributions to date have been a return of capital. ~~During~~Net ~~our~~cash ~~liquidation stage (anticipated to commence in November 2013~~flow, ~~unless~~as ~~extended),~~defined ~~net cash flows~~below, will be distributed among the Limited Partners and the General Partner in the following manner:

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

Non-controlling Interests – Non-controlling interests includes a 40% ownership interest that our affiliates have in our Woodlake Pointe property and a 40% interest that our affiliates have in our investment in Woodlake HoldCo that we consolidate as a result of our 60% controlling financial interest.10

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	•	Second - 100% to the General Partner until it has received cumulative distributions from all sources equal to 100% of its actual invested capital of $1,000;

	•	Third - 1% to the General Partner and 99% to the Limited Partners on a per Unit basis until such time as the Limited Partners have received cumulative distributions from all sources equal to 8.5% per annum, cumulative, uncompounded return on their unreturned deemed capital contributions (which will be equal to (i) the product of $25,000 per Unit (regardless of the purchase price paid for a Unit) multiplied by the number of Units owned by a partner, reduced by (ii) the aggregate amount of any distributions received that constitute a return of capital contributions);

	•	Fourth – 100% to the General Partner until it has received cumulative distributions from all sources (other than with respect to the Units it purchased) in an amount equal to 40% of the net cash flow paid to date to the Limited Partners in excess of their actual invested capital; and

	•	Thereafter - 60% to the Limited Partners on a per Unit basis and 40% to the General Partner.

Non-controlling Interests – Non-controlling interests includes a 40% ownership interest that our affiliates have in our Woodlake Pointe property and a 40% interest that our affiliates have in our investment in Woodlake Holdco that we consolidate as a result of our 60% controlling financial interest.


8.	RELATED PARTY TRANSACTIONS

~~Certain~~We have no employees or offices. Additionally, certain of our affiliates receive fees ~~for~~and ~~ongoing~~compensation ~~property~~during ~~management~~the ~~and administrative~~operating ~~services.~~stage In of the ~~event~~Partnership, ~~that~~including compensation ~~these~~for ~~companies~~providing ~~are~~services ~~unable~~ to ~~provide~~ us ~~with~~in the ~~respective~~areas ~~services~~of asset management, wedevelopment ~~would~~and beacquisitions, ~~required~~property tomanagement and ~~find~~leasing, financing, brokerage ~~alternative~~and ~~providers~~administration. We reimburse our General Partner for an allocation of salary ~~these~~and ~~services~~other overhead costs. The following table summarizes the amount of such compensation ~~incurred~~paid byto usour affiliates during the three and ~~nine months~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	Three months ended June 30,				Six months ended June 30,
Type of service	~~2013~~2014		~~2012~~2013		~~2013~~2014		~~2012~~2013
Asset management fees	$	3864	$	3839	$	~~115~~128	$	~~115~~77
Property management fees		1210		12		3521		3423
Leasing costs		—2		27		84		988
Development costs		—		86		—		258
Administrative costs reimbursements		72		69		142		133
Interest expense-related party		64		44		96		106
Interest expense-related party (1)		9		32		17		62
Administrative cost reimbursements		75		78		208		213
	$	157	$	159	$	312	$	303
	$	189	$	260	$	462	$	824

In addition to the above fees incurred by us, the non-consolidated entities in which we have investments paid $653,000 and $979,000 in property management and leasing fees to one of our affiliated entities for the nine months ended September 30, 2013 and 2012, respectively. See also Note 4 regarding investments in non-consolidated entities.


		June 30, 2014		December 31, 2013

Notes payable - related party ⁽²⁾	$	1,366	$	1,091


(1)	Amounts are included in interest expense on our Consolidated Statements of Operations.
(2)	The note accrues interest monthly at 2.8% and is secured by our investment interest in the Woodlake Pointe property.

In addition to the above fees incurred by us, the non-consolidated entities in which we have investments paid $342,000 and $454,000 in property management and leasing fees to one of our affiliated entities for the six months ended June 30, 2014 and 2013, respectively. See also Note 3 regarding investments in non-consolidated entities.

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9. ~~COMMITMENTS~~ASSET DISPOSITIONS AND ~~CONTINGENCIES~~DISCONTINUED OPERATIONS

~~Litigation~~On -September In30, ~~the~~2013, ~~ordinary~~our ~~course~~Woodlake ofPointe ~~business,~~joint weventure ~~may~~sold ~~become~~a ~~subject~~single tenant building and land parcel at our Woodlake Pointe property for $12.0 million to an ~~litigation~~unrelated orthird party. The sale resulted in net proceeds of $4.9 million ~~claims~~after payoff of a $6.6 ~~There~~million ~~are~~mortgage noand ~~material~~other ~~pending~~closing ~~legal~~costs. ~~proceedings~~Our ~~against~~60% portion usof the net cash proceeds was approximately $3.0 million. We have presented the operating results of this property as discontinued operations in the accompanying consolidated statements of operations for all periods presented. A summary of our discontinued operations for the periods presented is detailed below:


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Rental income from operating leases	$	—		$	333		$	—		$	619
Total revenues		—			333			—			619

Expenses:
Property expense		17			94			19			187
Legal and professional		—			16			8			26
Depreciation and amortization		—			—			—			94
Total operating expenses		17			110			27			307

Operating income (loss)		(17	)		223			(27	)		312

Other expense:
Interest expense		—			(59	)		—			(123	)
Total other expense		—			(59	)		—			(123	)

Income (loss) from discontinued operations	$	(17	)	$	164		$	(27	)	$	189


10.	COMMITMENTS AND CONTINGENCIES

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

Environmental matters - In connection with the ownership and operation of real estate, we may be potentially liable for costs and damages related to environmental matters. We are not aware of any pending environmental proceedings with respect to our properties that would have a material adverse effect on our consolidated financial statements.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

Certain information presented in this Quarterly Report constitutes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include, but are not limited to the following: changes in general economic conditions, changes in real estate market conditions, continued availability of proceeds from our debt or equity capital, our ability to locate suitable tenants for our properties, the ability of tenants to make payments under their respective leases, timing of acquisitions, development starts and sales of properties, the ability to meet development and redevelopment schedules and other risks, uncertainties and assumptions. Any forward-looking statement speaks only as of the date on which it was made, and we undertake no duty or obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

OVERVIEW

We are a Delaware limited partnership formed to acquire, develop and operate, directly or indirectly through joint venture arrangements, a portfolio of commercial real estate consisting primarily of multi-tenant shopping centers and mixed-use properties. Our Units are not currently listed on a securities exchange, and there currently is no established public trading market for our Units. We do not intend to list our Units at this time and have no plans to list our Units on a securities exchange in the future.

Our general partner is a Delaware corporation and a wholly-owned subsidiary of AmREIT, an SEC reporting, Maryland corporation that is publicly traded on the NYSE and that has elected to be taxed as a REIT. Our General Partner has the exclusive right to manage our business and affairs on a day-to-day basis pursuant to our limited partnership agreement. The Limited Partners have the right to remove and replace our General Partner, with or without cause, by a vote of the Limited Partners owning a majority of the outstanding Units (excluding any Units held by our General Partner). Our General Partner is responsible for all of our investment decisions, including decisions relating to the properties to be developed, the method and timing of financing or refinancing the properties, the selection of tenants, the terms of the leases, the method and timing of the sale of our properties and the reinvestment of net sales proceeds. Our General Partner utilizes the services of AmREIT and its affiliates in performing its duties under our limited partnership agreement.

As of ~~September~~June 30, ~~2013,~~2014 our consolidated investments include one wholly-owned ~~property~~ property comprised of approximately 36,~~306~~000 square feet of GLA and one majority ~~owned~~ owned property comprised of approximately 82,~~120~~000 square feet of GLA and three properties in which we own a non-controlling interest through joint ventures comprised of approximately 938,000 square feet of GLA. Rental income accounted for 100% of our total revenue during the ~~nine~~six months ended ~~September~~June 30, ~~2013 and~~2014 ~~2012~~and 2013, primarily from net leasing arrangements where most of the operating expenses of the properties are absorbed by our tenants. As a result, our operating results and cash flows are primarily influenced by rental income from our properties and interest expense on our property indebtedness. As of ~~September~~ June 30, ~~2013~~2014, our properties had an average occupancy of 9892.60%.

Our operating period ~~will~~ended ~~continue~~in ~~until~~ November 152013, ~~2013~~and ~~(our~~we ~~scheduled~~have entered into our liquidation ~~commencement~~period. ~~date);~~Over ~~however,~~the anpast ~~orderly~~several ~~liquidation~~years our results of ~~all~~operations and valuations of our ~~properties~~ ~~and~~real ~~wind~~estate ~~down~~assets have been negatively impacted by overall economic conditions. Most of our ~~operations~~retail ~~will~~properties ~~likely~~were ~~take~~purchased ~~several~~prior ~~years~~to ~~for~~2008 when retail real estate market prices were much higher, and our ~~General~~property valuations ~~Partner~~have tobeen ~~complete~~negatively impacted by these market dynamics. ~~Once~~We webelieve that ~~enter~~the ~~into~~retail ~~our~~real ~~liquidation~~estate ~~period~~market has experienced improvements. However, weit is difficult to determine if the improvements will ~~not~~continue ~~invest~~through in2014. ~~any~~To navigate ~~new~~these ~~real~~challenging ~~estate~~market ~~without~~conditions, ~~approval~~we and our General Partner have created a strategic plan to maximize the potential value of our ~~Limited~~real estate ~~Partners~~portfolio and execute an orderly, but opportunistic liquidation. We plan to:

~~Over~~• ~~the~~Complete ~~past several years,~~ our ~~results of~~development ~~operations~~ and ~~valuations~~redevelopment ofprojects ~~our~~with ~~real~~a ~~estate~~goal ~~assets have been negatively impacted by overall economic conditions from the recent, severe recession. Most of our retail properties were purchased prior~~ to ~~2008~~stabilize ~~when retail real estate market prices were much higher, and our property valuations were negatively impacted by~~ these ~~market~~projects ~~dynamics.~~over ~~The United States has experienced recent improvements in~~ the ~~general~~next ~~economy; however, high levels of unemployment have persisted, and rental rates and valuations for retail space have not fully recovered to pre~~6-~~recession~~12 ~~levels and may not for a number of years~~months. ~~As a~~We ~~result,~~believe wethat ~~have~~completing ~~faced significant liquidity challenges over the last several years. However, we have been successful in meeting~~ our ~~historic~~development ~~cash~~and ~~shortfalls~~redevelopment ~~through~~projects ~~(1)~~including ~~managing~~their ~~the timing of forecasted capital expenditures related to the~~ lease-up ofand ~~properties,~~stabilization ~~(2)~~will ~~managing~~allow ~~the~~us ~~timing of operating expense payments and,~~ to ~~the~~maximize ~~extent possible, accelerating cash collections, (3) deferring~~ the ~~payment~~return ofon ~~fees~~these ~~owed~~properties toupon ~~our~~sale. ~~General~~Our ~~Partner~~investment ~~and~~in ~~its~~Cambridge ~~affiliates,~~& ~~(4)~~Holcombe ~~selling~~represents ~~certain of~~ our ~~properties~~only ~~and~~investment ~~investments~~property inthat ~~non-consolidated~~is ~~entities~~planned ~~(see~~for ~~Notes~~development. 3See ~~and~~Note 43 of the Notes to Consolidated Financial Statements) ~~and/or~~for ~~(5)~~further ~~obtaining~~discussion ~~funds~~of ~~through~~the ~~additional~~development ~~borrowings~~plans ~~from~~at ~~AmREIT~~this property.

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~~As of~~• ~~September~~Continue ~~30,~~to ~~2013,~~operate weour ~~have~~projects ~~$5.5~~in ~~million~~a infirst-class ~~cash~~manner onwith ~~hand~~a ~~and~~goal ~~our~~to ~~liquidity has~~generate ~~improved~~operating ~~due~~cash flow in order to re-commence distributions. We believe that the ~~sale~~stabilization of ~~Woodlake~~our ~~Square~~development and ~~the~~redevelopment ~~Woodlake~~properties, ~~Pointe~~coupled ~~joint~~with ~~venture’s~~the ~~sale~~continued ofand ~~a portion~~intense oversight of ~~its~~our ~~Woodlake~~operating ~~Pointe~~properties, ~~property~~will generate liquidity that could allow us to re-commence distributions to our Limited Partners;however, this most likely will not occur until we begin to sell our real estate assets. ~~See~~• ~~also~~Sell ~~Note~~our 3properties of opportunistically, likely beginning in the ~~Notes~~next twelve months. Once a property is marketed for sale, it may take several months to ~~the~~receive ~~Consolidated~~offers ~~Financial~~and ~~Statements~~complete ~~related~~due diligence by both parties. Our General Partner continues to review market opportunities to sell our ~~property dispositions~~operating properties. ~~During~~When ~~2013~~deciding whether or when to sell properties, weour ~~have~~General ~~repaid~~Partner ~~approximately~~will ~~$4.0~~consider ~~million~~factors such as potential appreciation of ~~our notes~~value ~~payable~~and ~~–related~~timing ~~party~~of ~~(including~~cash aflows. ~~payment~~As ~~made~~we ~~October~~have 1now entered the liquidation period, ~~2013)~~we will not be acquiring new real estate investments. We ~~expect~~ ~~that~~will be completing our ~~cash~~development onand ~~hand~~redevelopment ~~should~~projects beand ~~sufficient~~distributing tonet ~~allow~~proceeds usgenerated tofrom ~~execute~~property sales to our ~~strategy~~ inLimited Partners unless the ~~near~~General ~~term~~Partner has identified attractive acquisition opportunities and obtained a majority vote of the Limited Partners to re-invest such proceeds.

WeAlthough ~~have~~we ~~created~~believe athat our strategic plan tomaximizes ~~maximize~~the value ~~prior~~of toour properties and ~~during~~is in the best interests of our Limited Partners, no assurances can be given that ~~upcoming~~this ~~liquidation~~strategy ~~period~~will be successful. ~~The~~An ~~components~~orderly liquidation of all of our properties ~~strategic~~will ~~plan~~take ~~are~~years asfor our General Partner to complete and wind up our ~~follows:~~operations. Because of challenging real estate market conditions, it is possible that investors may not recover all of their original investment.

• The above ~~Complete~~steps ~~our~~may ~~development~~not ~~and~~be ~~redevelopment~~sufficient, ~~projects with a goal to stabilize these projects over the next 6-12 months. We believe that completing our development~~ and ~~redevelopment~~we ~~projects~~could ~~including~~incur ~~their~~individual ~~lease-up~~setbacks and possibly ~~stabilization~~significant ~~will allow us to maximize the return on these properties upon sale~~losses. ~~Our~~Additional ~~investment~~deterioration in ~~Cambridge~~the &United ~~Holcombe~~States economy ~~represents~~or ~~our~~the ~~only~~bankruptcy ~~investment~~or ~~property~~insolvency ~~currently~~of ~~under~~one ~~development/redevelopment.~~or ~~See~~more ~~Note 4~~ of ~~the~~our ~~Notes~~significant tenants tocould ~~Consolidated~~cause ~~Financial~~our ~~Statements~~current ~~for further discussion of the redevelopment~~ plans ~~at this property. • Continue~~ to ~~operate~~meet our ~~projects~~projected ~~in a first-class manner with a goal to generate operating~~ cash ~~flow~~shortfalls ~~in order~~ to be ~~re-commence distributions~~insufficient. WeEven ~~believe~~with ~~that~~ the ~~stabilization~~above ofstrategic ~~our~~plan ~~development~~ and ~~redevelopment properties, coupled with the continued and intense oversight of our operating properties, will generate~~ liquidity ~~that could allow us to re-commence distributions to our Limited Partners; however~~initiatives, we ~~expect~~still ~~this~~may ~~will~~incur ~~most~~cash ~~likely~~shortfalls ~~occur~~if ~~during the liquidation phase. Once~~ we ~~begin~~are ~~our~~required ~~liquidation~~to ~~period,~~perform anunder ~~orderly~~certain guarantees ~~liquidation~~(see ofNote ~~our~~3 ~~assets and wind-down~~ of ~~our operations will likely take several years for our General Partner to complete. • Sell our properties opportunistically as~~ the ~~market~~Notes ~~continues~~ to ~~recover.~~Consolidated ~~Our~~Financial ~~sales~~Statements) byof our ~~Woodlake Squre and Woodlake Pointe~~ joint ventures or are ~~recent~~unable ~~examples~~to ofrefinance certain ~~our~~debt ~~execution~~as ~~of this strategy. However, once a property is marketed for sale,~~ it ~~may~~comes ~~take several months to receive offers and complete~~ due, ~~diligence~~which bycould ~~both~~result ~~parties. Our General Partner will~~ in ~~good~~lender ~~faith~~repossession ~~begin~~of toone or ~~review~~more ~~market sales opportunities for our operating~~ properties atowned ~~the~~by ~~conclusion~~us ofand/or our ~~operating~~joint ~~period,~~ventures ~~but~~or ~~retail~~be ~~property~~forced ~~valuations may continue~~ to besell one ~~challenged, and, accordingly, attractive sales opportunities may not exist in the near term. When deciding whether~~ or ~~when~~more ~~to sell~~ properties, ~~our~~at ~~General~~a ~~Partner~~time ~~will~~when ~~consider~~it ~~factors~~is ~~such~~disadvantageous asto ~~potential~~do ~~appreciation of value~~so, potentially ~~and~~resulting ~~timing~~in oflosses ~~cash~~on ~~flows. During~~ the ~~liquidation~~disposition period, we will be distributing net proceeds generated from property sales to our Limited Partner unless the General Partner has identified attractive acquisition opportunities and obtained a majority vote of ~~the~~those ~~Limited Partners to re-invest such proceeds~~properties.

Although we believe that our strategic plan maximizes the value of our properties and is in the best interest of our Limited Partners, no assurance can be given that this strategy will be successful, and it is possible that investors may not recover all of their original investment.

RESULTS OF OPERATIONS

Below is a discussion of our results of operations for the three and ~~nine~~six months ended June ~~September~~ 30, ~~2013~~2014, as compared to the same ~~period~~periods in ~~2012~~2013.

16Comparison of the Three Months Ended June 30, 2014, to the Three Months Ended June 30, 2013

Revenues. Revenues decreased $22,000 for the three months ended June 30, 2014 as compared to the same period in 2013 The decrease was due to the vacancy of one of our tenants at our Village on the Green property during the first quarter of 2014.

Asset management fees – related party. Asset management fees – related party increased approximately $25,000 for the three months ended June 30, 2014, as compared to the same period in 2013. Our asset management fees are calculated based upon the net fair value of our assets, which increased between the 2013 and 2014 periods.

Interest expense. Interest expense decreased approximately $26,000 for the three months ended June 30, 2014 as compared to the same period in 2013. The decrease is due to lower balances owed on our notes payable - related party as a result of repayments made during 2013.

Income (loss) from non-consolidated entities. Loss from non-consolidated entities decreased approximately $32,000 for the three months ended June 30, 2014 as compared to the same period in 2013. These amounts represent our ownership portion of our joint ventures’ net income or loss for the period. The decrease in loss is primarily due to a gain recorded as a result of the final distribution made for the sale of the Woodlake Square property by our Woodlake Square joint venture.

Income (loss) from discontinued operations. Results from discontinued operations changed by approximately $181,000 during the three months ended June 30, 2014 (a loss of $17,000) as compared to the same period in 2013 (income of $164,000). The loss incurred during the three months ended June 30, 2014 represents a final adjustment to the sales price related to the allocation between us and the buyer for tenant property tax reimbursements related to the land and single tenant building at our Woodlake Pointe property that we sold during the third quarter of 2013.

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Comparison of the ~~Three~~Six Months Ended ~~September~~June 30, ~~2013~~ 2014, to the ~~Three~~Six Months Ended ~~September~~ June 30, ~~2012~~2013

~~Revenue~~Revenues. ~~Revenue~~Revenues ~~remained~~decreased ~~comparable~~$30,000 for the ~~three~~six months ended ~~September~~June 30, ~~2013~~2014 as compared to the same period in ~~2012~~2013. ~~with~~The andecrease ~~increase~~was due to the vacancy of one of our tenants at our Village on the Green property during ~~$10,000,~~the orfirst 4%quarter of 2014.

~~Income~~Asset ~~(loss)~~management ~~from~~fees ~~non-consolidated~~– ~~entities~~related party. ~~Income~~Asset ~~(loss)~~management ~~from~~fees ~~non-consolidated~~– ~~entities~~related party increased approximately $~~1.9~~51,000 ~~million~~ for the ~~three~~ six months ended ~~September~~ June 30, ~~2013~~2014, as compared to the same period in ~~2012 (income of $1,565,000 versus a loss of $324,000)~~2013. ~~These~~Our ~~amounts~~asset ~~represent~~management ~~our~~fees ~~ownership~~are ~~portion~~calculated ofbased ~~our~~upon ~~joint~~the ~~ventures’~~ net ~~income~~fair orvalue ~~loss for the period. The resulting increase in income is primarily related to 1) our portion~~ of ~~the gain on sale of Woodlake Square of approximately $10.5 million with~~ our ~~pro rata share of the gain representing approximately $1~~assets,~~050,000~~ ~~and~~which 2) increased ~~income and~~between ~~lease-up~~the of2013 ~~our properties within our investments in Casa Linda~~ and ~~Woodlake Square~~2014 ~~(prior to its sale) as compared to the respective period in 2012~~periods. ~~See further discussion of our sale of our investment in Woodlake Square as discussed in Note 4 of the Notes to Consolidated Financial Statements.~~

~~Loss~~Property ~~from discontinued operations~~expense. ~~Loss~~Property ~~from~~expense ~~discontinued operations~~ increased ~~approximately~~ $~~398~~69,000 ~~during~~for the six ~~three~~ months ended ~~September~~ June 30, ~~2013~~2014, as compared to the same period in ~~2012 ($406,000 loss in~~ 2013 ~~versus a loss of $8,000 in 2012)~~. The increase is ~~due~~primarily related to ~~the~~bad ~~loss~~debt onrecoveries ~~the sale~~ of ~~a portion of the land and single tenant building at our Woodlake Pointe property of~~ $~~576~~36,000, ~~partially~~during ~~offset by increased income from the single~~2013 ~~tenant~~with atno ~~our~~such ~~Woodlake~~recoveries ~~Pointe~~in ~~property, which opened for business during the fourth quarter of 2012~~2014.

~~Net~~Interest ~~(income) loss attributable to non-controlling interests~~expense. ~~Net (income)~~Interest ~~loss~~expense ~~attributable~~decreased ~~to non-controlling interests increased~~ approximately $~~543~~49,000 ~~during~~for the ~~three~~six months ended ~~September~~June 30, ~~2013~~2014 as compared to the same period in ~~2012 (income of $501,000 in~~ 2013 ~~versus a loss of $42,000 in 2012)~~. ~~This~~The ~~amount~~decrease ~~represents~~is ~~the~~due ~~40%~~to ~~interest~~lower inbalances ~~the~~owed ~~Woodlake~~on ~~Pointe property and the 40% interest in Woodlake Holdco (owns~~ our ~~investment~~notes inpayable ~~Woodlake Square)~~- ~~that~~related weparty doas not own, but that we consolidate in our financial statements. The increase in income was recognized from our equity portion of the gain on sale of Woodlake Square property offset by the loss from the sale of a ~~portion~~result of ~~the~~repayments ~~land~~made ~~and single~~during ~~tenant building at our Woodlake Pointe property~~2013.

~~Comparison~~ Income of(loss) ~~the~~from ~~Nine~~non-consolidated ~~Months~~entities. ~~Ended~~Loss ~~September~~from non-consolidated entities decreased approximately $80,000 for the six months ended June 30, 2014 as compared to the same period in 2013,. These amounts represent our ownership portion of our joint ventures’ net income or loss for the period. The decrease in loss is primarily due to an increase in operating income from our investment in the ~~Nine~~Casa ~~Months~~Linda ~~Ended~~property ~~September~~as well as a gain ~~30,~~recorded ~~2012~~as a result of the final distribution made for the sale of the Woodlake Square property by our Woodlake Square joint venture.

~~Revenue.~~Income (loss) from discontinued ~~Revenue~~operations. ~~decreased~~Results from discontinued operations changed by approximately $56216,000 during the ~~nine~~ six months ended ~~September~~June 30, 2014 ~~2013~~(a loss of $27,000) as compared to the same period in ~~2012~~ 2013 (income of $~~761~~189,000). inThe ~~2013~~loss ~~versus~~incurred ~~$817~~during the six months ended June 30,~~000~~ in2014 ~~2012).~~represents ~~The~~a ~~decrease~~final isadjustment ~~primarily~~to ~~due~~the sales price related to ~~a favorable~~the ~~resolution~~allocation ofbetween ~~prior~~us ~~year~~and ~~common~~the ~~area~~buyer ~~maintenance~~for ~~recoveries~~tenant ~~received~~property ~~during~~tax reimbursements related to the ~~first~~land ~~quarter~~and ofsingle ~~2012~~tenant ~~with~~building noat ~~comparable~~our ~~amount~~Woodlake Pointe property that we insold during the third quarter of 2013.

Property expense. Property expense decreased approximately $40,000 during the nine months ended September 30, 2013 compared to the same period in 2012 ($349,000 in 2013 versus $389,000 in 2012). The decrease is primarily due to bad debt expense for the second quarter of 2012. We did not have any such bad debt expense in the second quarter of 2013.

Legal and professional. Legal and professional expense decreased approximately $40,000 during the nine months ended September 30, 2013 as compared to the same period in 2012 ($158,000 in 2013 versus $198,000 in 2012). The decrease is primarily due to litigation fees that we incurred in 2012 resulting from the collection of outstanding receivables.

Income (loss) from non-consolidated entities. Income (loss) from non-consolidated entities increased approximately $2.1 million during the nine months ended September 30, 2013 as compared to the same period in 2012 (income of $1,250,000 in 2013 versus a loss of $876,000 in 2012). These amounts represent our ownership portion of our joint ventures’ net income or loss for the period. The resulting increase in income is primarily related to 1) our portion of the gain on sale of Woodlake Square of approximately $10.5 million with our pro rata share of the gain representing approximately $1,050,000 and 2) increased income associated with the lease-up of Casa Linda and Woodlake Square (prior to its sale) properties as compared to the respective period in 2012. See further discussion of the sale of our investment in Woodlake Square in Note 4 of the Notes to Consolidated Financial Statements.

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Loss from discontinued operations. Loss from discontinued operations increased approximately $192,000 during the nine months ended September 30, 2013 as compared to the same period in 2012 (a loss of $217,000 in 2013 versus a loss of $25,000 in 2012). The increase is due to the loss on the sale of a portion of the land and single tenant building at our Woodlake Pointe property of $576,000, partially offset by increased income from the single tenant at our Woodlake Pointe property, which opened for business during the fourth quarter of 2012.

Net (income) loss attributable to non-controlling interests. Net (income) loss attributable to non-controlling interests increased approximately $607,000 during the nine months ended September 30, 2013 as compared to the same period in 2012 (income of $476,000 in 2013 versus a loss of $131,000 in 2012). This amount represents the 40% interest in the Woodlake Pointe property and the 40% interest in Woodlake Holdco (owns our investment in Woodlake Square) that we do not own, but that we consolidate in our financial statements. The increase in income was recognized from our equity portion of the gain on sale of Woodlake Square property offset by the loss from the sale of a portion of the land and single tenant building at our Woodlake Pointe property.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~September~~June 30, ~~2013~~2014, ~~and~~we ~~December~~have 31$271,000 ~~2012~~in cash on hand, ~~our~~and ~~cash~~we continue to face liquidity challenges. Our results of operations and ~~cash~~valuations ~~equivalents~~of our real ~~totaled~~estate ~~approximately~~assets $5have been negatively impacted by overall economic conditions from the recession.5 ~~million~~Most of our retail properties were purchased prior to 2008 when retail real estate market prices were much higher, and ~~$129~~our property valuations were negatively impacted by these market dynamics. The United States has experienced recent improvements in the general economy; however,~~000,~~ ~~respectively~~it is difficult to determine if the improvements experienced in 2013 will continue through 2014 and into the future.

~~Over~~Our continuing ~~the~~short-term ~~past~~liquidity ~~several~~requirements ~~years,~~consist ~~our~~primarily ~~results~~ of operating ~~operations~~expenses and ~~valuations~~other ofexpenditures ~~our~~associated ~~real~~with ~~estate assets have been negatively impacted by overall economic conditions from the recent, severe recession. Most of~~ our ~~retail~~ properties, ~~were~~regular ~~purchased prior to 2008 when retail real estate market prices~~debt ~~were~~service ~~much~~requirements ~~higher,~~ and ~~our~~capital ~~property valuations were negatively impacted by these market dynamics~~expenditures. ~~The~~We ~~United~~anticipate ~~States~~that ~~has experienced~~our ~~recent improvements in the general economy; however, high levels of unemployment have persisted, and rental rates~~primary ~~and valuations for retail space have not fully recovered to pre~~long-~~recession~~term ~~levels and may not for a number of years. As a result, we have faced significant~~ liquidity ~~challenges~~requirements ~~over~~will ~~the last several years. However~~include, webut ~~have~~will ~~been~~not ~~successful~~be ~~in meeting~~limited ~~our historic cash shortfalls through (1) managing the timing of forecasted capital expenditures related~~ to ~~the~~, ~~lease-up~~operating ~~of properties~~expenses, ~~(2)~~making ~~managing~~scheduled ~~the~~debt ~~timing~~service ~~of operating expense~~ payments ~~and~~, ~~to the extent possible~~funding renovations, ~~accelerating cash collections~~expansions, ~~(3)~~and ~~deferring~~other ~~the~~significant ~~payment~~capital ofexpenditures ~~fees~~for ~~owed to~~ our existing ~~General~~portfolio ~~Partner and its affiliates, (4) selling certain~~ of ~~our~~ properties ~~and~~including ~~investments~~those ~~in non-consolidated entities (see Notes 3 and 4~~ of ~~the~~with ~~Notes~~our tojoint ~~Consolidated Financial Statements) and/or (5) obtaining funds through additional borrowings from AmREIT~~ventures.

AsWe ofhave ~~September~~been ~~30,~~successful ~~2013,~~in meeting our ~~liquidity~~historic ~~has~~cash ~~improved~~shortfalls ~~due~~through to(1) managing the ~~sale~~timing of ~~Woodlake~~ ~~Square~~forecasted ~~and~~capital expenditures related to the ~~Woodlake~~lease-up of ~~Pointe~~properties, ~~joint~~(2) ~~venture’s~~managing ~~sale~~the timing of aoperating ~~portion~~expense ofpayments ~~its~~and, ~~Woodlake~~to the ~~Pointe~~extent ~~property.~~possible, ~~See~~accelerating ~~also~~cash ~~Note~~collections, (3) ~~related~~deferring the payment of fees owed to our ~~property~~General ~~dispositions. During~~Partner ~~2013~~and its affiliates, we(4) ~~have~~selling ~~repaid~~certain ~~approximately~~of our ~~$4.0~~properties ~~million~~and ofinvestments ~~our~~in ~~notes~~non-consolidated ~~payable –related~~entities ~~party~~(see Note 3) and/or (~~including~~5) aobtaining ~~payment~~funds ~~made~~through ~~October~~additional 1,borrowings ~~2013)~~from AmREIT.

Our ~~short-term~~Cambridge ~~liquidity~~and ~~requirements~~Holcombe ~~consist~~property, ~~primarily~~in ofwhich ~~operating~~we ~~expenses~~own ~~and~~a 50% interest, is secured by ~~other~~a ~~expenditures~~$6.4 ~~associated~~million ~~with~~mortgage ~~our~~loan ~~properties,~~that ~~regular~~matures ~~debt~~in ~~service~~March 2015. In addition we and our ~~requirements~~joint venture partner have jointly and ~~capital~~severally ~~expenditures~~guaranteed up to 60% of the loan balance. We ~~anticipate~~have ~~that~~reached ~~our~~an ~~primary~~agreement ~~long-term~~with a third party to contribute the ~~liquidity~~land ~~requirements~~into ~~will~~a ~~include,~~multi-family ~~but~~development ~~will~~joint ~~not~~venture bethat ~~limited~~would fully repay the debt outstanding and is estimated to, ~~operating~~yield a return that would allow us to ~~expenses,~~recoup ~~making~~our ~~scheduled~~investment ~~debt~~in ~~service~~the ~~payments,~~site ~~funding~~plus ~~renovations,~~a nominal return. The due diligence ~~expansions,~~period has expired and ~~other~~we ~~significant~~expect ~~capital~~to ~~expenditures~~close ~~for~~on ~~our~~this ~~existing~~transaction during the third ~~portfolio~~quarter of ~~properties~~2014. However, we can provide no assurances that this transaction will close on the terms and timeline described herein or at all.

We expect to fund approximately $1.5 million in capital expenditures over the next two years at our Casa Linda property (a 50% joint venture between us and MIG III) representing our 50% share of a lease-up strategy at this property. The $38.0 million mortgage on the property matures in January 2014. We have engaged a mortgage broker to assist us with refinancing this loan and have recently selected a lender based upon preliminary terms for a non-recourse loan with an initial funding of $38.0 million and a future funding of approximately $4.5 million for the potential acquisition of an adjacent property. The terms of the proposed loan are a term of four years with a one-year extension, interest at the 3-Month LIBOR plus a spread of 3.50% and interest-only payments for the first two years with monthly payments of interest and principal based upon a 30-year amortization thereafter with the balance due upon maturity. We expect the joint venture to close on the loan during the fourth quarter of 2013.15

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~~There~~During is2013, noour ~~guarantee~~Woodlake ~~that~~Square ~~we and our~~ joint ~~ventures~~venture ~~will~~sold beits ~~successful~~Woodlake ~~with~~Square ~~all~~property ~~of the above liquidity initiatives,~~ and ~~we may continue to look to AmREIT to~~ ~~provide additional financial support to us to meet~~ our ~~operating~~Woodlake ~~cash~~Pointe ~~needs.~~joint ~~We can~~venture ~~provide~~also nosold ~~assurance~~a ~~that~~single ~~AmREIT~~tenant ~~will~~building beand ~~able to provide additional~~land ~~support,~~parcel ifat ~~needed. Historically, AmREIT has deferred payment of advisory fees earned to the extent such deferrals of fees were necessary for~~ our ~~continued operation.~~Woodlake ~~Such~~Pointe ~~fees included~~ property ~~management, asset management, development fees, interest expense on amounts owed to AmREIT and reimbursements of certain of AmREIT’s general and administrative costs~~. ~~Additionally~~Together, ~~AmREIT has~~these ~~agreed~~transactions ~~that~~allowed ~~it will not require~~ us to repay ~~the~~approximately ~~remaining~~$4.0 ~~balance~~million of our notes payable – related party ~~to it until a date subsequent to January 1, 2014 if such repayment were to prevent the execution of our strategy or present an unnecessary financial hardship to us~~. ~~AmREIT’s agreement to provide such financial support and defer payment is limited to its continued ability to do so~~

~~Current~~ During 2012, ~~Market~~we ~~Conditions~~and MIG III initiated a lease-up strategy at our Casa Linda property (a 50% joint venture between us and MIG III). We expect to fund a total of approximately $1.5 million in capital expenditures representing our 50% share of a lease-up strategy at this property. The lease-up strategy includes certain tenant build-out and site improvements. As of June 30, 2014, the joint venture has incurred approximately $1.4 million of the planned capital expenditures. Additionally, the joint venture refinanced the $38.0 million mortgage on the property on December 27, 2013, with a four-year, non-recourse loan with the opportunity for an additional funding of approximately $4.5 million related to the potential acquisition of an adjacent property.

~~Over~~Although ~~the~~no ~~past~~assurance ~~several~~can ~~years~~be given, ~~our~~we ~~results~~believe ofthat ~~operations~~we ~~and~~will ~~valuations~~be ofable ~~our~~to ~~real~~generate ~~estate~~liquidity ~~assets~~sufficient ~~have~~to ~~been~~continue ~~negatively~~to ~~impacted~~execute byour ~~overall~~strategic ~~economic~~plan; ~~conditions.~~however, ~~The~~there ~~United~~is ~~States~~no ~~economy~~guarantee ~~has~~that ~~experienced~~we ~~recent~~and ~~improvements~~our injoint ~~the~~ventures ~~general economy,~~will ~~but~~be ~~general~~successful ~~concerns~~with ~~from~~ the ~~recent, severe recession remain.~~ ~~Concerns~~above ~~include~~liquidity initiatives, ~~but~~and ~~are~~we ~~not~~may ~~limited~~continue to ~~the~~look ~~potential~~to ~~future~~AmREIT ~~increase~~to ofprovide ~~future~~additional ~~interest~~financial assupport ~~well~~to asus ~~the~~to ~~availability~~meet ~~and~~our ~~cost~~operating ofcash ~~capital as the economy improves~~needs. ~~Additionally~~ Historically, ~~there~~AmREIT ishas ~~remaining~~deferred ~~uncertainty~~payment of ~~whether~~advisory ~~the~~fees ~~United States economy will be adversely affected by inflation, deflation or stagflation~~ and ~~the~~payment ~~systemic impact~~ of ~~periods of high unemployment, volatile~~notes ~~energy~~payable ~~costs,~~– ~~geopolitical~~related ~~issues,~~party ~~which have contributed~~ to ~~increased~~the ~~market volatility~~extent ~~and~~such ~~weakened~~deferral ~~business and consumer confidence. High levels~~ of ~~unemployment~~ ~~have~~payments ~~persisted,~~were ~~and rental rates and valuations for retail space~~necessary ~~have not fully recovered to pre-recession levels and may not~~ for aour ~~number~~continued ~~of years~~operation. ~~Our~~In ~~General Partner believes that~~ the ~~retail~~event ~~real~~our ~~estate~~liquidity ~~market~~ is ~~likely~~ tonot ~~remain~~sufficient ~~depressed for most of 2013; however, it is difficult~~ to ~~determine~~execute ~~the breadth and duration of the financial market problems and how such problems may affect~~ our ~~tenants and the valuation of our assets. To navigate these challenging market conditions~~strategy, weAmREIT ~~have~~has ~~created~~agreed ~~a strategic plan~~ to ~~maximize~~defer ~~value~~payments, ~~prior~~subject to ~~and during our upcoming liquidation period as~~its ~~further~~continued ~~described~~ability into ~~the~~do ~~“Overview” section above~~so.

~~Cash~~ Even with ~~Flow~~the ~~Activities~~above ~~for~~strategy, ~~the~~we ~~nine~~may ~~months~~still ~~Ended~~incur ~~September~~individual 30setbacks and significant losses. Additionally, we may be required to perform under certain guarantees of ~~2013~~our joint ventures or be unable to refinance certain debt as it comes due that could result in lender repossession of one or more properties owned by us and/or ~~2012~~our joint ventures or we may be forced to sell one or more properties at a time when it is disadvantageous to do so, potentially resulting in losses on the disposition of those properties.

~~Cash flows~~Market ~~provided by (used in) operating activities, investing activities and financing activities for the nine months ended September 30, 2013 and 2012 are as follows (in thousands):~~ Conditions

	Nine months ended September 30,
	2013			2012
Operating activities	$	(396	)	$	(384	)
Investing activities		14,481			(4,521	)
Financing activities		(8,719	)		4,616

Our operations are sensitive to changes in overall economic conditions that impact our tenants, including, market and economic challenges experienced by the U.S. economy, the real estate industry or within our geographic markets where our properties are located. Most of our retail properties were purchased prior to 2008 when retail real estate market prices were much higher, and our property valuations were negatively impacted by these market dynamics. The U.S. economy has improved from the recent severe recession; however, should recessionary conditions return, such conditions could prevent us or from realizing growth or maintaining the value of our properties. Even if such conditions do not impact us directly, such conditions could adversely affect our tenants.

~~Net~~While ~~cash~~it ~~flows~~is ~~used~~difficult to determine the breadth and duration of financial market problems and the many ways in ~~operating~~which ~~activities~~they ~~has~~may ~~remained~~affect ~~comparable~~our ~~during~~tenants and our business, a general reduction in the ~~nine~~level ~~months~~of ~~ended~~tenant ~~September~~leasing 30or shifts in tenant leasing practices could adversely affect our business, ~~2013~~financial condition, asliquidity, ~~compared~~results toof operations, our redevelopment projects and ~~the~~future ~~same~~property ~~period~~dispositions. inAdditionally, ~~2012~~if ~~($396~~credit markets and/or debt or equity capital markets contract,~~000~~ inour ~~2013~~ability ~~versus~~to ~~$384~~obtain financing on terms and conditions that we find acceptable,~~000~~ inor ~~2012)~~at all, may be limited, which could reduce our ability to refinance existing debt and increase our future interest expense.

~~Net cash~~Cash ~~flows~~Flow ~~used in investing activities increased approximately $19.0 million~~Activities ~~during~~for the ~~nine~~Six months ~~ended~~Ended ~~September~~June 30, ~~2013,~~2014 asand ~~compared to the same period in 2012 ($14.5 million provided by investing activities in~~ 2013 ~~versus $4.5 million used in investing activities in 2012). The increase is cash provided by investing activities is primarily related to the following:~~

• Cash flows ~~Proceeds~~provided ~~received~~by ~~from~~(used ~~the~~in) ~~sale~~operating ofactivities, ainvesting ~~portion~~activities ~~of the land~~ and financing aactivities ~~single~~for ~~tenant~~the ~~building~~six atmonths ~~our~~ended ~~Woodlake~~June ~~Pointe~~30, ~~property~~2014 ofand ~~$11.6~~2013 ~~million.~~are •as follows ~~A decrease~~ (in ~~real~~thousands): estate improvements of $3.2 million primarily related to construction at our Woodlake Pointe property during 2012. • An increase in distributions received from our nonconsolidated investments of $3.5 million primarily related to the sale of Woodlake Square.


	Six months ended June 30,
	2014			2013
Operating activities	$	(269	)	$	(595	)
Investing activities		223			(525	)
Financing activities		(86	)		1,397

Net cash flows used in operating activities decreased approximately $326,000 during the six months ended June 30, 2014, as compared to the same period in 2013. This decrease is primarily due to additional receipts of tenant and accounts receivable and accounts receivable – related party of $580,000 and fewer payments of accounts payable – related party of $136,000 during the six months ended June 30, 2014, partially offset by an increase in net loss exclusive of bad debts, loss from non-consolidated entities and depreciation of $397,000, as compared to the same period in 2013.

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Net cash flows used in financing activities increased approximately $13.3 million during the nine months ended September 30, 2013, as compared to the same period in 2012 ($8.7 million used in financing activities in 2013 versus $4.6 million provided by financing activities in 2012). The increase in use of funds was primarily attributable to:
	•	A reduction in proceeds received from construction draw activity in 2013 versus 2012 on our Woodlake Pointe construction loan of approximately $3.2 million.
	•	Repayment of the Woodlake Pointe construction loan of $6.8 million during 2013 from the proceeds received from the sale of the portion of land and a single tenant building at our Woodlake Pointe property.
	•	Repayment of notes payable – related party of approximately $2.1 million from the distributions received from the sale of Woodlake Square.
	•	Increased distributions to our non-consolidated interests during 2013 of approximately $1.3 million, primarily to Cambridge & Holcombe and to fund Casa Linda lease-up.

Net cash flows provided by investing activities increased approximately $748,000 during the six months ended June 30, 2014, as compared to the same period in 2013 (cash provided by investing activities of $223,000 for the six months ended June 30, 2014 as compared to cash used in investing activities of $525,000 for the six months ended June 30, 2013). This increase in cash inflows is primarily due to $474,000 of cash received from Casa Linda for the repayment of advances made by MIG IV for property taxes and a decrease of $446,000 in expenditures made for improvements to real estate during 2014 as compared to 2013. The increase was partially offset by additional contributions made to our Cambridge & Holcombe joint venture during the six months ended June 30, 2014, as compared to the same period in 2013.

Net cash flows used in financing activities increased approximately $1.5 million during the six months ended June 30, 2014, as compared to the same period in 2013 (cash used in financing activities of $86,000 for the six months ended June 30, 2014 as compared to cash provided by financing activities of $1.4 million for the six months ended June 30, 2013). The increase in cash used in financing activities was primarily due to proceeds received during 2013 from borrowing proceeds received from notes payable and notes payable – related party with no such borrowing proceeds received during 2014.

OFF BALANCE SHEET ARRANGEMENTS


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.


ITEM 4.	CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our General Partner’s CEO and CFO, our General Partner’s management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of ~~September~~June 30, ~~2013~~2014. Based on that evaluation, our General Partner’s CEO and CFO concluded that, as of ~~September~~ June 30, ~~2013~~2014, our disclosure controls and procedures were effective in ~~causing~~ causing material information relating to us to be recorded, processed, summarized and reported by management on a timely basis and to ensure the quality and timeliness of our public disclosures in accordance with SEC ~~disclosure~~ disclosure obligations.

Changes in Internal Controls Over Financial Reporting

There has been no change to our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2013~~2014, that has materially affected, or is ~~reasonably~~ reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS.

In the ordinary course of business, we may become subject to litigation or claims. Neither we nor our properties are the subject of any material pending legal proceeding, nor are we aware of any legal proceeding that a government authority is contemplating against us.


ITEM 1A.	RISK FACTORS.

Not applicable.

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ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4.	MINE SAFETY DISCLOSURES.

Not applicable.


ITEM 5.	OTHER INFORMATION.

None.


ITEM 6.	EXHIBITS

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

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SIGNATURES

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

	AmREIT Monthly Income & Growth Fund IV, L.P.	~~AmREIT Monthly Income & Growth Fund IV, L.P.~~
	By:	~~By:~~AmREIT Monthly Income & Growth IV Corporation, its General Partner	~~AmREIT Monthly Income & Growth IV~~
			Corporation, its General Partner
Date: August 13, 2014	By:	/s/ H. Kerr Taylor
Date: November 12, 2013		By:	/s/ H. Kerr Taylor
		H. Kerr Taylor
			H. Kerr Taylor
		President, Chief Executive Officer and Director
			President, Chief Executive Officer and Director
Date: August 13, 2014	By:	/s/ Chad C. Braun
Date: November 12, 2013		By:	/s/ Chad C. Braun
		Chad C. Braun
			Chad C. Braun
		Executive Vice President, Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary
			Executive Vice President, Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary

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EXHIBIT INDEX

Exhibit 3.1	Certificate of Limited Partnership of AmREIT Monthly Income & Growth Fund IV, L.P., dated October 10, 2006 (incorporated herein by reference from Exhibit 3.1 to the Partnership’s Registration Statement on Form 10-12G dated April 29, 2008).
Exhibit 3.2	Agreement of Limited Partnership of AmREIT Monthly Income & Growth Fund IV, L.P., dated November 15, 2006 (incorporated herein by reference from Exhibit 3.2 to the Partnership’s Registration Statement on Form 10-12G dated April 29, 2008).
Exhibit 3.2.1	Amendment No. 1 to Agreement of Limited Partnership of AmREIT Monthly Income & Growth Fund IV, L.P., dated December 7, 2006 (incorporated herein by reference from Exhibit 3.3 to the Partnership’s Registration Statement on Form 10-12G dated April 29, 2008).
Exhibit 31.1	Certification of the Chief Executive Officer of the Partnership’s General Partner pursuant to Exchange Act Rule 13a-14(a) (filed herewith).
Exhibit 31.2	Certification of the Chief Financial Officer of the Partnership’s General Partner pursuant to Exchange Act Rule 13a-14(a) (filed herewith).
Exhibit 32.1	Certification of the Chief Executive Officer of the Partnership’s General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Exhibit 32.2	Certification of the Chief Financial Officer of the Partnership’s General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Exhibit 101.INS	XBRL Instance Document*
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document*
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*

* Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of September 30, 2013, (unaudited) and December 31, 2012, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2013, and 2012 (unaudited), (iii) the Consolidated Statement of Capital for the nine months ended September 30, 2013, (unaudited), (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2013, and 2012 (unaudited) and (v) the Notes to the Consolidated Financial Statements (unaudited).


Exhibit 101.INS	XBRL Instance Document*

Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document*

Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*

Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document*

Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*

23* Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013, (ii) the Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013 (unaudited), (iii) the Consolidated Statement of Capital for the six months ended June 30, 2014 (unaudited), (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited) and (v) the Notes to the Consolidated Financial Statements (unaudited).

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