UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~

~~FORM~~SECURITIES AND ~~10-K~~EXCHANGE COMMISSION

~~ANNUAL~~Washington, ~~REPORT~~D.C. ~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~20549

~~For~~FORM ~~the fiscal year ended December 31, 2011~~10-K

~~Commission~~ANNUAL ~~File~~REPORT ~~Number:~~PURSUANT ~~000-51291~~TO SECTION 13 OR 15(d) OF THE

~~Behringer~~SECURITIES ~~Harvard~~EXCHANGE ~~Short-Term~~ACT ~~Opportunity~~OF ~~Fund I LP~~1934

~~(Exact~~For ~~Name~~the offiscal ~~Registrant~~year asended ~~Specified~~December ~~in Its Charter)~~ 31, 2012

Texas		71-0897614
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Commission File Number: 000-51291

~~15601~~Behringer Harvard ~~Dallas~~Short-Term ~~Parkway,~~Opportunity ~~Suite~~Liquidating ~~600, Addison, Texas 75001~~Trust

(~~Address~~Exact Name of ~~principal~~Registrant ~~executive~~as ~~offices)~~Specified ~~(Zip~~in Its ~~Code~~Charter)

Registrant’s telephone number, including area code: (866) 655-1620

Delaware

71-0897614

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer

Identification No.)

~~Securities~~15601 ~~registered~~Dallas ~~pursuant~~Parkway, toSuite ~~section~~600, ~~12(b)~~Addison, Texas ~~of the Act:~~ 75001

~~None~~(Address of principal executive offices) (Zip Code)

~~Securities~~Registrant’s ~~registered~~telephone ~~pursuant~~number, including toarea ~~section~~code: 12(g866) ~~of the Act:~~ 655-1620

~~Units~~Securities ofregistered ~~limited~~pursuant ~~partnership~~to ~~interest~~section 12(b) of the Act:

~~Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x~~ None

~~Indicate~~Securities byregistered ~~check mark if the registrant is not required to file reports~~ pursuant to ~~Section 13 or Section 15~~section 12(dg) of the Act~~. Yes o No x~~ :

~~Indicate~~None 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 if ~~whether~~ the ~~Registrant~~registrant ~~has~~is ~~submitted~~a ~~electronically~~well-known ~~and~~seasoned ~~posted on its corporate website~~issuer, ifas ~~any,~~defined ~~every~~in ~~Interactive Data File required to be submitted and posted pursuant to~~ Rule 405 of ~~Regulation S-T (§232.45 of this chapter) during~~ the ~~preceding~~Securities ~~12 months (or for such shorter period that the registrant was required to submit and post such files)~~Act. Yes x o No o x

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)~~ is not ~~contained~~required ~~herein,~~to ~~and~~file ~~will~~reports ~~not~~pursuant ~~be contained,~~ to ~~the~~Section ~~best~~13 ~~of registrant’s knowledge, in definitive proxy~~ or ~~information~~Section ~~statements~~15(d) ~~incorporated by reference in Part III~~ of ~~this~~the ~~Form 10-K or any amendment to this Form 10-K~~Act. xYes o No o*

Indicate by check mark whether the registrant: is(1) ahas ~~large~~filed ~~accelerated~~all ~~filer,~~reports anrequired ~~accelerated~~to ~~filer,~~be afiled ~~non-accelerated~~by ~~filer~~Section 13 or a15(d) ~~smaller~~of ~~reporting~~the ~~company.~~Securities ~~See~~Exchange Act of 1934 during the ~~definitions~~preceding of12 ~~“large~~months ~~accelerated~~(or ~~filer,”~~for ~~“accelerated~~such ~~filer”~~shorter ~~and~~period ~~“smaller~~that ~~reporting~~the ~~company”~~registrant inwas ~~Rule~~required ~~12b-~~to file such reports) and (2) ofhas been subject to such filing requirements for the ~~Exchange~~past ~~Act:~~90 days. Yes o No o*

~~Large~~Indicate ~~accelerated~~by ~~filer~~check omark ~~Accelerated~~whether ~~filer~~the oRegistrant has ~~Non-accelerated~~submitted ~~filer~~electronically oand ~~(Do~~posted ~~not~~on ~~check~~its corporate website, if aany, ~~smaller~~every ~~reporting~~Interactive ~~company~~Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.45 of this chapter) ~~Smaller~~during ~~reporting~~the ~~company~~preceding x12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o*

Indicate by check mark ~~whether~~if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s isknowledge, ain ~~shell~~definitive ~~company~~proxy ~~(as~~or ~~defined~~information statements incorporated by reference in ~~Rule~~Part ~~12b-2~~III of ~~the~~this ~~Exchange~~Form ~~Act).~~10-K ~~Yes~~or oany Noamendment xto this Form 10-K. o*

~~While~~Indicate ~~there~~by ischeck nomark ~~established~~whether ~~market for~~ the registrant’s is ~~limited~~a ~~partnership~~large ~~interests~~accelerated filer, ~~the~~an ~~aggregate~~accelerated ~~market~~filer, ~~value~~a ofnon-accelerated ~~limited~~filer ~~partnership~~or ~~interests~~a ~~held~~smaller byreporting ~~nonaffiliates~~company. ofSee the ~~registrant as~~ definitions of ~~June~~“large ~~30,~~accelerated ~~2011 (the last business day of the registrant’s most recently completed second fiscal quarter) was $70~~filer,~~008,877,~~” ~~assuming~~“accelerated afiler” ~~market~~and ~~value~~“smaller ofreporting ~~$6.48~~company” ~~per~~in ~~unit~~Rule 12b-2 of ~~limited~~the ~~partnership~~Exchange ~~interest.~~ Act:

AsLarge ofaccelerated ~~March~~filer ~~19,~~o ~~2012,~~Accelerated ~~the~~filer ~~registrant~~o ~~had~~Non-accelerated ~~10,803,839~~filer ~~units~~o of(Do ~~limited~~not ~~partnership~~check ~~interest~~if ~~outstanding.~~a smaller reporting company) Smaller reporting company x

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

~~BEHRINGER~~While ~~HARVARD~~there ~~SHORT-TERM~~is ~~OPPORTUNITY~~no ~~FUND~~established market therefore, the aggregate market value of limited partnership interests held by nonaffiliates of the Behringer Harvard Short-Term Opportunity Fund I LP ~~FORM~~as ~~10-K~~of ~~Year~~June ~~Ended~~30, ~~December~~2012 31(the last business day of its most recently completed second fiscal quarter) was $4,321,536, ~~2011~~assuming a market value of $0.40 per unit of limited partnership interest.*

	Page
PART I
Item 1.Business.		1
Item 1A.Risk Factors.		8
Item 1B.Unresolved Staff Comments.		30
Item 2.Properties.		30
Item 3.Legal Proceedings.		31
Item 4.Mine Safety Disclosures.		31
PART II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		32
Item 6.Selected Financial Data.		35
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.		36
Item 7A.Quantitative and Qualitative Disclosures about Market Risk.		48
Item 8.Financial Statements and Supplementary Data.		48
Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.		48
Item 9A.Controls and Procedures.		48
Item 9B.Other Information.		49
PART III
Item 10.Directors, Executive Officers and Corporate Governance.		50
Item 11.Executive Compensation.		54
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.		54
Item 13.Certain Relationships and Related Transactions, and Director Independence.		55
Item 14.Principal Accountant Fees and Services.		58
PART IV
Item 15.Exhibits, Financial Statement Schedules.		59
Signatures		60

As of March 19, 2013, there were 10,803,839 units of beneficial interest in Behringer Harvard Short-Term Opportunity Liquidating Trust outstanding.

*Behringer Harvard Short-Term Opportunity Liquidating Trust iis the transferee of the assets and liabilities of Behringer Harvard Short-Term Opportunity Fund I LP and files reports under the Commission file number for Behringer Harvard Short-Term Opportunity Fund I LP. Behringer Harvard Short-Term Opportunity Fund I LP filed a Form 15 on February 11, 2013 indicating its notice of termination of registration and filing requirements.

~~TABLE~~BEHRINGER OFHARVARD ~~CONTENTS~~SHORT-TERM OPPORTUNITY LIQUIDATING TRUST

~~Forward-Looking~~FORM ~~Statements~~10-K

~~Certain~~Year ~~statements~~Ended inDecember ~~this Annual Report on Form 10-K constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933~~31, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include discussion and analysis of the financial condition of Behringer Harvard Short-Term Opportunity Fund I LP (which may be referred to herein as the “Partnership,” “we,” “us,” or “our”) and our subsidiaries, including our ability to rent space on favorable terms, to address our debt maturities and to fund our liquidity requirements, the value of our assets, our anticipated capital expenditures, the amount and timing of anticipated future distributions to our unitholders, the estimated per unit value of our limited partnership units and other matters. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements. 2012

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of our management based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution unitholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in this Annual Report on Form 10-K and the factors described below:

		Page
	PART I

Item 1.	Business.	4

Item 1A.	Risk Factors.	8

Item 1B.	Unresolved Staff Comments.	25

Item 2.	Properties.	25

Item 3.	Legal Proceedings.	26

Item 4.	Mine Safety Disclosures.	26

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	27

Item 6.	Selected Financial Data.	29

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	37

Item 8.	Financial Statements and Supplementary Data.	37

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	37

Item 9A.	Controls and Procedures.	38

Item 9B.	Other Information.	38

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance.	39

Item 11.	Executive Compensation.	42

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	42

Item 13.	Certain Relationships and Related Transactions, and Director Independence.	43

Item 14.	Principal Accountant Fees and Services.	44

	PART IV

Item 15.	Exhibits, Financial Statement Schedules.	45

Signatures		46

~~• adverse market and economic challenges experienced by the U.S. economy or real estate industry as a whole and the local economic conditions in the markets in which our properties are located;~~2

•Forward-Looking ~~the availability of cash flow from operating activities for distributions and capital expenditures;~~Statements

•Certain ~~our~~statements in ~~level~~this Annual Report on Form 10-K constitute “forward-looking statements” within the meaning of ~~debt~~Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the ~~terms~~Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include discussion and ~~limitations~~analysis ~~imposed~~of onthe financial condition of Behringer Harvard Short-Term Opportunity Liquidating Trust (which may be referred to herein as the “Liquidating Trust,” “we,” “us,” byor “our”) as successor in interest to Behringer Harvard Short-Term Opportunity Fund I LP (which may be referred to herein as the “Partnership”) and our subsidiaries, including our ability to rent space on favorable terms, to address our debt ~~agreements;~~maturities and to fund our liquidity requirements, the value of our assets, our anticipated capital expenditures, the amount and timing of anticipated future distributions to our beneficiaries and other matters. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.

•These forward-looking statements are not historical facts but reflect the ~~availability~~intent, belief or current expectations of ~~credit~~our ~~generally~~management based on their knowledge and understanding of the business and industry, the economy and ~~any~~other ~~failure~~future toconditions. ~~refinance~~These orstatements ~~extend~~are not guarantees of future performance, and we caution our ~~debt~~beneficiaries asnot itto ~~comes~~place ~~due~~undue reliance on forward-looking statements. Actual results may differ materially from those expressed or aforecasted ~~failure~~in the forward-looking statements due to ~~satisfy~~a variety of risks, uncertainties and other factors, including but not limited to the ~~conditions~~factors listed and ~~requirements~~described ofunder ~~that~~“Risk ~~debt;~~Factors” in this Annual Report on Form 10-K and the factors described below:

•· ~~the~~adverse ~~need~~market toand ~~invest~~economic ~~additional~~challenges ~~equity~~experienced inby ~~connection~~the ~~with~~U.S. ~~debt~~economy ~~refinancings~~or real estate industry as a ~~result~~whole ofand ~~reduced~~the ~~asset~~local ~~values~~economic ~~and~~conditions ~~requirements~~in tothe ~~reduce~~markets ~~overall~~in ~~leverage~~which our properties are located;

•· ~~future~~the ~~increases~~availability inof ~~interest~~cash ~~rates~~flow from operating activities for capital expenditures;

•· ~~impairment~~our ~~charges~~level of debt and the terms and limitations imposed on us by our debt agreements;

•· ~~our~~the ~~ability~~availability of credit generally, and any failure to ~~retain~~refinance or extend our ~~executive~~debt ~~officers~~as ~~and~~it ~~other~~comes ~~key~~due ~~personnel~~or ofa ~~our~~failure ~~advisor,~~to ~~our~~satisfy ~~property~~the ~~manager~~conditions and ~~their~~requirements ~~affiliates~~of that debt;

•· ~~conflicts~~the ofneed ~~interest~~to ~~arising~~invest ~~out~~additional ofequity ~~our~~in ~~relationships~~connection with ~~our~~debt ~~advisor~~refinancings as a result of reduced asset values and ~~its~~requirements ~~affiliates~~to reduce overall leverage;

•· ~~changes~~future increases in ~~the~~interest ~~level of financial assistance or support provided by our sponsor or its affiliates~~rates; ~~and~~

•· ~~unfavorable~~our ~~changes~~ability into ~~laws~~retain orour ~~regulations~~executive ~~impacting~~officers and other key personnel of our ~~business~~managing ortrustee, our ~~assets.~~property manager and their affiliates;

~~Forward-looking~~· ~~statements~~conflicts ~~in this Annual Report on Form 10-K reflect our management’s view only as~~ of ~~the~~interest ~~date~~arising ofout ~~this Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence~~ of ~~unanticipated~~our ~~events~~relationships orwith ~~changes~~our tomanaging ~~future~~trustee operating results except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and ~~Section~~its ~~21E of the Exchange Act.~~ affiliates;

ii · changes in the level of financial assistance or support provided by our sponsor or its affiliates; and

~~TABLE~~· OFunfavorable ~~CONTENTS~~changes in laws or regulations impacting our business or our assets.

~~Cautionary~~Forward-looking ~~Note~~statements in this Annual Report on Form 10-K reflect our management’s view only as of the date of this Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.

~~The~~Cautionary representations, warranties and covenants made by us in any agreement filed as an exhibit to this Annual Report on Form 10-K are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties or covenants to or with any other parties. Moreover, these representations, warranties or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs. Note

The representations, ~~iii~~warranties and covenants made by us in any agreement filed as an exhibit to this Annual Report on Form 10-K are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties or covenants to or with any other parties. Moreover, these representations, warranties or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.

~~TABLE OF CONTENTS~~3

PART I

~~Item~~Explanatory ~~1. Business.~~Note

~~General~~As ~~Description~~more fully described below, subsequent to December 31, 2012 but prior to the date of ~~Business~~filing of this Annual Report on Form 10-K, the Behringer Harvard Short-Term Opportunity Fund I LP (referred to herein as the “Partnership”) completed its liquidation pursuant to a Plan of Liquidation adopted by its general partners. The plan provides for the formation of a liquidating trust for the purpose of completing the liquidation of the assets of the Partnership. On February 11, 2013, the Behringer Harvard Short-Term Opportunity Liquidating Trust (referred to herein as the “Liquidating Trust,” “we,” “us,” or “our”) was formed, and the Partnership transferred all of its remaining assets and liabilities to the Liquidating Trust. This Annual Report on Form 10-K, including the accompanying unaudited consolidated financial statements and notes thereto as of December 31, 2012 with respect to the Partnership, is being prepared and filed by the Liquidating Trust as successor in interest to the Partnership.

WeItem ~~are a limited partnership formed in Texas on July 30, 2002~~1. ~~Our general partners are Behringer Harvard Advisors II LP (“Behringer Advisors II”) and Robert M~~Business. Behringer (each a “General Partner” and collectively the “General Partners”). We were funded through capital contributions from our General Partners and initial limited partner on September 20, 2002 (date of inception) and offered our limited partnership units pursuant to a public offering which commenced on February 19, 2003 and terminated on February 19, 2005 (the “Offering”). The Offering was a best efforts continuous offering, and we admitted new investors until the termination of the Offering. As of December 31, 2011, we had 10,803,839 limited partnership units outstanding. Our limited partnership units are not currently listed on a national exchange, and we do not expect any public market for the units to develop.

WeGeneral ~~have~~Description ~~used the proceeds from the Offering, after deducting offering expenses, to acquire interests in twelve properties, including seven office building properties (one~~ of which has been converted to a data center), one shopping/service center, a hotel redevelopment with an adjoining condominium development, two development properties and undeveloped land. As of December 31, 2011, four of the twelve properties we acquired remain in our portfolio. As of December 31, 2011, we wholly owned two properties, and we owned interests in two properties through separate limited partnerships or joint venture arrangements. We are not currently seeking to purchase additional properties for our portfolio. Business

~~Our~~The Partnership ~~Agreement~~was ofa ~~Limited~~limited ~~Partnership~~partnership formed in Texas on July 30, as2002. ~~amended~~Its ~~(the~~general partners were Behringer Harvard Advisors II LP (“~~Partnership~~Behringer ~~Agreement~~Advisors II”), ~~provides~~and ~~that~~Robert weM. ~~will~~Behringer ~~continue~~(each ina ~~existence~~“General ~~until~~Partner” and collectively the ~~earlier~~“General Partners”). ofIt ~~December~~was ~~31,~~funded ~~2017~~through orcapital ~~termination~~contributions from its General Partners and an initial limited partner on September 20, 2002 (date of ~~the~~inception). ~~Partnership~~It offered its limited partnership units pursuant to ~~the~~a ~~dissolution~~public offering which commenced on February 19, 2003 and ~~termination~~terminated ~~provisions~~on ofFebruary 19, 2005 (the “Offering”). The Offering was a best efforts continuous offering, and the Partnership ~~Agreement.~~admitted new investors until the termination of the Offering.

~~Our~~The Partnership ~~office~~used isthe ~~located~~proceeds atfrom ~~15601~~the ~~Dallas~~Offering, ~~Parkway~~after deducting offering expenses, ~~Suite~~to ~~600~~acquire interests in twelve properties, including ~~Addison~~seven office building properties (one of which has been converted to a data center), ~~Texas~~one ~~75001~~shopping/service center, a hotel redevelopment with an adjoining condominium development, two development properties and ~~our~~undeveloped ~~toll-free~~land. ~~telephone~~The ~~number~~Partnership isengaged an ~~(866)~~unaffiliated ~~655~~third party to manage the day-~~1620~~to-day operations of the hotel. ~~The~~As ~~name~~of ~~Behringer~~December ~~Harvard~~31, is2012, two of the ~~property~~twelve properties acquired remain in the Partnership’s portfolio. The Partnership disposed of ~~Behringer~~four ~~Harvard~~properties ~~Holdings~~during the twelve months ended December 31, ~~LLC~~2012 and as a result, only the hotel (~~“Behringer~~and ~~Holdings”~~its retail component), approximately five acres of land and isthe ~~used~~back-end promoted byinterest ~~permission.~~in distributable cash to two sold properties remain in the portfolio.

~~Liquidity~~Effective as of January 31, 2013, Mr. Behringer ceased to be a general partner of the Partnership due to a permanent disability resulting in an Event of Withdrawal under the Partnership’s Amended and ~~Capital~~Restated ~~Resources~~Agreement of Limited Partnership (the “Partnership Agreement”). Effective that same date, Mr. Behringer also resigned as Chairman of Behringer Advisors II.

~~The~~On ~~effects~~February of11, 2013, the ~~recent~~sole ~~economic~~remaining ~~downturn~~General ~~have~~Partner, ~~caused~~Behringer usAdvisors toII, ~~reconsider~~in ~~our~~its ~~strategy~~sole ~~for~~discretion ~~certain~~organized ofus ~~our~~as ~~properties~~a ~~where~~Delaware westatutory ~~believe~~trust for the ~~principal~~purpose ~~balance~~ of ~~the~~winding ~~debt~~up ~~encumbering~~ the ~~property~~Partnership’s ~~exceeds~~affairs ~~the~~and ~~value~~liquidating of the ~~asset~~Partnership’s ~~under~~assets, ~~current~~including, ~~market~~but ~~conditions.~~not Inlimited to, ~~those cases where we believe~~ the ~~value~~sale of aits ~~property~~remaining isreal ~~not~~estate ~~likely~~assets, to ~~recover~~make inappropriate ~~the~~provision ~~near future, we believe there are more effective uses~~ for ~~our capital, and as a result we may cease making debt service payments on certain property level debt, resulting in defaults or events of default under~~ the ~~related~~Partnership’s ~~loan~~remaining ~~agreements.~~obligations and Weto ~~are~~make inspecial ~~active~~distributions ~~negotiations with certain lenders~~ to ~~refinance or restructure debt in a manner that we believe is the best outcome for us and~~ our ~~unitholders~~investors ~~and expect that some loans may be resolved through a discounted purchase or payoff~~ of ~~the~~available ~~debt~~liquidation ~~and, in certain situations, other loans may be resolved by negotiating agreements conveying the properties to the lender~~proceeds.

Our ~~cash~~office ~~and~~is ~~cash equivalents were $3.3 million~~ located at ~~December~~15601 31Dallas Parkway, ~~2011.~~Suite ~~Our principal demands for funds in the next twelve months and beyond will be for the payment of costs associated with lease-up of available space at our operating properties~~600, ~~Partnership operating expenses and for the payment of recurring debt service~~Addison, ~~further~~Texas ~~principal paydowns and reserve requirements on our outstanding indebtedness as required by our lenders. As a result of current economic and market conditions~~75001, ~~our ability to continue as a going concern is dependent on the willingness~~ and ~~ability of~~ our General Partners or their affiliates to provide us with sources of liquidity and our ability to resolve our current debt maturities. Although we have had to extend beyond our original target life of three to five years after the end of the Offering, we are designed to be selftoll-~~liquidating~~free ~~and~~telephone ~~thus~~number ~~not~~is ~~intended~~(866) ~~to continue as a long~~655-~~term going concern~~1620. ~~During~~The ~~the~~name ~~year ended December 31, 2011,~~ Behringer Harvard ~~Advisors II or its affiliates waived reimbursement of administrative services, asset management fees and reimbursement of operating expenses totaling $4.1 million, of which $3.7 million~~ is ~~classified~~the asproperty ~~a capital contribution from our General Partners on our consolidated statement~~ of ~~equity~~Behringer ~~(deficit).~~Harvard ~~During the year ended December 31~~Holdings, ~~2010,~~LLC (“Behringer ~~Advisors~~Holdings”) ~~II or its affiliates waived reimbursement of administrative expenses, asset management fees~~ and ~~reimbursement of operating expenses totaling $7.5 million, of which $7.0 million~~ is ~~classified~~used asby ~~capital contributions from our General Partners on~~ permission.

1Liquidation of the Partnership

~~TABLE~~On OFFebruary ~~CONTENTS~~11, 2013 (the “Effective Date”), the Partnership completed its liquidation pursuant to a Plan of Liquidation (the “Plan”) adopted by Behringer Advisors II, as its General Partner pursuant to its authority under the Partnership Agreement, which provided for our formation as a liquidating trust for the purpose of completing the liquidation of the assets of the Partnership.

~~our~~In ~~consolidated~~furtherance ~~statement~~ of ~~equity~~the Plan, the Partnership entered into a Liquidating Trust Agreement (~~deficit~~the “Liquidating Trust Agreement”). Inwith ~~addition~~the Partnership’s General Partners, Behringer ~~Harvard~~Advisors ~~Holdings~~II, ~~LLC~~as managing trustee (the “~~Behringer~~Managing ~~Holdings~~Trustee”), orand ~~our~~CSC Trust Company of Delaware, as resident trustee (the “~~Sponsor~~Resident Trustee”),. ~~forgave~~As ~~$2.8~~of ~~million~~the Effective Date, each of ~~principal~~the ~~borrowings~~holders ~~and~~of ~~all~~limited ~~accrued~~partnership units ~~interest~~in ~~thereon~~the ~~under~~Partnership received a ~~loan~~pro ~~agreement,~~rata ~~which~~beneficial ~~was~~interest ~~also~~unit ~~accounted~~in ~~for~~the asLiquidating aTrust ~~capital~~in ~~contribution~~exchange byfor ~~our~~such ~~General~~holder’s interest ~~Partners~~in the Partnership.

WeIn accordance ~~signed~~with athe ~~long-term~~Plan ~~full~~and ~~building~~the ~~lease~~Liquidating ~~that~~Trust ~~began October 1~~Agreement, ~~2011~~the atPartnership ~~1221~~transferred ~~Coit~~all ~~Road~~of ~~which~~its ~~totals~~remaining ~~approximately~~assets ~~20%~~and liabilities ofto the ~~rentable~~Liquidating ~~square~~Trust ~~feet~~to inbe ~~our~~administered, ~~office~~disposed ~~and~~of ~~data~~or ~~center~~provided ~~properties~~for ~~and~~in weaccordance ~~continue~~with tothe ~~negotiate~~terms ~~with~~and conditions ~~prospective~~set ~~tenants~~forth ~~regarding~~in ~~unleased~~the ~~space~~Liquidating atTrust ~~250/290~~Agreement. ~~John~~On ~~Carpenter.~~the ~~Our~~Effective ~~current~~Date, ~~business~~the ~~plan~~Partnership ~~calls~~filed ~~for~~a usForm to15 ~~fund~~with ~~our~~the Securities ~~liquidity~~and ~~requirements~~Exchange ~~from~~Commission ~~proceeds~~(“SEC”) ~~from~~to terminate the ~~disposition~~registration of ~~properties~~the ~~and~~limited ~~borrowings,~~partnership ~~however,~~units asin athe Partnership ~~result~~under ofthe ~~current~~Exchange ~~economic~~Act ~~conditions,~~and ~~our~~announced ~~ability~~it towould docease sofiling isreports ~~subject~~under tothat ~~certain~~Act. ~~factors~~On ~~beyond~~March ~~our~~28, ~~control.~~2013 Inwe ~~addition,~~were granted weNo-Action ~~may~~relief ~~also~~from ~~seek~~the toSEC ~~raise~~regarding ~~capital~~our byproposed ~~contributing~~modified ~~one~~reporting. orA ~~more~~copy of ~~our~~the ~~existing~~No-Action ~~assets~~letter tois apublicly ~~joint~~available ~~venture~~through ~~with~~the aSEC’s ~~third party~~website. ~~Investments~~Accordingly inour ~~joint~~Managing ~~ventures,~~Trustee ~~under~~will ~~certain~~file ~~circumstances,~~with ~~involve~~the ~~risks~~SEC ~~not~~annual ~~present~~reports ~~when~~on aForm 10-K ~~third~~that ~~party~~contain isunaudited ~~not~~financial ~~involved.~~statements ~~Our~~based ~~ability~~on tothe ~~successfully~~liquidation ~~identify,~~basis ~~negotiate,~~of accounting and ~~complete~~current ~~joint~~reports ~~venture transactions~~ on ~~acceptable~~Form ~~terms~~8-K to ordisclose atmaterial ~~all~~events isrelating ~~highly~~to ~~uncertain in the current economic environment~~us.

We continue to prepare and assess properties for potential sale. In order to provide additional liquidity for the execution of our current business plan, we disposed of a number of our investments in 2011 and have identified additional investments for disposition in 2012. On December 16, 2011, we sold 5050 Quorum for a contract sales price of $6.8 million. Proceeds from the sale were used to fully satisfy the existing indebtedness associated with the property, resulting in a gain on troubled debt restructuring of approximately $4.8 million which is included in discontinued operations. On June 30, 2011, we sold Landmark I and Landmark II (collectively, “Landmark I and II”). Proceeds from the sale of Landmark I and II of $16.2 million were used to fully satisfy the existing indebtedness associated with the property of $21 million, resulting in a gain on troubled debt restructuring of $4.9 million which is included in discontinued operations on our consolidated statements of operations for the year ended December 31, 2011. The sale contract for each of 5050 Quorum and Landmark I and II provide that we retain a promoted interest in distributable cash related to the buildings, meaning that we would share in the profits and cash flows of these properties once a certain threshold has been met. Additionally, on December 16, 2011 we sold Bretton Woods, which was comprised of constructed luxury homes and developed land lots, to an unaffiliated third party for a sales price of $2.3 million and all of the proceeds were used to fully satisfy the existing indebtedness associated with the property. In addition, we are currently negotiating a new contract for the sale of 250/290 John Carpenter Freeway which contains approximately 539,000 rentable square feet In some instances, to preserve cash, it may be in the best interests of unit holders to allow lenders to take possession of certain properties when they are no longer economically viable, such as Plaza Skillman, which was placed into receivership in October 2010 and transferred to the associated lender pursuant to a foreclosure in July 2011, and Melissa Land, on which the lender foreclosed in December 2011. As a result of our current liquidity needs and unstable credit market conditions limiting available resources through additional borrowings for a closed-end, finite life fund, we may have to sell a property under terms that are less than advantageous than we could achieve with a longer holding period. However, there can be no assurance these future dispositions will occur, or, if they occur, that they will help us to achieve our liquidity objectives.

OfThe ~~our~~Liquidating ~~$123.7~~Trust will ~~million~~terminate inupon ~~notes~~the ~~payable~~earliest atof ~~December~~(i) ~~31, 2011, $52.6 million has matured and is subsequently in default and an additional $50.9 million is scheduled to mature in~~ the ~~next~~distribution ~~twelve months. As~~ of ~~December~~all ~~31, 2011,~~ of our ~~$123.7~~assets ~~million~~ in ~~notes~~accordance ~~payable, $111.3 million was secured by properties and $101.3 million was recourse to us. We continue to negotiate~~ with the ~~lenders~~terms toof ~~refinance or restructure~~ the ~~loans.~~Liquidating WeTrust Agreement, ~~currently~~or ~~expect~~(ii) ~~to use proceeds from~~ the ~~disposition~~expiration of ~~properties~~a ~~and~~period ~~additional borrowings to continue making our scheduled debt service payments on certain properties until the maturity dates~~ of ~~the~~three ~~loans~~years ~~are~~from ~~extended,~~ the ~~loans~~ ~~are~~Effective ~~refinanced or the outstanding balance of the loans is completely paid off~~Date. ~~There~~The isterm nomay ~~guarantee that we will~~ be ~~able~~extended tobeyond ~~refinance our borrowings with more or less favorable terms or extend~~ the ~~maturity~~three year ~~dates~~term ofif ~~such~~our ~~loans.~~Managing InTrustee ~~the~~determines ~~event~~ that ~~any of the lenders demanded immediate payment of~~ an ~~entire~~extension ~~loan~~is ~~balance,~~reasonably wenecessary ~~would have~~ to ~~consider~~wind ~~all~~up available alternatives, including transferring legal possession of the relevant property to the lender. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further information regarding our ~~debt~~affairs.

2Market Outlook

~~TABLE~~During OF2012, ~~CONTENTS~~the U.S. economic recovery, although still slow by most measures, survived uncertainties over the general election and the fiscal cliff and exhibited visible improvements in many fundamentals. One of the more important factors was the stabilization of the housing sector, a sector that historically has been important in prior economic recoveries. In the second half of the year, home price indexes for the largest 20 cities in the U.S. had recovered to 2003 levels. While these are still not at pre-recession highs, these are levels that show improvement in inventories, foreclosures and distressed sales. With recent government initiatives to encourage private investment of single family homes, many analysts are projecting a faster pace to clear the supply of foreclosed and vacant properties. Other improvements were made in factory output, particularly autos and other durable goods, corporate profits and modest gains in employment. Regarding employment, the economy averaged 165,000 new jobs in the fourth quarter of 2012, higher than prior quarters, but because that is barely exceeding new workers entering the market, it is a level that is consistent with a slow, gradual recovery. Also helping the U.S. are improvements, or at least stabilization, of global economic issues. The European debt crisis, which created uncertainty over sovereign defaults and departures from the Euro and European Union that were constant drags on the U.S. economy for the last couple of years, has now reached a point where the worst of the scenarios appear less likely. Global growth, as forecast by the World Bank, is projected at 2.4% for 2013. This compares to an expected 2.3% for 2012 and while less than earlier projections, is not expected to be a serious drag on the U.S.

~~The~~Offsetting ~~preparation~~these offactors ~~financial~~and ~~statements~~likely ofcontributors to a ~~going~~slower, ~~concern~~moderate ~~generally~~recovery ~~contemplates~~are ~~realization~~uneven ofprivate ~~assets~~consumption, ~~and~~as ~~settlement~~individual ofsavings ~~liabilities~~rates incontinue ~~the~~to ~~normal~~rise; ~~course~~continued ofdecline in new business. ~~The~~creation, ~~conditions~~as investors are reluctant to increase their risk capital; and ~~events~~decreases ~~described~~in ~~above~~the ~~raise~~labor ~~substantial~~force, ~~doubt~~as ~~about~~the ~~our~~long term ~~ability~~unemployed are not returning to ~~continue~~the aswork aforce ~~going~~and ~~concern.~~may ~~The~~be ~~accompanying~~structurally ~~consolidated~~unemployed. ~~financial~~Also, ~~statements~~there dois ~~not~~concern ~~include~~over ~~any~~the ~~adjustments~~consequences and uncertainty related to ~~reflect~~political ~~the~~gridlock, ~~possible~~which ~~future~~was ~~effects~~reported onas a major factor in the ~~recoverability~~negative ofGDP ~~assets~~report orfor the ~~amounts~~fourth quarter of ~~liabilities~~2012. ~~that~~The ~~may~~debate ~~result~~over ~~should~~the wedebt belimit ~~unable~~appears to ~~continue~~be ascontinuing for an extended period and risks a ~~going~~downgrade ~~concern~~of U.S. ~~Our~~credit ~~current~~and increased ~~plans~~borrowing ~~are~~costs. toThe ~~use~~federal ~~proceeds~~government ~~from~~has not passed a budget in the ~~disposition~~last offour ~~properties~~years and ~~additional~~appears ~~borrowings~~ to ~~make~~be ~~payments~~in ona ~~our~~prolonged ~~outstanding~~debate ~~debt~~over ~~until~~spending ~~the~~and ~~maturity~~tax ~~dates~~levels. ofWe ~~the~~believe ~~loans~~that ~~are~~businesses ~~extended,~~and ~~the~~consumers ~~loans~~tend ~~are~~to ~~refinanced~~be orvery ~~the~~conservative ~~outstanding~~when ~~balance~~confronted with these kinds of ~~the~~issues, ~~loans~~which iscould ~~completely~~disrupt ~~paid~~what ~~off,~~could ~~pay~~otherwise ~~for~~be ~~on-going~~a ~~capital~~stronger ~~needs,~~recovery. ~~fund~~On ~~operations~~a ~~and~~net basis, ifwe ~~available,~~believe ~~make~~the ~~special~~U.S. ~~distributions~~economy can toovercome ~~our~~a ~~unitholders.~~certain ~~For~~degree ~~property-related~~of ~~loans~~these ~~that~~issues, ~~have~~and ~~matured~~with most analysts, we ~~are~~expect ~~negotiating~~a ~~discounted~~moderate, ~~loan~~but ~~payoffs~~uneven orU.S. growth for the ~~transfer~~near term. ofHowever, these issues have the ~~relevant~~potential ~~property~~to be very significant to the ~~lender~~economy.

AsOur isprimary ~~usual~~objectives will ~~for~~be ~~opportunity~~to ~~style~~continue ~~real~~to ~~estate~~preserve ~~programs~~value, weprotecting ~~are~~and ~~structured as a finite life vehicle with the intent to full cycle by~~ selling ~~off~~ our ~~assets.~~remaining ~~Although we have extended beyond our original target life~~assets, asproviding ~~previously~~for ~~reported, we have entered into~~ our ~~disposition~~liabilities ~~phase~~ and ~~we are in~~ distributing the ~~process~~remaining ofproceeds. ~~selling~~Our ~~our~~ability ~~assets~~to ~~and~~dispose ~~winding~~of upour ~~operations~~properties ~~over~~will ~~approximately~~be ~~the~~subject ~~next~~to ~~two~~various ~~years~~factors, ~~with~~including the ~~goal~~ability of ~~returning~~potential purchasers ~~capital~~ to ~~our~~access ~~investors.~~capital Asdebt isfinancing. ~~typical~~If inwe ~~the~~are ~~commercial~~unable ~~real~~to ~~estate~~sell ~~industry,~~a ~~the~~property ~~original~~when ~~purchases~~we ofdetermine ~~the~~to ~~portfolio~~do ~~properties were financed using leverage. Thus~~so, asit ~~these~~could ~~dispositions~~have ~~are~~a ~~made,~~significant adverse ~~the~~effect ~~associated debt~~ on ~~the~~our ~~properties must~~cash ~~first~~flows beand ~~repaid~~results ~~before~~of ~~any remaining proceeds are returned to investors~~operations. ~~Presently,~~Given ~~given~~ the ~~continued~~disruptions ~~challenges~~ in the ~~real~~capital ~~estate~~ markets, weand dothe ~~not~~current ~~expect~~lack ~~that~~of available ~~investors~~credit, ~~will~~our ~~fully~~ability ~~recover~~to ~~their~~dispose ~~original~~of ~~$10~~our ~~per~~properties ~~unit~~may ~~investment.~~be ~~Since inception~~delayed, or we ~~have~~may ~~paid~~receive ~~$2.12~~lower ~~per~~than ~~unit~~anticipated ~~in total distributions, including both recurring monthly and special distributions~~returns.

~~Market~~Unit ~~Outlook~~Valuation

~~During~~The ~~2011,~~Partnership ~~the~~Agreement required ~~U.S.~~that ~~economy~~the ~~faced~~General ~~one~~Partners ofannually ~~its~~provide ~~most volatile periods as~~ the ~~economy~~Partnership’s ~~was~~limited ~~interrupted~~partners ~~by domestic and international economic events. The year began~~ with aan ~~view~~estimate ~~toward~~of ~~global and domestic recoveries, particularly in~~ the ~~U.S.~~amount ina ~~advance~~ holder of ~~quantitative~~limited ~~easing~~partnership ~~from~~units ~~the~~would ~~U.S.~~receive ~~Federal~~if ~~Reserve.~~its ~~This~~properties ~~optimism~~were ~~was~~sold ~~soon~~at ~~overcome~~their asfair ~~the~~market ~~Japanese~~values ~~earthquake~~as ~~disrupted~~of ~~world-wide industrial supply chains,~~ the ~~political~~close ~~unrest~~of in the ~~Middle~~fiscal year, ~~East led to higher energy~~ and ~~commodity~~the ~~prices~~proceeds ~~and~~from ~~finally~~ the ~~European~~sale ~~debt~~of ~~crisis appeared to threaten international debt markets in a Lehman-like collapse. Growth in~~ the ~~economy~~properties ~~was~~(without ~~further~~reduction ~~shaken~~for ~~during~~selling ~~the prolonged~~expenses), ~~U.S.~~together ~~debt~~with ~~ceiling~~other ~~debate~~funds ~~and the downgrade~~ of the ~~U.S. government’s credit rating in late summer. However~~ Partnership, ~~global and domestic markets~~ were ~~surprisingly~~distributed ~~resilient~~in ~~and by the fourth quarter~~ a ~~number of signs pointed once again to a modest recovery in the U~~liquidation.S. ~~economy.~~As ~~Leading~~of ~~the~~December ~~improvements were fourth quarter results for GDP~~29, ~~job creation~~2011, ~~unemployment claims, consumer spending and manufacturing indicators. While these improvements are still modest and~~ the ~~European~~General ~~debt~~Partners ~~crisis~~estimated ~~still~~a ~~remains~~value ~~not fully resolved, the end result is the economy appears to be similarly positioned for slow to moderate growth at the end~~ of ~~2011~~$0.40 asper itlimited partnership ~~was at the beginning of the year~~unit.

~~Our~~On ~~primary~~December ~~objectives~~14, ~~will~~2012, one beof tothe ~~continue~~Partnership’s toGeneral ~~preserve capital~~Partners, asBehringer ~~well~~Advisors ~~as sustain and enhance property values~~II, ~~while~~adopted ~~continuing~~an toestimated ~~focus~~value onper ~~the~~limited ~~disposition~~partnership unit of ~~our properties~~$1.93 ~~Our~~per ~~ability~~unit. As topart ~~dispose~~ of ~~our~~the ~~properties~~General ~~will~~Partner’s bevaluation ~~subject~~process, toand ~~various~~as ~~factors,~~required ~~including~~by the ~~ability~~Partnership ofAgreement, the ~~potential~~General ~~purchasers~~Partner toobtained ~~access~~the ~~capital~~opinion ~~debt~~of ~~financing.~~an Ifindependent wethird ~~are~~party, ~~unable~~Robert toA. ~~sell~~Stanger a& ~~property~~Co., ~~when~~Inc. ~~we determine to do so~~(“Stanger”), that itthe ~~could~~estimated ~~have~~valuation awas ~~significant~~reasonable ~~adverse effect on our cash flows~~ and ~~results~~was ofprepared ~~operations. Given the disruptions~~ in ~~the~~accordance ~~capital~~with ~~markets~~appropriate ~~and~~methods ~~the~~for ~~current~~valuing ~~lack~~real ofestate. Stanger, founded ~~available~~in ~~credit~~1978, ~~our~~is ~~ability~~a tonationally ~~dispose~~recognized ofinvestment ~~our~~banking ~~properties~~firm ~~may~~specializing bein ~~delayed~~real estate, orREITs weand ~~may~~direct ~~receive lower than~~participation ~~anticipated~~programs ~~returns.~~such Inas ~~addition,~~the ~~a more prolonged economic downturn could negatively affect our ability to attract and retain tenants~~Partnership’s.

~~Three~~Stanger’s ofopinion was ~~our~~expressed ~~four~~from ~~remaining~~a ~~real~~financial ~~estate~~point ~~assets are located in Texas, all~~ of ~~which~~view ~~are~~and ~~located~~was insubject ~~the~~to ~~Dallas-Fort~~various ~~Worth metropolitan area~~limitations. Stanger Werelied ~~have~~on ainformation ~~data~~provided by ~~center~~the ~~that~~General isPartner ~~100%~~without ~~leased~~independent ~~under~~verification ~~a long-term lease~~ and wedid ~~continue~~not toperform ~~work towards leasing our 250/290 John Carpenter building which was 18% leased at December 31~~appraisals, ~~2011. We~~ did not ~~experience~~inspect ~~any significant tenant defaults resulting in~~ the ~~loss~~properties ofor ~~material~~review engineering ~~rental~~or ~~income~~structural ~~during the year ended December 31~~studies, ~~2011.~~environmental ~~Additionally~~studies, asand itdid ~~relates~~not tomake ~~the~~independent ~~hotel~~local ~~within~~market ~~our~~inquiries. Stanger relied ~~portfolio,~~on ~~Smith~~information ~~Travel~~from ~~Research indicates that~~ the ~~national~~General ~~overall~~Partner ~~occupancy~~regarding ~~rate~~lease ~~for~~terms ~~hospitality~~and ~~properties in~~ the ~~United~~physical ~~States~~condition ~~rose from~~and ~~53.5%~~capital inexpenditure ~~the fourth quarter~~ requirements of ~~2010~~each ~~to 60~~property.1% inPlease ~~the~~see ~~fourth~~Item ~~quarter of 2011~~5. ~~The national overall Average Daily Rate (~~“~~ADR”)~~Market ~~also~~for ~~rose~~Registrant’s ~~from~~Common ~~$98.25~~Equity, inRelated ~~the~~Shareholder ~~fourth~~Matters ~~quarter~~and ofIssuer Purchases ~~2010 to $101.64 in the fourth quarter~~ of ~~2011.~~Equity ~~The~~Securities” ~~hotel~~for ~~industry~~additional isinformation ~~expected~~regarding toour ~~see~~most ~~continued~~recent ~~modest~~estimated ~~growth~~unit ~~in 2012~~valuation.

~~TABLE~~On OFthe ~~CONTENTS~~Effective Date, when the Partnership’s assets and liabilities were transferred to us, the economic value of each beneficial interest unit was equivalent to the economic value of one limited partnership unit in the Partnership. The most recent estimated value per limited partnership unit as of December 14, 2012 should not be relied upon after such date, as we continue to sell our remaining assets. Because we are actively in the process of completing the disposition of our remaining properties as soon as practicable, we will not continue the Partnership’s practice of making annual estimated valuations under the terms of the Liquidating Trust Agreement.

~~Unit~~Disposition ~~Valuation~~Policies and Objectives

~~Our~~The ~~Partnership~~Liquidating Trust Agreement ~~requires~~provides ~~that~~for a three year period to liquidate our ~~General~~remaining ~~Partners~~assets. ~~annually~~Our ~~provide~~Managing Trustee is working diligently to liquidate these assets in a manner that makes sense for our ~~limited~~beneficiaries, ~~partners~~and ~~with~~expects anthat ~~estimate~~the disposition of ~~the~~these ~~amount~~assets awill ~~holder~~be completed before the end of ~~limited~~this ~~partnership~~three ~~units~~year ~~would~~period. ~~receive~~However, ifwe intend to hold our various real properties ~~were~~until ~~sold~~such attime ~~their~~as ~~fair~~sale ~~market~~or ~~values~~other disposition asappears ofto ~~the~~be ~~close~~advantageous ofto ~~the~~achieve ~~fiscal~~our ~~year~~disposition objectives or until it appears that such objectives will not be met. In deciding whether to sell properties, we will consider factors such as potential capital appreciation, cash flow, future capital expenditure costs and ~~the~~federal ~~proceeds~~income ~~from~~tax considerations. We will also consider the ~~sale~~current state of the ~~properties~~general ~~(without~~economy, and ~~reduction~~whether waiting to dispose of a property will allow us to realize additional value for ~~selling~~our ~~expenses),~~beneficiaries. ~~together~~Our ~~with~~Managing ~~other~~Trustee may ~~funds~~exercise ofits discretion as to the ~~Partnership,~~timing ~~were~~of ~~distributed~~the insale of a ~~liquidation~~property. AsWe will have no obligation to sell properties at any particular time, except upon the termination of ~~December~~our 31existence on February 11, ~~2010~~2016, or, after such date if our ~~General~~Managing ~~Partners~~Trustee ~~estimated~~determines that aan ~~value~~extension ofis ~~$6.48~~reasonably ~~per~~necessary ~~limited~~to ~~partnership~~wind ~~unit.~~up our affairs.

OnPursuant ~~December~~to ~~29,~~the ~~2011~~Liquidating Trust ~~Behringer Advisors II~~Agreement, our ~~co-general~~primary ~~partner,~~objective ~~adopted~~is alimited ~~new~~to ~~estimated~~conserving value, ~~per~~protecting ~~limited~~and ~~partnership~~selling ~~unit~~our ofremaining ~~$0.40~~assets, ~~per~~providing ~~unit.~~for our Asliabilities ~~part~~and ofdistributing the ~~valuation~~remaining ~~process,~~proceeds ~~and~~therefrom. asThus, ~~required~~cash byflow ~~the~~from ~~Partnership~~operations ~~Agreement,~~will ~~the~~not ~~General~~be ~~Partner~~invested ~~obtained~~in the acquisition ~~opinion~~ of anproperties. ~~independent~~Thus, ~~third~~we ~~party,~~are ~~Robert~~intended A.to ~~Stanger~~be &self-liquidating ~~Co.,~~in ~~Inc~~nature. ~~(“Stanger”)~~However, ~~that~~at the ~~estimated~~discretion ~~valuation~~of ~~was~~our ~~reasonable~~Managing ~~and~~Trustee, cash ~~was~~flow ~~prepared~~and/or innet ~~accordance~~sales ~~with~~proceeds ~~appropriate~~may ~~methods~~be ~~for~~held ~~valuing~~as ~~real~~working ~~estate.~~capital ~~Stanger,~~to ~~founded~~pay inexpenses ~~1978,~~or isother aliabilities ~~nationally~~of ~~recognized~~the ~~investment~~Liquidating ~~banking~~Trust or ~~firm~~used ~~specializing~~to inmake ~~real~~capital ~~estate,~~improvements ~~REITs~~to ~~and~~existing ~~direct participation programs such as ours~~properties.

~~Stanger’s~~The ~~opinion~~Liquidating ~~was~~Trust will ~~expressed from a financial point of view and was subject to various limitations. Stanger relied on information provided by the General Partner without independent verification and did~~ not ~~perform appraisals~~pay, ~~did~~directly ~~not~~or ~~inspect~~indirectly, ~~the~~any ~~properties~~commission or ~~review engineering or structural studies~~fee, ~~environmental~~except ~~studies,~~as ~~and~~specifically ~~did~~permitted ~~not~~under ~~make~~Article ~~independent~~VI ~~local~~of ~~market~~the ~~inquiries.~~Liquidating Trust ~~Stanger~~Agreement, ~~relied~~to onour ~~information~~Managing ~~from~~Trustee ~~the~~or ~~General~~its ~~Partner~~affiliates ~~regarding~~in ~~lease~~connection ~~terms~~with ~~and~~ the ~~physical~~distribution ~~condition and capital expenditure requirements~~ of ~~each~~proceeds ~~property.~~from ~~Please~~the ~~see Item 5. “Market for Registrant’s Common Equity~~sale, ~~Related Shareholder Matters and Issuer~~exchange ~~Purchases~~or financing of ~~Equity Securities” for additional information regarding~~ our ~~most recent estimated unit valuation~~properties.

~~Disposition~~Although ~~Policies~~not required to do so, we will generally seek to sell our real estate properties for cash. We may, however, accept terms of payment from a buyer that include purchase money obligations secured by mortgages as partial payment, depending upon then-prevailing economic conditions customary in the area in which the property being sold is located, credit of the buyer and available financing alternatives. Some properties we sell may be sold on an installment basis under which only a portion of the sale price will be received in the year of sale, with subsequent payments spread over a number of years. In such event, our full distribution of the net proceeds of any sale may be delayed until the notes are paid, sold or financed.

~~We believe it makes economic sense to sell properties in today’s market in certain instances~~Generally, ~~such~~we asdo ~~when~~not anticipate ~~the~~selling ~~value~~our ofassets ~~the~~until ~~in-place~~we ~~cash~~feel ~~flows~~it ~~from existing tenants~~ is ~~stable,~~the ~~predictable~~right ~~and~~time ~~attractive~~ to ~~potential~~dispose ~~buyers,~~of ~~when~~an ~~the property has limited or no equity with a near-term debt maturity~~asset, or ~~when~~we ~~the~~feel ~~equity~~that ~~in a property can be redeployed in~~ the ~~portfolio~~economy inhas ~~order to achieve better returns or strategic goals. Therefore~~improved, and we ~~will evaluate each real property in which we~~ have ~~invested~~the ~~until~~opportunity ~~such time as sale or other disposition appears~~ to berealize ~~advantageous~~additional ~~to achieve our investment objectives or until it appears that such objectives will not be met~~value. WeOur ~~will~~Managing ~~also~~Trustee ~~consider~~intends ~~factors such as potential capital appreciation, cash flow and federal income tax considerations, including possible adverse federal income tax consequences~~ to ~~our~~use ~~limited~~all ~~partners,~~reasonable ~~the~~efforts ~~current state of the general economy and whether waiting~~ to ~~dispose of a property will allow us to~~ realize ~~additional~~ value for our ~~limited partners~~beneficiaries. ~~Our~~We ~~General~~are ~~Partners~~diligently ~~may~~working ~~exercise their discretion as~~ to ~~whether~~increase ~~and~~net ~~when~~operational toperformance ~~sell a property, and we will have no obligation to sell properties~~ at ~~any particular time, except upon~~ our ~~termination~~hotel onproperty ~~December~~and ~~31, 2017,~~ renew or ~~earlier~~secure ifretail ~~our~~leases ~~General~~with ~~Partners~~quality ~~determine~~tenants to ~~liquidate~~increase ~~us,~~net ~~or,~~operating ifincome ~~investors~~and ~~holding a majority of~~ the ~~units~~ultimate ~~vote~~value ~~to liquidate us in response to a formal proxy to liquidate. Instead~~ of ~~causing us to liquidate,~~ our ~~General~~assets Partners, in their sole discretion, may determine to offer to limited partners the opportunity to convert their units into interests in another public real estate program sponsored by our General Partners or their affiliates, through a plan of merger, plan of exchange or plan of conversion, provided that the transaction is approved by holders of such percentage of units as determined by our General Partners, but not less than a majority and ~~excluding those units held by our General Partners and their affiliates. If such an opportunity is provided~~ to ~~our limited partners, it may involve the distribution to limited partners of freely traded securities that are listed~~ execute on aother ~~securities~~value ~~exchange.~~creation strategies.

~~Cash~~Conflicts ~~flow from operations will not be invested in the acquisition~~ of ~~new properties. However, our General Partners may determine not to distribute net sales proceeds if such proceeds are:~~ Interest

•We ~~held~~are assubject ~~working~~to ~~capital~~various conflicts ~~reserves;~~of orinterest arising out of our relationship with our Managing Trustee and its affiliates, including conflicts related to the arrangements pursuant to which our Managing Trustee and its affiliates will be compensated by us. All of our agreements and arrangements with our Managing Trustee and its affiliates, including those relating to compensation, are not the result of arm’s-length negotiations. Some of the conflicts of interest in our transactions with our Managing Trustee and its affiliates are described below.

•Our ~~used~~Managing toTrustee is ~~make~~Behringer ~~improvements~~Advisors toII, ~~existing~~one ~~properties~~of the former General Partners of the Partnership. Mr. Robert M. Behringer, the other former General Partner of the Partnership, owns a controlling interest in Behringer Holdings, a Delaware limited liability company that indirectly owns all of the outstanding equity interests of Behringer Advisors II, our property managers and Behringer Securities LP (“Behringer Securities”), the dealer manager for the Offering. Robert S. Aisner, Robert J. Chapman, Gerald J. Reihsen, III, Gary S. Bresky and M. Jason Mattox are executive officers of Harvard Property Trust, LLC (“HPT”), the sole general partner of Behringer Advisors II, and Behringer Securities. In addition, Mr. Bresky is an executive officer of Behringer Securities.

~~Thus,~~Because we ~~are~~will ~~intended~~be operated toby our Managing Trustee, conflicts of interest will not be ~~self~~resolved through arm’s-~~liquidating~~length innegotiations, ~~nature~~but through the exercise of our Managing Trustee’s judgment consistent with its fiduciary responsibility to our beneficiaries and our disposition objectives and policies. For a description of some of the risks related to these conflicts of interest, see the Item 1A. “Risk Factors” section of this Annual Report on Form 10-K. For a discussion of the conflict resolution policies, see the Item 13. “Certain Relationships and Related Transactions and Director Independence” section of this Annual Report on Form 10-K.

~~TABLE~~Interests OFin ~~CONTENTS~~Other Real Estate Programs

WeOur ~~will~~Managing ~~not~~Trustee and ~~pay,~~its ~~directly~~affiliates orare ~~indirectly~~general partners of other Behringer Harvard programs, ~~any~~including ~~commission~~real orestate ~~fee~~programs that have investment objectives similar to ours, ~~except~~and aswe ~~specifically~~expect ~~permitted~~that ~~under~~they ~~Article~~will ~~XII~~organize ofother ~~our~~such ~~Partnership~~programs ~~Agreement,~~in tothe ~~our~~future. ~~General~~Our ~~Partners~~Managing orTrustee ~~their~~and such affiliates inhave ~~connection~~legal and financial obligations with ~~the~~respect ~~distribution~~to these other programs that are similar to their obligations to us. As general partners of ~~proceeds~~other ~~from~~programs, they may have contingent liabilities for the ~~sale~~obligations of other programs structured as partnerships, ~~exchange~~as orwell ~~financing~~as our obligations, which, if such obligations were enforced against them, could result in substantial reduction of ~~our~~their ~~properties.~~net worth.

~~Although~~Other ~~not~~Activities ~~required to do so, we will generally seek to sell our real estate properties for cash. We may, however, accept terms~~ of ~~payment~~Our Managing ~~from~~Trustee a buyer that include purchase money obligations secured by mortgages as partial payment, depending upon then-prevailing economic conditions customary in the area in which the property being sold is located, credit of the buyer and ~~available~~its ~~financing~~Affiliates alternatives. Some properties we sell may be sold on an installment basis under which only a portion of the sale price will be received in the year of sale, with subsequent payments spread over a number of years. In such event, our full distribution of the net proceeds of any sale may be delayed until the notes are paid, sold or financed.

~~Borrowing~~We ~~Policies~~rely on our Managing Trustee and its affiliates for the day-to-day operation of our business. As a result of their interests in other Behringer Harvard programs and the fact that they have also engaged and will continue to engage in other business activities, our Managing Trustee and its affiliates will have conflicts of interest in allocating their time between us and other Behringer Harvard programs and other activities in which they are involved. In addition, our Liquidating Trust Agreement does not specify any minimum amount of time or level of attention that our Managing Trustee must devote to us. However, our Managing Trustee believes that it and its affiliates have sufficient personnel to discharge fully their responsibilities to all of the Behringer Harvard programs and other ventures in which they are involved.

We have used debt secured by real estate as a means of providing additional funds for the acquisition and development of properties. By operating on a leveraged basis, we have had more funds available for investment Competition in ~~properties~~Leasing ~~and~~Properties other investments. This has enabled us to make more investments than would otherwise be possible, resulting in a more diversified portfolio. Most of our borrowings are on a recourse basis to us, meaning that the liability for repayment is not limited to any particular asset. Furthermore, the use of leverage brings with it the risk of default on the mortgage payments and a subsequent foreclosure of a particular property.

~~There~~Conflicts isof nointerest will ~~limitation~~exist onto the ~~amount~~extent that we ~~may~~own ~~invest~~properties in ~~any~~the ~~single~~same ~~improved~~geographic ~~property~~areas where properties owned by our Managing Trustee, its affiliates or other ~~asset~~Behringer orHarvard onprograms ~~the~~are ~~amount~~located. weIn ~~can~~such ~~borrow~~a ~~for~~case, a conflict could arise in the ~~purchase~~leasing of ~~any~~our ~~single~~properties in ~~property~~the orevent ~~other~~that ~~investment.~~we ~~According~~and another Behringer Harvard program were to ~~our~~compete ~~Partnership~~for ~~Agreement~~the same tenants in negotiating leases, ~~the~~or ~~total~~a ~~amount~~conflict could arise in connection with the resale of ~~indebtedness~~properties in the event that ~~may~~we beand ~~incurred~~another byBehringer usHarvard ~~cannot~~program ~~exceed~~were atto ~~any~~attempt to ~~time~~sell similar properties at the ~~sum~~same time. Conflicts of ~~(1)~~interest ~~85%~~may ofalso ~~the~~exist ~~aggregate~~at ~~purchase~~such ~~price~~time ofas ~~all~~we ofor our affiliates managing properties ~~that~~on ~~have~~our ~~not~~behalf ~~been~~seek ~~refinanced~~to employ developers, ~~plus~~contractors ~~(2)~~or ~~85%~~building ofmanagers, and other circumstances. Our Managing Trustee will seek to reduce conflicts relating to the ~~aggregate~~employment ~~fair~~of ~~value~~developers, contractors or building managers by making prospective employees aware of all ofsuch properties seeking to employ such persons. In addition, our ~~refinanced~~Managing Trustee will seek to reduce conflicts that may arise with respect to properties asavailable ~~determined~~for sale or rent by ~~the~~making ~~lender~~prospective onpurchasers ~~the~~or ~~date~~tenants aware of ~~refinancing~~all such properties. ~~We expect~~However, ~~but~~these conflicts cannot ~~assure~~be fully avoided in that, atthere ~~any~~may ~~time,~~be ~~the~~differing ~~total~~compensation ~~amount~~arrangements ofestablished for ~~indebtedness~~employees ~~incurred~~at ~~will~~different ~~not exceed~~properties ~~75%~~or ofdiffering ~~our~~terms ~~aggregate~~for ~~asset~~resale ~~value.~~or leasing of the various properties.

WeAffiliated ~~will~~Property refinance our properties during the term of a loan only in limited circumstances, such as when a decline in interest rates makes it beneficial to prepay an existing mortgage or when an existing mortgage matures. The benefits of the refinancing may include an increased cash flow resulting from reduced debt service requirements and an increase in property ownership if refinancing proceeds are reinvested in real estate. Managers

~~Conflicts~~Our properties are managed and leased by HPT Management Services LLC, Behringer Harvard Short-Term Management Services, LLC or Behringer Harvard Real Estate Services, LLC, our affiliated property managers, or their affiliates (individually or collectively referred to as “Property Manager”). The Partnership’s agreements with our Property Manager expired in June 2010, but automatically extended for successive seven year terms. We succeeded to these agreements on the Effective Date. We can terminate the agreements only in the event of ~~Interest~~gross negligence or willful misconduct on the part of the Property Manager or upon sale of the property. HPT Management Services LLC and Behringer Harvard Real Estate Services, LLC also serve, and will continue to serve, as property manager for properties owned by affiliated real estate programs, some of which may be in competition with our properties. Management fees to be paid to our Property Manager are based on a percentage of the rental income received by the managed properties.

We are subject to various conflicts of interest arising out of our relationship with our General Partners and their affiliates, including conflicts related to the arrangements pursuant to which our General Partners and their affiliates will be compensated by us. All of our agreements and arrangements with our General Partners and their affiliates, including those relating to compensation, are not the result of arm’s-length negotiations. Some of the conflicts of interest in our transactions with our General Partners and their affiliates are described below. Regulations

Our ~~General~~investments ~~Partners~~ are subject ~~Robert~~to M.various ~~Behringer and Behringer Advisors II. Mr. Behringer owns a controlling interest in Behringer Holdings~~federal, astate ~~Delaware~~and ~~limited~~local ~~liability company that indirectly owns all of the outstanding equity interests of Behringer Advisors II~~laws, ~~our~~ordinances ~~property managers~~ and ~~Behringer Securities LP (“Behringer Securities”)~~regulations, ~~the dealer manager for the Offering. Mr. Behringer~~including, ~~Robert~~among S.other ~~Aisner~~things, ~~Robert~~zoning ~~J. Chapman~~regulations, land ~~Gerald~~use ~~J. Reihsen~~controls, ~~III,~~environmental ~~Gary~~controls S.relating ~~Bresky~~to air and M.water ~~Jason Mattox are executive officers of Harvard Property Trust~~quality, ~~LLC~~noise ~~(“HPT”),~~pollution ~~the~~and ~~sole~~indirect ~~general~~environmental ~~partner~~impacts such ofas ~~Behringer~~increased ~~Advisors~~motor ~~II,~~vehicle ~~and~~activity. ~~Behringer~~We ~~Securities.~~believe Inthat ~~addition, Messrs.~~we ~~Behringer,~~have ~~Reihsen,~~all ~~Bresky~~permits and ~~Mattox~~approvals ~~are~~necessary ~~executive~~under ~~officers~~current oflaw ~~Behringer~~to ~~Securities.~~operate our investments.

5Environmental

~~TABLE~~As OFan ~~CONTENTS~~owner of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on the Partnership’s financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest.

Because we were organized and will be operated by our General Partners, conflicts of interest will not be resolved through arm’s-length negotiations but through the exercise of our General Partners’ judgment consistent with their fiduciary responsibilities to the limited partners and our investment objectives and policies. For a description of some of the risks related to these conflicts of interest, see the Item 1A. “Risk Factors” section of this Annual Report on Form 10-K. For a discussion of the conflict resolution policies, see the Item 13. “Certain Relationships and Related Transactions and Director Independence” section of this Annual Report on Form 10-K. 7

~~Interests~~Significant ~~in Other Real Estate Programs~~Tenants

~~Our~~As ~~General~~of ~~Partners~~December ~~and~~31, 2012, ~~their~~four ~~affiliates~~retail ~~are~~tenants ~~general~~at ~~partners,~~Hotel ~~executive~~Palomar ~~officers~~accounted for 10% or ~~directors~~more of ~~other~~our ~~Behringer~~aggregate ~~Harvard~~annual ~~programs,~~rental ~~including~~revenues ~~real~~from ~~estate~~our ~~programs~~consolidated properties. ~~that~~Exhale ~~have~~Enterprises ~~investment~~VIII, ~~objectives~~Inc., ~~similar~~a toNew ~~ours~~York based spa, ~~and~~accounted wefor ~~expect~~33% ~~that~~or ~~they~~$0.2 ~~will~~million ~~organize~~of ~~other~~our ~~such~~rental ~~programs~~revenue infor the year ~~future~~ended December 31, 2012 under a lease that expires April 2020. ~~Our~~DD+JJ ~~General~~Productions, ~~Partners~~LLC, ~~and~~a ~~such~~local ~~affiliates~~full ~~have~~service ~~legal~~salon, ~~and~~accounted for ~~financial~~approximately ~~obligations~~24% ~~with~~or ~~respect~~more tothan ~~these~~$0.1 ~~other~~million ~~programs~~of our rental revenue under a lease that ~~are~~expires ~~similar~~April to2022. ~~their~~Mint ~~obligations~~Dentistry, toa local usdental office, accounted for approximately 14% or less than $0.1 Asmillion ~~general~~of ~~partners~~our rental revenues under a lease that expires January 2020. In addition, ~~they~~Brackets, ~~may~~LLC, ~~have~~a ~~contingent~~local ~~liabilities~~restaurant, accounted for ~~the~~11% ~~obligations~~or less than $0.1 million of ~~other~~our ~~programs~~rental ~~structured~~revenues for asthe ~~partnerships~~year ended December 31, as2012 ~~well~~under asa ~~our~~lease ~~obligations~~that expired during 2012. During the year ended December 31, ~~which~~2011, ifBrackets, LLC ~~such~~accounted ~~obligations~~for ~~were~~27% ~~enforced~~or ~~against~~approximately ~~them~~$0.2 million, ~~could~~Exhale Enterprises VIII, Inc. accounted for approximately 24% or less than ~~result~~$0.2 inmillion ~~substantial~~and ~~reduction~~DD+JJ ofProductions, ~~their~~LLC ~~net~~accounted ~~worth~~for approximately 20% or less than $0.2 million of our rental revenue.

~~Other Activities of Our General Partners and Their Affiliates~~Employees

We ~~rely~~have onno ~~our~~employees. The ~~General~~employees ~~Partners and their affiliates for the day-to-day operation~~ of our ~~business.~~Managing AsTrustee, ~~a result of their interests in other~~ Behringer ~~Harvard~~Advisors ~~programs~~II and ~~the fact that they have also engaged and will continue to engage in~~ other ~~business activities, our General Partners and their~~ affiliates ~~will have conflicts~~ of ~~interest in allocating their time between us and other~~ Behringer ~~Harvard~~Holdings ~~programs~~perform ~~and~~a ~~other~~full ~~activities~~range ~~in which they are involved. In addition, our Partnership Agreement does not specify any minimum amount~~ of real ~~time~~estate orservices ~~level~~for ~~of attention that our General Partners must devote to~~ us~~. However~~, ~~our~~including ~~General~~property ~~Partners~~management, ~~believe~~accounting, ~~that~~legal, ~~they and~~asset ~~their~~management ~~affiliates have sufficient personnel to discharge fully their responsibilities to all of the Behringer Harvard programs~~ and ~~other~~investor ~~ventures in which they are involved~~relations.

We are dependent on our affiliates for services that are essential to us, including disposition decisions, property management and leasing services and other general and administrative responsibilities. In nothe event ~~may~~that these companies are unable to provide these services to us, we: would be required to obtain such services from other sources.

•Financial ~~make~~Information ~~loans~~About ~~to our General Partners or any of their affiliates; or~~Industry Segments

•Our ~~enter~~current ~~into~~business consists ~~agreements~~only ~~with~~of ~~our~~owning, ~~General~~managing, ~~Partners~~operating, orleasing, ~~their~~developing, ~~affiliates~~and ~~for~~disposing ~~the provision~~ of ~~insurance~~real ~~covering~~estate usassets. orWe ~~any~~internally evaluate all of our ~~properties,~~real ~~except~~estate ~~under~~assets ~~the~~as ~~limited~~one ~~circumstances~~industry ~~permissible~~segment, ~~under~~and, ~~the~~accordingly, ~~NASAA~~we ~~Guidelines~~do not report segment information.

~~Competition~~Available ~~in Leasing Properties~~Information

~~Conflicts~~We ofelectronically file ~~interest~~an ~~will~~annual ~~exist~~report toon ~~the~~Form ~~extent~~10-K ~~that~~and wecurrent ~~own~~reports ~~properties~~on inForm ~~the~~8-K ~~same~~and ~~geographic~~all ~~areas~~amendments ~~where~~to ~~properties~~those ~~owned~~reports bywith ~~our~~the ~~General~~Securities ~~Partners,~~and Exchange ~~their~~Commission ~~affiliates or other Behringer Harvard programs are located~~(“SEC”). InCopies ~~such a case, a conflict could arise in the leasing~~ of our ~~properties~~filings inwith the ~~event~~SEC, ~~that~~as wewell ~~and~~as ~~another Behringer Harvard program were to compete for~~ the ~~same~~Partnership’s ~~tenants~~prior ~~in negotiating leases~~filings, may orbe aobtained ~~conflict~~from ~~could arise in connection with~~ the ~~resale~~web ofsite ~~properties~~maintained infor ~~the~~us ~~event~~by ~~that~~our wemanaging ~~and~~trustee ~~another Behringer Harvard program were to attempt to sell similar properties~~ at ~~the same time~~http://www.behringerharvard.com ~~Conflicts~~or ~~of interest may also exist~~ at ~~such time as we or our~~the ~~affiliates~~SEC’s ~~managing~~web ~~properties~~site onat ~~our~~http://www.sec.gov. ~~behalf~~Access ~~seek~~ to ~~employ~~these ~~developers,~~filings ~~contractors~~is orfree ~~building~~of ~~managers, and other circumstances~~charge. ~~Our~~As ~~General~~part ~~Partners~~of ~~will~~the ~~seek~~creation toof ~~reduce conflicts relating to~~ the ~~employment~~Liquidating Trust, ofwe ~~developers~~requested, ~~contractors~~and oron March ~~building~~28, ~~managers~~2013 bywere ~~making~~granted, ~~prospective~~No-Action ~~employees~~relief ~~aware~~from ofthe ~~all~~SEC ~~such~~regarding ~~properties~~our ~~seeking~~proposed tomodified ~~employ such persons~~reporting. In ~~addition,~~accordance ~~our~~with ~~General~~this ~~Partners~~No-Action ~~will~~relief, ~~seek~~we toare ~~reduce~~not ~~conflicts~~required ~~that may arise with respect~~ to ~~properties~~file ~~available~~Quarterly ~~for~~Reports ~~sale~~on orForm ~~rent~~10-Q bywith ~~making~~the ~~prospective~~SEC. ~~purchasers~~A orcopy ~~tenants aware~~ of ~~all~~the No-Action ~~such~~letter ~~properties.~~may ~~However,~~also ~~these conflicts cannot~~ be ~~fully~~obtained ~~avoided~~through inthe ~~that~~SEC’s ~~there~~website. ~~may~~We beare ~~differing~~not ~~compensation~~incorporating ~~arrangements~~our ~~established~~website ~~for employees at different properties~~ or ~~differing~~any ~~terms~~information from ~~for~~the ~~resale~~website orinto ~~leasing~~this ofForm ~~the various properties~~10-K.

6Item 1A. Risk Factors.

~~TABLE~~Risks OFRelated ~~CONTENTS~~to our Liquidation and your Investment in Behringer Harvard Short-Term Opportunity Liquidating Trust

~~Affiliated~~The ~~Property~~factors ~~Managers~~described below represent our principal risks. Other factors may exist that we do not consider to be significant based on information that is currently available or that we are not currently able to anticipate. The occurrence of any of the risks discussed below could have a material adverse effect on our business, financial condition, results of operations and ability to pay distributions to our unitholders.

Our ~~properties~~units ~~are~~have managed and leased by HPT Management Services LLC, Behringer Harvard Short-Term Management Services, LLC or Behringer Harvard Real Estate Services, LLC, our affiliated property managers, or their affiliates (individually or collectively referred to as “Property Manager”). The agreements with our Property Manager expired in June 2010, but automatically extended for successive seven year terms. We can terminate the agreements only in the event of gross negligence or willful misconduct on the part of the Property Manager or upon sale of the property. HPT Management Services LLC and Behringer Harvard Real Estate Services, LLClimited ~~also~~transferability ~~serve,~~ and ~~will~~lack ~~continue to serve, as property manager for properties owned by affiliated real estate programs, some of which may be in competition with our properties~~liquidity. ~~Management fees to be paid to our Property Manager are based on a percentage of the rental income received by the managed properties.~~

~~Regulations~~There is no established trading market for our units of beneficial interests, and we do not expect that one will develop. Except for certain transfers by will, intestate succession or operation of law, or from a qualified account to a non-qualified account if necessary to allow holders of beneficial interests to comply with certain IRA required minimum distribution requirements under the Internal Revenue Code, if applicable, beneficial interests in the Liquidating Trust are not transferable, and beneficiaries do not have authority or power to sell or in any other manner dispose of their beneficial interests.

~~Our~~We ~~investments~~ are ~~subject~~limited in tothe ~~various~~number ~~federal, state~~ and ~~local~~type ~~laws,~~of ~~ordinances~~properties ~~and~~in ~~regulations,~~which ~~including,~~we have ~~among~~invested ~~other things, zoning regulations, land use controls, environmental controls relating to air~~ and ~~water~~the ~~quality,~~value ~~noise~~of ~~pollution~~the ~~and~~beneficiaries’ ~~indirect~~investments ~~environmental~~will fluctuate ~~impacts~~with ~~such~~the asperformance ~~increased~~of ~~motor~~the ~~vehicle~~specific ~~activity. We believe that we have all permits and approvals necessary under current law to operate our~~ investments. made.

~~Environmental~~Currently, we hold two real estate investments, resulting in less diversification in terms of the number of investments owned, the geographic regions in which our investments are located and the types of investments that we made. As a result, the likelihood of our profitability being affected by the performance of any one of our investments has increased. The investment in our units will be subject to greater risk to the extent that we lack a diversified portfolio of investments. In addition, our fixed operating expenses, as a percentage of gross income, are higher, and our financial condition and ability to pay distributions may be adversely affected.

As an owner of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest. 8

~~Significant~~Our ~~Tenants~~beneficiaries should view their investments as long-term in nature.

AsOur ofunits ~~December~~lack ~~31,~~a ~~2011,~~public trading ~~two~~market ~~tenants~~and ~~accounted~~are ~~for~~subject ~~10%~~to ortransfer ~~more~~restrictions. Although of our ~~aggregate~~Liquidating ~~annual~~Trust ~~rental~~Agreement ~~revenues~~provides ~~from~~for ~~our~~a ~~consolidated~~three year ~~properties.~~period ~~Avelo~~to ~~Mortgage~~liquidate the remaining four assets, the Managing Trustee is working diligently to liquidate these assets in a ~~subsidiary~~manner that makes sense for the beneficiaries, and expects that disposition of ~~Goldman~~these ~~Sachs~~assets will be completed before the end of this three year period. However, ~~accounted~~we ~~for~~may ~~approximately~~choose $2to ~~million~~wait to sell any or ~~43%~~all of the properties we now hold and our ~~aggregate~~existence ~~rental~~may ~~revenue~~be extended ~~for~~beyond the three year ~~ended~~term ~~December~~if ~~31,~~our ~~2011~~Managing ~~under~~Trustee adetermines ~~lease~~ that ~~expires~~an ~~August~~extension ~~2018.~~is ~~Internap~~reasonably ~~Network~~necessary ~~Services~~to ~~Corp~~wind (aup ~~leader~~our affairs. We inexpect ~~the~~that ~~data~~net ~~center~~proceeds ~~service~~from ~~industry),~~the ~~accounted~~sale ~~for~~of ~~approximately~~our ~~$0.5~~properties ~~million~~will orgenerally ~~11%~~be ofdistributed to our ~~rental~~beneficiaries unless ~~revenues~~needed for ~~the~~working ~~year~~capital ~~ended~~resources ~~December~~and ~~31,~~capital ~~2011~~improvements. For ~~under~~each aof ~~lease~~these ~~that~~reasons, ~~expires~~beneficiaries should view their investment in ~~June~~units ~~2022.~~strictly as a long-term investment.

~~Leasing~~If we lose or are unable to obtain key personnel, our ability to implement our disposition strategies could be delayed or hindered.

Our ~~portfolio~~success ofdepends to ~~office~~a ~~and~~significant ~~data~~degree ~~center~~upon ~~properties~~the ~~was~~continued ~~approximately~~contributions ~~35%~~of ~~percent~~certain ~~leased~~key atpersonnel ~~December~~of 31the general partner of Behringer Advisors II, ~~2011~~HPT, who would be difficult to replace. Although WeHPT ~~are~~has ~~continuing~~employment ~~marketing~~agreements ~~efforts~~with toits ~~re-lease~~key ~~all~~personnel, ofthese ~~our~~agreements are ~~vacant~~terminable ~~spaces~~at ~~quickly~~will, and atwe ~~terms~~cannot guarantee that ~~are~~such ~~favorable~~persons towill remain affiliated with HPT or us. If any of HPT’s key personnel were to cease employment, our operating results could suffer. We ~~signed~~believe athat ~~long-term~~our ~~full~~future ~~building~~success ~~lease~~depends, in large part, upon HPT’s ability to hire and retain highly skilled managerial, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure beneficiaries that ~~began~~HPT ~~October~~will 1be successful in attracting and retaining such skilled personnel. Further, ~~2011~~our atManaging ~~1221~~Trustee ~~Coit~~intends ~~Road~~to ~~which~~establish ~~represents~~strategic ~~approximately~~relationships ~~19%~~with offirms ~~the~~that ~~current~~have ~~rentable~~special expertise ~~square~~in ~~feet~~certain services or as to real properties in certain geographic regions. Maintaining such relationships will be important for us to effectively compete. We cannot assure beneficiaries that our ~~office~~Managing Trustee will be successful in attracting and ~~data~~retaining ~~center~~such ~~properties~~relationships. If we lose or are unable to obtain the services of key personnel or do not establish or maintain appropriate strategic relationships, our ability to implement our strategies could be delayed or hindered.

~~Employees~~Robert S. Aisner and the other executive officers of HPT have a dominant role in determining what is in our best interests and, therefore, we will not have the benefit of independent consideration of issues affecting our operations.

WeOur ~~have~~Managing noTrustee is ~~employees.~~Behringer ~~Affiliates~~Advisors of II. Behringer Advisors II is managed by its general partner, HPT, for which Mr. Aisner serves as President and Chief Executive Officer. Therefore, Mr. Aisner together with the other ~~affiliates~~executive officers of ~~Behringer~~HPT ~~Holdings~~has a ~~perform~~dominant arole ~~full~~in ~~range~~determining ofwhat ~~real~~is ~~estate~~in ~~services~~the ~~for~~best interests of us, ~~including~~and ~~property~~our beneficiaries. Since no person other than Mr. Aisner and the other executive officers of HPT have any direct control over our management, ~~accounting,~~we ~~legal~~do not have the benefit of independent consideration of issues affecting our operations. Therefore, ~~asset~~Mr. ~~management~~Aisner and ~~investor~~the ~~relations.~~other executive officers of HPT alone will determine the propriety of their own actions, which could result in a conflict of interest when they are faced with any significant decision relating to our affairs.

WeOur ~~are~~Managing Trustee ~~dependent~~has ona ~~our~~limited ~~affiliates~~net ~~for~~worth ~~services~~consisting of assets that are ~~essential~~not ~~to us~~liquid, ~~including~~which ~~disposition~~may ~~decisions,~~adversely ~~property~~affect ~~management and leasing services and other general and administrative responsibilities. In~~ the ~~event~~ability ~~that~~of ~~these~~our ~~companies~~Managing Trustee ~~are unable~~ to ~~provide~~fulfill ~~these~~its ~~services~~financial toobligations ~~us, we would be required~~ to ~~obtain such services from other sources~~us.

~~Financial~~The ~~Information~~net ~~About~~worth ~~Industry~~of ~~Segments~~our Managing Trustee consists primarily of interests in real estate, partnerships and closely held businesses. Accordingly, the net worth of our Managing Trustee is illiquid and not readily marketable. This illiquidity, and the fact that our Managing Trustee and its affiliates have commitments to other Behringer Harvard programs, may adversely affect the ability of our Managing Trustee to fulfill its financial obligations to us.

Our ~~current~~rights ~~business consists only of owning, managing, operating, leasing, developing,~~ and the ~~disposing~~rights of ~~real~~our ~~estate~~beneficiaries ~~assets.~~to Werecover ~~internally~~claims ~~evaluate~~against ~~all of~~ our ~~real~~Managing ~~estate~~Trustee ~~assets~~are ~~as one industry segment, and, accordingly, we do not report segment information~~limited.

7Our Liquidating Trust Agreement provides that our Managing Trustee will have no liability for any action or failure to act that the Managing Trustee in good faith determines was in our best interest, provided its action or failure to act did not constitute gross negligence, willful misconduct or fraud. As a result, we and our beneficiaries may have more limited rights against our Managing Trustee than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our Managing Trustee in some cases.

~~TABLE~~We OFmay ~~CONTENTS~~not successfully provide beneficiaries with a liquidity event.

~~Available~~Our ~~Information~~current timeframe for liquidating is by 2016. Market conditions and other factors could cause us to delay liquidation beyond this period. If liquidation is delayed, your units will continue to be illiquid.

WeIf ~~electronically~~our ~~file~~liquidation costs anor ~~annual~~unpaid ~~report~~liabilities onare ~~Form~~greater ~~10-K,~~than ~~quarterly~~we ~~reports on Form 10-Q~~expect, ~~current~~our ~~reports~~liquidating ondistributions ~~Form 8-K and all amendments~~ to ~~those reports with the Securities and Exchange Commission (“SEC”). Copies of~~ our ~~filings~~beneficiaries ~~with the SEC~~ may be ~~obtained~~delayed ~~from the web site maintained for us by our advisor at http:~~and/~~/www.behringerharvard.com~~ or ~~at the SEC’s web site at http://www~~ reduced.~~sec.gov. Access to these filings is free of charge. We are not incorporating our website or any information from the website into this Form 10-K.~~

~~Item~~Before 1Amaking the final liquidating distribution to our beneficiaries, we will need to pay or arrange for the payment of all of our transaction costs in the liquidation, and all other costs and all valid claims of our creditors. ~~Risk~~Our ~~Factors~~Managing Trustee may also decide to acquire one or more insurance policies covering unknown or contingent claims against us, for which we would pay a premium which has not yet been determined. Our Managing Trustee may also decide to establish a reserve fund to pay these contingent claims. The total amount of transaction costs in the liquidation is not yet known. In addition, if the claims of our creditors are greater than we have anticipated or we decide to acquire one or more insurance policies covering unknown or contingent claims against us, our liquidating distributions to our beneficiaries may be delayed and/or reduced. Further, if a reserve fund is established, payment of liquidating distributions to our beneficiaries may be delayed and/or reduced.

~~Risks Related to an Investment in Behringer Harvard Short-Term Opportunity Fund I LP~~9

~~The~~There ~~factors~~can ~~described below represent our principal risks. Other factors may exist that we do not consider to~~ be no ~~significant~~assurance ~~based on information~~ that isthe ~~currently~~plan ~~available~~of orliquidation ~~that~~will weresult ~~are~~in ~~not~~greater ~~currently~~returns ~~able~~ to ~~anticipate.~~our ~~The~~beneficiaries ~~occurrence~~on oftheir ~~any~~investment ofwithin ~~the risks discussed below could have~~ a ~~material~~reasonable period ~~adverse~~of ~~affect~~time, onthan our ~~business,~~beneficiaries ~~financial~~would ~~condition,~~receive ~~results~~through ofother ~~operations~~alternatives ~~and~~reasonably ~~ability~~available to ~~pay distributions to our unitholders~~us.

~~There~~While isthe noPartnership’s General ~~public~~Partners ~~trading~~each ~~market~~believed ~~for~~that a liquidation would be more likely to provide our ~~units,~~beneficiaries ~~therefore~~with ita ~~will~~greater bereturn ~~difficult~~on ~~for~~their investment ~~limited~~within ~~partners~~a reasonable period of time than our beneficiaries would receive through other alternatives reasonably available to ~~sell~~us ~~their~~at ~~units~~the time, such belief relied upon certain assumptions and judgments concerning future events which may be unreliable or incorrect.

~~There~~The isplan noof liquidation public trading market for our units, and we do not expect one to ever develop. Our Partnership Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providing that any transfer that may ~~cause~~lead us to belitigation ~~classified~~which ascould aresult ~~publicly traded partnership as defined~~ in ~~Section~~substantial ~~7704~~costs ~~of the Internal Revenue Code shall be deemed void~~ and ~~shall~~distract ~~not be recognized by us. Because classification of the Partnership as a publicly traded partnership may significantly decrease the value of the units,~~ our ~~General~~Managing ~~Partners intend to use their authority to the maximum extent possible to prohibit transfers of units that could cause us to be classified as a publicly traded partnership~~Trustee. ~~For these reasons, it will be difficult for our limited partners to sell their units.~~

~~Our~~Historically, ~~units~~extraordinary company actions by a company, such as the plan of liquidation, may sometimes lead to securities class action lawsuits being filed against that company. We may become involved in this type of litigation as a result of the plan of liquidation. As of March 28, 2013, no such lawsuits relative to the plan of liquidation have ~~limited~~been ~~transferability~~filed. However, if such a lawsuit is filed against us, the litigation is likely to be expensive and, ~~lack~~even ~~liquidity~~if we ultimately prevail, the process will divert our Managing Trustee’s attention from implementing the plan of liquidation and otherwise operating our business. If we do not prevail in any such lawsuit which may be filed against us in the future, we may be liable for damages. In such event, we cannot predict the amount of any such damages; however, they may be significant and may reduce our cash available for distribution to our beneficiaries.

~~Except~~Beneficiaries could ~~for~~be ~~certain~~liable ~~intra-family transfers, limited partners are limited in their ability~~ to ~~transfer their units. Our Partnership Agreement and certain state regulatory agencies have imposed restrictions relating to~~ the ~~number~~extent of ~~units~~liquidating ~~limited~~distributions ~~partners~~received ~~may~~from ~~transfer.~~us ~~Accordingly, it will be difficult for limited partners to sell their units promptly or at all. Limited partners may not be able to sell their units in the event of an emergency, and~~ if ~~they~~contingent reserves are ~~able~~insufficient to ~~sell~~satisfy our ~~their units, they may have to sell them at a substantial discount~~liabilities. ~~It is also likely that the units would not be accepted as the primary collateral for a loan.~~

~~Robert~~If M.we ~~Behringer~~fail to create an adequate contingency reserve for payment of our expenses and ~~Robert~~liabilities, S.or ~~Aisner~~if ~~have~~the ~~dominant~~contingency ~~roles~~reserve inand ~~determining~~the ~~what~~assets isheld by us are less than the amount ultimately found payable in ~~our~~respect ~~best~~of ~~interests,~~expenses and ~~therefore~~liabilities, weeach ~~will~~of ~~not~~our ~~have~~beneficiaries could be held liable for the ~~benefit~~payment to creditors of ~~independent~~such ~~consideration~~beneficiary’s pro rata portion of ~~issues~~the ~~affecting~~excess, ~~our~~limited ~~Partnership~~to ~~operations~~the amounts previously received by each beneficiary in distributions from us.

~~Mr.~~If ~~Behringer~~a iscourt ~~one~~holds ofat any ~~our~~time ~~general~~that ~~partners.~~we ~~Our~~have ~~other~~failed ~~general~~to ~~partner~~make isadequate ~~Behringer~~provision ~~Advisors~~for ~~II.~~our ~~Behringer~~expenses ~~Advisors~~and IIliabilities isor ~~managed~~if bythe ~~its~~amount ~~general~~ultimately ~~partner,~~required ~~HPT,~~to be ~~for~~paid ~~which~~in ~~Mr.~~respect ~~Behringer~~of ~~serves~~such asliabilities ~~Chairman~~exceeds ~~and~~the ~~sole~~amount ~~manager~~available ~~and~~from ~~Mr.~~contingency ~~Aisner~~reserve ~~serves~~and asour ~~Vice Chairman. Therefore~~assets, ~~Mr.~~our ~~Behringer~~creditors ~~and~~could seek ~~Mr.~~an ~~Aisner~~injunction ~~have~~to ~~dominant~~prevent ~~roles~~us infrom ~~determining~~making ~~what~~distributions isunder in the ~~best~~plan ~~interests~~ of usliquidation ~~and~~on ~~our~~the ~~limited~~grounds ~~partners.~~that ~~Since~~the noamounts ~~persons~~to ~~other~~be distributed ~~than~~are ~~Mr.~~needed ~~Behringer~~to ~~and~~provide ~~Mr.~~for ~~Aisner have any direct control over our management, we do not have~~ the ~~benefit~~payment of ~~independent consideration of issues affecting~~ our ~~Partnership~~expenses ~~operations. Therefore, Mr. Behringer~~ and Mrliabilities. ~~Aisner~~Any ~~alone~~such ~~will determine~~action ~~the propriety of their own actions, which~~ could ~~result~~delay inor asubstantially diminish ~~conflict~~the ofcash ~~interest~~distributions ~~when~~to ~~they~~be ~~are~~made ~~faced~~to ~~with~~beneficiaries ~~any~~under ~~significant~~the ~~decision~~Liquidating ~~relating~~Trust ~~to our Partnership affairs~~Agreement.

8The prior performance of real estate investment programs sponsored by affiliates of our Managing Trustee or former General Partners may not be an indication of our future results.

~~TABLE~~Investors OFshould ~~CONTENTS~~not rely upon the past performance of other real estate investment programs sponsored by Mr. Behringer, our Managing Trustee, or their respective affiliates, to predict our future results. To be successful in this market, we must, among other things:

~~The~~· ~~prior~~attract, ~~performance~~integrate, ofmotivate ~~real~~and ~~estate~~retain ~~investment~~qualified ~~programs~~personnel ~~sponsored~~to bymanage ~~affiliates of~~ our ~~General~~day-to-day ~~Partners~~operations; ~~may not be an indication of our future results.~~and

~~Investors~~· ~~should~~continue ~~not~~to ~~rely~~build ~~upon~~and ~~the~~expand ~~past performance of other real estate investment programs sponsored by Mr. Behringer,~~ our ~~individual~~operations ~~general~~structure ~~partner, or his affiliates,~~ to ~~predict~~support our ~~future results~~business. ~~To be successful in this market, we must, among other things:~~

•We ~~attract,~~cannot ~~integrate,~~guarantee ~~motivate~~that ~~and~~we ~~retain~~will ~~qualified~~succeed in ~~personnel~~achieving tothese ~~manage~~goals, and our ~~day-~~failure to~~-day~~ ~~operations;~~do ~~and~~so could cause investors to lose all or a portion of their investment.

•If ~~continue~~we lose or are unable to ~~build~~obtain ~~and~~key ~~expand~~personnel, our ~~operations~~ability ~~structure~~ to ~~support~~implement our ~~business~~investment strategies could be delayed or hindered.

WeOur success depends to a significant degree upon the continued contributions of certain key personnel of the general partner of Behringer Advisors II and HPT, who would be difficult to replace. Although HPT has employment agreements with its key personnel, these agreements are terminable at will, and we cannot guarantee that wesuch persons will ~~succeed~~remain affiliated with HPT or us. If any of HPT’s key personnel were to cease employment, our operating results could suffer. We believe that our future success depends, in ~~achieving~~large part, ~~these~~upon ~~goals~~HPT’s ability to hire and retain highly skilled managerial, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure investors that HPT will be successful in attracting and retaining such skilled personnel. Further, our ~~failure~~Managing Trustee intends to doestablish sostrategic ~~could~~relationships ~~cause~~with ~~investors~~firms that have special expertise in certain services or as to ~~lose~~real ~~all~~properties in certain geographic regions. Maintaining such relationships will be important for us to effectively compete. We cannot assure investors that our Managing Trustee will be successful in attracting and retaining such relationships. If we lose or aare ~~portion~~unable to obtain the services of ~~their~~key ~~investment.~~personnel or do not establish or maintain appropriate strategic relationships, our ability to implement our strategies could be delayed or hindered.

~~If we lose or are unable to obtain key personnel, our ability to implement our investment strategies could be delayed or hindered.~~10

~~Our~~Risks ~~success~~Related ~~depends~~ to aOur ~~significant~~Business degree upon the continued contributions of certain key personnel of the general partner of Behringer Advisors II and HPT, who would be difficult to replace. Although HPT has employment agreements with its key personnel, these agreements are terminable at will, and we cannot guarantee that such persons will remain affiliated with HPT or us. If any of HPT’s key personnel were to cease employment, our operating results could suffer. We believe that our future success depends, in large part, upon HPT’s ability to hire and retain highly skilled managerial, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure limited partners that HPT will be successful in attracting and retaining such skilled personnel. Further, our General Partners intend to establish strategic relationships with firms that have special expertise in certain services or as to real properties in certain geographic regions. Maintaining such relationships will be important for us to effectively compete. We cannot assure limited partners that our General Partners will be successful in attracting and retaining such relationships. If we lose or are unable to obtain the services of key personnel or do not establish or maintain appropriate strategic relationships, our ability to implement our strategies could be delayed or hindered.

~~Our~~Recent ~~General~~market ~~Partners~~ disruptions have aimpacted ~~limited~~and ~~net~~may ~~worth,~~continue ~~consisting~~to ~~of assets that are not liquid, which may~~ adversely ~~affect~~impact ~~the~~many ~~ability~~aspects of our ~~General~~operating ~~Partners~~results toand ~~fulfill~~operating ~~their financial obligations to us~~condition.

The ~~net~~financial ~~worth~~and ofreal estate ~~our~~markets ~~General~~have ~~Partners~~undergone ~~consists~~pervasive ~~primarily~~and fundamental disruptions. The disruptions have had and may continue to have an adverse impact on the availability of ~~interests~~credit into businesses, generally, and real estate, ~~retirement~~in ~~plans~~particular, ~~partnerships~~and have resulted in and ~~closely-held~~could ~~businesses.~~lead to ~~Accordingly,~~further weakening of the ~~net~~U.S. ~~worth~~and ofglobal ~~our~~economies. ~~General~~Our ~~Partners~~business is ~~illiquid~~affected by market and ~~not~~economic ~~readily~~challenges ~~marketable~~experienced by the U.S. ~~This~~economy ~~illiquidity~~or real estate industry as a whole or by the local economic conditions in the markets in which our properties are located, including the current dislocations in the credit markets and general global economic recession. Availability of debt financing secured by commercial real estate has declined as a result of tightened underwriting standards. These conditions have and may continue to materially affect the ~~fact~~value ~~that~~of our ~~General~~investment ~~Partners~~properties ~~have~~and ~~commitments~~will likely continue to ~~other~~affect ~~Behringer~~our ~~Harvard~~ability ~~programs~~to pay distributions, the availability or the terms of financing that we have or may ~~adversely~~anticipate ~~affect~~utilizing, and our ability to make principal and interest payments on, or refinance, any outstanding debt when due. These challenging economic conditions will also continue to impact the ability of ~~our~~certain ~~General~~of ~~Partners~~our tenants to ~~fulfill~~enter ~~their~~into ~~financial~~new ~~obligations~~leasing transactions on terms acceptable to us or satisfy rental payments under existing leases. Specifically, the current conditions have had, or similar conditions existing in the future may continue to have, the following consequences:

~~Our~~· ~~rights and~~ the ~~rights~~financial condition of our ~~limited~~tenants ~~partners~~may be adversely affected, which results in us having to ~~recover~~increase ~~claims~~concessions, ~~against~~reduce ~~our~~rental ~~General~~rates ~~Partners~~or ~~are~~make ~~limited.~~capital improvements in order to maintain occupancy levels or to negotiate for reduced space needs, which could result in a decrease in our occupancy levels;

~~Our~~· ~~Partnership~~credit ~~Agreement~~spreads ~~provides that our General Partners will have no liability~~ for ~~any~~major ~~action~~sources orof ~~failure~~capital tocould ~~act~~widen ~~that~~as ~~the~~investors ~~General~~demand ~~Partners~~higher inrisk ~~good~~premiums, ~~faith~~resulting ~~determine was~~ in ~~our~~lenders ~~best~~increasing interests, provided their action or failure to act did not constitute negligence or misconduct. As a result, we and our limited partners may have more limited rights against our General Partners than might otherwise exist under common law. In addition, we may be obligated to fund the ~~defense~~cost ~~costs~~for ~~incurred~~debt ~~by our General Partners in some cases.~~ financing;

~~Our~~· ~~units~~a ~~are~~reduction in the amount of capital that is available to finance real estate, which, in turn, could lead to a decline in real estate values generally, ~~not~~slow ~~suitable~~real ~~for~~estate ~~IRAs~~transaction ~~and~~activity, ~~other~~reduce ~~retirement~~the ~~plans~~loan ~~subject~~to value ratio upon which lenders are willing to ~~ERISA.~~lend, and result in difficulty refinancing our debt;

~~Because~~· our ~~intended~~ability ~~operations~~to ~~will~~borrow ~~likely~~on ~~give~~terms ~~rise~~and toconditions ~~unrelated~~that ~~business~~we ~~taxable~~find ~~income~~acceptable, ~~(“UBTI”)~~or at all, may be limited, which could reduce our ~~units~~ability ~~are~~to ~~generally~~refinance ~~not~~existing andebt, ~~appropriate~~reduce ~~investment~~our ~~vehicle~~returns ~~for~~from ~~IRAs~~our acquisition and ~~retirement~~development ~~plans~~activities ~~subject~~and toincrease ~~ERISA.~~our future interest expense;

9· the value of some of our properties has likely decreased below the amounts we paid for them, which may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; and

~~TABLE~~· OFthe ~~CONTENTS~~value and liquidity of our short-term investments and cash deposits could be reduced as a result of the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors.

~~Risks~~For ~~Related~~these and other reasons, we cannot assure you that we will be profitable or that we will realize growth in the value of our investments. Further, in light of the current economic conditions, we cannot provide assurance that we will be able to ~~Our~~resume ~~Business~~regular distributions in the ~~General~~future.

~~Recent~~We ~~market disruptions~~ have ~~impacted~~incurred indebtedness and ~~may~~other ~~continue~~borrowings, towhich ~~adversely~~may ~~impact~~increase ~~many aspects of~~ our ~~operating~~business ~~results and operating condition~~risks.

~~The~~We ~~financial~~have acquired and developed real ~~estate~~properties ~~markets~~by ~~have~~using ~~undergone~~either ~~pervasive~~existing ~~and~~financing ~~fundamental~~or ~~disruptions~~borrowing new funds. ~~The~~In ~~disruptions~~addition, we have ~~had~~incurred ~~and~~or ~~may~~increased our ~~continue~~debt toby ~~have~~obtaining anloans ~~adverse~~secured ~~impact~~by onsome ~~the~~or ~~availability~~all of ~~credit~~our toreal ~~businesses,~~properties. ~~generally,~~We ~~and~~have ~~real~~incurred ~~estate~~debt inon a particular, ~~and~~real ~~have~~property if ~~resulted~~we inbelieve ~~and~~the ~~could~~property’s ~~lead~~projected tocash ~~further~~flow ~~weakening~~is ofsufficient ~~the~~to ~~U.S.~~service ~~and~~the ~~global~~mortgage ~~economies~~debt. ~~Our~~Incurring ~~business~~debt isincreases ~~affected~~the risk byof ~~market~~loss ~~and~~since ~~economic~~defaults ~~challenges~~on ~~experienced~~indebtedness secured by ~~the~~a ~~U.S.~~property ~~economy~~may orresult ~~real~~in ~~estate~~foreclosure ~~industry~~actions asinitiated aby ~~whole~~lenders orand byour loss of the ~~local~~property ~~economic~~securing ~~conditions~~the inloan ~~the~~which ~~markets~~is in ~~which~~default. For tax purposes, a foreclosure of any of our properties ~~are~~would ~~located,~~be ~~including~~treated as a sale of the ~~current~~property ~~dislocations~~for ina purchase price equal to the ~~credit~~outstanding ~~markets~~balance ~~and~~of ~~general~~the ~~global~~debt ~~economic~~secured ~~recession~~by the mortgage. If the outstanding ~~Availability~~balance of the debt ~~financing~~ secured by ~~commercial~~the ~~real~~mortgage ~~estate~~exceeds ~~has~~our ~~declined~~tax asbasis ain ~~result~~the ofproperty, ~~tightened~~we ~~underwriting~~would ~~standards.~~recognize ~~These~~taxable ~~conditions~~income ~~have~~on ~~and~~foreclosure, but would not receive any cash proceeds. We may ~~continue~~give full or partial guarantees to ~~materially~~lenders ~~affect~~of mortgage debt to the ~~value~~entities ofthat own our ~~investment~~ properties. ~~and~~When ~~will~~we ~~likely~~provide ~~continue~~a toguaranty ~~affect~~on ~~our~~behalf ~~ability~~of toan ~~pay~~entity ~~distributions~~that owns one of our properties, ~~the~~we ~~availability~~will orbe responsible to the ~~terms~~lender offor ~~financing~~satisfaction ~~that~~of wethe ~~have~~debt orif ~~may~~it ~~anticipate~~is ~~utilizing,~~not ~~and~~paid ~~our~~by ~~ability~~such toentity. ~~make~~If ~~principal~~any ~~and~~mortgages ~~interest~~contain ~~payments~~cross-collateralization ~~on,~~ or ~~refinance~~cross-default provisions, ~~any~~there ~~outstanding~~is ~~debt~~a ~~when~~risk ~~due.~~that ~~These~~more ~~challenging~~than ~~economic~~one ~~conditions~~real ~~will~~property ~~also~~may ~~continue~~be toaffected ~~impact~~by ~~the~~a ~~ability~~default. ofIf ~~certain~~any of our ~~tenants~~properties toare ~~enter~~foreclosed upon ~~into~~due ~~new~~to ~~leasing~~a ~~transactions~~default, onour ~~terms~~ability ~~acceptable~~ to uspay ordistributions ~~satisfy~~to ~~rental~~our ~~payments~~limited ~~under~~partners ~~existing~~will ~~leases~~be adversely affected. ~~Specifically,~~Our ~~the~~approach ~~current~~to ~~conditions~~investing in ~~have~~properties ~~had,~~utilizing orleverage ~~similar~~in ~~conditions~~order ~~existing~~to inaccomplish ~~the~~our ~~future~~investment objectives may ~~continue~~present more risks to investors than comparable real estate programs which have, ~~the~~a ~~following~~longer ~~consequences:~~intended duration and which do not utilize borrowing to the same degree.

• the financial condition of our tenants, which may include financial, legal and other professional firms, may be adversely affected, which results in us having to increase concessions, reduce rental rates or make capital improvements in order to maintain occupancy levels or to negotiate for reduced space needs, which could result in a decrease in our occupancy levels;11

•Our ~~significant~~indebtedness ~~job~~adversely affects ~~losses~~our ~~in the~~ financial ~~and~~health ~~professional services industries have occurred~~ and ~~may~~operating continue to occur, which may decrease demand for our office space and result in lower occupancy levels, which could result in decreased revenues and which could diminish the value of our properties, which depends in part upon the cash flow generated by our properties;flexibility.

•At ~~credit~~December ~~spreads~~31, ~~for~~2012, the ~~major~~Partnership ~~sources~~had notes payable of ~~capital~~approximately ~~may~~$41.1 ~~continue~~million in principal amount, of which $31 million was secured by properties and the Partnership guaranteed payment of certain customary nonrecourse carveouts in favor of the lender. As a result of this indebtedness, we are required to ~~widen~~use asa ~~interest~~material ~~rates~~portion ~~could~~of ~~increase~~our ~~due~~cash flow to ~~inflationary~~service ~~expectations~~principal and interest on our debt, which ~~resulting~~will inlimit anthe ~~increased~~cash ~~cost~~flow available for ~~debt~~other ~~financing;~~purposes.

•Our alevel ~~further~~of ~~reduction~~debt in and the ~~amount~~limitations ofimposed ~~capital~~on ~~that~~us isby ~~available~~our todebt ~~finance~~agreements ~~real~~could ~~estate,~~have ~~which,~~significant inadverse ~~turn,~~consequences ~~could lead~~ to aus ~~decline~~and ~~in real estate values generally, slow real estate transaction activity, reduce~~ the ~~loan to~~ value ~~ratio~~of ~~upon~~our ~~which~~units, regardless ~~lenders~~of ~~are~~our ~~willing~~ability to ~~lend,~~refinance ~~and~~or ~~result~~extend ~~in difficulty refinancing~~ our debt;, including:

•· limiting our ability to borrow onadditional ~~terms~~amounts ~~and~~for ~~conditions~~working ~~that we find acceptable~~capital, orcapital ~~at all~~expenditures, ~~may~~debt beservice ~~limited~~requirements, ~~which~~execution ~~could~~of ~~reduce~~ our ~~ability~~business toplan ~~refinance~~or ~~existing~~other ~~debt, reduce our returns from our acquisition and development activities and increase our future interest expense~~purposes;

•· ~~the~~limiting ~~value of some of~~ our ~~properties~~ability ~~has~~to ~~likely~~use ~~decreased~~operating ~~below~~cash ~~the~~flow ~~amounts~~in weother ~~paid~~areas ~~for~~of ~~them,~~our ~~which~~business ~~may~~because ~~limit~~we ~~our~~must ~~ability~~dedicate toa ~~dispose~~substantial portion of ~~assets~~these atfunds ~~attractive prices or~~ to ~~obtain~~service ~~debt financing secured by~~ our ~~properties and may reduce the availability of unsecured loans~~debt;

•· ~~the~~increasing ~~value~~our ~~and~~vulnerability ~~liquidity~~to ofgeneral ~~our~~adverse ~~short-term~~economic ~~investments~~ and ~~cash~~industry ~~deposits could be reduced as a result of the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors~~conditions; ~~and~~

•· ~~one~~limiting orour ~~more~~ability ~~counterparties~~ to ~~our~~capitalize ~~derivative~~on ~~financial~~business ~~instruments,~~opportunities ifand ~~any,~~to ~~could~~react ~~default on their obligations~~ to ~~us,~~competitive orpressures ~~could~~and ~~fail,~~adverse ~~increasing~~changes ~~the~~in ~~risk~~governmental ~~that we may not realize the benefits of these instruments.~~regulation;

~~For~~· ~~these~~limiting ~~and other reasons, we cannot assure you that we will be profitable or that we will realize growth in the value of~~ our ~~investments.~~ability ~~Further,~~to infund ~~light~~capital ~~of the current economic conditions~~expenditures, wetenant ~~cannot~~improvements ~~provide~~and ~~assurance~~leasing ~~that~~commissions; ~~we will be able to resume regular distributions in the future.~~ and

10· limiting our ability or increasing the costs to refinance our indebtedness.

~~TABLE~~In OFaddition, ~~CONTENTS~~a breach of the financial and operating covenants in our debt agreements could cause a default and accelerate payment, which could have a material adverse effect on our financial condition.

We ~~have~~may ~~incurred~~not ~~indebtedness~~be ~~and~~able ~~other~~to refinance ~~borrowings,~~or ~~which~~repay ~~may increase~~ our ~~business risks~~indebtedness.

We have ~~acquired~~debt ~~and~~that ~~developed~~we may ~~real~~not ~~properties~~be byable ~~using~~to ~~either~~refinance ~~existing financing~~ or ~~borrowing~~repay. ~~new~~As ~~funds.~~of InDecember ~~addition~~31, we2012, ~~have~~approximately ~~incurred~~$1.3 million ~~or increased our debt by obtaining loans secured by some or all~~ of ~~our~~principal ~~real~~payments, ~~properties.~~which Weincludes scheduled ~~have incurred~~ debt onmaturities aand ~~particular~~monthly ~~real~~principal ~~property~~payments, ifhas wematured ~~believe~~or ~~the property’s projected cash flow~~ is ~~sufficient~~scheduled to ~~service~~mature ~~the mortgage debt. Incurring debt increases the risk of loss since defaults on indebtedness secured by a property may result~~ in ~~foreclosure actions initiated by lenders and our loss of~~ the ~~property~~next ~~securing~~twelve ~~the loan which is in default~~months. ~~For~~We ~~tax~~will face ~~purposes,~~significant achallenges ~~foreclosure~~refinancing ~~of any of~~ our ~~properties~~current ~~would~~debt ~~be treated~~on asacceptable aterms ~~sale~~if ofat ~~the~~all ~~property~~due ~~for a purchase price equal~~ to ~~the~~(1) ~~outstanding~~reduced ~~balance~~values of ~~the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds~~ our ~~tax basis in the property~~investments, (2) welimited ~~would~~cash ~~recognize~~flow ~~taxable~~from ~~income on foreclosure~~operations, ~~but~~(3) ~~would~~our ~~not receive any cash proceeds. We may give full or partial guarantees to lenders of mortgage~~ debt ~~to the entities that own our properties. When we provide a guaranty on behalf of an entity that owns one of our properties~~level, we(4) ~~will be responsible to~~ the ~~lender~~cost ~~for~~and ~~satisfaction~~terms of ~~the~~new ~~debt if it is not paid by such entity. If any mortgages contain cross-collateralization~~ or ~~cross-default~~refinanced ~~provisions,~~indebtedness ~~there~~and is(5) amaterial changes ~~risk~~in ~~that~~lending ~~more than one real property may be affected by a default. If any of our properties are foreclosed upon due to a default~~parameters, ~~our~~including ~~ability~~lower loan-to-value ~~pay distributions to our limited partners will be adversely affected~~standards. Our ~~approach~~indebtedness toalso ~~investing~~requires inus ~~properties~~to ~~utilizing~~use ~~leverage~~a inmaterial ~~order~~portion of ~~to accomplish~~ our ~~investment~~ ~~objectives~~cash ~~may~~flow ~~present more risks~~ to ~~investors~~service ~~than~~principal ~~comparable~~and ~~real~~interest, ~~estate programs~~ which ~~have~~limits athe ~~longer~~cash ~~intended~~flow ~~duration~~available ~~and~~for ~~which~~other dobusiness ~~not~~expenses ~~utilize~~or ~~borrowing to the same degree~~opportunities.

~~Our~~Further, we may not have the funds necessary to repay our debt as it matures. Failure to refinance or extend our debt as it comes due, or a failure to satisfy the conditions and requirements of that debt, could result in an event of default. We have experienced, and may continue to experience, defaults or events of default with respect to our existing indebtedness, which has required us to either restructure the debt in a way that is supported by the underlying asset values of the properties collateralizing the debt or to purchase or pay off the debt at a discount. In situations where we are not able to restructure the debt or to purchase or pay off the debt at a discount, we may have to transfer the underlying property to the lender. We can provide no assurance that, with respect to any other indebtedness that we may be unable to repay, we will be able to restructure that debt or to purchase or pay off that debt at a discount, which could result in lenders accelerating that debt or foreclosing on the related property. If our debt is accelerated, the value of our assets may not be sufficient to repay the debt in full. If we are unable to refinance or repay our debt as it comes due and maintain sufficient cash flow, our business, financial condition and results of operations will be materially and adversely ~~affects~~affected. Furthermore, even if we are able to obtain extensions on our existing debt, those extensions may include operational and financial ~~health~~covenants significantly more restrictive than the covenants on existing indebtedness. Any extensions will also require us to pay certain fees to, and ~~operating~~expenses ~~flexibility~~of, our lenders. Any fees and cash flow restrictions will affect our ability to fund our ongoing operations.

AtRecent ~~December~~disruptions ~~31, 2011, we had notes payable of approximately $123.7 million~~ in the ~~principal~~financial ~~amount,~~markets ~~of which $111.3 million was secured by properties~~ and ~~$101.3~~adverse ~~million~~economic ~~was~~conditions ~~guaranteed~~could byadversely ~~us.~~affect Asour aability ~~result~~to ofsecure ~~this~~debt ~~indebtedness,~~financing weon ~~are~~attractive terms ~~required~~and todispose ~~use a material portion~~ of our ~~cash~~properties ~~flow to service principal~~ and ~~interest~~have onaffected ~~our debt, which will limit~~ the ~~cash~~value ~~flow~~of ~~available~~our ~~for other purposes~~investments.

~~Our~~The ~~level~~commercial ofreal estate debt markets have recently experienced volatility as a result of certain factors, including the tightening of underwriting standards by lenders and credit rating agencies and the ~~limitations~~significant ~~imposed~~inventory onof usunsold bycollateralized ~~our~~mortgage ~~debt~~backed ~~agreements~~securities in ~~could~~the market. Credit spreads for major sources of capital widened significantly as investors have ~~significant~~demanded ~~adverse~~a ~~consequences~~higher torisk premium. This usresulted ~~and~~in lenders increasing the ~~value~~cost for debt financing. An increase in the overall cost of borrowings, either by increases in the index rates or by increases in lender spreads, may result in our ~~units~~investment operations generating lower overall economic returns and a reduced level of cash flow. We expect this potential impact to be more pronounced upon refinancing any fixed rate indebtedness. As a result of current economic conditions, ~~regardless~~potential purchasers may be unable to obtain financing on acceptable terms. In addition, the recent dislocations in the debt markets have reduced the amount of ~~our~~capital ~~ability~~that is available to ~~refinance~~finance orreal estate, which, in turn: (1) has led to a decline in real estate values generally; (2) slowed real estate transaction activity; (3) reduced the loan to value upon which lenders are willing to extend ~~our~~debt; and (4) resulted in difficulty in refinancing debt as it becomes due. If the current debt market environment persists, ~~including:~~it may be difficult for us to refinance our debt coming due.

~~• limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our business plan or other purposes;~~12

•Further, ~~limiting~~the recent market volatility will likely make the valuation of our ~~ability~~investment toproperties ~~use~~more ~~operating~~difficult. There ~~cash~~may ~~flow~~be significant uncertainty in ~~other~~the ~~areas~~valuation, or in the stability of the value, of our ~~business~~properties ~~because~~that wecould ~~must~~result ~~dedicate~~in a substantial ~~portion~~decrease in the value of ~~these~~our ~~funds~~properties. As a result, we may not be able to ~~service~~recover the carrying amount of our ~~debt;~~properties, and we may be required to recognize impairment charges, which will reduce our reported earnings.

•The ~~increasing~~pervasive ~~our~~and ~~vulnerability~~fundamental disruptions that the global financial markets have undergone have led to ~~general~~extensive ~~adverse~~and ~~economic~~unprecedented governmental intervention. Such intervention has, in certain cases, been implemented on an “emergency” basis, suddenly and ~~industry~~substantially ~~conditions;~~eliminating market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions. In addition, these interventions have typically been unclear in scope and application, resulting in confusion and uncertainty, which in itself has been materially detrimental to the efficient functioning of the markets, as well as previously successful investment strategies. Legislators continue to propose new restrictions affecting moratoriums on loan payments, limits on the ability of lenders to enforce loan provisions, including the collection of interest at rates agreed upon in the loan documents and involuntary modifications of loan agreements. It is impossible to predict what, if any, additional interim or permanent governmental restrictions may be imposed or the effect of such restrictions on us and our results of operations. There is likely to be increased regulation of the financial markets.

•If ~~limiting~~debt ~~our~~is ~~ability~~unavailable at toreasonable ~~capitalize~~rates, onwe ~~business~~may ~~opportunities~~not ~~and~~be toable ~~react~~ to ~~competitive~~refinance ~~pressures~~our ~~and~~properties. ~~adverse changes in governmental regulation;~~

•When ~~limiting~~we ~~our~~place ~~ability~~debt on properties, we run the risk of being unable to ~~fund~~refinance ~~capital~~the ~~expenditures~~properties when the loans come due, ~~tenant~~or ~~improvements~~of ~~and~~being ~~leasing~~unable ~~commissions;~~to refinance on favorable terms. If interest rates are higher when the properties are refinanced, we may not be able to finance the properties, and our income could be reduced. If this occurs, it may prevent us from borrowing more money.

•Future ~~limiting~~financing could ~~our~~be ~~ability~~impacted orby ~~increasing~~negative ~~the~~capital ~~costs~~market ~~to refinance our indebtedness~~conditions.

~~In addition~~Recently, athe ~~breach~~U.S. credit ofmarkets and the ~~financial~~sub-prime residential mortgage market experienced severe dislocations and ~~operating~~liquidity ~~covenants~~disruptions. inSub-prime mortgage ~~our~~loans ~~debt~~have ~~agreements~~experienced ~~could~~increasing ~~cause~~rates of delinquency, foreclosure and loss. These and other related events have had a ~~default~~significant impact on the capital markets associated not only with sub-prime mortgage-backed securities, asset-backed securities and ~~accelerate~~collateralized ~~payment~~debt obligations, ~~which~~but ~~could~~also ~~have~~with the U.S. housing, credit and financial markets as a ~~material~~whole. ~~adverse~~Consequently, ~~effect~~there is ongreater uncertainty regarding our ~~financial~~ability ~~condition~~to access the credit market in order to attract financing on reasonable terms. Our ability to borrow funds to refinance current debt, including any financing provided by our Sponsor, could be adversely affected by our inability to secure permanent financing on reasonable terms, if at all.

WeGains ~~may~~and ~~not~~distributions upon beresale ~~able~~of toour ~~refinance~~properties orare ~~repay our indebtedness~~uncertain.

WeAlthough ~~have~~gains ~~debt~~from the ~~that~~sales ~~we may not be able to refinance or repay. As~~ of ~~December~~properties ~~31,~~typically ~~2011,~~represent ~~approximately~~a ~~$103.5~~substantial ~~million~~portion of ~~principal~~any ~~payments,~~profits ~~which~~attributable ~~includes~~to ~~scheduled~~a ~~debt~~real ~~maturities~~estate ~~and monthly principal payments~~investment, ~~has~~we ~~matured~~cannot assure orinvestors isthat ~~scheduled~~we ~~to mature in the next twelve months. We~~ will ~~face~~realize ~~significant~~any ~~challenges~~gains ~~refinancing our current debt~~ on ~~acceptable~~the ~~terms~~resales ~~if at all due to (1) reduced values~~ of our ~~investments,~~properties. ~~(2)~~In ~~limited cash flow from operations~~addition, ~~(3) our debt level, (4)~~ the ~~cost~~amount ~~and terms~~ of ~~new~~taxable orgain ~~refinanced indebtedness and (5) material changes in lending parameters, including lower loan-~~allocated to~~-value~~ ~~standards.~~investors ~~Our~~with ~~indebtedness~~respect ~~also requires us~~ to ~~use~~ athe ~~material~~sale ~~portion~~ of ~~our~~a ~~cash~~property ~~flow~~could toexceed ~~service principal and interest, which limits~~ the cash ~~flow~~proceeds ~~available~~received ~~for~~from ~~other~~such ~~business expenses or opportunities~~sale.

11Proceeds from the sale of a property will be distributed to investors if the Managing Trustee, in its sole discretion, has determined that such proceeds are not needed to fund:

~~TABLE~~· OFworking ~~CONTENTS~~capital reserves;

~~Further,~~· wecapital ~~may~~improvements ~~not have the funds necessary~~ to ~~repay~~ our debt as it matures. Failure to refinance or extend our debt as it comes due, or a failure to satisfy the conditions and requirements of that debt, could result in an event of default. We have experienced, and may continue to experience, defaults or events of default with respect to our existing ~~indebtedness, which has required us to either restructure the debt in a way that is supported by the underlying asset values of the~~ properties; ~~collateralizing the debt~~ or to purchase or pay off the debt at a discount. In situations where we are not able to restructure the debt or to purchase or pay off the debt at a discount, we may have to transfer the underlying property to the lender. We can provide no assurance that, with respect to any other indebtedness that we may be unable to repay, we will be able to restructure that debt or to purchase or pay off that debt at a discount, which could result in lenders accelerating that debt or foreclosing on the related property. If our debt is accelerated, the value of our assets may not be sufficient to repay the debt in full. If we are unable to refinance or repay our debt as it comes due and maintain sufficient cash flow, our business, financial condition and results of operations will be materially and adversely affected. Furthermore, even if we are able to obtain extensions on our existing debt, those extensions may include operational and financial covenants significantly more restrictive than the covenants on existing indebtedness. Any extensions will also require us to pay certain fees to, and expenses of, our lenders. Any fees and cash flow restrictions will affect our ability to fund our ongoing operations.

~~Recent~~· ~~disruptions~~required inprincipal ~~the financial markets~~ and ~~adverse~~interest ~~economic~~payments ~~conditions could adversely affect our ability~~ to ~~secure debt financing on attractive terms and dispose of~~ our ~~properties~~existing ~~and have affected the value of our investments~~properties.

~~The~~Because ~~commercial~~we ~~real~~cannot be ~~estate debt markets have recently experienced volatility as a result of~~ certain ~~factors,~~about ~~including~~ the ~~tightening~~precise ofnet ~~underwriting~~realizable ~~standards~~value byof ~~lenders~~our ~~and~~assets ~~credit rating agencies~~ and the ~~significant~~ultimate ~~inventory~~amount of ~~unsold~~our ~~collateralized~~liabilities, ~~mortgage~~we ~~backed~~are ~~securities~~not inable ~~the~~to predict ~~market.~~accurately ~~Credit~~the ~~spreads~~aggregate ~~for~~cash ~~major~~amounts ~~sources~~which ofwill ~~capital~~ultimately ~~widened~~be ~~significantly~~distributed asto ~~investors~~our ~~have~~beneficiaries ~~demanded~~or ~~a higher risk premium. This resulted in lenders increasing~~ the ~~cost~~timing ~~for debt financing. An increase in the overall cost~~ of ~~borrowings,~~any ~~either by increases in the index rates or by increases in lender spreads, may result in our investment operations generating lower~~such ~~overall~~distributions. ~~economic~~The ~~returns~~amount and atiming ~~reduced level~~ of ~~cash~~remaining ~~flow.~~distributions Wewill ~~expect this potential impact to~~ be ~~more~~determined ~~pronounced~~by ~~upon~~our ~~refinancing~~Managing ~~any~~Trustee ~~fixed~~based ~~rate indebtedness. As a result of current economic conditions, potential purchasers may be unable to obtain financing~~ on ~~acceptable~~funds ~~terms. In addition~~available, net ~~the~~proceeds ~~recent~~realized ~~dislocations~~from in the ~~debt~~remaining ~~markets~~assets, ~~have reduced~~ the ~~amount~~timing of ~~capital~~asset ~~that is available to finance real estate~~sales, ~~which,~~whether inour ~~turn:~~total ~~(1)~~assets ~~has~~exceed ~~led~~total toliabilities aat such ~~decline~~time, inwhether ~~real~~we ~~estate~~have ~~values~~provided ~~generally;~~for ~~(2) slowed real estate transaction activity; (3) reduced~~ the ~~loan~~level toof ~~value~~reserves ~~upon~~deemed ~~which~~necessary ~~lenders~~or ~~are~~appropriate ~~willing to extend debt;~~ and ~~(4)~~other ~~resulted in difficulty in refinancing debt as it becomes due~~considerations. ~~If the current debt market environment persists, it may be difficult for us to refinance our debt coming due.~~

~~Further,~~The ~~the~~provisions ~~recent market volatility will likely make the valuation~~ of ~~our investment properties more difficult. There may be significant uncertainty in~~ the Delaware ~~valuation,~~Statutory orTrust inAct ~~the~~applicable ~~stability~~to ofstatutory ~~the~~trusts ~~value,~~do ~~of our properties that could result in a substantial decrease in the value of our properties. As a result, we may~~ not begrant ~~able~~beneficiaries toany ~~recover~~voting ~~the carrying amount of our properties~~rights, and webeneficiaries’ rights ~~may~~are belimited ~~required~~under ~~to recognize impairment charges, which will reduce~~ our ~~reported~~Liquidating ~~earnings.~~Trust Agreement.

~~The~~A ~~pervasive~~vote and fundamental disruptions that the global financial markets have undergone have led to extensive and unprecedented governmental intervention. Such intervention has, in certain cases, been implemented on an “emergency” basis, suddenly and substantially eliminating market participants’ ability to continue to implement certain strategies or manage the risk of ~~their~~a outstanding positions. In addition, these interventions have typically been unclear in scope and application, resulting in confusion and uncertainty, which in itself has been materially detrimental to the efficient functioning of the markets, as well asmajority ~~previously successful investment strategies. Legislators continue to propose new restrictions affecting moratoriums on loan payments, limits on the ability~~ of ~~lenders to enforce loan provisions, including~~ the ~~collection~~units of beneficial interest ~~at rates agreed upon in the loan documents and involuntary modifications of loan agreements. It~~ is ~~impossible~~sufficient to ~~predict~~take ~~what, if any, additional interim or permanent governmental restrictions may be imposed or~~ the ~~effect~~following ~~of such restrictions on us and our results of operations. There is likely to be increased regulation of the financial markets.~~ actions:

12· to amend our Liquidating Trust Agreement;

~~TABLE~~· OFto ~~CONTENTS~~dissolve and terminate the Liquidating Trust;

If· ~~debt is unavailable at reasonable rates, we may not be able~~ to ~~refinance~~remove our ~~properties.~~Managing Trustee; and

~~When~~· ~~we place debt on properties, we run the risk of being unable~~ to ~~refinance~~authorize ~~the~~a ~~properties~~merger ~~when~~or ~~the~~a ~~loans~~consolidation ~~come due, or~~ of ~~being unable to refinance on favorable terms. If interest rates are higher when~~ the ~~properties~~Liquidating ~~are refinanced, we may not be able to finance the properties, and our income could be reduced~~Trust. ~~If this occurs, it may prevent us from borrowing more money.~~

~~The~~These ~~aggregate~~are ~~amount~~the weonly ~~may~~significant ~~borrow~~voting isrights granted ~~limited~~to ~~under~~ our ~~Partnership~~beneficiaries ~~Agreement,~~under ~~which~~our ~~may~~Liquidating ~~hinder~~Trust ~~our~~Agreement. ~~ability~~Therefore, tobeneficiaries’ ~~secure~~voting ~~additional~~rights ~~funding~~in ~~when~~our itoperations are ~~is needed~~limited.

Our Partnership Agreement limits the aggregate amount we may borrow to the sum of (1) with respect to loans insured, guaranteed or provided by the federal government or any state or local government or agency, 100% of the aggregate purchase price of all of our properties which have not been refinanced plus 100% of the aggregate fair market value of all of our refinanced properties and (2) with respect to other loans, the sum of 85% of the aggregate purchase price of all of our properties which have not been refinanced plus 85% of the aggregate fair market value of all of our refinanced properties. That limitation could have adverse business consequences such as: (1) causing operational problems if there are cash flow shortfalls for working capital purposes; and (2) resulting in the loss of a property if, for example, financing is necessary to repay a default on a mortgage. 13

~~Future~~Our Managing Trustee will make all decisions with respect to our management and determine all of our major policies, including our financing, ~~could~~growth, investment strategies and distributions. Our Managing Trustee may revise these and other policies without a vote of the beneficiaries. Therefore, beneficiaries will be ~~impacted~~relying byalmost ~~negative~~entirely ~~capital~~on ~~market~~our Managing Trustee for our management and the operation of our business. Our Managing Trustee may only be removed under certain conditions, as set forth in our Liquidating Trust Agreement.

~~Recently,~~Payment ~~the U.S. credit markets and the sub-prime residential mortgage market experienced severe dislocations and liquidity disruptions. Sub-prime mortgage loans have experienced increasing rates~~ of ~~delinquency,~~fees foreclosure and loss. These and other related events have had a significant impact on the capital markets associated not only with sub-prime mortgage-backed securities, asset-backed securities and collateralized debt obligations, but also with the U.S. housing, credit and financial markets as a whole. Consequently, there is greater uncertainty regarding our ability to ~~access the credit market in order to attract financing on reasonable~~our ~~terms.~~Managing ~~Our~~Trustee ~~ability~~and toits ~~borrow~~affiliates ~~funds~~will toreduce ~~refinance~~cash ~~current~~available ~~debt,~~for ~~including any financing provided by our Sponsor, could be adversely affected by our inability to secure permanent financing on reasonable terms, if at all~~distribution.

~~The~~Our ~~distributions~~Managing weTrustee and ~~have~~its ~~paid~~affiliates ~~are~~will ~~not~~perform ~~necessarily~~services ~~indicative~~for ofus ~~our~~in ~~current~~connection orwith ~~future~~the ~~operating~~management ~~results~~ and ~~there~~leasing ~~can~~of beour noproperties ~~assurance~~and ~~that~~the weadministration of our other investments. They will be ~~able~~paid tofees ~~achieve~~for ~~expected~~these ~~cash~~services, ~~flows~~which ~~necessary~~will toreduce ~~continue~~the toamount ~~pay~~of ~~distributions~~cash atavailable ~~any~~for ~~particular~~distribution to ~~level~~beneficiaries.

~~There~~The ~~are~~failure ~~many factors that can affect the availability and timing~~ of ~~distributions~~any to limited partners. Distributions will be based principally on cash available from our properties, real estate securities and other investments. We expect to distribute net cash from operations and net proceeds from the sales of properties to limited partners. However, our General Partners, bank in ~~their~~which ~~discretion,~~we ~~may~~deposit ~~defer fees payable by us to the General Partners, allowing for more cash to be available to us for distribution to~~ our ~~limited~~funds ~~partners.~~could Inreduce ~~addition, our General Partners may make supplemental payments to us or our limited partners, or otherwise support our operations to~~ the ~~extent not prohibited under the NASAA Guidelines, which would permit distributions to our limited partners in excess of net cash from operations. The~~ amount of cash ~~available~~we ~~for~~have ~~distributions will be affected by many factors, such as our operating expense levels, as well as many other variables. Actual cash~~ available ~~for distributions may vary substantially from estimates. We declared monthly distributions at an annualized rate of 3% through the second quarter of 2009. In light of cash needs required~~ to ~~meet~~pay ~~maturing debt obligations and our ongoing operating capital needs, our General Partners determined that it was necessary to discontinue payment of monthly~~ distributions ~~beginning with the 2009 third quarter. Distributions have not resumed through December 31, 2011,~~ and we do not anticipate that payment of regular distributions will resume. Such distributions, or lack thereof, are not necessarily indicative of current or future operating results, and we can give no assurance that we will be able to resume regular distributions at the prior rate or that distributions will increase over time. Nor can we give any assurance that rents or other income from our investments will increase, that the investments we make ~~will~~additional ~~increase in value or provide constant or increased distributions over time, or that mortgage loans or our~~ investments ~~in securities will increase our cash available for distributions to limited partners~~. ~~Our actual results may differ significantly from the assumptions used by our General Partners in establishing distributions to limited partners.~~

13We have diversified our cash and cash equivalents among several banking institutions in an attempt to minimize exposure to any one of these entities. However, the Federal Deposit Insurance Corporation, or FDIC, generally only insures limited amounts per depositor per insured bank. We have cash and cash equivalents and restricted cash deposited in interest bearing transaction accounts at certain financial institutions in excess of federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose the portion of our deposits that exceed the federally insured levels. The loss of our deposits could reduce the amount of cash we have available to distribute and could result in a decline in the value of your investment.

~~TABLE~~Financing OFarrangements involving ~~CONTENTS~~balloon payment obligations may adversely affect our operations.

~~Many~~Our offixed-term financing arrangements generally require us to make “balloon” payments at maturity. During the ~~factors~~interest only period, the amount of each scheduled payment is less than that ~~can~~of ~~affect~~traditional amortizing loans. The principal balance of the ~~availability~~loan ~~and~~will ~~timing~~not be reduced (except in the case of ~~distributions~~prepayments) because there are no scheduled monthly payments of principal during this period. Our ability to ~~limited~~make ~~partners~~a ~~are~~balloon ~~beyond~~payment at maturity is uncertain and may depend upon our ~~control~~ability to obtain additional financing or our ability to sell the property or other properties in our portfolio. At the time the balloon payment is due, ~~and~~we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell the property at a ~~change~~price insufficient ~~any~~to ~~one~~make ~~factor~~the balloon ~~could~~payment. ~~adversely~~The effect of a refinancing or sale could affect ~~our~~the ~~ability~~rate of return to ~~pay~~unitholders ~~future~~and ~~special~~the ~~distributions~~projected time of disposition of our assets. ~~Such~~In ~~factors~~addition, payments of principal and interest made to service our debts may ~~include:~~adversely affect our operations. Any of these results would have a significant, negative impact on your investment.

•Increases Ifin ~~one~~interest rates ~~or more tenants defaults or terminates its lease, there~~ could beincrease athe ~~decrease~~amount ~~or cessation~~ of ~~rental~~our debt payments, ~~which~~and ~~would~~adversely ~~mean~~affect ~~less~~our operating cash ~~available for special distributions~~flow.

•We ~~Cash~~have ~~available~~borrowed ~~for~~money that ~~special~~bears ~~distributions~~interest ~~would~~at bevariable ~~reduced~~rates, ifand we are ~~required~~exposed to ~~spend~~increases ~~money~~in costs in a rising interest rate environment. Accordingly, increases in interest rates would increase our interest costs, which could have a material adverse effect on our operating cash flow. In addition, if rising interest rates cause us to ~~correct~~need ~~defects~~additional orcapital to ~~make~~repay ~~improvements~~indebtedness in accordance with its terms or otherwise, we may be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments.

•To ~~Cash~~hedge ~~available~~against tointerest rate ~~make~~fluctuations, ~~special~~we ~~distributions~~may use derivative financial instruments that may ~~decrease~~be ifcostly ~~the~~and ~~assets~~ineffective weand ~~acquire~~may ~~have~~reduce ~~lower~~the ~~yields~~overall ~~than~~returns on ~~expected~~your investment.

•From Iftime to time, we ~~borrow~~may ~~funds~~use ~~from~~derivative ~~third~~financial ~~parties,~~instruments ~~more~~to ofhedge ~~our~~exposures ~~cash~~to changes in interest rates on ~~hand~~loans secured by our assets. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions will be ~~needed~~determined toin ~~make~~light ~~debt~~of ~~payments,~~the facts and ~~cash~~circumstances existing ~~available~~at ~~for~~the ~~special~~time ~~distributions~~of the hedge and may ~~therefore~~differ ~~decrease~~from time to time. There is no assurance that our hedging strategy will achieve our objectives.

InTo ~~addition~~the extent that we use derivative financial instruments to hedge against interest rate fluctuations, ~~our~~we ~~General~~are ~~Partners~~exposed to credit risk, inbasis ~~their~~risk and ~~discretion~~legal enforceability risks. In this context, ~~may~~credit ~~retain~~risk ~~any~~is ~~portion~~the failure of ~~our~~the ~~cash~~counterparty onto ~~hand~~perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for ~~working~~us. ~~capital~~Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. WeFinally, ~~cannot~~legal ~~assure~~enforceability ~~limited~~risks ~~partners~~encompass general contractual risks, including the risk that ~~sufficient~~the ~~cash~~counterparty will bebreach ~~available~~the toterms ~~pay~~of, ~~distributions~~or fail to ~~them~~perform its obligations under, the derivative contract. We may be unable to manage these risks effectively.

~~Gains~~We ~~and~~may ~~distributions~~enter ~~upon~~into ~~resale~~derivative contracts ofthat ~~our~~could ~~properties~~expose ~~are~~us ~~uncertain~~to contingent liabilities in the future.

~~Although~~Our ~~gains~~derivative ~~from~~financial instruments may require us to fund cash payments upon the ~~sales~~early termination of ~~properties~~a ~~typically~~derivative ~~represent~~agreement acaused ~~substantial~~by ~~portion~~an event of ~~any~~default or ~~profits~~other ~~attributable~~early totermination aevent. ~~real~~The ~~estate~~amount ~~investment,~~due wewould ~~cannot~~be ~~assure~~equal ~~investors~~to ~~that~~the weunrealized ~~will~~loss ~~realize~~of ~~any~~the ~~gains~~open onswap positions with the ~~resales~~respective counterparty ofand ~~our~~could ~~properties~~also include other fees and charges. In addition, ~~the~~some ~~amount~~of these derivative arrangements may require that we maintain specified percentages of ~~taxable~~cash ~~gain~~collateral ~~allocated~~with the counterparty to ~~investors~~fund ~~with~~potential ~~respect~~liabilities under the derivative contract. We may have to make cash payments in order to maintain the ~~sale~~required percentage of acollateral ~~Partnership~~with ~~property~~the ~~could~~counterparty. ~~exceed~~These economic losses would be reflected in our results of operations, and our ability to fund these obligations would depend on the ~~cash~~liquidity of ~~proceeds~~our ~~received~~respective ~~from~~assets ~~such~~and ~~sale~~access to capital at the time. Our due diligence may not reveal all of an entity’s liabilities and may not reveal other weaknesses in the entity’s business.

~~Proceeds from the sale of a property will be distributed to investors if the General Partners, in their sole discretion, have determined that such proceeds are not needed to fund:~~ 14

•Lenders ~~working~~may ~~capital~~require ~~reserves;~~us to enter into restrictive covenants that may have an adverse effect on our operations.

•In ~~capital~~connection ~~improvements~~with obtaining certain financing, a lender could impose restrictions on us that affect our ability to incur additional debt and our operating ~~existing~~policies. ~~properties;~~Loan documents we enter into may contain customary negative covenants that may limit our ability to further leverage the property, to discontinue insurance coverage, replace our Managing Trustee or impose other limitations. Any such restriction or limitation may have an adverse effect on our operations.

•Your ~~required~~investment ~~principal~~return may ~~and~~be ~~interest~~reduced ~~payments~~if we are required to ~~our~~register ~~existing~~as ~~properties~~an investment company under the Investment Company Act.

~~The~~We ~~provisions~~are ofnot ~~the~~registered, and ~~Texas~~do ~~Business~~not ~~Organizations~~intend ~~Code~~to ~~applicable~~register, toas ~~limited~~an ~~partnerships~~investment docompany ~~not~~under ~~grant~~the ~~limited~~Investment ~~partners~~Company ~~any~~Act ~~voting~~of ~~rights~~1940, ~~and~~as ~~limited~~amended ~~partners’~~(“Investment Company ~~rights~~Act”), based on exclusions that we believe are ~~limited~~available to us. If we were obligated to register as an investment company, we would have to comply with a variety of substantive requirements under ~~our~~the ~~Partnership~~Investment ~~Agreement.~~Company Act imposing, among other things:

A· ~~vote~~limitations ofon acapital ~~majority of the units of limited partnership interest is sufficient to take the following actions:~~ structure;

•· torestrictions ~~amend~~on ~~our~~specified ~~Partnership Agreement~~investments;

•· toprohibitions ~~dissolve~~on ~~and~~transactions ~~terminate~~with ~~the Partnership~~affiliates; and

•· tocompliance ~~remove~~with ~~our~~reporting, ~~General~~record ~~Partners;~~keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.

•In order to ~~authorize~~be aexcluded from ~~merger~~regulation under the Investment Company Act, we must engage primarily in the business of acquiring and owning real estate assets or areal ~~consolidation~~estate-related assets. We rely on exemptions or exclusions provided by the Investment Company Act for the direct ownership, or the functional equivalent thereof, of certain qualifying real estate assets or by engaging in business through one or more majority-owned subsidiaries, as well as other exemptions or exclusions. The position of the ~~Partnership~~SEC staff generally requires us to maintain at least 55% of our assets directly in qualifying real estate interests in order for us to maintain our exemption. Mortgage-backed securities may or may not constitute qualifying real estate assets, depending on the characteristics of the mortgage-backed securities, including the rights that we have with respect to the underlying loans.

~~These~~To ~~are~~maintain compliance with the ~~only~~Investment ~~significant~~Company ~~voting~~Act ~~rights~~exemption, ~~granted~~we may be unable to ~~our~~sell ~~limited~~assets ~~partners~~we ~~under~~would ~~our~~otherwise ~~Partnership~~want ~~Agreement~~to sell and may need to sell assets we would otherwise wish to retain. In ~~Therefore~~addition, ~~limited~~we ~~partners’~~may ~~voting~~have ~~rights~~to acquire additional income or loss generating assets that we might not otherwise have acquired or may have to forgo opportunities to acquire interests in ~~our~~entities ~~operations~~that ~~are~~we ~~limited.~~would otherwise want to acquire and would be important to our investment strategy.

~~Our~~The ~~General~~method ~~Partners~~we ~~will~~use ~~make~~to classify ~~all~~our ~~decisions~~assets ~~with~~for ~~respect~~purposes toof ~~our~~the ~~management~~Investment ~~and~~Company ~~determine~~Act ~~all~~is ofbased ~~our~~in ~~major~~large ~~policies,~~measure ~~including~~upon ~~our~~no-action ~~financing,~~positions ~~growth,~~taken ~~investment~~by ~~strategies~~the SEC ~~and~~staff ~~distributions~~in the past. ~~Our~~These ~~General~~no-action ~~Partners~~positions ~~may~~were ~~revise~~issued ~~these~~in ~~and~~accordance ~~other~~with ~~policies~~factual ~~without~~situations athat ~~vote~~may ofbe substantially different from the ~~limited~~factual ~~partners.~~situations ~~Therefore~~we may face, ~~limited~~and ~~partners~~a ~~will~~number beof ~~relying~~these ~~almost~~no-action ~~entirely~~positions onwere ~~our~~issued ~~General~~more ~~Partners~~than ~~for~~ten ~~our~~years ~~management~~ago. ~~and~~No assurance can be given that the ~~operation~~SEC staff will concur with our classification of our ~~business~~assets. ~~Our~~In ~~General~~addition, ~~Partners~~the SEC staff may, ~~only~~in bethe ~~removed~~future, issue ~~under~~further ~~certain~~guidance ~~conditions,~~that asmay ~~set~~require ~~forth~~us into re-classify our ~~Partnership~~assets ~~Agreement.~~for Ifpurposes ~~our~~of ~~General~~qualifying ~~Partners~~for ~~are~~exemption ~~removed,~~from ~~they~~regulation ~~will~~under the ~~receive~~Investment ~~payment~~Company ~~equal~~Act. If we are required to ~~the~~re-classify ~~fair~~our ~~market~~assets, ~~value~~we ofmay ~~their~~no ~~interests~~longer be in uscompliance ~~as agreed~~with ~~upon~~the byexemption from ~~our~~the ~~General~~definition ~~Partners~~of ~~and~~an ~~us,~~“investment orcompany” provided by ~~arbitration~~Section if3(c)(5)(C) weof ~~are~~the ~~unable~~Investment toCompany ~~agree~~Act.

14If we are required to register as an investment company but fail to do so, we will be prohibited from engaging in our business, and criminal and civil actions could be brought against us. In addition, our contracts will be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business.

~~TABLE~~Risks OFRelated ~~CONTENTS~~to Investments in Real Estate

~~Payment~~Our ofoperating ~~fees~~results will tobe ~~our~~affected ~~General~~by ~~Partners~~economic and ~~their~~regulatory ~~affiliates~~changes that may have an adverse impact on the real estate market in general, and we cannot assure investors that we will ~~reduce~~be ~~cash~~profitable ~~available~~or ~~for~~that ~~distribution~~we will realize growth in the value of our real estate properties.

Our ~~General~~operating ~~Partners and their affiliates~~ results will ~~perform~~be ~~services~~subject ~~for~~to usrisks ingenerally ~~connection~~incident ~~with~~to the ~~management~~ownership ~~and leasing~~ of ~~our~~real ~~properties and the administration of our other investments. They will be paid fees for these services~~estate, ~~which will reduce the amount of cash available for distribution to limited partners.~~ including:

~~The~~· ~~failure~~changes ~~of any bank~~ in ~~which~~general weeconomic ~~deposit~~or ~~our~~local ~~funds could reduce the amount of cash we have available to pay distributions and make additional investments.~~conditions;

We· ~~have~~changes ~~diversified our cash and cash equivalents among several banking institutions~~ in ansupply ~~attempt to minimize exposure to any one~~ of ~~these~~or ~~entities.~~demand ~~However,~~for ~~the~~similar ~~Federal Deposit Insurance Corporation,~~ or ~~FDIC,~~competing ~~generally~~properties ~~only insures limited amounts per depositor per insured bank. We have cash and cash equivalents and restricted cash deposited~~ in ~~interest~~an bearing transaction accounts at certain financial institutions in excess of federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose the portion of our deposits that exceed the federally insured levels. The loss of our deposits could reduce the amount of cash we have available to distribute and could result in a decline in the value of your investment. area;

~~Financing arrangements involving balloon payment obligations may adversely affect our operations.~~15

~~Our~~· fixed-term financing arrangements generally require us to make “balloon” payments at maturity. During the interest only period, the amount of each scheduled payment is less than that of traditional amortizing loans. The principal balance of the loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. Our ability to ~~make~~collect arent ~~balloon~~from payment at maturity is uncertain and may depend upon our ability to obtain additional financing or our ability to sell the property or other properties in our portfolio. At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell the property at a price sufficient to make the balloon payment. The effect of a refinancing or sale could affect the rate of return to unitholders and the projected time of disposition of our assets. In addition, payments of principal and interest made to service our debts may adversely affect our operations. Any of these results would have a significant, negative impact on your investment. tenants;

~~Increases~~· inincreasing ~~interest~~vacancy rates ~~could~~or ~~increase~~ability ~~the~~to ~~amount~~rent ofspace ~~our~~on ~~debt~~favorable ~~payments and adversely affect our operating cash flow.~~terms;

We· ~~have~~changes ~~borrowed~~in ~~money that bears~~ interest ~~at variable~~ rates, and weavailability are exposed to increases in costs in a rising interest rate environment. Accordingly, increases in interest rates would increase our interest costs, which could have a material adverse effect on our operating cash flow. In addition, if rising interest rates cause us to need additional capital to repay indebtedness in accordance with its terms or otherwise, we may be required to liquidate one or more of ~~our~~permanent ~~investments~~mortgage infunds ~~properties~~that ~~at times which~~ may ~~not~~render ~~permit~~the ~~realization~~sale of ~~the~~a ~~maximum~~property ~~return~~difficult onor ~~such investments.~~ unattractive;

To· ~~hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective and may reduce~~ the ~~overall~~illiquidity ~~returns~~of onreal ~~your~~estate ~~investment.~~investments generally;

~~From~~· ~~time to time, we may use derivative financial instruments to hedge exposures to~~ changes in ~~interest rates on loans secured by our assets. Derivative instruments may include interest rate swap contracts~~tax, ~~interest~~real ~~rate cap or floor contracts~~estate, ~~futures~~environmental ~~or forward contracts, options or repurchase agreements. Our actual hedging decisions will be determined in light of the facts~~ and ~~circumstances~~zoning ~~existing~~laws; ~~at the time of the hedge~~ and ~~may differ from time to time. There is no assurance that our hedging strategy will achieve our objectives.~~

To· ~~the~~periods ~~extent~~of ~~that~~high ~~we use derivative financial instruments to hedge against~~ interest ~~rate~~rates ~~fluctuations, we are exposed to credit risk, basis risk~~ and ~~legal~~tight ~~enforceability~~money ~~risks~~supply. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract. We may be unable to manage these risks effectively.

15The return on our real estate assets also may be affected by a continued or exacerbated general economic slowdown experienced by the local economies where our properties are located, including:

~~TABLE~~· OFpoor ~~CONTENTS~~economic conditions may result in defaults by tenants of our properties;

We· ~~may~~job ~~enter~~transfers ~~into~~and ~~derivative~~layoffs ~~contracts~~may ~~that~~cause ~~could~~vacancies ~~expose us~~ to ~~contingent~~increase; ~~liabilities in the future.~~and

~~Our~~· ~~derivative~~increasing ~~financial~~concessions, ~~instruments~~reduced ~~may~~rental ~~require~~rates ~~us to fund cash payments upon the early termination of a derivative agreement caused by an event of default~~ or ~~other~~capital ~~early~~improvements ~~termination~~may ~~event. The amount due would~~ be ~~equal~~required to ~~the unrealized loss of the open swap positions with the respective counterparty and could also include other fees and charges. In addition, some of these derivative arrangements may require that we~~ maintain ~~specified~~or ~~percentages~~limit ofa ~~cash~~decline ~~collateral with the counterparty to fund potential liabilities under the derivative contract. We may have to make cash payments~~ in ~~order~~occupancy ~~to maintain the required percentage of collateral with the counterparty~~levels. These economic losses would be reflected in our results of operations, and our ability to fund these obligations would depend on the liquidity of our respective assets and access to capital at the time. Our due diligence may not reveal all of an entity’s liabilities and may not reveal other weaknesses in the entity’s business.

~~Lenders~~For ~~may~~these ~~require~~and usother toreasons, ~~enter~~we ~~into~~cannot assure ~~restrictive~~investors ~~covenants~~that we will be profitable or that ~~may~~we ~~have~~will anrealize ~~adverse~~growth ~~effect~~in onthe value of our ~~operations~~real estate properties.

InOur ~~connection~~remaining ~~with~~properties are ~~obtaining~~located ~~certain~~in ~~financing~~the Dallas, aTexas ~~lender~~metropolitan ~~could impose restrictions on us that affect our ability to incur additional debt and our operating policies~~area. ~~Loan~~As ~~documents~~a weresult ~~enter~~of ~~into~~this ~~may~~limited ~~contain~~diversification ~~customary~~of ~~negative~~the ~~covenants~~geographic ~~that~~locations ~~may limit~~ of our ~~ability to further leverage the property~~properties, ~~to discontinue insurance coverage, replace~~ our ~~General~~operating ~~Partners~~results orwill ~~impose~~be ~~other~~affected ~~limitations.~~by ~~Any~~economic ~~such~~changes ~~restriction~~that ~~or limitation may~~ have an adverse ~~effect~~impact on ~~our~~the ~~operations.~~real estate market in that area.

~~Your~~The ~~investment~~remaining ~~return~~properties that ~~may~~we behave ~~reduced~~acquired ifare welocated ~~are~~in ~~required~~the Southwest United States, more specifically, in the Dallas, Texas metropolitan area. Consequently, because of the lack of geographic diversity among our current assets, our operating results and ability to ~~register~~pay asdistributions anare likely to be impacted by economic changes affecting the real estate market in the Dallas, Texas area. An investment ~~company~~in ~~under~~our units will be subject to greater risk to the ~~Investment~~extent ~~Company~~that ~~Act~~we lack a geographically diversified portfolio of properties.

We ~~are~~may ~~not~~be ~~registered,~~unable ~~and do not intend~~ to ~~register,~~secure funds asfor anfuture ~~investment~~tenant ~~company under the Investment Company Act of 1940~~improvements, aswhich ~~amended~~could ~~(“Investment~~adversely ~~Company~~impact ~~Act”),~~our ~~based~~ability ~~on exclusions that we believe are available~~ to ~~us.~~pay Ifspecial wedistributions ~~were obligated~~ to ~~register~~our ~~as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act imposing, among other things:~~ beneficiaries.

•When ~~limitations~~tenants ondo not renew their leases or otherwise vacate their space we may be required to expend substantial funds for tenant improvements and tenant refurbishments to the vacated space in order to attract replacement tenants. We generally maintain initial working capital ~~structure;~~reserves of 1% of the contract price of the properties we own. If these reserves or any reserves otherwise established are insufficient to meet our cash needs, we may have to obtain financing from either affiliated or unaffiliated sources to fund our cash requirements. We cannot assure investors that sufficient financing will be available or, if available, will be available on economically feasible terms or on terms acceptable to us. Any borrowing will require us to pay interest expense, and therefore our financial condition and our ability to pay special distributions to our beneficiaries may be adversely affected.

•We ~~restrictions~~may onbe ~~specified~~unable ~~investments;~~to sell a property if or when we decide to do so, which could adversely impact our ability to pay special distributions to our beneficiaries.

•The ~~prohibitions~~real estate market is affected, as set forth above, by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any property for the price or on ~~transactions~~the ~~with~~terms ~~affiliates;~~set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. If we are unable to sell a property when we determine to do so, it could have a significant adverse effect on our cash flow, results of operations and our ability to pay special distributions to our beneficiaries.

•We ~~compliance~~may ~~with~~be ~~reporting,~~unable to ~~record~~sell ~~keeping,~~a ~~voting,~~property ~~proxy~~on ~~disclosure~~acceptable ~~and~~terms ~~other rules~~ and ~~regulations~~conditions, ~~that~~if ~~would~~at ~~significantly change our operations~~all.

InWe ~~order~~intend to behold ~~excluded~~our real ~~from~~properties ~~regulation~~and ~~under~~other ~~the~~investments ~~Investment~~until ~~Company~~our ~~Act,~~Managing weTrustee ~~must~~decides ~~engage~~that ~~primarily~~a insale ~~the business of acquiring and owning real estate assets~~ or ~~real~~other ~~estate-related~~disposition ~~assets.~~is Weconsistent ~~rely~~with onour disposition ~~exemptions~~objectives or ~~exclusions~~until ~~provided~~it byappears ~~the~~that ~~Investment~~these ~~Company~~objectives ~~Act~~will ~~for~~not ~~the~~be ~~direct ownership~~met. Otherwise, orour ~~the~~Managing ~~functional~~Trustee ~~equivalent~~may exercise ~~thereof,~~its ofdiscretion ~~certain~~as ~~qualifying~~to ~~real~~whether ~~estate~~and ~~assets~~when orto bysell ~~engaging~~a inproperty, ~~business~~and ~~through~~we ~~one~~will orhave ~~more~~no ~~majority-owned~~obligation ~~subsidiaries,~~to assell ~~well~~properties asat ~~other~~any ~~exemptions~~particular time, orexcept ~~exclusions.~~upon ~~The position of~~ the ~~SEC~~termination ~~staff generally requires us to maintain at least 55%~~ of our ~~assets~~existence ~~directly~~ in ~~qualifying~~2016, ~~real estate interests in order for us to maintain our exemption. Mortgage-backed securities may~~ or ~~may not constitute qualifying real estate assets~~, ~~depending~~after onsuch ~~the~~date ~~characteristics~~if ofour ~~the~~Managing ~~mortgage-backed~~Trustee ~~securities,~~determines ~~including the rights~~ that wean ~~have~~extension is ~~with~~reasonably ~~respect~~necessary to ~~the~~wind ~~underlying~~up ~~loans.~~our affairs.

To maintain compliance with the Investment Company Act exemption, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we may have to acquire additional income or loss generating assets that we might not otherwise have acquired or may have to forgo opportunities to acquire interests in entities that we would otherwise want to acquire and would be important to our investment strategy. 16

~~The~~We method we use to classify our assets for purposes of the Investment Company Act is based in large measure upon no-action positions taken by the SEC staff in the past. These no-action positions were issued in accordance with factual situations that may besuffer ~~substantially~~adverse consequences ~~different~~due ~~from~~to the ~~factual~~financial ~~situations we may face~~difficulties, ~~and~~bankruptcy aor ~~number~~insolvency of ~~these no-action positions were issued more than ten years ago. No assurance can be given that the SEC staff will concur with~~ our ~~classification of our assets~~tenants. ~~In addition, the SEC staff may, in the~~

16The current economic conditions have caused, and may continue to cause, our tenants to experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business. We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would bar efforts by us to collect pre-bankruptcy debts from that tenant or lease guarantor, or its property, unless we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of bankruptcy. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is assumed by a tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. If, however, a lease is rejected by a tenant in bankruptcy, we would have only a general, unsecured claim for damages. An unsecured claim would only be paid to the extent that funds are available and only in the same percentage as is paid to all other holders of general, unsecured claims. Restrictions under the bankruptcy laws further limit the amount of any other claims that we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of the remaining rent during the term.

~~TABLE~~Properties OFthat ~~CONTENTS~~have significant vacancies could be difficult to sell, which could diminish the return on an investment.

~~future,~~A ~~issue~~property ~~further guidance that~~ may ~~require~~incur vacancies useither toby ~~re-classify~~the ~~our~~continued ~~assets~~default ~~for purposes~~ of ~~qualifying~~tenants ~~for~~under ~~exemption~~their ~~from~~leases ~~regulation~~or ~~under~~ the ~~Investment~~expiration ~~Company~~of ~~Act~~tenant leases. If wevacancies ~~are~~continue for ~~required~~a tolong ~~re-classify~~period ~~our~~of ~~assets~~time, we may nosuffer ~~longer~~reduced berevenues resulting in ~~compliance~~a ~~with~~reduction in the ~~exemption~~total ~~from~~return to our beneficiaries. In addition, the ~~definition~~resale value of anthe ~~“investment~~property ~~company”~~could ~~provided~~be bydiminished ~~Section~~because ~~3(c)(5)(C)~~the market value of a particular property will depend principally upon the ~~Investment~~value ~~Company~~of ~~Act.~~the leases of such property.

IfWe we are ~~required~~dependent toon ~~register~~tenants for ~~as an investment company but fail to do so, we will be prohibited from engaging in~~ our ~~business~~revenue, and ~~criminal~~lease ~~and~~terminations ~~civil actions~~ could bereduce ~~brought~~or ~~against~~prevent ~~us.~~special Indistributions ~~addition, our contracts will be unenforceable unless a court required enforcement, and a court could appoint a receiver~~ to ~~take control of us and liquidate~~ our ~~business~~beneficiaries.

AThe ~~proposed~~success ~~change~~of inour real Uproperty investments is materially dependent on the financial stability of our tenants.S. ~~accounting~~A ~~standards~~default ~~for~~by ~~leases~~a ~~could~~significant ~~reduce~~tenant on ~~the~~its ~~overall~~lease ~~demand~~payments to us would cause us to lose the revenue associated with such lease and cause us to have to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage. In the event of a tenant default, we may experience delays in enforcing our ~~properties~~rights as landlord and may incur substantial costs in protecting our investment and re-letting our property. If significant leases are terminated, we cannot assure investors that we will be able to lease the property for the rent previously received or sell the property without incurring a loss.

~~The~~If ~~existing~~we ~~accounting~~sell ~~standards~~any for leases require lessees to classify their leases as either capital or operating leases. Under a capital lease, both the leased asset and the contractual lease obligation are recorded on the tenant’s balance sheet if one of ~~the~~our properties ~~following~~in ~~criteria are met: (i) the lease transfers ownership of the property to the lessee by the end of the lease term; (ii) the lease contains a bargain purchase option; (iii) the non~~tenant-~~cancellable~~in-common ~~lease~~transactions, ~~term~~those issales ~~more~~may ~~than~~be ~~75%~~viewed ofas ~~the~~sales ~~useful life~~ of ~~the asset; or (iv) the present value of the minimum lease payments equals 90% or more of the leased property’s fair value. If the terms of the lease do not meet these criteria~~securities, ~~the lease is considered an operating lease,~~ and nowe ~~leased~~would ~~asset~~retain orpotential ~~contractual~~liability after ~~lease obligation is recorded by~~ the ~~lessee~~sale onunder ~~its~~applicable ~~balance~~securities ~~sheet~~laws.

InWe ~~order~~may tosell ~~address~~properties in ~~concerns~~tenant-in-common ~~raised by the SEC regarding the transparency of contractual lease obligations under the existing accounting standards for operating leases, the U~~transactions.S. ~~Financial~~If ~~Accounting~~we ~~Standards~~do ~~Board~~make ~~(“FASB”)~~such ~~and the International Accounting Standards Board (“IASB”) initiated a joint project to develop new guidelines for lease accounting. The FASB and IASB (collectively~~sales, ~~the~~they ~~“Boards”)~~may ~~issued~~be anviewed ~~Exposure~~as ~~Draft~~sales onof ~~August 17~~securities, ~~2010~~and ~~(the~~as “Exposure Draft”), which proposes substantial changes to the current lease accounting standards if adopted in its current form, primarily by eliminating the concept of operating lease accounting. As a result, ~~a lease asset and obligation will be recorded on the tenant’s balance sheet for all lease arrangements. In addition, the Exposure Draft,~~ if ~~adopted in its current form, would impact~~ the purchasers ~~method~~ in ~~which contractual lease payments will be recorded. In order to mitigate~~ the ~~effect of the proposed lease accounting, tenants may seek to negotiate certain terms of new lease arrangements or modify terms~~ tenant-in-common ~~existing~~transaction ~~lease~~had ~~arrangements,~~post-closing ~~such as shorter lease terms or fewer extension options~~claims, ~~which~~they ~~would~~could ~~generally~~bring ~~have~~claims ~~less~~under ~~impact~~applicable onsecurities ~~tenants’ balance sheets~~laws. Those ~~Also,~~claims ~~tenants may reassess their lease-versus-buy strategies. This~~ could ~~result~~have in a ~~greater~~material ~~renewal~~adverse ~~risk,~~effect ~~shorter~~upon ~~lease terms, a shift in the market away from leasing or making it more difficult for us to retain or obtain tenants, each of which may negatively impact~~ our ~~operations~~business and ~~ability~~results toof ~~pay distributions~~operations.

~~After~~If ~~issuing~~we ~~the~~set ~~Exposure~~aside ~~Draft,~~insufficient working ~~the~~capital ~~Boards~~reserves, ~~deliberated~~we ~~and~~may ~~made~~be ~~significant~~required ~~revisions~~ to ~~certain~~defer ~~proposals~~necessary inproperty ~~their Exposure Draft~~improvements. The Boards plan to continue deliberations. The Boards have decided to reconsider their proposed lease accounting standard and plan to publish a revised Exposure Draft during the first half of 2012. A final lease accounting standard likely will not be issued before the second half of 2012.

~~Risks~~If ~~Related~~we do not estimate enough reserves for working capital to ~~Investments~~supply needed funds for capital improvements throughout the life of the investment in ~~Real~~a property, ~~Estate~~we may be required to defer necessary improvements to the property that may cause the property to suffer from a greater risk of obsolescence or a decline in value, or a greater risk of decreased cash flow as a result of fewer potential tenants being attracted to the property. If this happens, we may not be able to maintain projected rental rates for affected properties, and our results of operations may be negatively impacted.

~~Our~~Uninsured ~~operating~~losses ~~results~~relating to ~~will~~real beproperty ~~affected~~or byexcessively ~~economic~~expensive ~~and~~premiums ~~regulatory~~for ~~changes~~insurance ~~that~~coverage may ~~have~~adversely anaffect ~~adverse impact on the real estate market in general, and we cannot assure~~ investors’ ~~that we will be profitable or that we will realize growth in the value of our real estate properties~~returns.

Our ~~operating~~Managing ~~results~~ Trustee will attempt to ensure that all of our properties are adequately insured to cover casualty losses. However, there are types of losses which are generally catastrophic in nature and are related to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters which may be uninsurable, not economically insurable or may be insurable subject to limitations, such as large deductibles or co-payments. Insurance risks ~~generally~~associated ~~incident~~with potential terrorism acts could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases have begun to insist that specific coverage against terrorism be purchased by commercial property owners as a condition for providing mortgage loans. It is uncertain whether such insurance policies will be available, or available at reasonable cost, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We cannot assure investors that we will have adequate coverage for such losses. In the ~~ownership~~event that any of ~~real~~our ~~estate~~properties incur a casualty loss which is not fully covered by insurance, ~~including:~~the value of our assets will be reduced by any such uninsured loss. In addition, other than the working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured damaged property, and we cannot assure limited partners that any such sources of funding will be available to us for such purposes in the future. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in less cash available for distribution to beneficiaries.

~~• changes in general economic or local conditions;~~17

•A ~~changes~~concentration of our investments in ~~supply~~any ofone orproperty ~~demand~~class ~~for~~may ~~similar~~leave orour ~~competing~~profitability ~~properties~~vulnerable to a downturn in ansuch ~~area;~~sector.

•At ~~ability~~any one time, a significant portion of our investments could be in one property class. As a result, we will be subject to ~~collect~~risks ~~rent~~inherent in investments in a single type of property. The potential effects on our revenues and corresponding cash available for distribution to our unitholders resulting from ~~tenants;~~a downturn in the businesses conducted in a single asset class could be more pronounced than if we had more fully diversified our investments.

•The ~~increasing~~costs ~~vacancy~~of ~~rates~~compliance with orenvironmental ~~ability~~laws toand ~~rent~~other ~~space~~governmental onlaws ~~favorable~~and ~~terms;~~regulations may adversely affect our income and the cash available for any distributions.

•All ~~changes~~real inproperty ~~interest~~and the ~~rates~~operations conducted on real property are subject to federal, state and ~~availability~~local laws and regulations relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of ~~permanent~~underground ~~mortgage~~and ~~funds~~above-ground ~~that~~storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated with disposals. Some of these laws and regulations may ~~render~~impose joint and several liability on tenants, owners or operators for the ~~sale~~costs of ainvestigation ~~property~~or ~~difficult~~remediation of contaminated properties, regardless of fault or ~~unattractive;~~the legality of the original disposal. In addition, the presence of these substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent such property or to use the property as collateral for future borrowing.

17Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us. We cannot assure beneficiaries that future laws, ordinances or regulations will not impose any material environmental liability, or that the current environmental condition of our properties will not be affected by the operations of the tenants, by the existing condition of the land, by operations in the vicinity of the properties, such as the presence of underground storage tanks, or by the activities of unrelated third parties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance.

~~TABLE~~Discovery OFof ~~CONTENTS~~previously undetected environmentally hazardous conditions may adversely affect our operating results.

•Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the ~~illiquidity~~cost of removal or remediation of hazardous or toxic substances on, under or in such property. The costs of removal or remediation could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures. Environmental laws provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances, including asbestos-containing materials into the air, and third parties may seek recovery from owners or operators of real ~~estate~~properties ~~investments~~for ~~generally;~~personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to beneficiaries.

•Our ~~changes~~costs inassociated ~~tax,~~with complying ~~real~~with ~~estate,~~the ~~environmental~~Americans ~~and~~with ~~zoning~~Disabilities ~~laws;~~Act ~~and~~may affect cash available for distributions.

•Our ~~periods~~properties may be subject to the Americans with Disabilities Act of ~~high~~1990, ~~interest~~as ~~rates~~amended (the “Disabilities Act”). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and ~~tight~~use ~~money~~by ~~supply~~disabled persons. The Disabilities Act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities. The Disabilities Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. We will attempt to place the burden on the seller or other third party, such as a tenant, to ensure compliance with the Disabilities Act. However, we cannot assure investors that we have acquired properties or will be able to allocate responsibilities in this manner. If we cannot, our funds used for Disabilities Act compliance may affect cash available for distributions and the amount of distributions, if any.

~~The return on our real estate assets also may be affected by a continued or exacerbated general economic slowdown experienced by the local economies where our properties are located, including:~~ 18

•If ~~poor~~we ~~economic~~sell ~~conditions~~properties by ~~may~~providing ~~result~~financing into ~~defaults~~purchasers, bywe ~~tenants~~will bear the risk of ~~our~~default ~~properties;~~by the purchaser.

•If ~~job~~we ~~transfers~~decide to sell any of our properties, we intend to use our best efforts to sell them for cash. However, in some instances we may sell our properties by providing financing to purchasers. When we provide financing to purchasers, we will bear the risk of default by the purchaser and ~~layoffs~~will be subject to remedies provided by law, which could negatively impact our distributions to beneficiaries. There are no limitations or restrictions on our ability to take purchase money obligations. We may, ~~cause~~therefore, ~~vacancies~~take a purchase money obligation secured by a mortgage as part payment for the purchase price. The terms of payment to ~~increase;~~us generally will be affected by custom in the area where the property being sold is located and the then-prevailing economic conditions. If we receive promissory notes or other property in lieu of cash from property sales, the distribution of the proceeds of sales to our beneficiaries will be delayed until the promissory notes or other property are actually paid, sold, refinanced or otherwise disposed of. In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years. If any purchaser defaults under a financing arrangement with us, it could negatively impact our ability to pay distributions to beneficiaries.

•We ~~increasing~~may ~~concessions,~~have ~~reduced~~to ~~rental~~make ~~rates or~~ significant capital ~~improvements~~expenditures ~~may be required~~ to maintain orlodging ~~limit a decline in occupancy levels~~facilities.

~~For~~Hotels ~~these~~have an ongoing need for renovations and other ~~reasons~~capital improvements, weincluding ~~cannot~~replacement ~~assure~~of ~~investors~~furniture, ~~that~~fixtures weand equipment. Generally, we will be ~~profitable~~responsible orfor ~~that~~the wecosts ~~will~~of ~~realize~~these ~~growth~~capital inimprovements, ~~the~~which ~~value~~gives ofrise ~~our~~to ~~real~~the ~~estate~~following ~~properties.~~ risks:

We· ~~have~~cost ~~acquired~~overruns aand large percentage of our properties in the Southwest United States, particularly in the Dallas, Texas metropolitan area. As a result of this limited diversification of the geographic locations of our properties, our operating results will be affected by economic changes that have an adverse impact on the real estate market in that area.delays;

~~Many~~· ofrenovations ~~the~~can ~~properties~~be ~~that~~disruptive weto ~~have~~operations ~~acquired~~and ~~using~~can ~~the~~displace ~~proceeds~~revenue ofat the ~~Offering are located in the Southwest United States~~hotels, ~~more~~including ~~specifically,~~revenue inlost ~~the~~while ~~Dallas,~~rooms ~~Texas~~under ~~metropolitan~~renovation ~~area. Consequently, because of the lack of geographic diversity among our current assets, our operating results and ability to pay distributions~~ are ~~likely~~out to be impacted by economic changes affecting the real estate market in the Dallas, Texas area. An investment in our units will be subject to greater risk to the extent that we lack a geographically diversified portfolio of ~~properties.~~ service;

We· ~~may~~the becost ~~unable~~of tofunding ~~secure~~renovations ~~funds~~and ~~for~~the ~~future~~possibility ~~tenant~~that ~~improvements,~~financing ~~which~~for ~~could~~these ~~adversely~~renovations ~~impact~~may ~~our~~not ~~ability~~be toavailable ~~pay~~on ~~special~~attractive ~~distributions~~terms toor ~~our~~at ~~limited~~all; ~~partners.~~and

~~When~~· ~~tenants do not renew their leases or otherwise vacate their space we may be required to expend substantial funds for tenant improvements and tenant refurbishments to~~ the ~~vacated~~risk ~~space~~that ~~in order to attract replacement tenants. We generally maintain initial working capital reserves of 1% of~~ the ~~contract~~return price of the properties we own. If these reserves or any reserves otherwise established are insufficient to meet our cash needs, we may have to obtain financing from either affiliated or unaffiliated sources to fund our cash requirements. We cannot assure investors that sufficient financing will be available or, if available, will be available on ~~economically~~ ~~feasible terms or on terms acceptable to us. Our Partnership Agreement imposes certain limits on~~ our ~~ability~~investment toin ~~borrow~~these ~~money.~~capital ~~Any~~improvements ~~borrowing~~ will ~~require us to pay interest expense, and therefore our financial condition and our ability to pay special distributions to our limited partners may~~ be ~~adversely~~less ~~affected.~~than expected.

WeIf ~~may~~we behave ~~unable~~insufficient cash to ~~sell~~fund aneeded ~~property~~capital ifexpenditures, orthen ~~when~~ we ~~decide~~will toneed ~~do so, which could adversely impact our ability~~ to ~~pay~~borrow ~~special~~money ~~distributions~~ to ~~our~~fund ~~limited~~future ~~partners~~capital improvements.

The real estate market is affected, as set forth above, by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. If we are ~~unable~~dependent ~~to sell a property when we determine to do so, it could have a significant adverse effect~~ on ~~our cash~~third-party ~~flow,~~managers ~~results~~ of ~~operations~~lodging ~~and our ability to pay special distributions to our limited partners~~facilities.

18We depend on independent management companies to adequately operate our hotel. We may not have the authority to require any hotel to be operated in a particular manner or to govern any particular aspect of the daily operations of any hotel (for instance, setting room rates). Thus, even if we believe our hotel is being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, revenue per available room and average daily rates, we may not be able to force the management company to change its method of operation of our hotel. We can only seek remedies against a management company to the extent that it violates the terms of the applicable management agreement and such remedies are provided for under the terms of the management agreement. In the event that we need to replace any of our management companies, we may be required by the terms of the management agreement to pay substantial termination fees and may experience significant disruptions at the affected hotels.

~~TABLE~~Risks OFRelated ~~CONTENTS~~to Conflicts of Interest

We ~~may~~will ~~suffer~~be ~~adverse~~subject to ~~consequences~~conflicts ~~due~~of tointerest ~~the~~arising ~~financial~~out ~~difficulties,~~of ~~bankruptcy~~our orrelationships ~~insolvency~~with of our ~~tenants~~Managing Trustee and its affiliates, including the material conflicts discussed below.

~~The~~Our ~~current~~Managing ~~economic~~Trustee ~~conditions have caused,~~ and certain ~~may~~of ~~continue~~its tokey ~~cause,~~personnel ~~our tenants to experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business. We cannot assure you that any tenant that files for bankruptcy protection~~ will ~~continue~~face tocompeting ~~pay~~demands ~~us rent. A bankruptcy filing by or~~ relating to ~~one~~their ~~of our tenants or a lease guarantor would bar efforts by us to collect pre-bankruptcy debts from that tenant or lease guarantor~~time, orand ~~its~~this ~~property,~~may ~~unless~~cause ~~we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of bankruptcy. The bankruptcy of a tenant or lease guarantor could delay~~ our ~~efforts~~investment toreturns collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is assumed by a tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to ~~us in full~~suffer. If, however, a lease is rejected by a tenant in bankruptcy, we would have only a general, unsecured claim for damages. An unsecured claim would only be paid to the extent that funds are available and only in the same percentage as is paid to all other holders of general, unsecured claims. Restrictions under the bankruptcy laws further limit the amount of any other claims that we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of the remaining rent during the term.

~~Properties~~Our ~~that~~Managing ~~have~~Trustee and ~~significant~~certain ~~vacancies~~of ~~could~~its bekey ~~difficult~~personnel and their respective affiliates are general partners and sponsors of other real estate programs having investment objectives and legal and financial obligations similar to ~~sell~~ours and may have other business interests as well. Because these persons have competing interests on their time and resources, ~~which~~they ~~could~~may ~~diminish~~have conflicts of interest in allocating their time between our business and these other activities. During times of intense activity in other programs and ventures, they may devote less time and resources to our business than is necessary or appropriate. If this occurs, the ~~return~~returns on anour ~~investment~~investments may suffer.

AOur ~~property~~Managing ~~may~~Trustee ~~incur~~will face ~~vacancies~~conflicts ~~either by the continued default~~ of ~~tenants~~interest ~~under~~relating ~~their~~to ~~leases~~joint ~~or the expiration of tenant leases. If vacancies continue for a long period of time~~ventures, wewhich ~~may~~could ~~suffer~~result ~~reduced revenues resulting~~ in a ~~reduction~~disproportionate inbenefit ~~the total return~~ to ~~our limited partners. In addition, the resale value of the property could be diminished because the market value of~~ a ~~particular~~Behringer ~~property~~Harvard program ~~will~~or ~~depend~~third ~~principally~~party ~~upon~~other ~~the~~than ~~value of the leases of such property~~us.

We ~~are~~have ~~dependent~~entered oninto joint ~~tenants~~ventures with third parties having investment objectives similar to ours for ~~our~~the ~~revenue~~acquisition, development or improvement of properties. We have also purchased and ~~lease~~developed ~~terminations~~properties ~~could~~in ~~reduce~~joint ventures or ~~prevent~~in ~~special~~partnerships, ~~distributions~~co-tenancies toor ~~our~~other ~~limited~~co-ownership arrangements ~~partners~~with the sellers of the properties, affiliates of the sellers, developers or other persons. Such investments may involve risks not otherwise present with other methods of investment in real estate, including, for example:

~~The~~· ~~success of our real property investments, particularly properties occupied by a single tenant, is materially dependent on~~ the ~~financial~~possibility ~~stability~~that of our ~~tenants.~~co-venturer, ~~A default by a significant~~ co-tenant onor ~~its~~partner ~~lease~~in ~~payments to us would cause us to lose the revenue associated with such lease and cause us to have to find~~ an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage. In the event of a tenant default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment ~~and~~might ~~re-letting~~become our property. If significant leases are terminated, we cannot assure investors that we will be able to lease the property for the rent previously received or sell the property without incurring a loss. bankrupt;

If· wethe ~~sell~~possibility ~~any~~that ofthe investment requires additional capital that we and/or our ~~properties~~partner indo ~~tenant-in-common~~not ~~transactions~~have, ~~those~~which ~~sales~~lack ~~may~~of becapital ~~viewed~~could asaffect ~~sales~~the performance of ~~securities,~~the investment and/or wedilute ~~would~~our ~~retain~~interest ~~potential~~if ~~liability~~the ~~after~~partner ~~the~~were ~~sale~~to ~~under~~contribute ~~applicable~~our ~~securities~~share ~~laws.~~of the capital;

We may sell properties in tenant-in-common transactions. If we do make such sales, they may be viewed as sales of securities, and as a result, if the purchasers in the tenant-in-common transaction had post-closing claims, they could bring claims under applicable securities laws. Those claims could have a material adverse effect upon our business and results of operations. 19

If· wethat ~~set~~such ~~aside~~co-venturer, ~~insufficient~~co-tenant ~~working~~or ~~capital~~partner ~~reserves,~~may weat ~~may~~any betime ~~required~~have toeconomic ~~defer~~or ~~necessary~~business ~~property~~interests ~~improvements.~~or goals which are or which become inconsistent with our business interests or goals;

If· wethat dosuch ~~not~~co-venturer, ~~estimate~~co-tenant ~~enough~~or ~~reserves~~partner ~~for~~may ~~working~~be ~~capital to supply needed funds for capital improvements throughout the life of the investment~~ in a ~~property,~~position ~~we may be required~~ to ~~defer~~take ~~necessary~~action ~~improvements~~contrary to ~~the~~our ~~property~~instructions ~~that may cause the property to suffer from a greater risk of obsolescence~~ or arequests ~~decline in value,~~ or acontrary ~~greater risk of decreased cash flow as a result of fewer potential tenants being attracted~~ to ~~the property. If this happens, we may not be able to maintain projected rental rates for affected properties, and~~ our ~~results~~policies ofor ~~operations may be negatively impacted.~~ objectives;

19· the possibility that we may incur liabilities as the result of the action taken by our co-venturer, co-tenant or partner; or

~~TABLE~~· OFthat ~~CONTENTS~~such partner may exercise buy/sell rights that force us to either acquire the entire investment, or dispose of our share, at a time and price that may not be consistent with our investment objectives.

~~Uncertain~~Actions ~~market~~by ~~conditions~~such ~~and~~a ~~the~~co-venturer, co-tenant ~~broad~~or ~~discretion~~partner ofmight ~~our~~have ~~General~~the ~~Partners~~result ~~relating~~of tosubjecting the ~~future~~property ~~disposition~~to liabilities in excess of ~~properties~~those ~~could~~contemplated ~~adversely~~and ~~affect~~may have the ~~return~~effect onof anreducing ~~investment~~beneficiaries’ returns.

WeAffiliates ~~intend~~of toour ~~hold~~Managing Trustee ~~the~~have ~~various~~sponsored, ~~real~~or ~~properties~~are incurrently ~~which~~sponsoring, weregistered ~~invest~~public ~~until~~offerings ~~such~~on ~~time~~behalf asof ~~our~~Behringer ~~General~~Harvard ~~Partners~~REIT I, ~~determine~~Inc. (“Behringer ~~that~~Harvard aREIT ~~sale~~I”), orBehringer ~~other~~Harvard ~~disposition~~Opportunity ~~appears~~REIT toI, beInc. ~~advantageous~~(“Behringer toHarvard ~~achieve~~Opportunity ~~our~~REIT I”), ~~investment~~Behringer ~~objectives~~Harvard orOpportunity ~~until~~REIT itII, ~~appears~~Inc. ~~that~~(“Behringer ~~such~~Harvard ~~objectives~~Opportunity ~~will~~REIT ~~not~~II”), beBehringer ~~met.~~Harvard Multifamily ~~Our~~REIT ~~General~~I, ~~Partners~~Inc. ~~may~~(“Behringer ~~exercise~~Harvard ~~their~~Multifamily ~~discretion~~REIT”) asand toBehringer ~~whether~~Harvard ~~and~~Mid-Term ~~when~~Value toEnhancement ~~sell~~Fund I aLP ~~property,~~(“Behringer ~~and~~Harvard weMid-Term ~~will~~Value ~~have~~Enhancement noFund”). ~~obligation~~Behringer toHarvard ~~sell~~Advisors I LP ~~properties~~(an atentity ~~any~~that is ~~particular~~under ~~time,~~common ~~except~~control ~~upon~~with our ~~termination~~Managing onTrustee, ~~December~~Behringer ~~31,~~Advisors ~~2017~~II), oracts ~~earlier~~as ifmanaging ~~our~~trustee ~~General~~of ~~Partners~~Behringer ~~determine~~Harvard toMid-Term Value ~~liquidate~~Enhancement ~~us,~~Liquidating ~~or,~~Trust if(successor ~~investors~~in ~~holding~~interest ato ~~majority~~Behringer ofHarvard ~~the~~Mid-Term ~~units~~Value ~~vote~~Enhancement toFund). ~~liquidate~~Because usour inManaging Trustee ~~response~~or toits aaffiliates ~~formal~~have ~~proxy~~advisory ~~to liquidate.~~and Wemanagement ~~cannot~~arrangements ~~predict~~ with ~~any~~other ~~certainty~~Behringer ~~the~~Harvard ~~various~~programs, ~~market~~it ~~conditions~~is ~~affecting~~likely ~~real estate investments~~ that they will ~~exist~~encounter atopportunities ~~any~~to ~~particular~~acquire ~~time~~or insell ~~the~~properties ~~future. Due~~ to the ~~uncertainty~~benefit of ~~market~~one ~~conditions~~of ~~that may affect~~ the ~~future~~Behringer ~~disposition~~Harvard ~~of our properties~~programs, webut ~~cannot~~not ~~assure~~others. Our ~~limited~~Managing ~~partners~~Trustee ~~that~~or weits ~~will~~affiliates bemay ~~able~~make decisions to ~~sell~~buy ~~our~~or ~~properties~~sell atcertain ~~a profit in the future. Accordingly~~properties, ~~the extent to~~ which ~~investors~~decisions ~~will~~might ~~receive~~disproportionately benefit ~~special~~a ~~distributions~~Behringer ~~and~~Harvard ~~realize~~program ~~potential~~other ~~appreciation~~than ~~on our real estate investments will be dependent upon fluctuating market conditions~~us.

~~Uninsured~~If ~~losses~~we ~~relating~~enter into a joint venture with another Behringer Harvard program or joint venture, our Managing Trustee may have a conflict of interest when determining when and whether to sell a particular real estate property, orand ~~excessively~~beneficiaries ~~expensive~~may ~~premiums~~face certain additional risks. For example, if we enter into a joint venture with a Behringer Harvard real estate investment trust (“REIT”) that subsequently becomes listed on a national exchange, such REIT would automatically become a perpetual life entity at the time of listing and might not continue to have similar goals and objectives with respect to the resale of properties as it had prior to being listed. In addition, if that Behringer Harvard REIT was not listed on a securities exchange by the time set forth in its charter, its organizational documents might provide for ~~insurance~~an ~~coverage~~immediate liquidation of its assets. In the event of such liquidation, any joint venture between us and that Behringer Harvard REIT might also be required to sell its properties at such time even though we may ~~adversely~~not ~~affect~~otherwise desire ~~investors’~~to ~~returns~~do so. Although the terms of any joint venture agreement between us and another Behringer Harvard program would grant us a right of first refusal to buy such properties, it is unlikely that we would have sufficient funds to exercise our right of first refusal under these circumstances.

~~Our~~Since ~~General~~our ~~Partners~~Managing Trustee ~~will~~and ~~attempt~~its toaffiliates ~~ensure~~control ~~that~~us ~~all~~and ofeither ~~our~~control ~~properties~~or ~~are~~serve ~~adequately~~as ~~insured~~advisor to ~~cover~~other ~~casualty~~Behringer ~~losses.~~Harvard ~~However~~programs, ~~there~~agreements ~~are~~and transactions ~~types~~between ofthe ~~losses~~parties ~~which~~with ~~are~~respect ~~generally catastrophic in nature and are related~~ to ~~wars,~~any ~~acts~~joint ofventure ~~terrorism,~~between ~~earthquakes, floods, hurricanes, pollution~~ or ~~environmental~~among ~~matters~~such ~~which~~parties ~~may~~will ~~be uninsurable,~~ not ~~economically~~have ~~insurable~~the orbenefit ~~may~~of bearm’s length ~~insurable~~negotiation ~~subject~~of tothe ~~limitations,~~type ~~such~~normally asconducted ~~large~~between ~~deductibles~~unrelated or co-~~payments~~venturers. ~~Insurance~~Under ~~risks~~these ~~associated~~joint ~~with~~venture ~~potential~~arrangements, ~~terrorism~~neither co-venturer ~~acts~~may ~~could~~have ~~sharply increase~~ the ~~premiums~~power weto ~~pay~~control ~~for~~the ~~coverage~~venture, ~~against property~~ and ~~casualty~~under ~~claims.~~certain ~~Additionally~~circumstances, ~~mortgage~~an ~~lenders~~impasse incould ~~some~~be ~~cases~~reached ~~have~~regarding ~~begun~~matters pertaining to ~~insist~~ ~~that~~the ~~specific~~joint ~~coverage against terrorism be purchased by commercial property owners as a condition for providing mortgage loans. It is uncertain whether such insurance policies will be available~~venture, ~~or available at reasonable cost,~~ which ~~could~~might ~~inhibit~~have ~~our~~a ~~ability~~negative toinfluence ~~finance~~on orthe ~~refinance~~joint ~~our~~venture ~~properties.~~and Indecrease ~~such~~potential ~~instances,~~returns ~~we may be required~~ to ~~provide other financial support, either through financial assurances or self-insurance, to cover potential losses~~beneficiaries. ~~We cannot assure investors that we will have adequate coverage for such losses.~~ In the event that ~~any~~a ofco-venturer ~~our~~has ~~properties incur~~ a ~~casualty~~right ~~loss~~of ~~which~~first isrefusal ~~not~~to ~~fully~~buy ~~covered~~out ~~by insurance,~~ the ~~value~~other ofco-venturer, ~~our~~it ~~assets~~may ~~will~~ be ~~reduced~~unable byto ~~any~~finance such buy-out ~~uninsured~~at ~~loss~~that time. InIt ~~addition, other than the working capital reserve or other reserves we~~ may ~~establish,~~also webe ~~have~~difficult nofor ~~source~~us ~~of funding~~ to ~~repair~~sell orour ~~reconstruct~~interest ~~any~~in ~~uninsured damaged property, and we cannot assure limited partners that~~ any such ~~sources~~joint ofventure ~~funding~~or ~~will~~partnership beor ~~available~~as toa ~~us for such~~co-tenant ~~purposes~~ in ~~the future~~property. ~~Also~~In addition, to the extent wethat ~~must~~our ~~pay unexpectedly large amounts for insurance~~co-venturer, wepartner ~~could~~or ~~suffer~~co-tenant ~~reduced~~is ~~earnings~~an ~~that~~affiliate ~~would~~of ~~result~~our inManaging ~~less~~Trustee, ~~cash~~certain conflicts ~~available~~of ~~for~~interest ~~distribution~~will ~~to limited partners~~exist.

AThe ~~concentration~~Managing Trustee and certain of ~~our~~its ~~investments~~affiliates inface ~~any~~conflicts ~~one~~of ~~property~~interest ~~class~~caused ~~may~~by ~~leave~~their ~~our~~compensation ~~profitability~~arrangements ~~vulnerable~~with tous, awhich ~~downturn~~could result in ~~such~~actions that ~~sector~~are not in the long-term best interests of our unitholders.

AtOur ~~any~~Managing ~~one~~Trustee and ~~time,~~certain aof ~~significant~~its ~~portion~~affiliates, ofincluding our ~~investments~~Property ~~could be in one property class. As a result~~Manager, weare ~~will~~entitled ~~be subject~~ to ~~risks~~substantial ~~inherent~~fees infrom ~~investments~~us inunder athe ~~single~~terms ~~type~~ of ~~property. The potential effects on~~ our Liquidating ~~revenues~~Trust Agreement and ~~corresponding~~property ~~cash~~management ~~available~~agreement. ~~for~~These ~~distribution~~fees towere ~~our~~not ~~unitholders~~negotiated ~~resulting~~at ~~from~~arm’s alength ~~downturn~~and in reduce the ~~businesses~~amount ~~conducted~~of incash aavailable ~~single~~for ~~asset class could be more pronounced than if we had more fully diversified our investments~~distributions.

~~The~~These ~~costs~~fees ofcould ~~compliance~~influence our ~~with~~Managing ~~environmental~~Trustee’s ~~laws~~advice ~~and~~to ~~other~~us, ~~governmental~~as ~~laws~~well ~~and~~as ~~regulations~~the ~~may~~judgment ~~adversely~~of ~~affect~~its ~~our~~affiliates ~~income~~performing ~~and~~services ~~the~~for ~~cash~~us. ~~available~~Among ~~for~~other ~~any~~matters, these ~~distributions.~~compensation arrangements could affect their judgment with respect to:

~~All~~· ~~real property and the operations conducted on real property are subject to federal~~continuing, ~~state~~renewing ~~and~~or ~~local~~enforcing ~~laws~~our ~~and~~agreements ~~regulations~~with ~~relating~~our toManaging ~~environmental~~Trustee ~~protection~~ and ~~human~~its ~~health and safety. These laws and regulations generally govern wastewater discharges~~affiliates, ~~air~~including ~~emissions,~~ the ~~operation~~advisory ~~and~~management ~~removal~~agreement ~~of underground~~ and ~~above-ground storage tanks,~~ the ~~use,~~property ~~storage,~~management treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated with disposals. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators for the costs of investigation or remediation of contaminated properties, regardless of fault or the legality of the original disposal. In addition, agreement;

20· property sales, which reduce the asset management and property management fees payable to our Managing Trustee or its affiliates but also entitle them to real estate commissions;

~~TABLE~~· OFborrowings ~~CONTENTS~~to refinance properties, which increase the debt financing fees payable to our Managing Trustee;

the presence of these substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent such property or to use the property as collateral for future borrowing. 20

~~Some~~· ofdetermining ~~these~~the ~~laws~~compensation ~~and~~paid ~~regulations~~to ~~have~~employees ~~been~~for ~~amended~~services soprovided as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us~~. We cannot assure limited partners that future laws~~, ~~ordinances~~which orcould ~~regulations~~be ~~will~~influenced ~~not~~in ~~impose~~part ~~any~~by ~~material~~whether ~~environmental liability,~~ or ~~that the current environmental condition of our properties will~~ not ~~be affected by~~ the ~~operations~~Managing ofTrustee ~~the~~is ~~tenants,~~reimbursed by ~~the~~us ~~existing~~for ~~condition of~~ the ~~land,~~related bysalaries ~~operations in the vicinity of the properties, such as the presence of underground storage tanks, or by the activities of unrelated third parties. In addition, there are various local, state~~ and ~~federal fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance.~~ benefits;

~~Discovery~~· ofwhether ~~previously~~and ~~undetected~~when ~~environmentally~~we ~~hazardous~~seek ~~conditions~~to ~~may~~sell ~~adversely~~our ~~affect~~assets, which sale could entitle our ~~operating~~Managing ~~results~~Trustee real estate commissions.

~~Under~~The ~~various~~fees ~~federal,~~our ~~state~~Managing Trustee ~~and~~receives ~~local~~in ~~environmental~~connection ~~laws,~~with ~~ordinances~~transactions ~~and~~involving ~~regulations, a current or previous owner or operator of real property may be liable for~~ the ~~cost~~management of ~~removal~~an orasset ~~remediation~~are ofbased ~~hazardous or toxic substances~~ on, ~~under or in such property. The costs of removal or remediation could be substantial. Such laws often impose liability whether or not~~ the ~~owner~~cost ~~or operator knew~~ of, ~~or was responsible for,~~ the ~~presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated~~investment, ~~and these restrictions may require substantial expenditures.~~ ~~Environmental~~including ~~laws~~the ~~provide~~amount budgeted for ~~sanctions in~~ the ~~event of noncompliance and may be enforced by governmental agencies or~~development, ~~in certain circumstances~~construction, ~~by private parties. Certain environmental laws~~ and ~~common~~improvement ~~law principles could be used to impose liability for release~~ of ~~and~~each ~~exposure to hazardous substances~~asset, ~~including asbestos-containing materials into the air,~~ and ~~third~~are ~~parties~~not ~~may~~based ~~seek~~on ~~recovery~~the ~~from owners or operators~~ quality of ~~real~~the ~~properties~~investment ~~for personal injury~~ or ~~property~~the ~~damage~~quality ~~associated~~of ~~with~~the ~~exposure~~services rendered to ~~released hazardous substances~~us. ~~The~~This ~~cost~~may ofinfluence defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our ~~business,~~Managing ~~assets~~Trustee orto ~~results~~recommend ofriskier transactions ~~operations and, consequently, amounts available for distribution~~ to ~~limited partners~~us.

~~Our~~We ~~costs~~may ~~associated~~be ~~with~~restricted in ~~complying~~our ~~with~~ability ~~the~~to ~~Americans~~replace ~~with~~our ~~Disabilities~~Property ~~Act~~Manager ~~may~~under ~~affect~~certain ~~cash available for distributions~~circumstances.

~~Our~~Under ~~properties may be subject to~~ the ~~Americans~~terms ~~with~~of our ~~Disabilities~~property ~~Act~~management ~~of 1990~~agreement, aswe ~~amended~~may (terminate the ~~“Disabilities~~agreement ~~Act”).~~upon ~~Under~~30 ~~the~~days’ ~~Disabilities~~notice ~~Act,~~in ~~all~~the ~~places~~event of ~~public~~(and ~~accommodation~~only ~~are~~in ~~required~~the event toof) ~~comply~~a ~~with~~showing ~~federal~~of ~~requirements~~willful ~~related~~misconduct, togross ~~access~~negligence, ~~and~~or ~~use~~deliberate malfeasance by ~~disabled~~our ~~persons.~~Property ~~The~~Manager ~~Disabilities~~in ~~Act~~the ~~has~~performance of ~~separate~~their ~~compliance~~duties. ~~requirements~~Our ~~for~~Managing ~~“public~~Trustee ~~accommodations”~~may ~~and~~find ~~“commercial~~the ~~facilities”~~performance ~~that~~of ~~generally~~our ~~require~~Property ~~that~~Manager ~~buildings~~to ~~and services~~ be ~~made accessible and available to people with disabilities~~unsatisfactory. ~~The~~However, ~~Disabilities~~such ~~Act’s~~performance by ~~requirements~~the ~~could~~Property ~~require~~Manager ~~removal~~may ofnot ~~access~~reach ~~barriers and could result in~~ the ~~imposition~~level of ~~injunctive~~ ~~relief,~~“willful ~~monetary penalties or~~misconduct, ingross ~~some cases~~negligence, anor ~~award~~deliberate ~~of damages~~malfeasance.” As ~~We will attempt to place the burden on the seller or other third party, such as~~ a ~~tenant~~result, ~~to ensure compliance with the Disabilities Act. However,~~ we ~~cannot~~may ~~assure investors that we have acquired properties or will~~ be ~~able~~unable to ~~allocate~~terminate ~~responsibilities~~the inproperty ~~this~~management ~~manner.~~agreement Ifat wethe ~~cannot~~desired time, ~~our~~which ~~funds used for Disabilities Act compliance~~ may ~~affect~~have ~~cash~~an ~~available~~adverse ~~for~~effect on ~~distributions~~the management and ~~the~~profitability ~~amount~~ of ~~distributions,~~our ~~if any~~properties.

IfOur weManaging ~~sell~~Trustee and ~~properties~~certain byof ~~providing~~its ~~financing~~key personnel face conflicts of interest related to ~~purchasers,~~the wepositions ~~will~~they ~~bear~~hold with affiliated entities, which could diminish the ~~risk~~value of ~~default~~the byservices ~~the~~they ~~purchaser~~provide to us.

IfCertain weof ~~decide~~the tokey personnel ~~sell any~~ of ~~our~~Behringer ~~properties,~~Advisors weII ~~intend~~are toalso ~~use~~officers of our ~~best~~Property ~~efforts~~Manager, toour ~~sell~~dealer ~~them~~manager ~~for~~and ~~cash.~~other ~~However,~~affiliated inentities. As ~~some~~a ~~instances~~result, wethese ~~may~~individuals ~~sell~~owe ~~our~~fiduciary ~~properties~~duties ~~by providing financing~~ to ~~purchasers.~~these ~~When~~other ~~we provide financing to purchasers~~entities, wewhich ~~will~~may ~~bear~~conflict with the ~~risk~~fiduciary ofduties ~~default~~that they byowe ~~the~~to ~~purchaser~~us and ~~will~~our beinvestors. ~~subject~~Conflicts towith ~~remedies~~our ~~provided~~business byand ~~law,~~interests ~~which~~are ~~could~~most ~~negatively~~likely ~~impact our distributions~~ to ~~limited~~arise ~~partners.~~from ~~There~~involvement ~~are~~in noactivities related ~~limitations~~to or(1) ~~restrictions~~allocation onof ~~our~~management ~~ability~~time toand ~~take~~services ~~purchase~~between ~~money~~us ~~obligations.~~and Wethe ~~may,~~other ~~therefore~~entities, ~~take~~(2) athe ~~purchase~~timing ~~money~~and ~~obligation~~terms ~~secured~~of bythe asale of ~~mortgage~~an asasset, ~~part~~(3) ~~payment~~development ~~for~~of ~~the~~our ~~purchase~~properties ~~price.~~by ~~The~~affiliates, ~~terms~~(4) ofinvestments ~~payment~~with toaffiliates usof ~~generally~~our ~~will~~Managing beTrustee, (5) compensation ~~affected~~to byour ~~custom~~Managing inTrustee, ~~the~~and ~~area~~(6) ~~where~~our ~~the~~relationship ~~property~~with ~~being~~our ~~sold~~dealer ismanager ~~located~~ and Property Manager.

21Because we rely on affiliates of Behringer Holdings for the provision of property management, if Behringer Holdings is unable to meet its obligations, we may be required to find alternative providers of these services, which could result in a significant and costly disruption of our business.

~~TABLE~~Behringer OFHoldings, through ~~CONTENTS~~one or more of its subsidiaries, owns and controls our Property Manager. The operations of our Property Manager rely substantially on Behringer Holdings. In light of the common ownership of this entity and its reliance on Behringer Holdings, we consider the financial condition of Behringer Holdings when assessing the financial condition of our Property Manager. In the event that Behringer Holdings would be unable to meet its obligations as they become due, we might be required to find alternative service providers, which could result in a significant and costly disruption of our business.

~~the~~There ~~then-prevailing~~is ~~economic~~no ~~conditions.~~separate counsel Iffor weus ~~receive~~and ~~promissory notes or other property in lieu of cash from property sales, the distribution of the proceeds of sales to~~ our ~~limited partners~~affiliates, orwhich ~~their~~could ~~reinvestment~~result in ~~other~~conflicts ~~properties, will be delayed until the promissory notes or other property are actually paid, sold, refinanced or otherwise disposed~~ of. In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of yearsinterest. ~~If any purchaser defaults under a financing arrangement with us, it could negatively impact our ability to pay distributions to limited partners.~~

WeDLA Piper LLP (US) acts as legal counsel to us, and is also expected to represent our Managing Trustee and some of its affiliates from time to time. There is a possibility in the future that the interests of the various parties may ~~have~~become adverse and, under the Code of Professional Responsibility of the legal profession, DLA Piper LLP (US) may be precluded from representing any one or all of such parties. If any situation arises in which our interests appear to ~~make~~be ~~significant~~in ~~capital~~conflict ~~expenditures~~with those of our Managing Trustee or its affiliates, additional counsel may be retained by one or more of the parties to ~~maintain~~assure ~~lodging~~that ~~facilities~~their interests are adequately protected. Moreover, should such a conflict not be readily apparent, or otherwise not recognized, DLA Piper LLP (US) may inadvertently act in derogation of the interest of the parties which could affect us and, therefore, our limited partners’ ability to meet our investment objectives.

~~Hotels~~Federal ~~have~~Income anTax ~~ongoing~~Risks need for renovations and other capital improvements, including replacement of furniture, fixtures and equipment. Generally, we will be responsible for the costs of these capital improvements, which gives rise to the following risks:

•There ~~cost~~can ~~overruns~~be ~~and~~no ~~delays;~~assurance that the Liquidating Trust will be treated as a partnership for federal income tax purposes.

•The ~~renovations~~Liquidating ~~can~~Trust is intending to be ~~disruptive~~treated as a continuation of the Partnership and classified as a partnership for federal income tax purposes, and therefore income, gains, losses, deductions and credits (if any) realized by the Liquidating Trust will be allocated among the beneficiaries for federal tax purposes in the same manner as previously allocated by the Partnership. Further, with the transfer of all of the Partnership’s remaining assets to ~~operations~~the Liquidating Trust and ~~can~~the ~~displace~~assumption ~~revenue~~by atthe Liquidating Trust of all of the ~~hotels~~Partnership’s remaining liabilities, ~~including~~it ~~revenue~~is ~~lost~~contemplated ~~while~~that ~~rooms~~there ~~under~~will ~~renovation~~be ~~are~~no ~~out~~change to the adjusted basis of ~~service;~~any beneficiary’s interest in the Liquidating Trust and the beneficiaries will each have an adjusted basis with respect to such beneficiary’s beneficial interest in the Liquidating Trust equal to the adjusted basis of such beneficiary’s limited partnership interest in the Partnership immediately prior to the Effective Date. On a yearly basis, the Managing Trustee will cause the Liquidating Trust to continue to issue a schedule K-1 to each beneficiary. However, there can be no assurance that the Liquidating Trust will be treated as a partnership for federal income tax purposes. We will advise you if we learn that the tax treatment of the Liquidating Trust is other than as described herein.

~~• the cost of funding renovations and the possibility that financing for these renovations may not be available on attractive terms or at all; and~~21

•The state and local tax consequences of the ~~risk~~transfer ~~that~~of assets to the ~~return~~Liquidating onTrust ~~our~~may ~~investment~~be indifferent ~~these~~from ~~capital~~the ~~improvements~~federal ~~will~~income tax consequences of such transfer. In addition, any items of income, gain, loss, deduction or credit of the Liquidating Trust, and any distribution made by the Liquidating Trust, may be ~~less~~treated differently for state and local tax purposes than ~~expected~~for federal income tax purposes.

IfThe weInternal ~~have~~Revenue Service ~~insufficient~~may ~~cash~~challenge ~~flow~~our ~~from~~characterization ~~operations~~of tomaterial ~~fund~~tax ~~needed~~aspects ~~capital~~of ~~expenditures,~~an ~~then~~investment wein ~~will~~our ~~need~~units toof ~~borrow~~beneficial ~~money to fund future capital improvements~~interest.

WeAn investment in units involves material income tax risks. Beneficiaries are ~~dependent~~urged to consult with their own tax advisor with respect to the federal, state and foreign tax considerations of an investment in our units. We will not seek any rulings from the Internal Revenue Service regarding any of the tax issues discussed herein. Further, although we have obtained an opinion from our counsel regarding the material federal income tax issues relating to an investment in our units, investors should be aware that the opinion represents only our counsel’s best legal judgment, based upon representations and assumptions referred to therein and conditioned upon the existence of certain facts. Our counsel’s tax opinion has no binding effect on ~~third-party~~the ~~managers~~Internal Revenue Service or any court. Accordingly, we cannot assure investors that the conclusions reached in the tax opinion, if contested, would be sustained by any court. In addition, our counsel is unable to form an opinion as to the probable outcome of ~~lodging~~the ~~facilities~~contest of certain material tax aspects, including whether we will be characterized as a “dealer” so that sales of our assets would give rise to ordinary income rather than capital gain, and whether we are required to qualify as a tax shelter under the Internal Revenue Code. Our counsel also gives no opinion as to the tax considerations to investors of tax issues that have an impact at the individual or beneficiary level. Accordingly, investors are urged to consult with and rely upon their own tax advisors with respect to tax issues that have an impact at the beneficiary or individual level.

WeInvestors ~~depend on independent management companies to adequately operate our hotel. We~~ may ~~not~~realize taxable ~~have~~income ~~the~~without ~~authority~~cash ~~to require any hotel to be operated in a particular manner or to govern any particular aspect of the daily operations of any hotel (for instance~~distributions, ~~setting room rates). Thus, even if we believe our hotel is being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, revenue per available room~~ and ~~average daily rates, we~~ may ~~not~~have ~~be able~~ to ~~force~~use ~~the~~funds ~~management~~from ~~company~~other tosources ~~change its method of operation of our hotel. We can only seek remedies against a management company~~ to the extent that it violates the terms of the applicable management agreement and such remedies are provided for under the terms of the management agreement. In the event that we need to replace any of our management companies, we may be required by the terms of the management agreement to pay ~~substantial~~their ~~termination~~tax ~~fees and may experience significant disruptions at the affected hotels~~liabilities.

~~Risks~~Beneficiaries ~~Related~~will be required to ~~Conflicts~~report their allocable share of ~~Interest~~our taxable income on their personal income tax return regardless of whether they have received any cash distributions from us. It is possible that units of beneficial interest will be allocated taxable income in excess of their cash distributions. We cannot assure investors that cash flow will be available for distribution in any year. As a result, investors may have to use funds from other sources to pay their tax liability.

We ~~will~~could be ~~subject~~characterized as toa ~~conflicts~~publicly oftraded ~~interest~~partnership, ~~arising~~which ~~out~~would ofhave ~~our~~an ~~relationships~~adverse ~~with~~tax ~~our~~effect ~~General~~on ~~Partners and their affiliates, including the material conflicts discussed below~~investors.

If the Internal Revenue Service were to classify us as a publicly traded partnership, we could be taxable as a corporation, and distributions made to investors could be treated as portfolio income rather than passive income. Our counsel has given its opinion that we will not be classified as a publicly traded partnership, which is defined generally as a partnership whose interests are publicly traded or frequently transferred. However, this opinion is based only upon certain representations of our former General Partners and the provisions in our Liquidating Trust Agreement that attempt to comply with certain ofsafe ~~their~~harbor ~~key~~standards ~~personnel~~adopted by the Internal Revenue Service. We cannot assure investors that the Internal Revenue Service will ~~face~~not ~~competing~~challenge ~~demands~~this ~~relating~~conclusion toor ~~their~~that we will not, at some time in the future, ~~and~~be ~~this~~treated ~~may~~as ~~cause~~a ~~our~~publicly ~~investment~~traded ~~returns~~partnership due to ~~suffer.~~the following factors:

~~Our~~· ~~General~~the ~~Partners~~complex ~~and~~nature ~~certain~~ of their key personnel and their respective affiliates are general partners and sponsors of other real estate programs having investment objectives and legal and financial obligations similar to ours and may have other business interests as well. Because these persons have competing interests on their time and resources, they may have conflicts of interest in allocating their time between our business and these other activities. During times of intense activity in other programs and ventures, they may devote less time and resources to our business than is necessary or appropriate. If this occurs, the ~~returns~~Internal onRevenue ~~our investments~~Service ~~may~~safe ~~suffer.~~ harbors;

22· the lack of interpretive guidance with respect to such provisions; and

~~TABLE~~· OFthe ~~CONTENTS~~fact that any determination in this regard will necessarily be based upon facts that have not yet occurred.

~~Our~~The ~~General~~deductibility ~~Partners~~of losses will ~~face~~be ~~conflicts~~subject ~~of interest relating~~ to ~~joint~~passive ~~ventures~~loss limitations, ~~which~~and ~~could~~therefore ~~result~~their indeductibility awill ~~disproportionate~~be ~~benefit to a Behringer Harvard program or third party other than us~~limited.

WeUnits ~~have~~of ~~entered~~beneficial interest ~~into~~will ~~joint~~be ~~ventures~~allocated ~~with~~their ~~third~~pro ~~parties~~rata ~~having~~share ~~investment~~of ~~objectives~~our ~~similar~~tax tolosses. ~~ours~~Section 469 of the Internal Revenue Code limits the allowance of deductions for losses attributable to passive activities, which are defined generally as activities in which the ~~acquisition~~taxpayer does not materially participate. Any tax losses allocated to investors will be characterized as passive losses, ~~development~~and oraccordingly, ~~improvement~~the deductibility of ~~properties~~such losses will be subject to these limitations. WeLosses ~~have~~from ~~also~~passive ~~purchased~~activities ~~and~~are ~~developed~~generally ~~properties~~deductible inonly to ~~joint~~the ~~ventures~~extent of a taxpayer’s income or ingains ~~partnerships~~from passive activities and will not be allowed as an offset against other income, ~~co-tenancies~~including salary or other ~~co-ownership~~compensation ~~arrangements~~for ~~with~~personal ~~the~~services, ~~sellers~~active ofbusiness ~~the~~income ~~properties~~or “portfolio income,” which ~~affiliates~~includes ofnon-business ~~the~~income ~~sellers~~derived from dividends, ~~developers~~interest, orroyalties, ~~other~~annuities ~~persons~~and gains from the sale of property held for investment. ~~Such~~Accordingly, ~~investments~~investors may ~~involve~~receive ~~risks~~no ~~not~~current ~~otherwise~~benefit ~~present~~from ~~with~~their ~~other~~share ~~methods~~ of ~~investment~~tax inlosses ~~real~~unless ~~estate,~~they ~~including,~~are ~~for~~currently being ~~example:~~allocated passive income from other sources.

~~• the possibility that our co-venturer, co-tenant or partner in an investment might become bankrupt;~~22

•The ~~the~~Internal ~~possibility~~Revenue Service ~~that~~may ~~the~~challenge ~~investment~~our ~~requires~~allocations ~~additional~~of ~~capital~~profit ~~that we~~ and~~/or~~ ~~our partner do not have~~loss, ~~which~~and ~~lack~~any reallocation of ~~capital~~items ~~could affect the performance~~ of ~~the~~income, ~~investment~~gain, deduction and~~/or~~ ~~dilute~~credit could ~~our~~reduce ~~interest~~anticipated iftax ~~the~~benefits. ~~partner were to contribute our share of the capital;~~

•Counsel has given its opinion that ~~such~~it ~~co-venturer~~is more likely than not that partnership items of income, ~~co-tenant~~gain, orloss, ~~partner~~deduction ~~may~~and atcredit ~~any~~will ~~time~~be ~~have~~allocated among ~~economic~~our orbeneficiaries ~~business~~substantially ~~interests~~in oraccordance ~~goals~~with ~~which~~the allocation provisions of the Liquidating Trust Agreement. We cannot assure investors, however, that the Internal Revenue Service will not successfully challenge the allocations in the Liquidating Trust Agreement and reallocate items of income, gain, loss, deduction and credit in a manner that reduces anticipated tax benefits. The tax rules applicable to allocation of items of taxable income and loss are orcomplex. The ultimate determination of whether allocations adopted by us will be respected by the Internal Revenue Service will depend upon facts which ~~become~~will ~~inconsistent~~occur in the future and which cannot be predicted with ~~our~~certainty ~~business~~or ~~interests~~completely controlled by us. If the allocations we use are not recognized, beneficiaries could be required to report greater taxable income or ~~goals;~~less taxable loss with respect to an investment in us and, as a result, pay more tax and associated interest and penalties. Our beneficiaries might also be required to incur the costs of amending their individual returns.

•We ~~that~~may ~~such~~be ~~co-venturer,~~characterized as ~~co-tenant~~a ordealer, ~~partner~~and ~~may~~if beso, inany again ~~position~~recognized toupon ~~take~~a ~~action~~sale ~~contrary~~of toreal ~~our~~property ~~instructions~~would orbe ~~requests~~taxable ~~or contrary~~ to ~~our~~investors ~~policies~~as orordinary ~~objectives;~~income.

•If ~~the~~we ~~possibility~~are ~~that~~deemed wefor tax ~~may~~purposes ~~incur~~to ~~liabilities~~be a dealer, defined as one who holds property primarily for sale to customers in the ~~result~~ordinary course of ~~the~~business, with ~~action~~respect ~~taken~~to byone or more of our ~~co-venturer~~properties, coany gain recognized upon a sale of such real property will be taxable to investors as ordinary income and will also constitute UBTI to investors who are tax-~~tenant~~exempt entities. The resolution of our status in this regard is dependent upon facts that will not be known until the time a property is sold or ~~partner;~~held for sale. Under existing law, whether property is held primarily for sale to customers in the ordinary course of business must be determined from all the facts and circumstances surrounding the particular property at the time of disposition. These include the number, frequency, regularity and nature of dispositions of real estate by the holder and activities of the holder of the property in selling the property or preparing the property for sale. Accordingly, our counsel is unable to render an opinion as to whether we will be considered to hold any or all of our properties primarily for sale to customers in the ordinary course of business.

•We ~~that such partner~~ may ~~exercise~~be ~~buy/sell~~audited ~~rights~~by the ~~that~~Internal ~~force~~Revenue usService, towhich ~~either~~could ~~acquire~~result in the ~~entire~~imposition ~~investment, or dispose~~ of ~~our~~additional ~~share~~tax, atinterest ~~a time~~ and ~~price that may not be consistent with our investment objectives~~penalties.

~~Actions~~Our federal income tax returns may be audited by ~~such~~the aInternal ~~co-venturer~~Revenue Service. Any audit of us could result in an audit of an investor’s tax return that may require adjustments of items unrelated to an investment in us, ~~co-tenant~~in oraddition ~~partner~~to adjustments to various items. In the event of any such adjustments, an investor might ~~have~~incur attorneys’ fees, court costs and other expenses contesting deficiencies asserted by the ~~result~~Internal Revenue Service. Investors may also be liable for interest on any underpayment and penalties from the date their tax was originally due. The tax treatment of ~~subjecting~~all items will generally be determined at the ~~property~~Liquidating toTrust ~~liabilities~~level in a single proceeding rather than in ~~excess~~separate proceedings with each investor, and our Managing Trustee is primarily responsible for contesting federal income tax adjustments proposed by the Internal Revenue Service. In this connection, our Managing Trustee may extend the statute of ~~those~~limitations ~~contemplated~~as to all investors and, in certain circumstances, may ~~have~~bind the ~~effect~~investors to a settlement with the Internal Revenue Service. Further, our Managing Trustee may cause us to elect to be treated as an electing large partnership. If they do, we could take advantage of ~~reducing~~simplified ~~limited~~flow-through ~~partners~~reporting ~~returns~~of items. Adjustments to items would continue to be determined at the Liquidating Trust level, however, and any such adjustments would be accounted for in the year they take effect, rather than in the year to which such adjustments relate. Our Managing Trustee will have the discretion in such circumstances either to pass along any such adjustments to the beneficiaries or to bear such adjustments at the Liquidating Trust level.

~~Affiliates~~State of our General Partners have sponsored, or are currently sponsoring, registered public offerings on behalf of Behringer Harvard REIT I, Inc. (“Behringer Harvard REIT I”), Behringer Harvard Opportunity REIT I, Inc. (“Behringer Harvard Opportunity REIT I”), Behringer Harvard Opportunity REIT II, Inc. (“Behringer Harvard Opportunity REIT II”), Behringer Harvard Multifamily REIT I, Inc. (“Behringer Harvard Multifamily REIT”) and ~~Behringer~~local ~~Harvard Mid-Term Value Enhancement Fund I LP (“Behringer Harvard Mid-Term Value Enhancement Fund”). Mr. Behringer’s affiliate, Behringer Harvard Advisors~~taxes Iand LPa ~~(an~~requirement ~~entity that is under common control with our general partner, Behringer Advisors II), acts as managing trustee of Behringer Harvard Mid-Term Value Enhancement Liquidating Trust (successor in interest~~ to ~~Behringer~~withhold ~~Harvard~~state ~~Mid-Term~~taxes ~~Value~~may ~~Enhancement Fund)~~apply, and ~~Mr.~~if ~~Behringer serves as Chairman of the Board of Behringer Harvard REIT I~~so, Behringer Harvard Opportunity REIT I, Behringer Harvard Opportunity REIT II, Behringer Harvard Multifamily REIT and Behringer Harvard Multifamily REIT II, Inc. Because our General Partners or their affiliates have advisory and management arrangements with other Behringer Harvard programs, it is likely that they will encounter opportunities to acquire or sell properties to the ~~benefit~~amount of ~~one~~net ofcash ~~the~~from ~~Behringer~~operations ~~Harvard~~payable ~~programs, but not others. Our General Partners or their affiliates may make decisions~~ to ~~buy~~investors orwould be ~~sell certain properties, which decisions might disproportionately benefit a Behringer Harvard program other than us~~reduced.

IfThe westate ~~enter~~in ~~into~~which an ainvestor ~~joint~~resides ~~venture~~may ~~with~~impose ~~another~~an ~~Behringer~~income ~~Harvard~~tax ~~program~~upon orits ~~joint~~share ~~venture,~~of our ~~General~~taxable ~~Partners~~income. ~~may~~Further, ~~have~~states ain ~~conflict~~which ofwe ~~interest~~will ~~when~~own ~~determining~~our ~~when~~properties may ~~and~~impose ~~whether~~income totaxes ~~sell~~upon aits ~~particular~~share ~~real~~of ~~estate~~our ~~property,~~taxable ~~and~~income ~~limited~~allocable ~~partners~~to ~~may~~any ~~face~~property ~~certain~~located ~~additional~~in ~~risks~~that state. ~~For~~Many ~~example,~~states ifhave also weimplemented ~~enter~~or ~~into~~are aimplementing ~~joint~~programs ~~venture~~to ~~with~~require aentities ~~Behringer~~classified ~~Harvard~~as ~~real~~partnerships ~~estate~~to ~~investment~~withhold ~~trust~~and ~~(“REIT”)~~pay ~~that~~state ~~subsequently~~income taxes ~~becomes~~owed ~~listed~~by onnon-resident apartners ~~national~~relating ~~exchange~~to income-producing properties located in their states, ~~such~~and ~~REIT~~we ~~would~~may ~~automatically~~be ~~become~~required ato withhold ~~perpetual~~state ~~life~~taxes ~~entity~~from atcash ~~the~~distributions ~~time~~otherwise ofpayable. ~~listing~~Investors ~~and~~may ~~might~~also ~~not~~be ~~continue~~required to ~~have~~file ~~similar~~income ~~goals~~tax returns in some states and ~~objectives~~report ~~with~~their ~~respect~~share of income attributable to ownership and operation by the ~~resale~~Liquidating Trust of properties asin itthose states. ~~had~~Moreover, ~~prior~~despite ~~to being~~our ~~listed~~pass-through treatment for U.S. Infederal ~~addition,~~income iftax ~~that~~purposes, ~~Behringer~~certain ~~Harvard~~states ~~REIT~~may ~~was~~impose ~~not~~income ~~listed~~or franchise ontaxes aupon ~~securities~~our ~~exchange~~income byand ~~the~~not ~~time~~treat ~~set~~us ~~forth~~as ina ~~its~~pass-through ~~charter,~~entity. ~~its~~The ~~organizational~~imposition ~~documents~~of ~~might~~such ~~provide~~taxes ~~for~~will anreduce ~~immediate~~the ~~liquidation~~amounts distributable ofto ~~its~~our ~~assets~~beneficiaries. In the event ofwe ~~such~~are ~~liquidation,~~required ~~any~~to ~~joint~~withhold ~~venture~~state ~~between~~taxes usfrom ~~and~~cash ~~that~~distributions, ~~Behringer~~the ~~Harvard~~amount ~~REIT~~of the ~~might~~net ~~also~~cash befrom ~~required~~operations tootherwise ~~sell~~payable ~~its~~would ~~properties~~be atreduced. In addition, such ~~time~~collection ~~even~~and ~~though~~filing werequirements at the state level may ~~not~~result ~~otherwise~~in ~~desire~~increases toin doour ~~so.~~administrative ~~Although~~expenses that would have the ~~terms~~effect of ~~any~~reducing ~~joint~~cash ~~venture~~available ~~agreement~~for ~~between~~distribution. Investors usare urged to consult with their own tax advisors with respect to the impact of applicable state and ~~another~~local ~~Behringer~~taxes ~~Harvard~~and state ~~program~~tax ~~would~~withholding ~~grant~~requirements uson aan investment in our units.

~~TABLE~~Legislative OFor ~~CONTENTS~~regulatory action could adversely affect investors.

~~right~~In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of ~~first~~the ~~refusal~~federal income tax laws applicable to ~~buy~~investments similar to an investment in our units. Additional changes to the tax laws are likely to continue to occur, and we cannot assure investors that any such changes will not adversely affect the taxation of a beneficiary. Any such changes could have an adverse effect on an investment in our units or on the market value or the resale potential of our properties. Investors are urged to consult with their own tax advisor with respect to the impact of recent legislation on their investment in units and the status of legislative, itregulatory isor ~~unlikely~~administrative developments and proposals and their potential effect on an investment in our units. Investors should also note that weour ~~would~~counsel’s ~~have~~tax ~~sufficient~~opinion ~~funds~~assumed that no legislation that will be applicable to ~~exercise~~an investment in our ~~right~~units would be enacted after the commencement of ~~first~~the ~~refusal~~Offering ~~under~~on February ~~these~~19, ~~circumstances~~2003.

~~Since~~Congress previously ~~our~~passed ~~General~~major ~~Partners~~federal ~~and~~tax ~~their~~legislation ~~affiliates~~regarding ~~control~~taxes usapplicable ~~and either control or serve as advisor~~ to ~~other~~recipients ~~Behringer~~of ~~Harvard~~dividends. ~~programs,~~One ~~agreements~~of ~~and~~the ~~transactions~~changes ~~between~~ reduced the ~~parties~~tax ~~with~~rate ~~respect~~ to ~~any~~certain ~~joint~~recipients ~~venture~~of ~~between~~dividends orpaid ~~among~~by ~~such~~corporations ~~parties~~to ~~will~~individuals ~~not~~to ~~have~~a ~~the~~maximum ~~benefit~~ of ~~arm’s~~15% ~~length~~through ~~negotiation of the type normally conducted between unrelated co-venturers~~2012. ~~Under~~The ~~these~~tax ~~joint~~changes did ~~venture~~not, ~~arrangements~~however, ~~neither~~reduce ~~co-venturer may have~~ the ~~power~~corporate totax ~~control~~rates. ~~the venture~~Therefore, ~~and under certain circumstances, an impasse could be reached regarding matters pertaining to~~ the ~~joint~~maximum ~~venture,~~corporate ~~which~~tax ~~might~~rate ~~have~~of a35% ~~negative~~was ~~influence~~not ~~on the joint venture and decrease potential returns to limited partners~~affected. InEven with the ~~event~~reduction ~~that a co-venturer has a right~~ of ~~first~~the ~~refusal~~rate toon ~~buy~~dividends ~~out~~received by the ~~other co-venturer~~individuals, itthe ~~may~~combined bemaximum ~~unable~~corporate tofederal ~~finance~~tax ~~such~~rate ~~buy-out~~and individual attax ~~that~~rate ~~time.~~on Itqualified ~~may~~corporate ~~also~~dividends bewas ~~difficult for us to sell our interest in any such joint venture or partnership or as a co-tenant in property~~44.75% ~~In addition~~and, towith the ~~extent~~effect ~~that our co-venturer, partner or co-tenant is an affiliate~~ of ~~our~~state ~~General Partners~~income taxes, ~~certain~~could ~~conflicts~~exceed ~~of interest will exist~~50%.

~~The~~Under ~~General~~recently ~~Partners~~enacted ~~and~~legislation, ~~certain~~for taxable ofyears ~~their~~beginning ~~affiliates~~after ~~face~~December ~~conflicts~~31, 2012, capital gains will be taxed at a maximum rate of ~~interest~~20% ~~caused~~and bydividend ~~their~~income ~~compensation~~will be ~~arrangements~~taxed ~~with~~at usordinary income rates. Additionally, ~~which~~a ~~could~~U.S. ~~result~~person inthat ~~actions~~is an individual or estate, or a trust that ~~are~~does not infall into a special class of trusts that is exempt from such tax, generally will be subject to a 3.8% tax (the ~~long-term~~"Medicare ~~best~~tax") on ~~interests~~the lesser of (1) the U.S. person's "net investment income" for the relevant taxable year and (2) the excess of the U.S. person's modified adjusted gross income for the taxable year over a certain threshold. A U.S. person's net investment income for these purposes will generally include income and gain allocable to such U.S. person and/or any gain realized with respect to a disposition of our ~~unitholders~~units of beneficial interest. If you are a U.S. person that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your investment in the ordinary shares.

~~Our~~Although ~~General~~entities ~~Partners~~classified as ~~and~~partnerships ~~certain~~for offederal ~~their~~income ~~affiliates~~tax purposes continue to receive substantially better tax treatment than entities taxed as corporations, it ~~including~~is possible that future legislation would make a partnership structure a less advantageous organizational form for investment in real estate, or that it could become more advantageous for us to elect to be taxed for federal income tax purposes as a corporation or a REIT. Pursuant to our ~~Property~~Liquidating ~~Manager~~Trust Agreement, our Managing Trustee has the authority to make any tax elections on our behalf that, in its sole judgment, are ~~entitled~~in our best interest. This authority includes the ability to ~~substantial~~elect ~~fees~~to ~~from~~cause us ~~under~~to be taxed as a corporation or to qualify as a REIT for federal income tax purposes. Our Managing Trustee has the ~~terms~~authority ofunder our ~~advisory~~Liquidating Trust ~~management~~Agreement ~~agreement~~to ~~and~~make ~~property~~those ~~management~~elections ~~agreement~~without the necessity of obtaining the approval of our beneficiaries. ~~These~~In ~~fees~~addition, ~~were~~our Managing ~~not~~Trustee ~~negotiated~~has atthe ~~arm’s~~authority ~~length~~to ~~and~~amend ~~reduce~~our Liquidating Trust Agreement without the ~~amount~~consent of ~~cash~~beneficiaries ~~available~~in order to facilitate our operations so as to be able to qualify us as a REIT, corporation or other tax status that it elects for ~~distributions~~us. Our Managing Trustee has fiduciary duties to us and to all investors and would only cause such changes in our organizational structure or tax treatment if it determines in good faith that such changes are in the best interest of our investors.

~~These~~There ~~fees~~are ~~could~~special ~~influence~~considerations that ~~our~~apply ~~General Partners’ advice~~ to ~~us,~~pension asor ~~well~~profit assharing ~~the~~trusts ~~judgment~~or ofIRAs ~~their~~investing ~~affiliates~~in ~~performing~~our ~~services for us~~units. ~~Among other matters, these compensation arrangements could affect their judgment with respect to:~~

•If ~~continuing~~investors are investing the assets of a pension, ~~renewing~~profit sharing, 401(k), Keogh or ~~enforcing~~other ~~our~~qualified ~~agreements~~retirement ~~with~~plan ~~our~~or ~~General~~the ~~Partners~~assets ~~and~~of ~~their~~an ~~affiliates,~~IRA ~~including~~in ~~the~~our ~~advisory~~units of ~~management~~beneficial ~~agreement~~interest, ~~and~~they ~~the~~should ~~property~~be ~~management~~satisfied ~~agreement;~~that, among other things:

•· ~~property~~their ~~sales,~~investment ~~which~~is ~~reduce~~consistent ~~the~~with ~~asset management and property management fees payable to our General Partners or~~ their ~~affiliates~~fiduciary ~~but~~obligations ~~also~~under ~~entitle~~ERISA ~~them~~and tothe ~~real~~Internal ~~estate~~Revenue ~~commissions~~Code;

•· ~~borrowings~~their toinvestment ~~refinance~~is ~~properties,~~made ~~which~~in ~~increase~~accordance with the ~~debt~~documents ~~financing~~and ~~fees~~instruments ~~payable~~governing totheir ~~our~~plan ~~General~~or ~~Partners~~IRA, including their plan’s investment policy;

•· ~~determining~~their ~~the~~investment ~~compensation~~satisfies ~~paid to employees for services provided to us, which could be influenced in part by whether or not~~ the ~~General~~prudence ~~Partners~~and ~~are~~diversification ~~reimbursed~~requirements byof ~~us for the related salaries and benefits~~ERISA;

•· ~~whether~~their ~~and~~investment ~~when~~will wenot ~~seek~~impair tothe ~~sell~~liquidity ~~our~~of ~~assets,~~the ~~which~~plan ~~sale~~or ~~could entitle our General Partners to real estate commissions.~~IRA;

~~The~~· ~~fees~~they ~~our~~will ~~General~~be ~~Partners~~able ~~receive~~to invalue ~~connection with transactions involving~~ the ~~management~~assets of ~~an asset are based on~~ the ~~cost~~plan ofannually ~~the~~in ~~investment,~~accordance ~~including~~with ~~the~~ERISA amount budgeted for the development, construction, and improvement of each asset, and are not based on the quality of the investment or the quality of the services rendered to us. This may influence our General Partners to recommend riskier transactions to us. requirements;

We· ~~may~~their beinvestment ~~restricted~~will innot ~~our~~constitute ~~ability~~a toprohibited ~~replace~~transaction ~~our~~under ~~Property~~Section ~~Manager~~406 ~~under~~of ~~certain~~ERISA ~~circumstances.~~or Section 4975 of the Internal Revenue Code;

~~Under~~· ~~the~~their ~~terms~~investment ofwill ~~our~~likely ~~property~~produce ~~management~~UBTI ~~agreement,~~for ~~we may terminate~~ the ~~agreement~~plan ~~upon~~or 30IRA ~~days’ notice in the event of (~~and ~~only in the event of) a showing of willful misconduct~~, ~~gross negligence~~therefore, oris ~~deliberate~~not ~~malfeasance~~likely byto ~~our~~be ~~Property~~an ~~Manager~~appropriate ininvestment ~~the~~for ~~performance~~an ~~of their duties~~IRA. ~~Our~~(Due ~~General~~to ~~Partners may find the performance of~~ our ~~Property~~intended ~~Manager~~method ~~to be unsatisfactory. However, such performance by the Property Manager may not reach the level~~ of ~~“willful misconduct~~operation, ~~gross~~it ~~negligence,~~is orlikely ~~deliberate~~that ~~malfeasance.” As a result,~~ we ~~may~~will begenerate ~~unable to terminate the property management agreement at the desired time, which may have an adverse effect on the management and profitability of our properties~~UBTI. )

24We may dissolve the Liquidating Trust if our assets are deemed to be “plan assets” or if we engage in prohibited transactions.

~~TABLE~~If OFour ~~CONTENTS~~assets were deemed to be assets of qualified plans investing as limited partners, known as “plan assets,” our Managing Trustee would be considered to be a plan fiduciary and certain contemplated transactions between our Managing Trustee or its affiliates and us may be deemed to be prohibited transactions subject to excise taxation under Section 4975 of the Internal Revenue Code. Additionally, if our assets were deemed to be plan assets, ERISA’s fiduciary standards would extend to the Managing Trustee as a plan fiduciary with respect to our investments. We have not requested an opinion of our counsel regarding whether or not our assets would constitute plan assets under ERISA, nor have we sought any rulings from the U.S. Department of Labor (“Department of Labor”) regarding classification of our assets.

Our General Partners and certain of their key personnel face conflicts of interest related to the positions they hold with affiliated entities, which could diminish the value of the services they provide to us.24

~~Mr.~~Department ~~Behringer~~of ~~and~~Labor regulations ~~certain~~defining ofplan ~~the~~assets ~~key~~for ~~personnel~~purposes of ~~Behringer~~ERISA ~~Advisors~~contain IIexemptions ~~are~~that, ~~also~~if ~~officers~~satisfied, ofwould ~~our~~preclude ~~Property~~assets ~~Manager,~~of ~~our~~an ~~dealer~~entity as ~~manager~~ours ~~and~~from ~~other~~being ~~affiliated~~treated ~~entities~~as plan assets. AsWe acannot ~~result,~~assure ~~these~~investors ~~individuals~~that ~~owe~~our ~~fiduciary~~Liquidating ~~duties~~Trust toAgreement ~~these~~and ~~other~~the ~~entities,~~Offering ~~which~~have been ~~may~~structured ~~conflict~~so ~~with~~that the ~~fiduciary~~exemptions ~~duties~~in ~~that~~such ~~they~~regulations ~~owe~~would apply to us, and although our ~~investors.~~Managing ~~Conflicts~~Trustee ~~with~~intends ~~our~~that ~~business~~an investment ~~and~~by ~~interests~~a ~~are~~qualified ~~most~~plan ~~likely~~in tounits ~~arise~~will ~~from~~not ~~involvement~~be deemed an investment in ~~activities~~our ~~related~~assets, towe ~~(1)~~can ~~allocation~~make no representations or warranties of ~~management~~any ~~time~~kind ~~and~~regarding ~~services~~the ~~between~~consequences usof ~~and~~an ~~the~~investment ~~other~~in ~~entities,~~our ~~(2)~~units ~~the~~by ~~timing~~qualified plans in this regard. Plan fiduciaries are urged to consult with and ~~terms~~rely ofupon ~~the~~their ~~sale~~own ofadvisors anwith ~~asset~~respect to this and other ERISA issues which, ~~(3)~~if ~~development~~decided ofadversely ~~our~~to ~~properties~~us, could byresult ~~affiliates~~in prohibited transactions, ~~(4)~~which ~~investments~~would ~~with~~cause ~~affiliates~~the imposition of ~~our~~excise taxation and the imposition of co-fiduciary ~~General~~liability ~~Partners,~~under ~~(5)~~Section ~~compensation~~405 toof ~~our~~ERISA ~~General~~in ~~Partners,~~the ~~and~~event ~~(6)~~actions ~~our~~undertaken ~~relationship~~by ~~with~~us ~~our~~are ~~dealer~~deemed ~~manager~~to ~~and~~be ~~Property~~non-prudent ~~Manager.~~investments or prohibited transactions.

~~Because~~In wethe ~~rely~~event onour ~~affiliates~~assets are ofdeemed ~~Behringer~~to ~~Holdings~~constitute ~~for~~plan ~~the~~assets, ~~provision~~or ofif ~~property~~certain ~~management,~~transactions ifundertaken ~~Behringer~~by ~~Holdings~~us isare ~~unable~~deemed to ~~meet~~constitute ~~its~~prohibited ~~obligations,~~transactions under weERISA ~~may~~or bethe ~~required~~Internal toRevenue ~~find~~Code ~~alternative~~and ~~providers~~no ofexemption ~~these~~for ~~services~~such transactions applies or is obtainable by us, ~~which~~our ~~could~~Managing ~~result~~Trustee has inthe aright, ~~significant~~but ~~and~~not ~~costly~~the ~~disruption~~obligation, upon notice to all beneficiaries, but without the consent of ~~our~~any ~~business.~~beneficiary to:

~~Behringer~~· ~~Holdings,~~compel ~~through~~a ~~one~~termination ~~or more of its subsidiaries, owns~~ and ~~controls~~dissolution ~~our Property Manager. The operations~~ of ~~our Property Manager rely substantially on Behringer Holdings. In light of~~ the ~~common~~Liquidating ~~ownership~~Trust; of this entity and its reliance on Behringer Holdings, we consider the financial condition of Behringer Holdings when assessing the financial condition of our Property Manager. In the event that Behringer Holdings would be unable to meet its obligations as they become due, we might be required to find alternative service providers, which could result in a significant and costly disruption of our business. or

~~There~~· isrestructure noour ~~separate~~activities ~~counsel~~to ~~for~~the usextent ~~and~~necessary ~~our~~to ~~affiliates,~~comply ~~which~~with ~~could~~any ~~result~~exemption in ~~conflicts~~the Department of ~~interest~~Labor regulations or any prohibited transaction exemption granted by the Department of Labor or any condition that the Department of Labor might impose as a condition to granting a prohibited transaction exemption.

~~DLA~~Adverse ~~Piper~~tax LLP (US) acts as legal counsel to us, and is also expected to represent our General Partners and some of their affiliates from time to time. There is a possibility in the future that the interests of the various parties may become adverse and, under the Code of Professional Responsibility of the legal profession, DLA Piper LLP (US) may be precluded from representing any one or all of such parties. If any situation arises in which our interests appear to be in conflict with those of our General Partners or their affiliates, additional counsel may be retained by one or more of the parties to assure that their interests are adequatelyconsiderations ~~protected. Moreover, should such a conflict not be readily apparent, or otherwise not recognized, DLA Piper LLP (US)~~ may ~~inadvertently~~result ~~act~~because ~~in derogation~~ of ~~the~~minimum ~~interest~~distribution ~~of the parties which could affect us and, therefore, our limited partners’ ability to meet our investment objectives~~requirements.

~~Federal~~If ~~Income~~an ~~Tax~~investor ~~Risks~~purchased units through an IRA, or if an investor is a trustee of an IRA or other fiduciary of a retirement plan that invested in units, the investor must consider the limited liquidity of an investment in our units as it relates to applicable minimum distribution requirements under the Internal Revenue Code. If units are held and our properties have not yet been sold at such time as mandatory distributions are required to begin to an IRA beneficiary or qualified plan participant, Sections 408(a)(6) and 401(a)(9) of the Internal Revenue Code will likely require that a distribution-in-kind of the units be made to the IRA beneficiary or qualified plan participant. Any such distribution-in-kind of units must be included in the taxable income of the IRA beneficiary or qualified plan participant for the year in which the units are received at the fair market value of the units without any corresponding cash distributions with which to pay the income tax liability attributable to any such distribution. Also, fiduciaries of a retirement plan should consider that, for distributions subject to mandatory income tax withholding under Section 3405 of the Internal Revenue Code, the fiduciary may have an obligation, even in situations involving in-kind distributions of units, to liquidate a portion of the in-kind units distributed in order to satisfy such withholding obligations. There may also be similar state and/or local tax withholding or other obligations that should be considered.

~~The~~UBTI ~~Internal~~is ~~Revenue~~likely ~~Service~~to ~~may~~be generated ~~challenge~~with ~~our~~respect ~~characterization~~to ~~of material~~ tax-exempt ~~aspects of an investment in our units of limited partnership interest~~investors.

AnWe ~~investment~~intend into ~~units~~incur indebtedness. ~~involves~~This ~~material~~will ~~income~~cause ~~tax~~a ~~risks.~~portion ~~Limited~~of ~~partners~~our ~~are~~income ~~urged~~allocable to ~~consult with their own~~ tax-exempt ~~advisor~~investors ~~with respect~~ to ~~the~~be ~~federal,~~recharacterized ~~state~~as ~~and foreign tax considerations of an investment in our units~~UBTI. ~~We will not seek any rulings from the Internal Revenue Service regarding any of the tax issues discussed herein.~~ Further, in ~~although we have obtained an opinion from our counsel, DLA Piper LLP (US), regarding~~ the ~~material~~event ~~federal~~we ~~income~~are ~~tax~~deemed ~~issues relating~~ to anbe ~~investment~~a “dealer” in ~~our~~real ~~units~~property, ~~investors~~defined ~~should~~as beone ~~aware~~who ~~that~~holds ~~the~~real ~~opinion~~estate ~~represents~~primarily ~~only~~for ~~our counsel’s best legal judgment, based upon representations and assumptions referred~~sale to ~~therein~~customers ~~and~~in ~~conditioned upon~~ the ~~existence~~ordinary course of ~~certain~~business, ~~facts.~~the ~~Our~~gain ~~counsel’s~~realized ~~tax opinion has no binding effect~~ on the ~~Internal~~sale ~~Revenue~~of ~~Service~~our orproperties ~~any court. Accordingly, we cannot assure investors~~ that ~~the~~is ~~conclusions~~allocable ~~reached~~to ~~in the~~ tax-exempt investors ~~opinion, if contested,~~ would be ~~sustained~~characterized byas ~~any court~~UBTI. InIf ~~addition,~~we ~~our~~generate ~~counsel~~UBTI, isa ~~unable~~trustee ~~to form an opinion as to the probable outcome~~ of ~~the~~a ~~contest~~charitable ofremainder ~~certain~~trust ~~material~~that ~~tax~~has ~~aspects,~~invested ~~including~~in us ~~whether we~~ will belose ~~characterized~~its asexemption afrom ~~“dealer” so that sales of our assets would give rise to ordinary~~ income ~~rather~~taxation ~~than~~with ~~capital~~respect ~~gain, and whether we are required~~ to ~~qualify~~all asof aits ~~tax~~income ~~shelter~~for ~~under~~ the ~~Internal~~tax ~~Revenue~~year ~~Code~~in question. ~~Our~~A ~~counsel~~tax-exempt ~~also~~beneficiary other ~~gives~~than noa ~~opinion~~charitable asremainder totrust ~~the~~that ~~tax~~has ~~considerations~~UBTI toin ~~investors~~any of tax ~~issues~~year ~~that~~from ~~have~~all ansources ~~impact~~of atmore ~~the~~than ~~individual or partner level. Accordingly~~$1,000 ~~investors~~will ~~are~~be ~~urged~~subject to taxation ~~consult~~on ~~with~~such income and ~~rely~~be ~~upon~~required ~~their~~to ~~own~~file tax ~~advisors~~returns ~~with~~reporting ~~respect~~such ~~to tax issues that have an impact at the partner or individual level~~income.

25Item 1B. Unresolved Staff Comments.

~~TABLE OF CONTENTS~~None.

~~Investors~~Item ~~may~~2. ~~realize taxable income without cash distributions, and may have to use funds from other sources to pay their tax liabilities~~Properties.

As aof ~~limited~~December ~~partner~~31, 2012, ~~investors~~the ~~will~~Partnership beowned ~~required~~interests toin ~~report~~a ~~their~~hotel ~~allocable~~with ~~share~~adjoining ofretail ~~our~~space ~~taxable~~and ~~income~~approximately onfive ~~their~~acres ~~personal income tax return regardless~~ of ~~whether~~land ~~they~~at ~~have received any cash distributions from us~~1221 Coit Road. ItThe isfollowing ~~possible~~table ~~that~~presents ~~limited~~certain ~~partnership~~additional ~~units~~information ~~will~~about bethe ~~allocated~~properties ~~taxable~~as ~~income in excess~~ of ~~their cash distributions. We cannot assure investors that cash flow will be available for distribution in any year. As a result~~December 31, ~~investors may have to use funds from other sources to pay their tax liability.~~ 2012:

We could be characterized as a publicly traded partnership, which would have an adverse tax effect on investors.

Date

Ownership

Property name

Location

Acquired

Rooms/acres

Description

Interest

Hotel Palomar

Dallas, Texas

11/08/04

198 rooms

hotel

1221 Coit Road- Land

Dallas, Texas

10/04/04

5 acres

developed land

IfEach of the ~~Internal~~properties was ~~Revenue~~transferred ~~Service were~~ to ~~classify~~ us ason athe ~~publicly~~Effective ~~traded partnership, we could be taxable as a corporation, and distributions made to investors could be treated as portfolio income rather than passive income~~Date. ~~Our~~The ~~counsel~~following ~~has~~information ~~given its opinion that we will not be classified as a publicly traded partnership, which is defined~~ generally asapplies ato ~~partnership~~all ~~whose interests are publicly traded or frequently transferred. However, this opinion is based only upon certain representations~~ of our General Partners and the provisions in our Partnership Agreement that attempt to comply with certain safe harbor standards adopted by the Internal Revenue Service. We cannot assure investors that the Internal Revenue Service will not challenge this conclusion or that we will not, at some time in the future, be treated as a publicly traded partnership due to the following factorsproperties:

~~• the complex nature of the Internal Revenue Service safe harbors;~~25

•· ~~the~~we ~~lack~~believe all of ~~interpretive~~our ~~guidance~~properties ~~with~~are ~~respect~~adequately tocovered ~~such~~by ~~provisions;~~insurance and suitable for their intended purposes;

•· ~~the~~we ~~fact~~have ~~that~~no ~~any~~plans ~~determination~~for inany ~~this~~material ~~regard~~renovations, ~~will~~improvements ~~necessarily~~or bedevelopment ~~based~~of ~~upon~~our ~~facts~~properties, ~~that~~except ~~have~~in ~~not~~accordance ~~yet~~with ~~occurred.~~planned budgets;

~~The~~· ~~deductibility~~our ofproperties ~~losses~~are ~~will~~located bein markets where we are subject to ~~passive~~competition ~~loss~~in ~~limitations,~~attracting ~~and~~new ~~therefore~~tenants ~~their~~and ~~deductibility~~retaining ~~will~~current betenants; ~~limited.~~and

~~Limited~~· ~~partnership~~depreciation ~~units~~is ~~will~~provided beon allocated their pro rata share of our tax losses. Section 469 of the Internal Revenue Code limits the allowance of deductions for losses attributable to passive activities, which are defined generally as activities in which the taxpayer does not materially participate. Any tax losses allocated to investors will be characterized as passive losses, and accordingly, the deductibility of such losses will be subject to these limitations. Losses from passive activities are generally deductible only to the extent of a taxpayer’s income or gains from passive activities and will not be allowed as an offset against other income, including salary or other compensation for personal services, active business income or “portfolio income,” which includes nonstraight-~~business~~line ~~income~~basis ~~derived~~over ~~from dividends, interest, royalties, annuities and gains from~~ the ~~sale~~estimated ofuseful ~~property~~lives ~~held for investment. Accordingly, investors may receive no current benefit from their share~~ of ~~tax~~the ~~losses unless they are currently being allocated passive income from other sources~~buildings.

~~The~~Dispositions ~~Internal Revenue Service may challenge our allocations of profit and loss, and any reallocation of items of income, gain, deduction and credit could reduce anticipated tax benefits.~~

~~Counsel~~On ~~has~~May ~~given~~17, ~~its~~2012, ~~opinion~~Behringer Harvard ~~that~~Mountain itVillage, isLLC, ~~more~~a ~~likely~~wholly-owned ~~than~~subsidiary ~~not~~of ~~that~~the Partnership ~~items of income~~, ~~gain,~~entered ~~loss,~~into ~~deduction~~a ~~and~~Deed ~~credit~~in ~~will~~Lieu beof ~~allocated~~Foreclosure ~~among~~Agreement with ~~our~~Credit ~~General~~Union ~~Partners~~Liquidity ~~and~~Services, ~~our~~LLC ~~limited~~(“CULS”) ~~partners~~effective ~~substantially~~May 8, 2012, inwhereby ~~accordance~~ownership ~~with~~of ~~the~~our ~~allocation~~23-unit condominium ~~provisions~~property of(“Cassidy ~~the~~Ridge”) ~~Partnership~~was ~~Agreement.~~transferred Weto ~~cannot assure investors~~CULS, ~~however,~~resulting ~~that~~in ~~the~~full ~~Internal~~settlement ~~Revenue~~of ~~Service will not successfully challenge~~ the ~~allocations~~outstanding indebt to the ~~Partnership~~lender. ~~Agreement~~As ~~and~~a ~~reallocate items of income~~result, ~~gain, loss, deduction and credit in~~ a ~~manner~~gain ~~that~~on ~~reduces~~troubled ~~anticipated~~debt ~~tax~~restructuring ~~benefits. The tax rules applicable to allocation~~ of ~~items~~$7.1 ofmillion ~~taxable~~was ~~income~~recognized ~~and~~which ~~loss~~is ~~are~~included ~~complex.~~in ~~The~~the ~~ultimate~~consolidated ~~determination~~statement of ~~whether~~operations ~~allocations~~for ~~adopted by us will be respected by~~ the ~~Internal~~year ~~Revenue~~ended ~~Service~~December ~~will~~31, ~~depend~~2012. ~~upon~~On ~~facts~~September ~~which~~29, ~~will~~2006 ~~occur in~~ the ~~future~~borrower ~~and~~entered ~~which~~into ~~cannot~~a beloan ~~predicted~~ agreement with ~~certainty~~CULS orto ~~completely~~borrow ~~controlled~~a bytotal ~~us.~~principal Ifamount ~~the~~of ~~allocations~~up weto ~~use~~$27.7 ~~are~~million ~~not~~to ~~recognized,~~construct ~~limited~~Cassidy ~~partners~~Ridge ~~could~~(“Cassidy beRidge ~~required~~Loan toAgreement”). The ~~report~~outstanding ~~greater~~principal ~~taxable~~balance, ~~income~~together ~~or less taxable loss~~ with ~~respect~~all toaccrued anbut ~~investment~~unpaid ~~in us and~~interest, aswas adue ~~result,~~and ~~pay~~payable ~~more~~on ~~tax~~the ~~and~~maturity ~~associated~~date ~~interest~~of October ~~and~~1, ~~penalties~~2011. ~~Our~~The ~~limited~~loan, ~~partners~~which ~~might~~was ~~also~~recourse beto ~~required~~the toPartnership, ~~incur~~had ~~the~~an ~~costs~~outstanding ofprincipal ~~amending~~balance ~~their~~of ~~individual~~approximately ~~returns~~$28.4 million at May 17, 2012.

26On June 8, 2012, Mockingbird Commons, LLC (the “Mockingbird Commons Partnership”) entered into a Deed in Lieu of Foreclosure Agreement with Westdale Capital Investors I, Ltd (“Mockingbird Lender”) whereby 39 luxury high-rise condominiums and 1.4 acres of excess land located in Dallas, Texas (“Palomar Residences”) were transferred to the Mockingbird Lender, resulting in full settlement of the outstanding debt. As a result, a gain on troubled debt restructuring of $1.0 million was recognized of which $0.9 million is included in discontinued operations on the statement of operations for the year ended December 31, 2012. The outstanding principal balance under the loan agreement was approximately $19.4 million at June 8, 2012.

~~TABLE~~On OFAugust ~~CONTENTS~~16, 2012, 1221 Coit Road was sold for a contract sales price of $20.0 million and on August 17, 2012, 250/290 John Carpenter was sold for a contract sales price of $22.8 million. Proceeds from the sales of these properties were used to fully satisfy the existing indebtedness associated with the properties and additional liabilities of the fund.

WeItem ~~may~~3. beLegal ~~characterized as a dealer, and if so, any gain recognized upon a sale of real property would be taxable to investors as ordinary income~~Proceedings.

IfWe we are ~~deemed~~not ~~for tax purposes to be~~ a ~~dealer, defined as one who holds property primarily for sale~~ party to ~~customers in the ordinary course of business~~, ~~with~~and ~~respect~~none ~~to one or more~~ of our properties, ~~any gain recognized upon a sale of such real property will be taxable to investors as ordinary income and will also constitute UBTI to investors who~~ are ~~tax-exempt~~subject entities. The resolution of our status in this regard is dependent upon facts that will not be known until the time a property is sold or held for sale. Under existing law, whether property is held primarily for sale to ~~customers in the ordinary course of business must be determined from all the facts and circumstances surrounding the particular property at the time of disposition. These include the number~~, frequency, regularity and nature of dispositions of real estate by the holder and activities of the holder of the property in selling the property or preparing the property for sale. Accordingly, our counsel is unable to render an opinion as to whether we will be considered to hold any ormaterial ~~all~~pending oflegal ~~our properties primarily for sale to customers in the ordinary course of business~~proceedings.

WeItem ~~may~~4. beMine ~~audited~~Safety ~~by the Internal Revenue Service, which could result in the imposition of additional tax, interest and penalties~~Disclosures.

~~Our federal income tax returns may be audited by the Internal Revenue Service~~None. Any audit of us could result in an audit of an investor’s tax return that may require adjustments of items unrelated to an investment in us, in addition to adjustments to various Partnership items. In the event of any such adjustments, an investor might incur attorneys’ fees, court costs and other expenses contesting deficiencies asserted by the Internal Revenue Service. Investors may also be liable for interest on any underpayment and penalties from the date their tax was originally due. The tax treatment of all Partnership items will generally be determined at the partnership level in a single proceeding rather than in separate proceedings with each partner, and our General Partners are primarily responsible for contesting federal income tax adjustments proposed by the Internal Revenue Service. In this connection, our General Partners may extend the statute of limitations as to all partners and, in certain circumstances, may bind the partners to a settlement with the Internal Revenue Service. Further, our General Partners may cause us to elect to be treated as an electing large partnership. If they do, we could take advantage of simplified flow-through reporting of Partnership items. Adjustments to Partnership items would continue to be determined at the partnership level, however, and any such adjustments would be accounted for in the year they take effect, rather than in the year to which such adjustments relate. Our General Partners will have the discretion in such circumstances either to pass along any such adjustments to the partners or to bear such adjustments at the partnership level.

~~State and local taxes and a requirement to withhold state taxes may apply, and if so, the amount of net cash from operations payable to investors would be reduced.~~26

The state in which an investor resides may impose an income tax upon its share of our taxable income. Further, states in which we will own our properties may impose income taxes upon its share of our taxable income allocable to any Partnership property located in that state. Many states have also implemented or are implementing programs to require partnerships to withhold and pay state income taxes owed by non-resident partners relating to income-producing properties located in their states, and we may be required to withhold state taxes from cash distributions otherwise payable. Investors may also be required to file income tax returns in somePART states and report their share of income attributable to ownership and operation by the Partnership of properties in those states. Moreover, despite our pass-through treatment for U.S. federal income tax purposes, certain states may impose income or franchise taxes upon our income and not treat us as a pass-through entity. The imposition of such taxes will reduce the amounts distributable to our limited partners. In the event we are required to withhold state taxes from cash distributions, the amount of the net cash from operations otherwise payable would be reduced. In addition, such collection and filing requirements at the state level may result in increases in our administrative expenses that would have the effect of reducing cash available for distribution. Investors are urged to consult with their own tax advisors with respect to the impact of applicable state and local taxes and state tax withholding requirements on an investment in our units. II

27Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

~~TABLE~~Market ~~OF CONTENTS~~Information

~~Legislative~~There is no established trading market for our units of beneficial interests, and we do not expect that one will develop. Except for certain transfers by will, intestate succession or ~~regulatory~~operation ~~action~~of ~~could~~law, ~~adversely~~or ~~affect~~from ~~investors~~a qualified account to a non-qualified account if necessary to allow holders of beneficial interests to comply with certain IRA required minimum distribution requirements under the Internal Revenue Code, if applicable, beneficial interests in the Liquidating Trust are not transferable, and beneficiaries do not have authority or power to sell or in any other manner dispose of their beneficial interests.

~~Changes~~The toPartnership ~~the~~Agreement required ~~tax~~that ~~laws~~the ~~are~~General ~~likely~~Partners toannually ~~occur,~~provide ~~and these changes may adversely affect~~ the ~~taxation~~Partnership’s ~~of a~~ limited ~~partner.~~partners ~~Any~~with ~~such changes could have~~ an ~~adverse~~estimate ~~effect~~of onthe anamount ~~investment~~a holder inof ~~our~~limited partnership units orwould onreceive ~~the~~if ~~market value or~~ the ~~resale potential of our~~ properties. ~~Investors~~were ~~are~~sold ~~urged~~at ~~to consult with~~ their ~~own~~fair ~~tax~~market ~~advisor~~values ~~with~~as ~~respect~~of to the ~~status~~close of ~~legislative~~the fiscal year, ~~regulatory or administrative developments~~ and ~~proposals~~the ~~and~~proceeds ~~their~~from ~~potential~~the ~~effect~~sale onof anthe ~~investment~~properties in(without ~~our~~reduction ~~units.~~for ~~Investors~~selling ~~should~~expenses), ~~also~~together ~~note~~with ~~that~~other ~~our counsel’s tax opinion assumes that no legislation that will be applicable to an investment in our units will be enacted after the~~funds ~~commencement~~ of the ~~Offering~~Partnership, onwere ~~February~~distributed ~~19,~~in ~~2003.~~a liquidation.

~~Congress~~On ~~has~~December 14, 2012, one ~~passed major federal tax legislation regarding taxes applicable to recipients~~ of ~~dividends.~~the ~~One~~Partnership’s ofGeneral ~~the~~Partners, ~~changes~~Behringer ~~reduced~~Advisors ~~the~~II ~~tax~~LP, ~~rate~~adopted toan ~~certain~~estimated ~~recipients~~value of ~~dividends~~$1.93 ~~paid~~per bylimited ~~corporations~~partnership unit. As topart ~~individuals to a maximum~~ of ~~15%~~the ~~through~~General ~~2012.~~Partner’s ~~The~~valuation ~~tax~~process, ~~changes~~and ~~did~~as ~~not,~~required ~~however,~~by ~~reduce~~ the ~~corporate~~Partnership ~~tax rates. Therefore~~Agreement, the ~~maximum~~General Partner ~~corporate~~obtained ~~tax~~the ~~rate~~opinion of ~~35%~~Stanger, ~~has~~an ~~not~~independent ~~been~~third ~~affected.~~party, ~~Even~~that ~~with~~ the ~~reduction~~estimated ofvaluation ~~the~~was ~~rate~~reasonable onand ~~dividends~~was ~~received~~prepared in byaccordance ~~the~~with ~~individuals,~~appropriate ~~the~~methods ~~combined~~for ~~maximum~~valuing ~~corporate~~real ~~federal~~estate. Stanger, ~~tax~~founded ~~rate~~in ~~and~~1978, ~~individual~~is ~~tax~~a ~~rate~~nationally onrecognized investment ~~qualified~~banking ~~corporate~~firm ~~dividends~~specializing isin ~~44.75%~~real ~~and~~estate, ~~with~~REITs ~~the~~and ~~effect~~direct ofparticipation ~~state~~programs ~~income~~such ~~taxes,~~as ~~can~~the ~~exceed 50%~~Partnership.

~~Although~~Stanger’s ~~partnerships~~opinion was ~~continue~~expressed tofrom ~~receive substantially better tax treatment than entities taxed as corporations, it is possible that future legislation would make~~ a ~~limited~~financial ~~partnership~~point ~~structure~~of aview ~~less~~and ~~advantageous~~was ~~organizational~~subject ~~form for investment in real estate, or that it could become more advantageous for a limited partnership~~ to ~~elect~~various ~~to be taxed for federal income tax purposes as a corporation or a REIT~~limitations. Stanger ~~Pursuant~~relied toon ~~our~~information provided ~~Partnership~~by ~~Agreement,~~the ~~our~~ General ~~Partners~~Partner ~~have~~without ~~the~~independent ~~authority~~verification toand ~~make~~did ~~any~~not ~~tax~~perform ~~elections on our behalf that~~appraisals, indid ~~their~~not ~~sole~~inspect ~~judgment, are in our best interests. This authority includes~~ the ~~ability to elect to cause us to be~~properties ~~taxed~~or asreview aengineering ~~corporation~~ or tostructural ~~qualify~~studies, asenvironmental astudies, ~~REIT~~and ~~for~~did ~~federal~~not ~~income tax purposes. Our General Partners have the authority under our Partnership Agreement to~~ make ~~those~~independent ~~elections~~local ~~without~~market ~~the necessity of obtaining the approval of our limited partners~~inquiries. Stanger relied Inon ~~addition,~~information ~~our~~from ~~General Partners have~~ the authority to amend our Partnership Agreement without the consent of limited partners in order to facilitate our operations so as to be able to qualify us as a REIT, corporation or other tax status that they elect for us. Our General ~~Partners~~Partner ~~have~~regarding ~~fiduciary~~lease ~~duties~~terms ~~to us~~ and tothe ~~all~~physical ~~investors~~condition and ~~would~~capital ~~only~~expenditure ~~cause such changes in our organizational structure or tax treatment if they determine in good faith that such changes are in the best interests~~ requirements of ~~our~~each ~~investors~~property.

~~There~~Process ~~are~~and ~~special considerations that apply to pension or profit sharing trusts or IRAs investing in our units.~~Methodology

IfThe ~~investors~~objective ~~are~~in ~~investing~~determining an ~~the~~estimated ~~assets~~value ofper aunit ~~pension,~~is ~~profit~~to ~~sharing,~~arrive ~~401(k),~~at ~~Keogh~~a orvalue ~~other~~that ~~qualified~~is ~~retirement~~reasonable ~~plan~~using orwhat the ~~assets~~General ofPartner andeems ~~IRA~~to be appropriate valuation methodologies and assumptions under then current circumstances in ~~our~~accordance ~~units~~with ofthe valuation methodology required by the Partnership Agreement. In arriving at the estimated value per limited partnership ~~interest~~unit, ~~they~~the ~~should~~General bePartner utilized ~~satisfied~~valuation methodologies that, ~~among~~it ~~other~~believes ~~things:~~are standard and acceptable in the real estate industry for the types of assets held by the Partnership. The following is a summary of the valuation methodologies used by the General Partner.

•Investments ~~their~~in Real ~~investment~~Estate: isAs ~~consistent~~an opportunity style fund with ~~their~~varying ~~fiduciary~~asset ~~obligations~~types, ~~under~~the ~~ERISA~~General Partner estimated the value of the investments in real estate by using a variety of methods for purposes of calculating the estimated value per unit. In calculating values for all of the real estate assets, the General Partner assumed that such assets were sold as of January 1, 2013. The new estimated per-unit value reflects the current challenging economic climate that continues to impact the real estate and capital markets, and opportunistic investing in particular. An opportunity-style fund like the ~~Internal~~Partnership generally ~~Revenue~~acquires ~~Code;~~assets with the intention of spending capital to enhance and reposition or develop these assets for appreciation. However, the difficult economic and capital market conditions of recent years have severely impacted valuations in a broad range of real estate classes, including those in which the Partnership was invested. The markets for commercial real estate fluctuate, and values are expected to continually change in the future.

• For ~~their~~the improved ~~investment~~operating isproperty ~~made~~within the portfolio and the value of the promoted interest in ~~accordance~~two ~~with~~properties that the ~~documents~~Partnership sold ~~and~~in ~~instruments~~2011, ~~governing~~the ~~their~~General ~~plan~~Partner orestimated ~~IRA~~the values using appraisals performed by a third party. In estimating the value of developed land, ~~including~~the ~~their~~General ~~plan’s~~Partner ~~investment~~used ~~policy;~~the purchase option price currently available to an independent third party.

•Other ~~their~~Assets ~~investment~~and Liabilities: ~~satisfies~~The carrying value of a majority of the ~~prudence~~other assets and ~~diversification~~liabilities ~~requirements~~are considered to be equal to fair value due to their short maturities. The valuation also includes the carrying value of ~~ERISA;~~the current assets and liabilities on a consolidated basis.

•The ~~their~~estimated ~~investment~~value per ~~will~~unit of the Partnership’s limited partnership units does not ~~impair~~reflect ~~the~~a liquidity discount for the fact that the units are not currently traded on a national securities exchange, a discount for the non-assumability or prepayment obligations associated with certain of the ~~plan~~debt, or ~~IRA;~~a discount for the corporate level overhead and other costs that may be incurred, including any costs of any sale of the assets. Others using different assumptions and estimates could derive a different estimated value per unit, and these differences could be significant. The markets for real estate can fluctuate and values are expected to change in the future.

~~• they will be able to value the assets of the plan annually in accordance with ERISA requirements;~~27

•Allocation ~~their investment will not constitute a prohibited transaction under Section 406~~ of ~~ERISA~~Estimated ~~or Section 4975 of the Internal Revenue Code;~~Value

•The ~~their~~estimated ~~investment~~value ~~will~~per ~~likely~~limited ~~produce~~partnership ~~UBTI~~unit ~~for~~was allocated amongst the ~~plan~~asset ortypes ~~IRA~~as ~~and, therefore, is not likely to be an appropriate investment for an IRA. (Due to our intended method of operation, it is likely that we will generate UBTI.)~~follows:

Real estate assets	$	5.05
Debt		(3.91	)
Other		0.79
Estimated net asset value per unit	$	1.93

~~TABLE~~Limitations OFof ~~CONTENTS~~Estimated Value Per Unit

WeAs ~~may~~with ~~dissolve~~any valuation methodology, the ~~Partnership~~General ifPartner’s ~~our~~methodology ~~assets~~is ~~are~~based ~~deemed~~upon a number of estimates and assumptions that may prove later to be inaccurate or incomplete. Further, different parties with different assumptions and estimates could derive a different estimated value per unit. The estimated per share limited partnership unit determined by the General Partner neither represents the fair value according to generally accepted accounting principles in the United States (“~~plan~~GAAP”) of the assets” less liabilities, nor does it represent the amount the units would trade at on a national securities exchange or the amount a unit holder would obtain if wehe ~~engage~~tried into ~~prohibited~~sell ~~transactions~~his units or if the Partnership liquidated its assets. Accordingly, with respect to the estimated value per unit, the Fund can give no assurance that:

If· ~~our~~a ~~assets~~unit ~~were~~holder ~~deemed to be assets of qualified plans investing as limited partners, known as “plan assets,” our General Partners~~ would be ~~considered~~able to beresell ~~plan~~his ~~fiduciaries and certain contemplated transactions between our General Partners~~ or ~~their~~her ~~affiliates~~units ~~and~~at usthis ~~may~~estimated be deemed to be prohibited transactions subject to excise taxation under Section 4975 of the Internal Revenue Code. Additionally, if our assets were deemed to be plan assets, ERISA’s fiduciary standards would extend to the General Partners as plan fiduciaries with respect to our investments. We have not requested an opinion of our counsel regarding whether or not our assets would constitute plan assets under ERISA, nor have we sought any rulings from the U.S. Department of Labor (“Department of Labor”) regarding classification of our assets. value;

~~Department~~· ofa ~~Labor~~unit ~~regulations~~holder ~~defining plan assets for purposes of ERISA contain exemptions that, if satisfied,~~ would ~~preclude~~ultimately ~~assets~~realize ofdistributions aper ~~limited~~unit ~~partnership~~equal ~~such as ours from being treated as plan assets. We cannot assure investors that our Partnership Agreement and the Offering have been structured so that the exemptions in such regulations would apply~~ to us, and although our General Partners intend that an investment by a qualified plan in units will not be deemed an investment in our assets, we can make no representations or warranties of any kind regarding the ~~consequences~~estimated ofvalue anper ~~investment~~unit ~~in our units by qualified plans in this regard. Plan fiduciaries are urged to consult with and rely~~ upon ~~their~~liquidation ~~own~~of ~~advisors with respect to this and other ERISA issues which, if decided adversely to us, could result in prohibited transactions, which would cause~~ the ~~imposition~~assets ~~of excise taxation~~ and ~~the~~settlement ~~imposition~~ of ~~co-fiduciary~~its ~~liability~~liabilities ~~under~~or ~~Section~~a ~~405~~sale of ~~ERISA in~~ the ~~event actions undertaken by us are deemed to be non-prudent investments or prohibited transactions.~~ Partnership;

In· the ~~event~~units ~~our~~would ~~assets~~trade ~~are~~at ~~deemed to constitute plan assets, or if certain transactions undertaken by us are deemed to constitute prohibited transactions under ERISA or~~ the ~~Internal~~estimated ~~Revenue~~value ~~Code~~per ~~and~~unit noon ~~exemption~~a ~~for~~national ~~such~~securities ~~transactions~~exchange; ~~applies~~ or ~~is obtainable by us, our General Partners have the right, but not the obligation, upon notice to all limited partners, but without the consent of any limited partner to:~~

•· ~~compel~~the amethodology ~~termination~~used ~~and~~to ~~dissolution~~estimate of the ~~Partnership;~~value per unit would be acceptable to FINRA or under ERISA for compliance with their respective reporting requirements.

•On ~~restructure~~the ~~our~~Effective ~~activities~~Date, when the Partnership’s assets and liabilities were transferred to us, the ~~extent~~economic ~~necessary~~value of each beneficial interest unit was equivalent to ~~comply~~the ~~with~~economic ~~any~~value ~~exemption~~of one limited partnership unit in the ~~Department~~Partnership. The most recent estimated value per limited partnership unit as of ~~Labor~~December ~~regulations~~14, or2012 ~~any~~should ~~prohibited~~not ~~transaction~~be ~~exemption~~relied ~~granted~~upon byafter such date, as we continue to sell our remaining assets. Because we are actively in the ~~Department~~process of ~~Labor~~completing orthe ~~any~~disposition ~~condition~~of ~~that~~our remaining properties as soon as practicable, we will not continue the ~~Department~~Partnership’s practice of ~~Labor~~making ~~might~~annual ~~impose~~estimated asvaluations aunder ~~condition~~the toterms ~~granting~~of athe ~~prohibited~~Liquidating ~~transaction~~Trust ~~exemption~~Agreement.

~~Adverse tax considerations may result because of minimum distribution requirements.~~Holders

IfAs ~~an investor purchased units through an IRA, or if an investor is a trustee~~ of anMarch ~~IRA or other fiduciary of a retirement plan that invested in units~~19, the investor must consider the limited liquidity of an investment in our units as it relates to applicable minimum distribution requirements under the Internal Revenue Code. If units are held and our properties have not yet been sold at such time as mandatory distributions are required to begin to an IRA beneficiary or qualified plan participant2013, ~~Sections 408(a)(6) and 401(a)(9) of the Internal Revenue Code will likely require that a distribution-in-kind of the units be made to the IRA beneficiary or~~ ~~qualified~~we ~~plan~~had ~~participant.~~10,803,839 ~~Any such distribution-in-kind~~ of ~~units~~beneficial ~~must~~interest ~~be included in the taxable income of the IRA beneficiary or qualified plan participant for the year in which the~~ units ~~are~~outstanding ~~received~~that atwere ~~the~~held ~~fair~~by ~~market value of the units without any corresponding cash distributions with which to pay the income tax liability attributable to any such distribution. Also, fiduciaries of~~ a ~~retirement~~total ~~plan should consider that, for distributions subject to mandatory income tax withholding under Section 3405~~ of ~~the~~approximately ~~Internal Revenue Code~~4,350 the fiduciary may have an obligation, even in situations involving in-kind distributions of units, to liquidate a portion of the in-kind units distributed in order to satisfy such withholding obligationsbeneficiaries. ~~There may also be similar state and/or local tax withholding or other obligations that should be considered.~~

29Distributions

~~TABLE~~As OFis ~~CONTENTS~~common in real estate related direct investments, when a fund enters its final disposition phase and sells assets, thereby reducing the asset base available to generate distributable cash, it is normal for monthly distributions to cease, and for further distributions to come only in the form of special distributions as assets are sold. As a result, the terms of the Liquidating Trust Agreement contemplates that from time to time we will make special cash distributions to our beneficiaries, including in connection with the disposition of our remaining assets, to the extent that such cash will not be needed to provide for our liabilities (including contingent liabilities). Because we cannot be certain about the precise net realizable value of our assets and the ultimate amount of our liabilities, we are not able to predict accurately the aggregate cash amounts which will ultimately be distributed to our beneficiaries or the timing of any such distributions. The amount and timing of remaining distributions will be determined by our Managing Trustee based on funds available, net proceeds realized from the remaining assets, the timing of asset sales, whether our total assets exceed total liabilities at such time, whether we have provided for the level of reserves deemed necessary or appropriate and other considerations.

~~UBTI~~Recent isSales ~~likely~~of toUnregistered ~~be generated with respect to tax-exempt investors.~~Securities

~~We intend to incur indebtedness~~None. This will cause a portion of our income allocable to tax-exempt investors to be recharacterized as UBTI. Further, in the event we are deemed to be a “dealer” in real property, defined as one who holds real estate primarily for sale to customers in the ordinary course of business, the gain realized on the sale of our properties that is allocable to tax-exempt investors would be characterized as UBTI. If we generate UBTI, a trustee of a charitable remainder trust that has invested in us will lose its exemption from income taxation with respect to all of its income for the tax year in question. A tax-exempt limited partner other than a charitable remainder trust that has UBTI in any tax year from all sources of more than $1,000 will be subject to taxation on such income and be required to file tax returns reporting such income.

~~Item 1B. Unresolved Staff Comments.~~28

~~None~~Item 6. Selected Financial Data.

~~Item~~As 2of December 31, 2012, the Partnership owned interests in a hotel and approximately five acres of land at 1221 Coit Road. ~~Properties~~The Partnership had ownership in four properties as of December 31, 2011 and ownership interests in ten properties as of December 31, 2010, 2009 and 2008. During the year ended December 31, 2012 the Partnership sold two office properties and returned Cassidy Ridge and Palomar Residences to the respective lenders. During the year ended December 31, 2011 the Partnership sold three office properties and a single family home development and returned a shopping/service center and undeveloped land back to the respective lenders. The following data should be read in conjunction with the consolidated financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K. The selected data below as of and for each of the five years in the period ended December 31, 2012 has been derived from the financial statements (in thousands, except per unit amounts).

As of December 31, 2011, we owned interests in a data center, an office building, a hotel redevelopment with an adjoining condominium development and a condominium project. In the aggregate, the data center and office property represent approximately 665,000 rentable square feet. The following table presents certain additional information about our properties as of December 31, 2011:

	2012			2011			2010			2009			2008

Total assets	$	40,672		$	116,026		$	203,308		$	203,009		$	199,918

Notes payable	$	41,095		$	123,742		$	165,123		$	156,024		$	153,987
Other liabilities		4,700			13,064			12,337			12,589			10,740
Partners' capital (deficit)		2,443			(14,472	)		29,961			36,513			34,874
Noncontrolling interest		(7,566	)		(6,308	)		(4,113	)		(2,117	)		317
Total liabilities and equity	$	40,672		$	116,026		$	203,308		$	203,009		$	199,918

	2012			2011			2010			2009			2008
Total revenues	$	14,619		$	20,501		$	15,093		$	13,412		$	16,418

Income (loss) from continuing operations		3,285			(34,664	)		(6,627	)		(7,880	)		(7,732	)
Loss from discontinued operations		(2,258	)		(15,568	)		(12,087	)		(7,592	)		(23,971	)
Gain on sale of discontinued operations		15,629			75			-			-			-
Net income (loss)		16,656			(50,157	)		(18,714	)		(15,472	)		(31,703	)

Net loss attributable to noncontrolling interest		259			2,016			2,100			2,434			1,159
Net income (loss) attributable to the Partnership	$	16,915		$	(48,141	)	$	(16,614	)	$	(13,038	)	$	(30,544	)

Basic and diluted net income (loss) per limited partnership unit	$	1.57		$	(4.45	)	$	(1.54	)	$	(1.21	)	$	2.83

Distributions declared per limited partnership unit	$	-		$	-		$	-		$	0.14		$	0.28

Property Name

Location

Date Acquired

Approx. Rentable Square Footage

Description

Approximate % Leased

Ownership Interest

1221 Coit Road

Dallas, Texas

10/04/04

125,030

two-story data center

100

Hotel Palomar and Residences

Dallas, Texas

11/08/04

475,000

redevelopment property

n/a

250/290 John Carpenter Freeway(1)

Irving, Texas

04/04/05

539,000

three-building office complex

100

Cassidy Ridge

Telluride, Colorado

05/15/06

condominiums

development property

n/a

100

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~(1)~~The Wefollowing ~~currently~~discussion and ~~have~~analysis ~~entered~~should ~~into~~be aread ~~contract~~in conjunction with the accompanying consolidated financial statements and the notes thereto with respect to ~~sell~~our predecessor in interest, the ~~property~~Partnership, as of December 31, 2012.

~~The~~Critical ~~following~~Accounting ~~information~~Policies ~~generally~~and ~~applies to all of our properties:~~ Estimates

•Management’s discussion weand ~~believe~~analysis ~~all~~of financial condition and results of operations of the Partnership are based upon our ~~properties~~consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including investment impairment. These estimates are ~~adequately~~based ~~covered~~on bymanagement’s ~~insurance~~historical industry experience and ~~suitable~~on ~~for~~various ~~their~~other ~~intended~~assumptions ~~purposes;~~that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

•Principles of weConsolidation ~~have~~and noBasis ~~plans for any material renovations, improvements or development~~ of ~~our~~Presentation ~~properties, except in accordance with planned budgets;~~

•The ~~our~~consolidated ~~properties~~financial statements ~~are~~include ~~located~~the Partnership’s accounts and the accounts of its subsidiaries. All inter-company transactions, balances and profits have been eliminated in ~~markets~~consolidation. ~~where~~Interests wein entities acquired are ~~subject~~evaluated based on applicable GAAP, which includes the consolidation of variable interest entities (“VIEs”) in which the Partnership is deemed to ~~competition~~be the primary beneficiary. If the interest in ~~attracting~~the ~~new~~entity ~~tenants~~is determined not to be a VIE, then the entities are evaluated for consolidation based on legal form, economic substance, and ~~retaining~~the ~~current~~extent ~~tenants;~~to which the Partnership has control and/or substantive participating rights under the respective ownership agreement.

•There ~~depreciation~~are judgments and estimates involved in determining if an entity in which the Partnership has made an investment is ~~provided~~a onVIE and if so, if it is the primary beneficiary. The entity is evaluated to determine if it is a ~~straight-line~~VIE ~~basis~~by, ~~over~~among other things, calculating the ~~estimated~~percentage of ~~useful~~equity ~~lives~~being risked compared to the total equity of the ~~buildings~~entity. Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses. A change in the judgments, assumptions and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment on the equity method that should in fact be consolidated, the effects of which could be material to the Partnership’s financial statements.

~~Dispositions~~29

~~On June 30, 2011, we sold Landmark I & II to an unaffiliated party for a contract sales price~~ Impairment of ~~$16.2 million. The sales contract provides for a retained back~~Long-~~end~~Lived ~~promoted~~Assets interest in distributable cash related to the buildings, meaning that we would share in the profits and cash flows of these properties once a certain threshold is met. Proceeds from the sale were used to fully satisfy the existing indebtedness associated with the properties, resulting in a gain on troubled debt restructuring of approximately $4.9 million which is included in discontinued operations in our consolidated statement of operations. Prior to the transaction, the loan had an outstanding balance of approximately $21 million and a scheduled maturity date of July 2011.

OnPrior ~~July~~to 5the Effective Date, ~~2011~~management monitored events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. Examples of the types of events and circumstances that would cause management to assess assets for potential impairment include, ~~pursuant~~but were not limited to: a ~~foreclosure,~~significant wedecrease ~~transferred~~in ~~ownership~~the market price of ~~Plaza~~an ~~Skillman~~asset; toa significant adverse change in the ~~associated~~manner ~~lender~~in which the asset was being used; an accumulation of costs in excess of the acquisition basis plus construction of the property; major vacancies and the resulting loss of revenues; natural disasters; a change in the projected holding period; legitimate purchase offers and changes in the global and local markets or economic conditions. AsAssets may have at times been concentrated in limited geographic locations and, to the extent that the Partnership’s portfolio was concentrated in limited geographic locations, downturns specifically related to such regions may have resulted in tenants defaulting on their lease obligations at a portion of its properties within a short time period, which might result in asset impairments. When such events or changes in circumstances were present, wemanagement assessed potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and from its eventual disposition to the carrying amount of the asset. In the event that the carrying amount exceeded the estimated future undiscounted operating cash flows, the Partnership recognized an aimpairment ~~gain~~loss onto ~~troubled~~adjust ~~debt~~the ~~restructuring~~carrying amount of ~~approximately~~the $3asset to its estimated fair value.1 ~~million~~Management considered projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in their assessment of whether impairment conditions existed. While management believes estimates of future cash flows were reasonable, different assumptions regarding factors such as market rents, economic conditions, and occupancy rates could significantly affect these estimates. A change in these estimates and assumptions could have resulted in understating or overstating the book value of our investments, which could be material to the financial statements.

30Real Estate Inventory

~~TABLE~~Real OFestate ~~CONTENTS~~inventory was stated at the lower of cost or fair market value and consisted of developed land, condominiums and constructed homes. In addition to land acquisition costs, land development costs and construction costs, costs included interest and real estate taxes, which were capitalized during the period beginning with the commencement of development and ending with the completion of construction.

isInventory ~~included~~Valuation Adjustment in discontinued operations in our consolidated statement of operations for the year ended December 31, 2011. Prior to the transaction, the loan had an outstanding balance of approximately $9.4 million and matured on April 11, 2011.

OnFor ~~December~~real 6estate inventory, at ~~2011~~each wereporting ~~agreed~~date, tomanagement ~~transfer~~compared ~~ownership~~the ofestimated ~~Melissa~~fair ~~Land,~~value ~~pursuant~~less costs to asell ~~plan~~to ofthe ~~foreclosure,~~carrying value. An adjustment was recorded to the ~~associated~~extent ~~lender~~that asthe ~~full~~fair ~~satisfaction~~value ofless costs to sell was less than the ~~existing~~carrying ~~indebtedness~~value. ~~The~~Management ~~outstanding~~determined ~~principal~~the ~~balance~~estimated fair ~~under~~value ~~the~~based ~~loan~~on ~~agreement~~comparable atsales in the ~~time~~normal course of ~~foreclosure~~business ~~was~~under ~~$1.5~~existing ~~million~~and anticipated market conditions. This evaluation took into consideration estimated future selling prices, costs spent to date, estimated additional future costs and management’s plans for the property.

OnOverview ~~December 16, 2011 we sold 5050 Quorum~~ and ~~Bretton~~Background Woods to unaffiliated third parties for contract sales prices of $6.8 million and $2.3 million, respectively. Proceeds from the sales were used to fully satisfy the existing indebtedness associated with the properties. The sale contract for 5050 Quorum provides that we retain a promoted interest in distributable cash related to the building, meaning that we would share in the profit and cash flow once a certain threshold is met. We recognized a gain on troubled debt restructuring of $4.8 million related the sale of 5050 Quorum which is included in discontinued operations in our consolidated statement of operations. Prior to the transaction the loan associated with 5050 Quorum had an outstanding balance of $10 million and matured on January 23, 2011.

~~Item~~During 32012, the U.S. ~~Legal~~economic ~~Proceedings~~recovery, although still slow by most measures, survived uncertainties over the general election and the fiscal cliff and exhibited visible improvements in many fundamentals. One of the more important factors was the stabilization of the housing sector, a sector that historically has been important in prior economic recoveries. In the second half of the year, home price indexes for the largest 20 cities in the U.S. had recovered to 2003 levels. While these are still not at pre-recession highs, these are levels that show improvement in inventories, foreclosures and distressed sales. With recent government initiatives to encourage private investment of single family homes, many analysts are projecting a faster pace to clear the supply of foreclosed and vacant properties. Other improvements were made in factory output, particularly autos and other durable goods, corporate profits and modest gains in employment. Regarding employment, the economy averaged 165,000 new jobs in the fourth quarter of 2012, higher than prior quarters, but because that is barely exceeding new workers entering the market, it is a level that is consistent with a slow, gradual recovery. Also helping the U.S. are improvements, or at least stabilization, of global economic issues. The European debt crisis, which created uncertainty over sovereign defaults and departures from the Euro and European Union that were constant drags on the U.S. economy for the last couple of years, has now reached a point where the worst of the scenarios appear less likely. Global growth, as forecast by the World Bank, is projected at 2.4% for 2013. This compares to an expected 2.3% for 2012 and while less than earlier projections, is not expected to be a serious drag on the U.S.

WeOffsetting these factors and likely contributors to a slower, moderate recovery are uneven private consumption, as individual savings rates continue to rise; continued decline in new business creation, as investors are reluctant to increase their risk capital; and decreases in the labor force, as the long term unemployed are not areturning ~~party~~to the work force and may be structurally unemployed. Also, there is concern over the consequences and uncertainty related to political gridlock, which was reported as a major factor in the negative GDP report for the fourth quarter of 2012. The debate over the debt limit appears to be continuing for an extended period and ~~none~~risks a downgrade of ~~our~~U.S. credit ~~properties~~and ~~are~~increased ~~subject~~borrowing costs. The federal government has not passed a budget in the last four years and appears to be in a prolonged debate over spending and tax levels. We believe that businesses and consumers tend to be very conservative when confronted with these kinds of issues, ~~any~~which ~~material~~could ~~pending~~disrupt ~~legal~~what ~~proceedings~~could otherwise be a stronger recovery. On a net basis, we believe the U.S. economy can overcome a certain degree of these issues, and with most analysts, we expect a moderate, but uneven U.S. growth for the near term. However, these issues have the potential to be very significant to the economy.

~~Item~~Our 4primary objectives will be to continue to preserve value, protecting and selling our remaining assets, providing for our liabilities and distributing the remaining proceeds. Our ~~Mine~~ability ~~Safety~~to ~~Disclosures~~dispose of our properties will be subject to various factors, including the ability of potential purchasers to access capital debt financing. If we are unable to sell a property when we determine to do so, it could have a significant adverse effect on our cash flows and results of operations. Given the disruptions in the capital markets and the current lack of available credit, our ability to dispose of our properties may be delayed, or we may receive lower than anticipated returns.

~~None.~~30

31Our remaining operating real estate asset, Hotel Palomar, is located in Dallas, Texas. Smith Travel Research indicates that the national overall occupancy rate for hospitality properties in the United States increased from 60.1% in 2011 to 61% in 2012 and the national overall Average Daily Rate (“ADR”) increased from $101.64 in 2011 to $106.10 during 2012. The forecast for the 2013 Dallas hotel market indicates modest increases in occupancy and ADR.

~~TABLE~~Current OFeconomic ~~CONTENTS~~conditions discussed above make it difficult to predict future operating results. There can be no assurance that we will not experience further declines in revenues or earnings for a number of reasons, including, but not limited to the possibility of greater than anticipated weakness in the economy and the continued impact of the trends mentioned above.

~~PART~~Results IIof Operations

~~Item~~Fiscal 5.year ~~Market~~ended December ~~for~~31, ~~Registrant’s~~2012 ~~Common~~as ~~Equity,~~compared ~~Related~~to ~~Stockholder~~the ~~Matters~~fiscal ~~and~~year ~~Issuer~~ended ~~Purchases~~December of31, ~~Equity Securities.~~2011

~~There~~As isof ~~not~~December 31, 2012, the anPartnership ~~established~~owned ~~trading~~interests ~~market~~in ~~for~~Hotel ~~our~~Palomar ~~limited partnership units,~~ and weapproximately dofive ~~not~~acres ~~expect~~of ~~that~~land ~~one~~at ~~will~~1221 Coit ~~develop~~Road. ~~This~~The ~~illiquidity~~Partnership had ~~creates~~ownership ain ~~risk~~four ~~that~~properties aas ~~limited~~of ~~partner~~December ~~may~~31, ~~not~~2011. beDuring ~~able~~the toyear ~~sell~~ended ~~its~~December ~~units~~31, at2012 ~~a time or price acceptable to~~ the ~~limited partner. Our~~ Partnership ~~Agreement~~sold ~~requires~~two ~~that~~office properties ~~our~~and ~~General~~returned ~~Partners~~Cassidy ~~annually~~Ridge ~~provide~~and ~~our~~Palomar ~~limited~~Residences ~~partners~~to ~~with~~the anrespective ~~estimate~~lenders. ofDuring the ~~amount~~year aended ~~holder~~December of31, ~~limited~~2011 the ~~partnership~~Partnership ~~units~~sold ~~would~~three ~~receive~~office ~~if our~~ properties ~~were~~and ~~sold~~a atsingle ~~their~~family ~~fair~~home ~~market~~development ~~values~~and asreturned ofa ~~the~~shopping/service ~~close~~center ~~of the fiscal year,~~ and ~~the~~undeveloped land ~~proceeds~~back ~~from~~to the ~~sale~~respective oflenders. ~~the~~All ~~properties~~investments ~~(without~~in ~~reduction~~partnerships ~~for~~and ~~selling~~joint ~~expenses),~~ventures ~~together~~were consolidated with ~~other~~and ~~funds~~into ~~of the~~our ~~Partnership, were distributed in a liquidation~~accounts.

OnContinuing December 29, 2011 Behringer Advisors II, our co-general partner, adopted a new estimated value per limited partnership unit of $0.40 per unit. As part of the valuation process, and as required by the Partnership Agreement, the General Partner obtained the opinion of Stanger, an independent third party, that the estimated valuation was reasonable and was prepared in accordance with appropriate methods for valuing real estate. Stanger, founded in 1978, is a nationally recognized investment banking firm specializing in real estate, REITs and direct participation programs such as ours. Operations

~~Stanger’s~~Rental ~~opinion~~Revenue. Rental ~~was~~revenue ~~expressed~~for ~~from~~the ayears ~~financial~~ended ~~point~~December of31, ~~view~~2012 and 2011 was ~~subject~~$0.6 tomillion ~~various~~and ~~limitations~~$0.8 million, ~~Stanger~~respectively, ~~relied~~and onwas comprised ~~information~~of ~~provided~~revenue, byincluding ~~the~~adjustments ~~General~~for ~~Partner~~straight-line ~~without~~rent ~~independent~~and ~~verification~~amortization of above-and ~~did~~below-market ~~not~~leases. ~~perform~~The ~~appraisals,~~decrease in ~~did~~rental ~~not~~revenue ~~inspect~~for the ~~properties~~year orended ~~review~~December ~~engineering~~31, or2012 ~~structural~~was ~~studies,~~primarily ~~environmental~~due ~~studies,~~to ~~and~~the ~~did~~loss ~~not~~of ~~make~~a ~~independent~~retail ~~local~~tenant ~~market~~at ~~inquiries~~Hotel Palomar. ~~Stanger~~We ~~relied~~expect rental onrevenue ~~information~~to ~~from~~remain ~~the~~at ~~General~~current ~~Partner~~levels ~~regarding~~until we lease ~~terms and~~ the ~~physical~~vacant ~~condition~~retail ~~and capital expenditure requirements of each property~~space.

~~Process~~Hotel Revenue. Hotel revenue for the years ended December 31, 2012 and ~~Methodology~~2011 was $14.0 million and $14.2 million, respectively, and was comprised of revenue generated by the operations of Hotel Palomar. The decrease in hotel revenue for the year ended December 31, 2012 is primarily due to the hotel hosting Dallas-Fort Worth area Super Bowl events in February 2011. For the year ended December 31, 2012, year over year occupancy and ADR at the hotel remained relatively flat. We expect revenue to increase modestly as the economy continues to improve.

~~Our~~Real ~~objective~~Estate inInventory Sales. ~~determining~~Real anestate ~~estimated~~inventory ~~value~~sales ~~per~~for ~~unit is to arrive at a value that is reasonable using what~~ the ~~General~~year ~~Partner~~ended ~~deems~~December to31, be2011 ~~appropriate~~was ~~valuation~~$5.6 ~~methodologies~~million and ~~assumptions~~was ~~under~~primarily ~~then~~comprised ~~current~~of ~~circumstances~~revenue generated inby ~~accordance with~~ the ~~valuation~~sale ~~methodology~~of ~~required~~home byinventory ~~our~~and ~~limited~~developed ~~partnership~~land ~~agreement. In arriving~~ at ~~the~~our ~~estimated~~luxury ~~value~~home ~~per limited partnership unit~~development, ~~the~~Bretton ~~General Partner utilized valuation methodologies that it believes are standard and acceptable in the real estate industry for the types of assets held by us~~Woods. ~~The~~There ~~following~~was isno ainventory sales ~~summary~~during of the ~~valuation~~year ~~methodologies~~ended ~~used~~December by31, ~~the General Partner~~2012.

~~Investments~~Property inOperating Expenses. ~~Real~~Property ~~Estate: As~~operating anexpenses ~~opportunity~~for ~~style~~the ~~fund~~years ~~with~~ended ~~varying~~December ~~asset types~~31, ~~the~~2012 ~~General~~and ~~Partner~~2011 ~~estimated~~were ~~the~~$11.1 ~~value~~million ofand ~~our~~$11.8 ~~investments~~million, respectively, inand ~~real~~were ~~estate~~comprised ~~by using a variety~~ of ~~methods~~expenses ~~for~~related ~~purposes~~to ~~of calculating~~ the ~~estimated~~daily ~~value~~operations ~~per unit. In calculating values for all~~ of our ~~real estate assets, the General Partner assumed that such assets were sold as of January 1, 2012~~properties. The ~~new~~decrease ~~estimated~~in ~~per-unit~~property ~~value~~operating expenses ~~reflects~~for the ~~current~~year ~~challenging~~ended ~~economic~~December ~~climate that continues to impact the real estate and capital markets~~31, ~~and~~2012 ~~opportunistic~~is ~~investing~~primarily indue ~~particular. An opportunity-style fund like ours generally acquires assets with the intention of spending capital~~ to ~~enhance and reposition or develop these assets for appreciation. However,~~ the ~~difficult~~disposal ~~economic and capital market conditions~~ of ~~recent~~development ~~years~~properties ~~have~~during ~~severely~~the ~~impacted~~second ~~valuations in a broad range~~ quarter of ~~real estate classes, including those in which we are invested~~2012. ~~The~~We ~~markets~~expect ~~for~~property ~~commercial~~operating ~~real~~expenses ~~estate fluctuate, and values are expected~~ to ~~continually~~remain ~~change~~constant in the ~~future~~near future.

~~For~~Asset ~~each~~Impairment Loss. ~~improved~~As ~~operating~~a ~~property~~result ~~within our portfolio, the General Partner estimated the value~~ of ~~our~~projected ~~investments~~selling ~~using a discounted cash flow analysis~~prices, aan ~~broker’s~~impairment ~~opinion~~loss of ~~value~~approximately ~~or,~~$0.5 ~~for~~million ~~those~~and ~~properties~~$1.4 ~~under~~million ~~contracts~~was ~~or letters of intent~~ recorded for ~~sale,~~ the ~~contracted~~years ~~sales~~ended ~~price.~~December In31, ~~estimating~~2012 ~~the~~and ~~value~~2011, ~~of development assets~~respectively, ~~the~~related ~~General Partner reviewed estimated periods~~ to ~~sell such assets or residential units in those developments, reviewed comparable sales in~~ the ~~markets~~land inat ~~which~~1221 Coit Road ~~the properties are located,~~ and ~~then used an applicable discount rate. In estimating~~ the ~~value of raw~~ undeveloped land, ~~the~~held ~~General Partner reviewed sales information from comparable projects~~ in ~~the~~Melissa, ~~respective submarkets~~Texas.

Inventory Valuation Adjustment. The ~~General~~inventory ~~Partner~~valuation ~~calculated~~adjustment for the ~~estimated~~year ended December 31, 2011 was $26.8 million and was composed of adjustments of $26.3 million to adjust the value of ~~our~~the ~~investments~~condominiums inat ~~real~~Cassidy ~~estate~~Ridge ~~using~~to ~~internally~~their ~~prepared~~fair ~~cash~~value ~~flow~~and ~~estimates,~~$0.5 ~~employing~~million arelated to ~~range~~the luxury homes and developed land lots at Bretton Woods. The U.S. housing market continued to experience its nationwide downturn, an oversupply of ~~terminal~~homes ~~capitalization~~available ~~rates~~for sale, reduced availability, deterioration in the credit markets, rising foreclosure activity, reduced selling prices and ~~discount~~relatively ~~rates~~high ~~within~~unemployment ~~historical~~and ~~average~~deteriorating ~~ranges~~conditions in the ~~General~~overall ~~Partner~~economy. ~~believes~~There ~~would~~was beno ~~used~~inventory valuation byadjustments ~~similar~~during ~~investors~~the toyear ~~value~~ended ~~the~~December 31, 2012.

32Interest Expense. Interest expense, net of amounts capitalized, for the years ended December 31, 2012 and 2011 was $3.4 million and $5.3 million, respectively, and was primarily comprised of interest expense and amortization of deferred financing fees. The decrease in interest expense during the year ended December 31, 2012 was primarily due to the disposal of development properties and the paydown of loan balances. Unless we have additional borrowings in the future, we expect interest expense to remain relatively constant.

~~TABLE~~Real OFEstate ~~CONTENTS~~Taxes. Real estate taxes, net of amounts capitalized, for the years ended December 31, 2012 and 2011 were $0.9 million and $0.7 million, respectively, and were comprised of real estate taxes from each of the properties.

properties we own. The cash flow estimates, capitalization rates and discount rates were developed for each property by the General Partner’s asset management team based on their industry knowledge and expertise in managing commercial real estate. 31

~~Other~~Property ~~Assets~~and Asset Management Fees. Property and ~~Liabilities: The~~asset ~~carrying~~management ~~value~~fees offor ayears ~~majority~~ended ofDecember 31, 2012 ~~our~~and ~~other~~2011 ~~assets~~were $0.8 million and ~~liabilities~~$0.9 ~~are~~million, ~~considered~~respectively, toand bewere ~~equal~~comprised toof ~~fair~~property ~~value~~and ~~due~~asset tomanagement ~~their~~fees ~~short~~from ~~maturities~~the consolidated properties. ~~Our~~Asset management ~~valuation~~fees ~~also~~of ~~includes~~approximately ~~the~~$50,000 ~~carrying~~were ~~value~~waived ofby ~~our~~Behringer ~~current~~Advisors ~~assets~~II ~~and~~for ~~liabilities~~the onyear aended ~~consolidated~~December ~~basis.~~31, 2011.

~~The~~General ~~estimated~~and ~~value~~Administrative Expenses. ~~per~~General ~~unit~~and ofadministrative ~~our~~expenses ~~limited partnership units does not reflect a liquidity discount~~ for the ~~fact~~years ~~that~~ended ~~our~~December 31, 2012 ~~units~~and ~~are~~2011 ~~not~~were ~~currently~~$1.2 ~~traded~~million onand $0.9 ~~a national securities exchange~~million, arespectively. ~~discount~~General ~~for~~and ~~the~~administrative ~~non-assumability~~expenses orwere ~~prepayment~~comprised ~~obligations associated with certain~~ of ~~our~~auditing ~~debt~~fees, ortransfer aagent ~~discount~~fees, ~~for~~tax ~~our~~preparation fees, ~~corporate~~directors’ ~~level overhead~~ and ~~other~~officers’ ~~costs~~insurance ~~that~~premiums, ~~may~~legal ~~be incurred~~fees, ~~including~~printing ~~any~~ costs ofand ~~any~~other ~~sale~~administrative ~~of our assets~~expenses. ~~Others~~The advisor ~~using~~waived ~~different~~reimbursement ~~assumptions~~of general and ~~estimates~~administrative ~~could~~expenses ~~derive~~of a$0.3 ~~different~~million ~~estimated~~for ~~value~~the ~~per~~year ~~unit,~~ended ~~and~~December ~~these~~31, ~~differences could be significant~~2011. The liquidating ~~markets~~trust ~~for~~structure ~~real~~is ~~estate~~intended ~~can~~to ~~fluctuate~~reduce ~~and~~future ~~values~~general ~~are~~and ~~expected~~administrative ~~to change in the future~~costs.

~~Allocation~~Depreciation and Amortization Expense. Depreciation and amortization expense for the years ended December 31, 2012 and 2011 was $1 million and $2 million, respectively, and included depreciation and amortization of ~~Estimated~~buildings, ~~Value~~furniture and equipment and real estate intangibles associated with the consolidated properties. The decrease in depreciation and amortization expense for the years ended December 31, 2012 was the result of certain furniture, fixtures and equipment becoming fully depreciated in 2011.

~~The~~Gain ~~estimated~~on ~~value~~Troubled Debt ~~per~~Restructuring. ~~limited~~Gain ~~partnership~~on ~~unit~~troubled debt restructuring for the year ended December 31, 2012 was ~~allocated~~$7.2 ~~amongst~~million ~~our~~and was ~~asset~~the ~~types~~result asof ~~follows:~~transferring ownership, through a deed in lieu of foreclosure, of Cassidy Ridge and the Palomar Residences to the respective lenders, resulting in full settlement of the outstanding debt to the lenders.

Real estate assets	$	11.49	(1)
Debt	$	(11.28	)
Other	$	0.19
Estimated net asset value per unit	$	0.40

Net Income (Loss) Attributable to Noncontrolling Interest. Net income attributable to noncontrolling interest for the years ended December 31, 2012 and 2011 was $0.9 million and $1 million, respectively, and represented the other partners’ proportionate share of losses from investments in the partnerships that are consolidated.

~~(1)~~Fiscal ~~The~~year ~~following~~ended December ~~are~~31, ~~the~~2011 ~~key~~as ~~assumptions~~compared ~~(shown on a weighted average basis) that were used in the discounted cash flow models~~ to ~~estimate~~ the ~~value~~fiscal ofyear ~~our~~ended ~~real~~December ~~estate~~31, ~~assets:~~2010

Exit capitalization rate	8.59	%
Discount rate	10.64	%
Annual market rent growth rate	3.00	%
Annual holding period	6.9 years

The Partnership had ownership interests in four properties and ten properties as of December 31, 2011 and 2010, respectively. All investments in partnerships and joint ventures were consolidated with and into the Partnership accounts. During the year ended December 31, 2011, Landmark I and II and 5050 Quorum were sold and Plaza Skillman was returned to the lender. In addition, during the year ended December 31, 2011, the remaining developed land lots and luxury homes at Bretton Woods, five previously leased condominiums as well as one model unit at the Palomar Residences were sold and the undeveloped land in Melissa, Texas was returned to the lender.

While we believe that our assumptions are reasonable, a change in these assumptions would impact the calculation of value of our real estate assets. For example, assuming all other factors remain unchanged, an increase of 25 basis points in the weighted average terminal capitalization rate for properties valued using a discounted cash flow analysis would yield a decrease in the value of our real estate assets of 2.2%, while a decrease in the weighted average terminal capitalization rate of 25 basis points would yield an increase in the value of our real estate assets of 2.4%. Continuing Operations

~~Limitations~~Rental Revenue. Rental revenue for the years ended December 31, 2011 and 2010 totaled $0.8 million and $0.7 million, respectively, and was comprised of ~~Estimated~~revenue, ~~Value~~including ~~Per~~adjustments ~~Unit~~for straight-line rent and amortization of above- and below-market leases.

AsHotel ~~with~~Revenue. Hotel ~~any~~revenue ~~valuation~~for ~~methodology,~~ the ~~General~~years ~~Partner’s~~ended ~~methodology~~December is31, ~~based~~2011 ~~upon~~and a2010 ~~number~~was of$14.2 ~~estimates~~million and ~~assumptions that may prove later to be inaccurate or incomplete~~$12.7 million, ~~Further~~respectively, ~~different parties with different assumptions~~ and ~~estimates~~was comprised ~~could~~of ~~derive~~revenue agenerated ~~different estimated value per unit. The estimated per share limited partnership unit determined~~ by the ~~General~~hotel ~~Partner~~operations ~~neither~~of ~~represents~~Hotel ~~the~~Palomar. ~~fair~~The ~~value~~increase ~~according to generally accepted accounting principles~~ in ~~the~~hotel ~~United~~revenue ~~States~~is ~~(“GAAP”)~~primarily ofdue ~~our~~to ~~assets less liabilities, nor does it represent~~ the ~~amount our units would trade at on a national securities exchange or the amount a unit~~ ~~holder~~hotel ~~would~~hosting ~~obtain~~Dallas-Fort ifWorth hearea ~~tried~~Super toBowl ~~sell~~events ~~his~~in ~~units~~February ~~or if we liquidated our assets~~2011. ~~Accordingly, with respect to the estimated value per unit, the Fund can give no assurance that:~~

•Real Estate aInventory ~~unit~~Sales ~~holder~~Revenue. ~~would~~Real beestate ~~able~~inventory tosales ~~resell~~revenue ~~his~~for orthe ~~her~~years ended ~~units~~December 31, 2011 and 2010 was $5.6 million and $1.7 million, respectively. Revenue for each year is primarily the result of sales of home inventory and developed land lots at ~~this~~Bretton ~~estimated~~Woods. ~~value;~~

•Property aOperating Expenses. ~~unit~~Property ~~holder~~operating ~~would~~expenses ~~ultimately~~for ~~realize~~the ~~distributions~~years ~~per~~ended ~~unit~~December ~~equal~~31, to2011 ~~our~~and ~~estimated~~2010 ~~value~~were ~~per~~$11.8 ~~unit~~million ~~upon~~and ~~liquidation~~$11.2 million, respectively, and were comprised of ~~our~~expenses ~~assets~~related ~~and~~to ~~settlement~~the daily operations of ~~its~~our ~~liabilities~~properties. orThe aincrease ~~sale~~in operating expenses for the year ended December 31, 2011 is primarily due to certain costs for Cassidy Ridge no longer being capitalized as a result of ~~us;~~construction being complete and increased activity at Hotel Palomar.

•Asset ~~our~~Impairment Loss. ~~units~~As ~~would~~a ~~trade~~result atof projected selling prices, an asset impairment loss of approximately $1.4 million was recognized for the ~~estimated~~year ~~value~~ended ~~per~~December ~~unit~~31, on2011 arelated ~~national~~to ~~securities~~the ~~exchange;~~undeveloped orland held in Melissa, Texas. There was no asset impairment loss during the year ended December 31, 2010.

•Inventory Valuation Adjustment. The inventory valuation adjustments for the ~~methodology~~years ~~used~~ended December 31, 2011 and 2010 were $26.8 million and $1.9 million, respectively. The inventory valuation adjustment for the year ended December 31, 2011 was composed of adjustments of $26.3 million to ~~estimate~~adjust ~~our~~the value ~~per~~of ~~unit~~the ~~would~~condominiums beat ~~acceptable~~Cassidy Ridge to ~~FINRA~~their orfair ~~under~~value ~~ERISA~~and $0.5 million related to the luxury homes and developed land lots at Bretton Woods. Inventory valuation adjustments for ~~compliance~~the ~~with~~year ended December 31, 2010 were composed of non-cash adjustments to reduce the carrying value of the luxury homes and developed land lots at Bretton Woods to their ~~respective~~estimated ~~reporting~~fair ~~requirements~~value.

33Interest Expense. Interest expense for the years ended December 31, 2011 and 2010 was $5.3 million and $2.2 million, respectively, and was comprised of interest expense and amortization of deferred financing fees related to the notes associated with the acquisition and development of our consolidated properties. The increase in interest expense during the year ended December 31, 2011 is primarily due to interest costs for Cassidy Ridge no longer being capitalized as a result of the construction being completed and the accrual of default interest on certain matured loans during the period. The Partnership capitalized interest costs of $0.7 million and $2.2 million for Cassidy Ridge during the years ended December 31, 2011 and 2010, respectively.

~~TABLE OF CONTENTS~~32

~~Further,~~Real ~~the~~Estate ~~estimated value per unit has been determined as of a particular point in time~~Taxes. Real ~~The~~estate ~~value~~taxes offor ~~our units will fluctuate over time in response to developments related to individual assets in~~ the ~~portfolio~~years ~~and~~ended ~~the~~December ~~management~~31, of2011 ~~those assets~~ and in2010 ~~response~~were to$0.7 ~~the~~million ~~real estate~~ and ~~finance markets~~$0.8 million, ~~As contemplated by our limited partnership agreement~~respectively, ~~the~~and were ~~General~~comprised ~~Partner~~of ~~intends~~real toestate ~~update~~taxes ~~its~~from ~~estimated~~each ~~value per unit annually but does not intend to make any attempt to establish any estimated valuations~~ of ~~our units in~~ the ~~interim~~properties. There is no assurance as to the extent to which the current estimated valuation should be relied upon for any purpose after its effective date regardless that it may be published on any statement issued by us or otherwise.

AsProperty weand ~~continue~~Asset Management ~~our~~Fees. ~~disposition~~Property ~~phase~~ and ~~assets~~asset ~~are~~management ~~sold,~~fees for the ~~number~~years ofended ~~assets~~December 31, ~~available~~2011 toand ~~create~~2010 ~~cash~~were ~~flow declines~~$0.9 Asmillion and a$0.7 ~~result~~million, ~~our~~respectively. ~~General~~Asset ~~Partners~~management ~~continue~~fees toof ~~preserve~~approximately ~~capital~~$50,000 ~~sustain~~ and ~~enhance property values~~$65,000 ~~reduce~~were ~~operating~~waived ~~expenses~~by ~~where~~Behringer ~~possible,~~Advisors ~~and~~II for ~~accelerate~~ the ~~pace~~years ofended ~~the~~December ~~dispositions~~31, of2011 ~~our~~and ~~remaining~~2010, ~~properties~~respectively.

InGeneral and Administrative Expenses. General and administrative expenses for the ~~meantime~~years ended December 31, we2011 ~~are~~and ~~diligently~~2010 ~~working~~were to$0.9 ~~renew~~million ~~current~~and ~~leases~~$1.1 million, orrespectively. ~~secure~~General ~~new~~and ~~leases~~administrative ~~with~~expenses ~~quality~~were ~~tenants~~comprised toof ~~increase~~auditing ~~net~~fees, ~~operating~~transfer ~~income~~agent fees, tax preparation fees, directors’ and ~~the~~officers’ ~~ultimate~~insurance ~~value~~premiums, oflegal ~~our~~fees, ~~remaining~~printing ~~assets~~costs and toother ~~execute~~administrative onexpenses. ~~other~~The advisor ~~value~~waived ~~creation~~reimbursement ~~strategies~~of general and administrative expenses of $0.3 million and $0.4 million for the years ended December 31, 2011 and 2010, respectively.

~~Generally,~~Depreciation ~~our~~and Amortization ~~business~~Expense. ~~plan~~Depreciation isand toamortization ~~sell~~expense ~~our~~for ~~assets once we believe that~~ the ~~economy~~years ~~has~~ended ~~improved~~December 31, 2011 and we2010 ~~have~~was ~~the~~$2 million ~~opportunity~~and ~~to realize additional value~~$2.2 Asmillion, ~~a result of our current liquidity needs~~respectively, weand ~~may~~includes ~~have~~depreciation toand ~~sell~~amortization aof ~~property~~buildings, ~~under~~furniture ~~terms~~and ~~that~~equipment, ~~are less advantageous than we could achieve with a longer holding period. Our General Partners intend to use all reasonable efforts to realize value for our limited partners when commercial~~ and real estate ~~prices~~intangibles ~~have~~associated ~~normalized.~~with ~~Therefore,~~the aswholly-owned weproperties ~~have~~and ~~previously~~investments ~~disclosed, we will not be liquidated~~ in ~~our original estimated time frame, but rather in a time frame that our General Partners believe will provide more value to our limited partners~~partnerships.

~~Unit~~Net ~~Redemption~~Loss ~~Program~~Attributable to Noncontrolling Interest. Net loss attributable to noncontrolling interest for the years ended December 31, 2011 and 2010 was $1 million and $1.4 million, respectively, and represents the other partners’ proportionate share of losses from investments in the partnerships that are consolidated.

~~The~~Cash ~~General~~Flow ~~Partners terminated our unit redemption program on December 31, 2006 and currently have no intention of re-instituting the program.~~ Analysis

~~Holders~~Fiscal year ended December 31, 2012 as compared to the fiscal year ended December 31, 2011

AsCash ofused ~~March~~in 19operating activities for the year ended December 31, 2012 was $7.4 million and was comprised primarily of net income of $16.7 million, weadjusted for ~~had~~the 10gain on the sale of discontinued operations of $15.6 million,~~803~~ the gain on troubled restructuring of $8 million,~~839~~ ~~limited~~changes in ~~partnership~~operating ~~units~~assets ~~outstanding~~and ~~that~~liabilities ~~were~~of ~~held~~$3.2 million, offset by adepreciation ~~total~~and amortization of ~~approximately~~$2.5 4million. Cash used in operating activities for the year ended December 31,~~200~~ ~~limited~~2011 ~~partners~~was $2.5 million and was comprised primarily of the net loss of $50.2 million, adjusted for asset impairment charges of $21.8 million, inventory valuation adjustments of $26.8 million, which was primarily composed of adjustments to the development of the condominiums at Cassidy Ridge, changes in operating assets and liabilities of $6.4 million and depreciation and amortization of $5.6 million offset by gains on troubled debt restructuring of $12.8 million.

~~Distributions~~Cash provided by investing activities for the year ended December 31, 2012 was $46 million and was primarily comprised of proceeds from the sale of 1221 Coit Road, 250/290 John Carpenter Freeway and condominiums at the Palomar Residences. Cash provided by investing activities for the year ended December 31, 2011 was $23 million and was primarily comprised of proceeds from the sale of assets including Landmark I & II and 5050 Quorum.

~~The~~Cash ~~timing~~used ~~and~~in ~~amount~~financing activities offor ~~any distributions to our limited partners is determined by~~ the ~~General~~year ~~Partners~~ended ~~and~~December ~~is dependent on a number of factors~~31, ~~including~~2012 ~~funds~~was ~~available~~$36.6 ~~for~~million ~~payment of distributions, financial condition~~ and ~~capital~~consisted ~~expenditures.~~primarily ~~In light~~ of ~~cash~~payments ~~needs~~on ~~required~~notes ~~to meet maturing debt obligations and our ongoing operating capital needs~~payable, ~~our~~net ~~General~~of proceeds. ~~Partners~~Cash ~~determined~~used ~~that~~in itfinancing ~~was~~activities ~~necessary~~for ~~to discontinue payment of monthly distributions beginning with~~ the ~~2009~~year ~~third~~ended ~~quarter. Distributions have not resumed through~~ December 31, 2011, ~~and~~was ~~we do not anticipate that payment of regular distributions will resume~~$19.2 ~~Our~~million ~~General Partners, in their discretion, may defer fees payable by us to them~~ and ~~make~~consisted ~~supplemental~~primarily of payments toon usthe ornotes ~~to our limited partners~~payable, ornet ~~otherwise~~of ~~support our operations. Accordingly~~proceeds, ~~all or some~~ of ~~our~~$22.3 ~~distributions~~million ~~may~~offset ~~constitute~~by acontributions ~~return~~from ~~of capital to our investors to~~ the ~~extent~~General ~~that~~Partners ~~distributions~~of ~~exceed net cash from operations, or may be recognized as taxable income by our investors~~$3.7 million.

~~Recent~~Fiscal ~~Sales~~year ofended December ~~Unregistered~~31, ~~Securities~~2011 as compared to the fiscal year ended December 31, 2010

~~None~~Cash used in operating activities for the year ended December 31, 2011 was $2.5 million and was comprised primarily of the net loss of $50.2 million, adjusted for asset impairment charges of $21.8 million, inventory valuation adjustments of $26.8 million, which was primarily composed of adjustments to the development of the condominiums at Cassidy Ridge, changes in operating assets and liabilities of $6.4 million and depreciation and amortization of $5.6 million offset by gains on troubled debt restructuring of $12.8 million. Cash used in operating activities for the year ended December 31, 2010 was $17.8 million and was comprised primarily of the net loss of $18.7 million, adjusted for depreciation and amortization of $7.4 million, asset impairment loss of $5.1 million, inventory valuation adjustments of $1.9 million and the increase in real estate inventory of $14.2 million, which was primarily composed of development of the condominiums at Cassidy Ridge.

34Cash provided by investing activities for the year ended December 31, 2011 was $23 million and was primarily comprised of proceeds from the sale of assets including Landmark I & II and 5050 Quorum. Cash used in investing activities for the year ended December 31, 2010 was $1.2 million and was comprised of capital expenditures for real estate of $0.7 million and change in restricted cash of $0.5 million.

~~TABLE~~Cash OFused ~~CONTENTS~~in financing activities for the year ended December 31, 2011 was $19.2 million and consisted primarily of payments on the notes payable, net of proceeds, of $22.3 million offset by contributions from the General Partners of $3.7 million. Cash provided by financing activities was $19.0 million in 2010 and consisted primarily of proceeds from notes payable, net of payments, of $12.1 million and contributions from the General Partners of $7 million.

~~Item 6. Selected Financial Data.~~33

WeLiquidity ~~had ownership in four properties as of December 31, 2011. We had ownership interests in ten properties as of December 31, 2010, 2009~~ and ~~2008,~~Capital ~~and~~Resources we had ownership interests in eleven properties as of December 31, 2007. During the year ended December 31, 2011 we sold three office properties and a single family home development and returned a shopping/service center and undeveloped land back to the respective lenders. We sold one office property in 2008. The following data should be read in conjunction with our consolidated financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K. The selected data below as of and for each of the five years in the period ended December 31, 2011 has been derived from our financial statements (in thousands, except per unit amounts).

	2011			2010			2009			2008		2007
Total assets	$	116,026		$	203,308		$	203,009		$	199,918	$	225,281
Notes payable	$	123,742		$	165,123		$	156,024		$	153,987	$	145,637
Other liabilities		13,064			12,337			12,589			10,740		10,264
Partners' capital		(14,472	)		29,961			36,513			34,874		66,971
Noncontrolling interest		(6,308	)		(4,113	)		(2,117	)		317		2,409
Total liabilities and equity	$	116,026		$	203,308		$	203,009		$	199,918	$	225,281

The effects of the recent economic downturn caused the Partnership to reconsider their strategy for certain properties where the Partnership believed the principal balance of the debt encumbering the property exceeded the value of the asset under current market conditions. In those cases where the Partnership believed the value of a property was not likely to recover in the near future, it believed there were more effective uses for its capital, and as a result debt service payments on certain property debt was ceased, resulting in defaults or events of default under the related loan agreements. The Partnership was in active negotiations with certain lenders to refinance or restructure debt in a manner that it believed was the best outcome for them and the unitholders and it resolved some of these recourse loans by negotiating agreements conveying the properties to the lender as it did with two properties during the year ended December 31, 2012 and two properties during the year ended December 31, 2011. There is no guarantee that we will not have to negotiate agreements conveying properties to lenders in the future.

	2011			2010			2009			2008			2007
Total revenues	$	24,205		$	18,386		$	15,933		$	19,785		$	27,384
Loss from continuing operations		(50,077	)		(13,959	)		(13,172	)		(29,705	)		(14,985	)
Loss from discontinued operations		(80	)		(4,755	)		(2,300	)		(1,998	)		(2,286	)
Net loss		(50,157	)		(18,714	)		(15,472	)		(31,703	)		(17,271	)
Net loss attributable to noncontrolling interest		2,016			2,100			2,434			1,159			3,811
Net loss attributable to the Partnership	$	(48,141	)	$	(16,614	)	$	(13,038	)	$	(30,544	)	$	(13,460	)
Basic and diluted net loss per limited partnership unit	$	(4.45	)	$	(1.54	)	$	(1.21	)	$	2.83		$	(1.25	)
Distributions declared per limited partnership unit	$	—		$	—		$	0.14		$	0.28		$	0.28

The Partnership’s cash and cash equivalents were $5.3 million at December 31, 2012. Our principal demands for funds in the next twelve months and beyond will be for the payment of operating expenses, costs associated with lease-up and capital improvements for our remaining operating property and for the payment of recurring debt service, further principal paydowns and reserve requirements on our outstanding indebtedness as required by our lenders. The timing and amount of cash distributed to beneficial interest unitholders will be determined by the Managing Trustee and will be dependent on a number of factors, including funds available for payment of distributions, financial condition and capital expenditures.

35In order to provide additional liquidity and execute the Partnership’s plan of selling assets and winding up operations over the next three years, it sold 1221 Coit Road and 250/290 John Carpenter Freeway during the year ended December 31, 2012. Proceeds from the sale of these properties were used to fully satisfy the existing indebtedness associated with the properties and pay down additional liabilities of the fund. As a result of current liquidity needs and unstable credit market conditions limiting available resources through additional borrowings for a closed-end, finite life fund, we may have to sell a property under terms that are less advantageous than we could achieve with a longer holding period. However, there can be no assurance these future dispositions will occur, or, if they occur, that they will help us to achieve our liquidity objectives.

~~TABLE~~The OFPartnership ~~CONTENTS~~had notes payable totaling $41.1 million at December 31, 2012 of which $31 million was secured by the hotel property. We may use proceeds from the prior disposition of properties to continue making our scheduled debt service payments until the maturity dates of the loans are extended, the loans are refinanced or the outstanding balances of the loans are completely paid off. There is no guarantee that we will be able to refinance our borrowings with more or less favorable terms or extend the maturity dates of such loans.

~~Item~~The 7Mockingbird Commons Partnership entered into a promissory note payable to CULS, an unaffiliated third party, whereby the borrower was permitted to borrow up to $34 million (“Palomar Residences Loan Agreement”) to construct the Palomar Residences. ~~Management’s~~The ~~Discussion~~borrower did not pay the outstanding principal balance, together with all accrued, but unpaid interest due on the maturity date of October 1, 2011, as the Partnership continued to negotiate with the lender. In December 2011, the parties had negotiated a recapitalization of the Palomar Residences Loan Agreement; however, the transaction ultimately was not approved by the credit union regulator and could ~~Analysis~~not be completed. Subsequently, on January 5, 2012, the borrower received notice from the lender demanding immediate payment of ~~Financial~~the ~~Condition~~entire outstanding loan balance and ~~Results~~all accrued but unpaid interest. The note was subsequently sold to the Mockingbird Lender on April 18, 2012. On June 8, 2012, the borrower entered into a Deed in Lieu of ~~Operations~~Foreclosure Agreement with the Mockingbird Lender whereby ownership of the Palomar Residences was transferred to the lender, resulting in full settlement of the outstanding debt. The outstanding principal balance under the Palomar Residences Loan Agreement, which was recourse to the Partnership, was approximately $19.4 million at June 8, 2012.

Behringer Harvard Mountain Village, LLC entered into the Cassidy Ridge Loan Agreement to construct Cassidy Ridge. The ~~following~~outstanding ~~discussion~~principal balance, together with all accrued, but unpaid interest was due and ~~analysis~~payable ~~should~~on the maturity date of October 1, 2011, which amount was not paid as the Partnership continued to negotiate with the lender. In December 2011, the parties had negotiated a recapitalization of the Cassidy Ridge Loan Agreement; however, the transaction ultimately was not approved by the credit union regulator and could not be ~~read~~completed. Subsequently, on January 5, 2012, the borrower received notice from the lender demanding immediate payment of the entire outstanding principal balance of $27.7 million and all accrued but unpaid interest. On May 17, 2012, the borrower entered into a Deed in ~~conjunction~~Lieu of Foreclosure Agreement with ~~our~~CULS ~~accompanying~~whereby ~~consolidated~~ownership ~~financial~~of ~~statements~~Cassidy ~~and~~Ridge was transferred to the ~~notes~~lender, ~~thereto:~~resulting in full settlement of the outstanding debt. The loan, which was recourse to the Partnership, had an outstanding principal balance of approximately $28.4 million at May 17, 2012.

~~Liquidity and Capital Resources~~34

~~Our~~On ~~cash~~August ~~and~~16, ~~cash equivalents were $3.3 million at December 31~~2012, 1221 ~~2011.~~Coit ~~Our~~Road ~~principal~~was ~~demands~~sold for ~~funds~~a incontract ~~the~~sales ~~next~~price ~~twelve months and beyond will be for the payment~~ of ~~costs~~$20.0 ~~associated~~million ~~with lease-up of available space at our operating properties, Partnership operating expenses~~ and ~~for the payment of recurring debt service, further principal paydowns and reserve requirements~~ on ~~our~~August ~~outstanding indebtedness as required by our lenders. In light of cash needs required to meet maturing debt obligations and our ongoing operating capital needs~~17, ~~our~~2012 ~~General~~250/290 ~~Partners~~John ~~determined~~Carpenter ~~that it~~ was ~~necessary~~sold ~~to discontinue payment of monthly distributions beginning with~~for ~~the~~a ~~2009~~contract ~~third~~sales ~~quarter.~~price ~~Distributions have not resumed through December 31, 2011, and we do not anticipate that payment~~ of ~~regular distributions will resume~~$22.8 As a result of current economic and market conditions, our ability to continue as a going concern is dependent on the willingness and ability of our General Partners or their affiliates to provide us with sources of liquidity and our ability to resolve our current debt maturitiesmillion. ~~Although~~Proceeds wefrom ~~have had to extend beyond our original target life of three to five years after~~ the ~~end~~sales of ~~the~~these ~~Offering,~~properties wewere ~~are~~used ~~designed~~ to befully ~~self-liquidating~~satisfy ~~and thus not intended to continue as a long-term going concern. During~~ the ~~year~~existing ended December 31, 2011, Behringer Advisors II or its affiliates waived reimbursement of administrative services, asset management fees and reimbursement of operating expenses totaling $4.1 million, of which $3.7 million is classified as a capital contribution from our General Partners on our consolidated statement ofindebtedness ~~equity~~associated ~~(deficit).~~with ~~During~~ the ~~year~~properties ~~ended December 31, 2010, Behringer Advisors II or its affiliates waived reimbursement of administrative expenses, asset management fees~~ and ~~reimbursement~~additional ofliabilities ~~operating expenses totaling $7.5 million,~~ of ~~which~~the $7fund.0 million is classified as capital contributions from our General Partners on our consolidated statement of equity (deficit). In addition, our Sponsor forgave $2.8 million of principal borrowings and all accrued interest thereon under a loan agreement, which was also accounted for as a capital contribution by our General Partners

WeOn ~~signed~~December a20, ~~long-term~~2012 the ~~full~~Mockingbird ~~building~~Commons ~~lease~~Partnership ~~that~~entered ~~began~~into ~~October~~a 1,promissory ~~2011~~note atagreement ~~1221~~with ~~Coit~~Great ~~Road~~American ~~which~~Life ~~totals~~Insurance ~~approximately~~Company ~~20%~~(“Palomar Lender”) ofto ~~the~~borrow ~~rentable~~$31 ~~square~~million ~~feet~~(the in“Hotel ~~our~~Palomar ~~office~~Loan”). ~~and~~Proceeds ~~data~~from ~~center~~the ~~properties~~loan and weadditional ~~continue~~cash were used to ~~negotiate~~pay ~~with~~off ~~prospective~~the ~~tenants~~outstanding ~~regarding~~principal ~~unleased~~balance ~~space~~of ata ~~250/290~~$31.6 ~~John~~million ~~Carpenter.~~note ~~Our~~with ~~plan~~Bank ~~currently~~of ~~calls~~America ~~for~~and usall toassociated ~~fund~~closing ~~our~~costs. ~~liquidity~~The Hotel ~~requirements~~Palomar ~~from~~Loan ~~proceeds~~bears ~~from~~interest ~~the~~at ~~disposition~~a fixed rate of ~~properties~~5.75% ~~and~~per ~~borrowings,~~annum ~~however,~~and asrequires amonthly ~~result~~payments of ~~current~~interest ~~economic~~only ~~conditions~~during ~~our~~the first ~~ability~~18 tomonths dowith so30-year isamortization ~~subject~~thereafter. toThe ~~certain~~loan, ~~factors~~which ~~beyond~~matures ~~our~~on ~~control.~~December 19, 2015, Incontains ~~addition,~~two weone year ~~may~~extension ~~also~~options ~~seek~~if tocertain ~~raise~~conditions ~~capital~~are bymet ~~contributing~~and ~~one~~does ornot ~~more~~allow ofprepayment ~~our~~in ~~existing~~whole ~~assets~~or toin apart ~~joint venture~~during ~~with~~the afirst ~~third~~12 ~~party~~months. Prepayment ~~Investments~~ in ~~joint~~whole ~~ventures,~~(but ~~under~~not ~~certain~~in ~~circumstances,~~part) ~~involve~~from ~~risks~~months ~~not~~13 ~~present~~through ~~when~~30 will include a ~~third~~yield ~~party~~maintenance ispremium ~~not~~as ~~involved~~defined under the terms of the loan. ~~Our~~The ~~ability~~Hotel toPalomar ~~successfully~~Loan ~~identify,~~is ~~negotiate,~~secured ~~and~~by ~~complete~~the ~~joint~~associated ~~venture~~property. ~~transactions~~We onhave ~~acceptable~~guaranteed ~~terms~~payment orof atcertain ~~all~~recourse liabilities iswith ~~highly~~respect ~~uncertain~~to certain customary nonrecourse carveouts in favor of the ~~current~~Palomar ~~economic~~Lender ~~environment.~~with respect to the loan.

WeOn ~~continue~~March to29, ~~prepare~~2011, the ~~and~~Partnership ~~assess~~entered ~~properties~~into ~~for~~the ~~potential~~Fifth ~~sale.~~Amended Inand ~~order~~Restated toPromissory ~~provide~~Note ~~additional~~to ~~liquidity~~amend ~~for~~ the ~~execution~~terms of ~~our~~a ~~current~~loan ~~business~~from ~~plan,~~Behringer weHoldings (the ~~disposed~~“BHH ofLoan”) to a ~~number~~maximum borrowing amount of ~~our~~$25 ~~investments~~million inwith ~~2011~~all borrowings and ~~have~~accrued ~~identified~~interest ~~additional~~due ~~investments~~on ~~for~~March 29, ~~disposition~~2014. inThe ~~2012.~~outstanding Onprincipal ~~December~~balance ~~16,~~under ~~2011,~~the weBHH ~~sold~~Loan ~~5050~~at ~~Quorum~~December ~~for~~31, a2012 ~~contract~~and ~~sales~~December ~~price~~31, of2011 was $68.8 million and $11.1 million, ~~Proceeds~~respectively. ~~from~~Borrowings under the ~~sale~~BHH ~~were~~Loan are being used principally to ~~fully~~finance ~~satisfy~~general ~~the~~working ~~existing~~capital and ~~indebtedness~~capital ~~associated~~expenditures. ~~with~~The ~~the~~BHH ~~property,~~Loan ~~resulting~~is inunsecured, ahas ~~gain~~an oninterest ~~troubled~~rate ~~debt~~of ~~restructuring~~5.0% ofper ~~approximately~~annum ~~$4.8~~and ~~million~~requires ~~which~~no ismonthly ~~included~~payments inof interest ~~discontinued~~or ~~operations~~principal. On ~~June~~July 305, ~~2011,~~2012 wethe ~~sold~~Partnership ~~Landmark~~entered Iinto ~~and~~the ~~II.~~Note ~~Proceeds~~Modification ~~from~~Agreement ~~the sale~~and Assignment of ~~Landmark~~Proceeds with IBehringer ~~and~~Holdings IIwhereby ofthe ~~$16.2~~maturity ~~million~~date ~~were~~of ~~used~~the toBHH ~~fully~~Loan ~~satisfy~~was ~~the~~extended ~~existing~~to ~~indebtedness~~May 31, 2014. ~~associated~~In ~~with~~order ~~the~~to ~~property~~secure payment of ~~$21~~the ~~million~~BHH Loan, ~~resulting~~the inPartnership aassigned ~~gain~~net onproceeds ~~troubled~~from ~~debt~~the ~~restructuring~~sale of ~~$4.9~~1221 ~~million~~Coit ~~which~~Road, is250/290 ~~included~~John inCarpenter ~~discontinued~~Freeway ~~operations~~and onthe back-end ~~our~~promoted ~~consolidated~~interest ~~statements~~in ofdistributable ~~operations~~cash ~~for~~related ~~the~~to ~~year~~Landmark ~~ended~~I ~~December~~& ~~31,~~II ~~2011.~~and ~~The~~5050 ~~sale~~Quorum ~~contract~~properties ~~for~~which ~~each~~were ofsold ~~5050~~in 2011. ~~Quorum~~On ~~and~~November ~~Landmark~~9, I2012 ~~and~~the IIPartnership ~~provides~~entered ~~that~~into wethe ~~retain~~Pledge aand ~~promoted~~Security ~~interest~~Agreement inwith ~~distributable~~Behringer ~~cash~~Holdings ~~related~~whereby tonet proceeds from the ~~buildings~~sale ~~after~~of the ~~respective~~remaining ~~buyer~~real ~~has~~estate ~~achieved~~and athe ~~specified~~remaining ~~return.~~land ~~Additionally,~~at on1221 ~~December~~Coit 16Road, ~~2011~~as wewell ~~sold~~as ~~Bretton~~the ~~Woods,~~net ~~which~~proceeds ~~was~~previously ~~comprised~~assigned under ofthe ~~constructed~~Note ~~luxury~~Modification ~~homes~~Agreement and ~~developed~~Assignment ~~land~~of ~~lots~~Proceeds, towere anpledged ~~unaffiliated~~as ~~third~~security ~~party~~ for athe ~~sales~~payment ~~price~~ of ~~$2.3 million and~~ all ofobligations owed ~~the~~to ~~proceeds~~Behringer ~~were~~Holdings ~~used~~or toits ~~fully~~subsidiaries, ~~satisfy~~including ~~the~~principal, ~~existing~~interest, ~~indebtedness~~fees ~~associated~~or ~~with~~reimbursement ~~the~~of ~~property~~expenses. InUnless ~~addition~~approved, net weproceeds ~~are~~from ~~currently~~the ~~negotiating~~sale aof ~~new~~real ~~contract~~estate, ~~for~~if ~~the~~not ~~sale~~reinvested ofin ~~250/290~~remaining ~~John~~properties, ~~Carpenter~~are ~~Freeway~~to ~~which~~be ~~contains~~remitted ~~approximately~~to ~~539,000~~Behringer Holdings ~~rentable~~within ~~square~~365 ~~feet.~~days Inof ~~some~~the ~~instances,~~sale. toOn ~~preserve~~December ~~cash~~28, it2012 ~~may~~the bePartnership inremitted ~~the~~net ~~best~~proceeds ~~interests~~ of ~~unit~~$6 ~~holders~~million to ~~allow~~Behringer ~~lenders~~Holdings and its subsidiaries to ~~take~~completely ~~possession~~payoff the BHH Cassidy Ridge Loan and for payment of ~~certain~~fees, ~~properties~~expenses, ~~when~~interest ~~they~~and principal on the BHH Loan.

36While there have been signs of improvement in the overall economy, management does not expect conditions to improve significantly in the near future. As a result, we expect that we may continue to require this liquidity support from our Sponsor during 2013. Our Sponsor, subject to its approval, may make available to us additional funds under the BHH Loan through 2013, potentially up to the borrowing limits thereunder. There is no guarantee that our Sponsor will provide additional liquidity to us.

~~TABLE~~On OFOctober ~~CONTENTS~~1, 2010, Behringer Harvard Mountain Village, LLC entered into a loan with Behringer Harvard Holdings, LLC (the “BHH Cassidy Ridge Loan”). Proceeds from the loan were used to complete construction of the condominiums at Cassidy Ridge. The loan bears interest at 5% and matured on October 1, 2011. The Partnership completely paid off the outstanding principal of $0.9 million and all accrued but unpaid interest on the loan on December 28, 2012.

~~are~~The noHotel ~~longer~~Palomar Loan ~~economically~~requires ~~viable,~~payments ~~such~~of asinterest ~~Plaza~~only ~~Skillman,~~during ~~which~~the ~~was~~first ~~placed~~18 ~~into~~months ~~receivership~~with in30-year ~~October~~amortization ~~2010~~thereafter. ~~and~~Our ~~transferred~~remaining toloans ~~the~~accrue interest ~~associated~~that ~~lender~~may ~~pursuant~~be topaid aat ~~foreclosure~~any intime. ~~July 2011~~Further, ~~and~~the ~~Melissa~~loan ~~Land,~~agreements onstipulate ~~which~~that the ~~lender~~Partnership ~~foreclosed~~comply inwith ~~December~~certain ~~2011~~reporting and financial covenants. AsThese acovenants ~~result~~include, among other things, notifying the lender of ~~our~~any ~~current~~change ~~liquidity~~in ~~needs~~management and ~~unstable~~maintaining certain ~~credit~~loan ~~market~~to ~~conditions~~value ~~limiting~~ratios. ~~available~~The ~~resources~~Hotel ~~through~~Palomar ~~additional~~Loan ~~borrowings~~is ~~for~~secured aby ~~closed-end,~~the ~~finite~~associated ~~life~~real ~~fund,~~property and we ~~may~~ have toguaranteed ~~sell~~payment of acertain ~~property~~recourse ~~under~~liabilities ~~terms~~with ~~that~~respect ~~are~~to ~~less~~certain ~~advantageous~~customary ~~than~~nonrecourse wecarveouts ~~could~~in ~~achieve~~favor ~~with~~of athe ~~longer~~Palomar ~~holding period~~Lender. ~~However~~At December 31, ~~there~~2012 ~~can~~the bePartnership noor ~~assurance~~its ~~these~~subsidiaries ~~future~~were ~~dispositions~~in ~~will~~default ~~occur,~~under ~~or,~~loans ifmade ~~they~~by ~~occur,~~the ~~that~~Mockingbird ~~they will~~Commons ~~help~~Partnership usnoncontrolling interest topartner ~~achieve~~in ~~our~~the ~~liquidity~~amount ~~objectives~~of $1.3 million.

OfOn ~~our $123.7 million in notes payable at December 31~~February 11, ~~2011~~ 2013, the ~~$52.6~~Partnership’s ~~million~~sole ~~has~~remaining ~~matured~~General ~~and~~Partner iselected ~~subsequently in default and an additional $50.9 million is scheduled~~ to ~~mature~~liquidate in the ~~next~~Partnership ~~twelve~~and ~~months.~~transfer Asits ofremaining ~~December 31, 2011, of our $123.7 million in notes payable, $111.3 million was secured by properties~~ assets and ~~$101.3~~liabilities ~~million was recourse~~ to ~~us.~~the WeLiquidating ~~continue~~Trust toas ~~negotiate~~a ~~with~~cost ~~the~~saving ~~lenders~~alternative tothat ~~refinance or restructure~~ the ~~loans.~~General WePartners ~~currently~~believed ~~expect~~ to ~~use~~be ~~proceeds~~in ~~from~~ the ~~disposition~~best interests of ~~properties~~the ~~and~~investors. ~~additional~~The ~~borrowings~~expenses toassociated ~~continue~~with ~~making~~operating ~~our~~a ~~scheduled~~public ~~debt~~reporting ~~service~~entity, ~~payments~~like ~~on certain properties until~~ the ~~maturity~~Partnership, ~~dates of the loans~~ are ~~extended,~~comparatively ~~the~~high ~~loans~~and ~~are~~therefore ~~refinanced~~detract orfrom ~~the~~distributable ~~outstanding~~proceeds ~~balance~~and ofreturns ~~the~~it ~~loans~~can ismake ~~completely~~to ~~paid~~its ~~off~~investors. ~~There~~The isreorganization nointo ~~guarantee~~a ~~that~~liquidating trust weenables ~~will~~us ~~be able~~ to ~~refinance~~reduce ~~our~~costs ~~borrowings~~associated with ~~more~~public orreporting ~~less~~obligations ~~favorable~~and ~~terms~~related oraudit ~~extend~~expenses ~~the maturity dates of such loans. In the event~~ that ~~any~~are ofnot ~~the lenders demanded immediate payment of an entire loan balance, we would have~~ applicable to ~~consider~~the ~~all~~Liquidating ~~available alternatives~~Trust, ~~including~~helping ~~transferring legal possession of the relevant property~~ to ~~the~~preserve ~~lender.~~capital ~~Distributions~~throughout ~~paid~~our indisposition ~~the~~phase ~~year~~for ~~ended December 31, 2009 were approximately $1.8 million. For~~ the ~~year~~benefit ~~ended December 31, 2009 we had negative cash flow from operating activities~~ of ~~approximately~~our ~~$17~~investors.2 ~~million.~~Cutting expenses ~~Accordingly,~~and ~~cash~~maximizing ~~amounts~~investor ~~distributed~~returns tois our ~~limited~~primary ~~partners for the year ended December 31, 2009 exceeded cash flow from operating activities, which were funded from our borrowings~~focus.

The preparation of financial statements of a going concern generally contemplates realization of assets and settlement of liabilities in the normal course of business. The conditions and events described above raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result should we be unable to continue as a going concern. Our current plans are to use proceeds from the disposition of properties and additional borrowings to make payments on our outstanding debt until the maturity dates of the loans are extended, the loans are refinanced or the outstanding balance of the loans is completely paid off, pay for on-going capital needs, fund operations and, if available, make special distributions to our unitholders. For property-related loans that have matured, we are negotiating discounted loan payoffs or the transfer of the relevant property to the lender. 35

~~Our~~Net ~~30%~~Operating noncontrolling partner previously entered into multiple loan agreements with Mockingbird Commons LLC (“Mockingbird Commons Partnership”), an entity in which we have a 70% ownership interest, totaling $1.3 million. These loan agreements were superseded and replaced by an Agreement Regarding Advances effective January 1, 2008, by which the loans were subordinated to the payment of any mortgage debt (“Mockingbird Commons Partnership Loans”). All of these loans matured prior to December 31, 2010 with interest rates ranging from 6% to 12%. The Mockingbird Commons Partnership was in default under the loan agreements as a result of nonpayment of the outstanding balances due and payable on the maturity dates. As a result, past due amounts under the loan agreements bear interest up to 18% per annum during the default period. We believe that we are in compliance with all other covenants under these loan agreements. The outstanding principal balance at December 31, 2010 and 2009 was $1.3 million. Income

~~The~~Net ~~Mockingbird~~operating ~~Commons~~income (“NOI”) ~~Partnership~~is ~~entered into~~ a ~~promissory~~non-GAAP ~~note~~financial ~~payable~~measure tothat ~~Credit~~is ~~Union~~defined ~~Liquidity~~as ~~Services,~~total ~~LLC,~~revenue ~~f/k/a~~less ~~Texans~~property ~~Commercial~~operating ~~Capital~~expenses, ~~LLC~~real ~~(“CULS”)~~estate taxes, anproperty ~~unaffiliated~~management ~~third~~fees ~~party,~~and ~~whereby~~ the ~~borrower~~cost ~~was~~of ~~permitted~~real toestate ~~borrow~~inventory upsales. toManagement ~~$34~~believes ~~million~~that ~~(“Palomar~~NOI ~~Residences~~provides ~~Loan~~an ~~Agreement”)~~accurate measure toof ~~construct~~the ~~luxury~~operating ~~high-rise~~performance ~~condominiums~~of ~~(“Palomar~~our ~~Residences”).~~operating ~~The~~assets ~~outstanding~~because ~~principal~~NOI ~~balance~~excludes ~~under~~certain ~~the~~items ~~Palomar~~that ~~Residences~~are ~~Loan~~not ~~Agreement~~associated ~~was~~with ~~$22.8~~management of ~~million~~the ~~at December 31, 2011 and $24~~properties.9 ~~million~~NOI atshould ~~December~~not ~~31,~~be ~~2010.~~considered Asas ~~previously~~an ~~reported,~~alternative ~~the borrower failed~~ to ~~make~~net aincome ~~mandatory~~(loss), $3or ~~million~~an ~~principal~~indication ~~payment~~of onour orliquidity. ~~before~~NOI ~~January~~is ~~15,~~not ~~2011,~~indicative asof ~~required~~funds ~~under~~available ~~the~~to ~~loan~~meet ~~agreement.~~our Wecash ~~received~~needs ~~notice~~or ~~from~~our ~~the~~ability ~~lender~~to ~~demanding~~make ~~payment~~distributions ofand ~~the~~should $3be ~~million~~reviewed ~~mandatory~~in ~~principal~~connection with ~~payment~~other byGAAP ~~May 20, 2011~~measurements. ~~The~~To ~~payment~~facilitate ~~was~~understanding ~~not~~of ~~made~~this byfinancial ~~that~~measure, ~~date~~a ~~and~~reconciliation ~~thus~~of ~~constituted~~NOI anto ~~event~~net ofloss ~~default~~attributable to ~~under~~ the ~~loan~~Partnership ~~agreement.~~in ~~The~~accordance ~~parent~~with ofGAAP ~~CULS~~has ~~was~~been ~~placed~~provided. ~~into~~Our ~~conservatorship~~calculations byof the ~~credit~~Partnership’s ~~union~~NOI ~~regulator,~~for the ~~National~~years ~~Credit~~ended December 31, 2012, ~~Union~~2011 ~~Association,~~and in2010 ~~April~~are ~~2011~~presented ~~during~~below (in thousands).

	2012			2011			2010

Total revenues	$	14,619		$	20,501		$	15,093

Operating expenses
Property operating expenses		11,144			11,825			11,168
Real estate taxes, net		918			679			765
Property and asset management fees		765			891			655
Cost of real estate inventory sales		-			5,414			1,718
Less: Asset management fees		(304	)		(410	)		(229	)
Total operating expenses		12,523			18,399			14,077

Net operating income	$	2,096		$	2,102		$	1,016

Reconciliation to Net loss
Net operating income	$	2,096		$	2,102		$	1,016

Less: Depreciation and amortization		(1,017	)		(2,008	)		(2,213	)
General and administrative expenses		(1,161	)		(896	)		(1,143	)
Interest expense, net		(3,394	)		(5,339	)		(2,224	)
Asset management fees		(304	)		(410	)		(229	)
Asset impairment loss (1)		(456	)		(1,412	)		-
Inventory valuation adjustment		-			(26,768	)		(1,886	)
Provision for income taxes		(137	)		(112	)		(166	)
Add: Interest income		295			179			132
Gain on troubled debt restructuring		7,163			-			125
Loss on derivative instruments, net		-			-			(39	)
Other income		200			-			-
Income (loss) from discontinued operations		13,371			(15,493	)		(12,087	)

Net income (loss)	$	16,656		$	(50,157	)	$	(18,714	)

~~TABLE~~1) OFExcludes ~~CONTENTS~~approximately $20.4 million and $5.1 million of impairment loss included in loss from discontinued operations for the years ended December 31, 2011 and 2010, respectively.

~~negotiations~~Performance toReporting ~~extend~~Required or modify the Palomar Residences Loan Agreement. The borrower did not pay the outstanding principal balance, together with all accrued, but unpaid interest due on the maturity date of October 1, 2011, as we continued to negotiate with the lender. In December 2011, the parties had negotiated a recapitalization of the Palomar Residences Loan Agreement; however, the transaction ultimately was not approved by the ~~credit~~Partnership union regulator and could not be completed. Subsequently, on January 5, 2012, the borrower received notice from the lender demanding immediate payment of the entire outstanding loan balance of $22.8 million and all accrued but unpaid interest. We have been informed that the lender and regulators are considering marketing the note under the Palomar Residences Loan Agreement ~~for sale. We continue to be in default of the loan agreement and all past due amounts may bear interest up to maximum amounts under applicable law.~~

WeSection ~~converted~~15.2 of the Partnership ~~unsold~~Agreement ~~condominium~~required ~~units in~~ the ~~Palomar~~Partnership ~~Residences~~ to aprovide ~~rental~~its ~~program~~limited inpartners ~~the~~with ~~first~~its ~~quarter~~net ofcash ~~2009.~~from ~~These~~operations, ~~units~~a ~~were~~non-GAAP ~~100%~~financial measure, ~~leased~~which ~~until~~is ~~May~~defined ~~2011~~as ~~when~~net weincome, ~~restarted~~computed ~~our~~in ~~sales~~accordance ~~program.~~with WeGAAP, ~~sold~~plus ~~six~~depreciation ~~units~~and inamortization ~~the~~on ~~project~~real inestate ~~2011~~assets, adjustments ~~our~~for ~~first~~gains ~~sales~~from ~~since~~the ~~2007.~~sale ~~All~~ of ~~the~~assets ~~proceeds~~and ~~from~~gains on the ~~sales~~sale of ~~condominiums~~discontinued inoperations, ~~2011~~debt ~~were~~service ~~used~~and tocapital ~~pay~~improvements (“Net ~~down~~Cash From Operations”). Calculations of the ~~outstanding~~Partnership’s ~~balance~~Net ~~under~~Cash From Operations for the ~~Palomar~~years ~~Residences~~ended December 31, ~~Loan~~2012, ~~Agreement.~~2011 and 2010 are presented below (in thousands):

Behringer Harvard Mountain Village, LLC, our wholly-owned subsidiary, entered into a promissory note payable to CULS, whereby the borrower was permitted to borrow a total principal amount of $27.7 million (“Cassidy Ridge Loan Agreement”) to construct 23 condominium units in Telluride, Colorado (“Cassidy Ridge”). We assigned a second lien position on Cassidy Ridge to the lender in the amount of $12.6 million as additional security to the Palomar Residences Loan Agreement. The default under the Palomar Residences Loan Agreement created a cross-default under the Cassidy Ridge Loan Agreement. The outstanding principal balance, together with all accrued, but unpaid interest was due and payable on the maturity date of October 1, 2011, which amount was not paid as we continued to negotiate with the lender. In December 2011, the parties had negotiated a recapitalization of the Cassidy Ridge Loan Agreement; however, the transaction ultimately was not approved by the credit union regulator and could not be completed. Subsequently, on January 5, 2012, the borrower received notice from the lender demanding immediate payment of the entire outstanding principal balance of $27.7 million and all accrued but unpaid interest. We continue to be in default under the loan agreement and all past due amounts may bear interest up to maximum amounts under applicable law. 36

Our direct and indirect subsidiary, 1221 Coit LP, entered into a new loan agreement on November 1, 2011 with Hampshire Lending LLC, whereby we may borrow up to $12 million (“1221 Coit Road Loan”). The interest rate under the loan is 10% and requires monthly payments of interest only with all principal and accrued but unpaid interest due on November 1, 2013, the maturity date. Proceeds from the loan are being used to pay-off the previous loan with Meridian Bank Texas and fund tenant improvements for the property. The loan, which is secured by the property, is nonrecourse to us but we have guaranteed payment of certain recourse liabilities with respect to certain nonrecourse carveouts in favor of the lender.

	2012			2011			2010

Net income (loss)	$	16,656		$	(50,157	)	$	(18,714	)
Net loss attributable to noncontrolling interest		259			2,016			2,100

Adjustments
Real estate depreciation and amortization (1)		1,799			3,941			6,116
Asset impairment loss (1)		410			21,765			5,119
Inventory valuation adjustment		-			26,768			1,886
(Gain) loss on sale of assets (1)		(114	)		11			-
Gain on sale of discontinued operations (1)		(14,561	)		(75	)		-
Gain on troubled debt restructuring (1)		(7,741	)		(12,842	)		-
Debt service, net of amounts capitalized (1)		(4,632	)		(7,192	)		(5,382	)
Capital improvements (1)		(949	)		(1,035	)		(603	)

Net cash used in operations	$	(8,873	)	$	(16,800	)	$	(9,478	)

~~On November 13, 2009, we entered into the Fourth Amended and Restated Unsecured Promissory Note payable to Behringer Holdings, pursuant to which we may borrow a maximum of $40 million~~ (~~“BHH Loan”~~1). OnThis ~~March~~represents ~~29,~~our ~~2011,~~ownership weportion ~~entered into the Fifth Amended and Restated Promissory Note to amend the terms~~ of the ~~BHH~~properties ~~Loan~~that to a maximum borrowing amount of $25 million. The outstanding principal balance under the BHH Loan at December 31, 2011 and 2010 was $11.1 million. Borrowings under the BHH Loan are being used principally to finance general working capital and capital expenditures. While we ~~would normally explore obtaining additional liquidity of this sort in the debt market, the debt market tightened, and we accessed support from our Sponsor instead~~consolidate. The BHH Loan is unsecured, has an interest rate of 5.0% per annum and requires no monthly payments of interest or principal. The maturity date of all borrowings and accrued but unpaid interest is March 29, 2014.

~~While~~Off-Balance ~~there~~Sheet have been signs of improvement in the overall economy, we do not expect conditions to improve significantly in the near future. As a result, we expect that we will continue to require this liquidity support from our Sponsor during 2012. Our Sponsor, subject to its approval, may make available to us additional funds under the BHH Loan through 2012, potentially up to the borrowing limits thereunder. There is no guarantee that our Sponsor will provide additional liquidity to us. Arrangements

38The Partnership had no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Partnership or the Liquidating Trust, as successor in interest.

~~TABLE~~Contractual ~~OF CONTENTS~~Obligations

InThe ~~addition,~~following ontable sets ~~October~~forth 1,certain ~~2010,~~information ~~Behringer~~concerning ~~Harvard Mountain Village, LLC entered into a promissory note agreement with Behringer Holdings to borrow up to $0.9 million (“BHH Cassidy Ridge Loan”). Proceeds from~~ the ~~loan~~Partnership’s ~~were~~contractual ~~used~~obligations toand ~~complete~~commercial ~~construction~~commitments as of ~~the~~December 31, ~~condominiums~~2012, ~~at Cassidy Ridge. The loan bears interest at 5%~~ and ~~matured~~outlines onexpected ~~October~~future 1,payments ~~2011. We continue~~ to be inmade ~~default~~by ~~under~~ the ~~loan~~Liquidating ~~agreement~~Trust and all past due amounts may bear interest up to 12% per annum. The loan is subordinate to the Cassidy Ridge Loan Agreement. We have not received notice of demand for payment from Behringer Holdings and they currently have no intention to do so. The outstanding principal balance under ~~the~~such ~~loan~~obligations ~~was $0.9 million~~ and ~~$0.6~~commitments ~~million at December 31, 2011 and 2010, respectively.~~ (in thousands):

On December 6, 2011 we agreed to transfer ownership of Melissa Land, pursuant to a foreclosure, to the associated lender under the Melissa Land Loan as full satisfaction of the existing indebtedness. The outstanding balance under the loan agreement at the time of the foreclosure was $1.5 million.

	Payments due by period
	Totals		2013		2014		2015		2016		2017		Thereafter
Notes payable	$	41,095	$	1,294	$	8,987	$	30,814	$	-	$	-	$	-
Interest		6,184		2,551		1,911		1,722		-		-		-
Total	$	47,279	$	3,845	$	10,898	$	32,536	$	-	$	-	$	-

As noted above, we or our subsidiaries were in default under the Palomar Residences Loan Agreement, Cassidy Ridge Loan Agreement and BHH Cassidy Ridge Loan at December 31, 2011. We remain in default under these loan agreements and are currently in negotiations with these lenders. There are no assurances that we will be successful in our negotiations to waive the events of default or modify the loan agreements with the lenders. As the lender under the Palomar Residences Loan Agreement and Cassidy Ridge Loan Agreement has demanded immediate payment of the entire loan balance, we would have to consider all available alternatives, as the loans are on a recourse basis to us, including transferring legal possession of the relevant property to the lender. Inflation

~~Generally,~~The ~~our~~real ~~notes~~estate ~~payable~~market has ~~mature~~not ~~approximately~~been ~~three~~affected tosignificantly ~~five~~by ~~years~~inflation ~~from~~in ~~origination.~~the ~~The~~past ~~Bank~~several ofyears ~~America~~due ~~loan~~to ~~for Hotel Palomar and~~ the ~~Revolver~~relatively ~~Agreement~~low ~~contain~~inflation ~~cross-default and cross-collateralization provisions~~rate. The ~~CULS~~majority of ~~loans for~~ the ~~Palomar~~leases ~~Residences and Cassidy Ridge also~~ contain ~~cross-default~~inflation ~~and~~protection ~~cross-collateralization~~ provisions. ~~The~~applicable ~~majority~~to ofreimbursement ~~our~~billings ~~notes~~for ~~payable~~common ~~require~~area ~~payments~~maintenance ~~of interest only~~charges, real ~~with~~estate ~~all~~tax ~~unpaid principal~~ and ~~interest~~insurance ~~due~~reimbursements aton ~~maturity.~~a ~~Further,~~per ~~our~~square ~~loan~~foot ~~agreements~~basis, ~~stipulate~~or ~~that~~in wesome ~~comply with certain reporting and financial covenants. These covenants include~~cases, ~~among~~annual ~~other~~reimbursement ~~things, notifying the lender~~ of ~~any~~operating ~~change in~~expenses ~~management~~above ~~and~~a ~~maintaining~~ certain ~~loan~~per tosquare ~~value~~foot ~~ratios~~allowance. Each loan, with the exception of the Mockingbird Commons Partnership Loans and the BHH Loan, is secured by the associated real property. In addition, the Mockingbird Commons Partnership Loans, the BHH Loan, the BHH Cassidy Ridge Loan and the 1211 Coit Road Loan, are nonrecourse to us.

~~Our~~Item ~~level~~7A. ofQuantitative ~~debt~~ and ~~the~~Qualitative ~~limitations~~Disclosures ~~imposed~~About onMarket ~~us by our debt agreements could have significant adverse consequences to us and the value of our units, regardless of our ability to refinance or extend our debt, including:~~ Risk.

•We ~~limiting~~may ~~our~~be ~~ability~~exposed to interest rate changes primarily from variable interest rate debt incurred to acquire and develop properties, issue loans and make other permitted investments. Our management’s objectives, with regard to interest rate risks, are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we borrow primarily ~~additional~~at ~~amounts~~fixed ~~for~~rates ~~working~~or ~~capital~~variable rates with the lowest margins available and in some cases, ~~capital~~with ~~expenditures~~the ability to convert variable rates to fixed rates. With regard to variable rate financing, ~~debt~~we ~~service~~will ~~requirements~~assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We may enter into derivative financial instruments such as options, ~~execution~~forwards, ofinterest rate swaps, caps or floors to mitigate our ~~business~~interest ~~plan~~rate risk on a related financial instrument or ~~other~~to ~~purposes;~~effectively lock the interest rate portion of our variable rate debt. None of the Partnership’s approximately $41.1 million in notes payable at December 31, 2012 were subject to variable interest rates.

•At ~~limiting~~December ~~our~~31, ~~ability~~2012, the toPartnership ~~use~~did ~~operating~~not ~~cash~~have ~~flow~~any inforeign ~~other~~operations ~~areas~~and ofthus ~~our~~were ~~business~~not ~~because~~exposed ~~we must dedicate a substantial portion of these funds~~ to ~~service~~foreign ~~our~~currency ~~debt;~~fluctuations.

•Item ~~increasing~~8. ~~our~~Financial ~~vulnerability~~Statements ~~to general adverse economic~~ and ~~industry~~Supplementary ~~conditions;~~Data.

•The ~~limiting~~information ~~our~~required by ~~ability~~this toItem ~~capitalize~~8 onis ~~business~~hereby ~~opportunities~~incorporated ~~and~~by reference to ~~react~~our toFinancial ~~competitive~~Statements ~~pressures~~beginning ~~and~~on ~~adverse~~page ~~changes~~F-1 inof ~~governmental~~this ~~regulation;~~Annual Report on Form 10-K.

•Item ~~limiting~~9. ~~our~~Changes ~~ability~~in toand ~~fund~~Disagreements ~~capital~~With ~~expenditures,~~Accountants ~~tenant~~on ~~improvements~~Accounting and ~~leasing~~Financial ~~commissions; and~~Disclosure.

•Not ~~limiting our ability or increasing the costs to refinance our indebtedness~~applicable.

~~Troubled Debt Restructuring~~37

OnItem ~~June~~9A. ~~30,~~Controls ~~2011, we sold our Landmark I~~ and ~~II properties for a contract sales price of $16~~Procedures.2 million. The contract sales price retains a back-end promoted interest in distributable cash related to the buildings after the respective buyer has achieved a specified return. Proceeds from the sale were used to fully satisfy the existing indebtedness associated with the properties, resulting in a gain on troubled debt restructuring of approximately $4.9 million which is included in discontinued operations. Additionally, on July 5, 2011,

39Evaluation of Disclosure Controls and Procedures

~~TABLE~~As OFrequired ~~CONTENTS~~by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, the management of Behringer Advisors II, as Managing Trustee of the Liquidating Trust, including its Chief Executive Officer and Chief Financial Officer, evaluated as of December 31, 2012 the effectiveness of the Partnership’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of Behringer Advisors II concluded that the Partnership’s disclosure controls and procedures, as of December 31, 2012, were effective for the purpose of ensuring that information required to be disclosed by us in this report as successor in interest to the Partnership is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to the management of Behringer Advisors II, as our Managing Trustee, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

~~pursuant~~We tobelieve, however, that a ~~foreclosure~~controls system, weno ~~transferred~~matter ~~ownership~~how ofwell ~~the~~designed ~~Plaza~~and ~~Skillman~~operated, ~~property~~cannot toprovide absolute assurance that the ~~associated~~objectives ~~lender~~of ~~and~~the controls assystems aare ~~result~~met, weand ~~recognized~~no aevaluation ~~gain~~of oncontrols ~~troubled~~can ~~debt~~provide ~~restructuring~~absolute assurance that all control issues and instances of fraud ~~approximately~~or ~~$3.1~~error, ~~million~~if any, ~~which~~within isa ~~included~~partnership inhave ~~discontinued~~been ~~operations~~detected.

OnManagement’s ~~December~~Annual ~~16,~~Report 2011, we sold 5050 Quorum for a contract sales price of $6.8 million. The sale contract provides that we retain a back-end promoted interest in distributable cash related to the building after the respective buyer has achieved a specified return. Proceeds from the sale were used to fully satisfy the existing indebtedness associated with the property, resulting in a gain on Internal ~~troubled~~Control ~~debt~~over ~~restructuring~~Financial ~~of approximately $4.8 million which is included in discontinued operations.~~ Reporting

~~Overview~~Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The Liquidating Trust’s management, including the Chief Executive Officer and Chief Financial Officer of Behringer Advisors II, as Managing Trustee of the Liquidating Trust, evaluated as of December 31, 2012 the effectiveness of the Partnership’s internal control over financial reporting using the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of Behringer Advisors II concluded that the Partnership’s internal controls, as of December 31, 2012, were effective in providing reasonable assurance regarding reliability of financial reporting.

~~During~~Changes 2011, the U.S. economy faced one of its most volatile periods as the economy was interrupted by domestic and international economic events. The year began with a view toward global and domestic recoveries, particularly in ~~the~~Internal ~~U.S.~~Control inover advance of quantitative easing from the U.S. Federal Reserve. This optimism was soon overcome as the Japanese earthquake disrupted world-wide industrial supply chains, the political unrest in the Middle East led to higher energy and commodity prices and finally the European debt crisis appeared to threaten international debt markets in a Lehman-like collapse. Growth in the economy was further shaken during theFinancial prolonged U.S. debt ceiling debate and the downgrade of the U.S. government’s credit rating in late summer. However, global and domestic markets were surprisingly resilient and by the fourth quarter a number of signs pointed once again to a modest recovery in the U.S. economy. Leading the improvements were fourth quarter results for GDP, job creation, unemployment claims, consumer spending and manufacturing indicators. While these improvements are still modest and the European debt crisis still remains not fully resolved, the end result is the economy appears to be similarly positioned for slow to moderate growth at the end of 2011 as it was at the beginning of the year. Reporting

~~Our~~There ~~primary~~has ~~objectives~~been ~~will~~no change bein tointernal ~~continue~~control toover ~~preserve~~financial ~~capital,~~reporting asthat ~~well~~occurred asduring ~~sustain and enhance property values, while continuing to focus on~~ the ~~disposition~~year ofended ~~our properties. Our ability to dispose of our properties will be subject to various factors~~December 31, 2012 ~~including~~that ~~the~~has ~~ability of potential purchasers to access capital debt financing. If we are unable to sell a property when we determine to do so~~materially affected, itor ~~could~~is ~~have~~reasonably alikely ~~significant adverse effect on our cash flows and results of operations. Given the disruptions in the capital markets and the current lack of available credit, our ability~~ to ~~dispose~~materially ~~of our properties may be delayed~~affect, ~~or we may receive lower than anticipated returns. In addition, a more prolonged economic downturn could negatively affect~~ our ~~ability~~internal tocontrol ~~attract~~over ~~and~~financial ~~retain tenants~~reporting. ~~Given current market conditions, this investment program’s life has extended beyond its original anticipated liquidation date.~~

~~Three~~Item ~~of our four remaining real estate assets are located in Texas, all of which are located in the Dallas-Fort Worth metropolitan area~~9B. WeOther ~~have a data center that is 100% leased under a long-term lease and we continue to work towards leasing our 250/290 John Carpenter building which was 18% leased at December 31, 2011~~Information. To date, we have not experienced any significant tenant defaults resulting in the loss of material rental income. Additionally, Smith Travel Research indicates that the national overall occupancy rate for hospitality properties in the United States rose from 53.5% in the fourth quarter of 2010 to 60.1% in the fourth quarter of 2011. The national overall ADR also rose from $98.25 in the fourth quarter of 2010 to $101.64 in the fourth quarter of 2011. The hotel industry is expected to see continued modest growth in 2012.

~~Current~~On ~~economic~~January ~~conditions~~31, ~~discussed~~2013, ~~above~~Mr. ~~make~~Robert itM. ~~difficult~~Behringer informed tothe ~~predict~~Partnership ~~future~~that, ~~operating~~as ~~results.~~of ~~There~~January ~~can~~31, be2013, nohe ~~assurance~~has ~~that~~received wea ~~will~~medical ~~not~~diagnosis ~~experience~~of ~~further~~a ~~declines~~condition inaffecting ~~revenues~~his orspeech causing ~~earnings~~Mr. ~~for~~Behringer to be permanently disabled. As a ~~number~~result, an Event of ~~reasons,~~Withdrawal ~~including~~occurred under the Amended and Restated Agreement of Limited Partnership, ~~but~~and ~~not~~Mr. ~~limited~~Behringer ceased to ~~the~~be ~~possibility~~a general partner of ~~greater~~the ~~than~~Partnership. ~~anticipated~~Behringer ~~weakness~~Advisors inII remained as a general partner of the ~~economy~~Fund. ~~and~~Mr. Behringer also informed the ~~continued~~Partnership ~~impact~~that he resigned as Chairman of ~~the~~Behringer ~~trends~~Advisors II ~~mentioned~~effective ~~above~~January 31, 2013. Mr. Robert S. Aisner was appointed Chairman of Behringer Advisors II on March 27, 2013.

~~Critical Accounting Policies and Estimates~~38

~~Management’s~~PART discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including investment impairment. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. III

40Item 10. Directors, Executive Officers and Corporate Governance.

~~TABLE~~Managing ~~OF CONTENTS~~Trustee

~~Principles~~Prior to the Effective Date, the Partnership operated under the direction of ~~Consolidation~~its General Partners, Behringer Advisors II and ~~Basis~~Mr. Robert M. Behringer. Since the Effective Date, the Liquidating Trust operates under the direction of ~~Presentation~~our Managing Trustee, Behringer Advisors II, which was formerly one of the General Partners. The Managing Trustee is assisted by the employees of HPT, the general partner of Behringer Advisors II. We do not employ our own management personnel; but instead we pay fees and expense allocations to our Managing Trustee for its services. The Managing Trustee is responsible for the management and control of our affairs, including acquisitions in the past, capital improvements, construction and property management.

~~The~~Our ~~consolidated~~Managing ~~financial~~Trustee Behringer ~~statements~~Advisors II is ~~include~~a ~~our~~Texas ~~accounts~~limited ~~and~~partnership ~~the~~formed ~~accounts~~in ofJuly ~~our subsidiaries~~2002. ~~All~~The ~~inter-company~~executive ~~transactions,~~office ~~balances~~of ~~and~~Behringer ~~profits~~Advisors II is ~~have~~located ~~been~~at ~~eliminated~~15601 inDallas ~~consolidation.~~Parkway, ~~Interests~~Suite in600, ~~entities~~Addison, ~~acquired~~Texas ~~are~~75001. ~~evaluated~~Behringer ~~based~~Advisors II onis ~~applicable~~owned ~~GAAP~~by HPT, ~~which~~its ~~includes~~sole ~~the~~general partner, ~~consolidation~~and ofBehringer ~~variable~~Harvard ~~interest~~Partners, ~~entities~~LLC (“~~VIEs~~Behringer Partners”), inits ~~which~~sole welimited ~~are~~partner. ~~deemed~~Behringer toHoldings is be the ~~primary~~sole ~~beneficiary.~~owner Ifof ~~the~~HPT ~~interest~~and inBehringer ~~the~~Partners. ~~entity~~Behringer isHoldings ~~determined~~also ~~not~~is ~~to be a VIE, then~~ the ~~entities~~indirect ~~are~~owner ~~evaluated~~of ~~for~~our ~~consolidation~~Property ~~based on legal form~~Manager, ~~economic substance~~Behringer Development, ~~and~~a ~~the~~real ~~extent~~estate todevelopment ~~which~~company, ~~we have control~~ and~~/or~~ ~~substantive~~Behringer ~~participating~~Securities, ~~rights~~our ~~under~~dealer ~~the respective ownership agreement~~manager.

~~There~~Behringer ~~are~~Advisors II ~~judgments~~was ~~and~~created ~~estimates involved~~ in ~~determining~~2002 iffor ~~an entity in which we have made an investment is a VIE and if so, if we are~~ the ~~primary~~sole ~~beneficiary.~~purpose ~~The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage~~ of ~~equity~~acting ~~being~~as ~~risked~~one ~~compared to the total equity~~ of the ~~entity.~~Partnership’s ~~Determining~~General expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future lossesPartners. AIt ~~change~~is inmanaged ~~the~~by ~~judgments, assumptions and estimates outlined~~its ~~above~~executive ~~could result in consolidating an entity that should not be consolidated or accounting for an investment on the equity method that should in fact be consolidated~~officers, ~~the effects of which could be material to our financial statements.~~ namely:

Impairment of Long-Lived Assets

Name	Age	Position(s)
Robert S. Aisner	66	Chairman
Michael J. O’Hanlon	61	Chief Executive Officer and President
Gerald J. Reihsen, III	54	Executive Vice President
Gary S. Bresky	46	Chief Financial Officer
M. Jason Mattox	37	Executive Vice President
S. Jason Hall	46	Treasurer

~~For~~Robert ~~all~~S. ofAisner is ~~our real estate, we monitor events and changes in circumstances indicating that~~ the ~~carrying~~Chairman ~~amounts~~ of ~~the~~Behringer ~~real~~Advisors ~~estate~~II. ~~assets may not be recoverable~~Mr. Aisner ~~Examples~~has ofserved ~~the~~as ~~types~~President of(from ~~events~~May ~~and~~2005 until ~~circumstances~~February ~~that~~2013, ~~would~~Chief ~~cause~~Executive ~~management~~Officer to(from ~~assess~~June ~~our~~2008 ~~assets~~until ~~for~~May ~~potential~~2009 ~~impairment~~and ~~include,~~from ~~but~~July ~~are~~2009 ~~not~~until ~~limited~~February ~~to:~~2013), aand ~~significant decrease in the market price of an asset;~~ a ~~significant~~director since ~~adverse~~June 2003 ~~change in the manner in which the asset is being used; an accumulation~~ of ~~costs~~Behringer inHarvard ~~excess~~REIT ofI. ~~the~~In ~~acquisition~~addition, ~~basis~~Mr. ~~plus~~Aisner ~~construction~~serves ofas ~~the~~Vice ~~property;~~Chairman ~~major~~(since ~~vacancies~~January 2012) and ~~the resulting loss of revenues; natural disasters;~~ a ~~change~~director in(since ~~the~~June ~~projected~~2006) ~~holding period;~~of ~~legitimate~~Behringer ~~purchase~~Harvard ~~offers~~Opportunity ~~and~~REIT ~~changes~~I. ~~in the global and local markets or economic conditions~~Mr. ~~Our~~Aisner ~~assets~~also ~~may~~has atserved ~~times~~as beVice ~~concentrated~~Chairman in(since ~~limited~~January 2012) ~~geographic locations~~ and, toa ~~the~~director ~~extent~~(since ~~that~~January ~~our~~2007) ~~portfolio~~of isBehringer ~~concentrated~~Harvard inOpportunity ~~limited~~REIT ~~geographic locations~~II, ~~downturns~~as ~~specifically~~Chief ~~related~~Executive toOfficer ~~such~~and ~~regions may result in tenants defaulting on their lease obligations at~~ a ~~portion~~ director of ~~our~~Behringer ~~properties~~Harvard ~~within~~Multifamily aREIT ~~short~~since ~~time~~August ~~period,~~2006 ~~which~~and ~~may~~as ~~result~~President in(since ~~asset~~April 2007) impairments. When such events or changes in circumstances are present, we assess potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and ~~from~~Chief ~~its~~Executive ~~eventual~~Officer ~~disposition~~(since September 2008) ~~to the carrying amount~~ of ~~the~~Adaptive ~~asset.~~Real InEstate ~~the~~Investment ~~event that the carrying amount exceeds the estimated future undiscounted operating cash flows~~Trust, ~~we recognize an impairment loss to adjust the carrying amount of the asset to estimated fair value~~Inc. We(“AREIT”)(formerly, ~~consider~~Behringer ~~projected~~Harvard ~~future~~Multifamily REIT ~~undiscounted cash flows~~II, ~~trends,~~ ~~strategic decisions regarding future development plans~~Inc.), ~~and~~currently ~~other factors~~ in ~~our~~registration. ~~assessment~~Furthermore, ofMr. ~~whether~~Aisner ~~impairment~~serves ~~conditions~~as ~~exist.~~a ~~While~~Class weII ~~believe~~Director ~~our estimates~~ of ~~future~~Priority ~~cash~~Senior ~~flows~~Secured ~~are~~Income Fund, ~~reasonable~~Inc., ~~different~~a ~~assumptions~~closed-end ~~regarding~~management ~~factors~~investment ~~such~~company asjointly ~~market~~advised ~~rents,~~by ~~economic~~Behringer ~~conditions,~~Harvard and ~~occupancy~~Prospect ~~rates~~Capital ~~could~~Management, ~~significantly affect these estimates~~LLC. Mr. AAisner ~~change~~is inalso ~~these~~Chief ~~estimates~~Executive Officer and ~~assumptions~~President ~~could~~of ~~result in understating or overstating~~ the ~~book~~other ~~value~~Behringer ofHarvard ~~our investments, which could be material to our financial statements~~companies.

~~Inventory~~Mr. ~~Valuation~~Aisner ~~Adjustment~~has over 30 years of commercial real estate experience with acquiring, managing and disposing of properties located in the United States and other countries, including Germany, the Netherlands, England, the Bahamas and Australia. From 1996 until joining Behringer Harvard REIT I in 2003, Mr. Aisner served as (i) Executive Vice President of AMLI Residential Properties Trust, formerly a New York Stock Exchange listed REIT that focused on the development, acquisition and management of upscale apartment communities, which serves as advisor and asset manager for institutional investors with respect to their multifamily real estate investment activities, (ii) President of AMLI Management Company, that oversees all of AMLI’s apartment operations in 80 communities, (iii) President of the AMLI Corporate Homes division that manages AMLI’s corporate housing properties, (iv) Vice President of AMLI Residential Construction, a division of AMLI that performs real estate construction services, and (v) Vice President of AMLI Institutional Advisors, the AMLI division that serves as institutional advisor and asset manager for institutional investors with respect to their multifamily real estate activities. Mr. Aisner also served on AMLI’s Executive Committee and Investment Committee from 1999 until 2003. From 1994 until 1996, Mr. Aisner owned and operated Regents Management, Inc., which had both a multifamily development and construction group, and a general commercial property management group. From 1984 to 1994, he was employed by HRW Resources, Inc., a real estate development and management company, where he served as Vice President.

~~For~~Mr. ~~real~~Aisner ~~estate~~served as ~~inventory,~~an atindependent ~~each~~director ~~reporting~~of ~~date,~~Behringer ~~management~~Harvard ~~compares~~REIT ~~the~~I ~~estimated~~from ~~fair~~June ~~value~~2002 ~~less~~until ~~costs~~February to2003 ~~sell~~and toas ~~the~~a ~~carrying~~management ~~value.~~director Anfrom ~~adjustment~~June 2003 isuntil ~~recorded~~February to2012. ~~the~~Mr. ~~extent~~Aisner ~~that~~received ~~the~~a ~~fair~~Bachelor ~~value~~of ~~less~~Arts ~~costs~~degree tofrom ~~sell~~Colby isCollege ~~less~~and ~~than~~a ~~the~~Masters ~~carrying~~of ~~value.~~Business WeAdministration degree ~~determine~~from the ~~estimated~~University ~~fair value based on comparable sales in the normal course~~ of ~~business~~New ~~under existing and anticipated market conditions~~Hampshire. ~~This evaluation takes into consideration estimated future selling prices, costs spent to date, estimated additional future costs and management’s plans for the property.~~

~~Results of Operations~~39

~~Fiscal~~Michael ~~year~~J. ~~ended~~O’Hanlon has ~~December~~served 31as Chief Executive Officer and President of Behringer Advisors II since January 2012. Mr. O’Hanlon also serves as Chief Executive Officer and President of several other Behringer Harvard–sponsored programs, ~~2011~~including Behringer Harvard Opportunity REIT I and Behringer Harvard Opportunity REIT II, effective January 2012. In addition, Mr. O’Hanlon has served as ~~compared~~a director of Behringer Harvard Opportunity REIT I and Behringer Harvard Opportunity REIT II since February 2013. Prior to ~~the~~his ~~fiscal~~appointment, ~~year~~Mr. O’Hanlon ~~ended~~was ~~December~~an 31independent director of Adaptive REIT (formerly, Behringer Harvard Multifamily REIT II Inc.) from September 2011 through December 2011. From September 2010 to December 2011, Mr. O’Hanlon was President and Chief Operating Officer of Billingsley Company, a major Dallas, Texas based owner, operator and developer that has interests in commercial office, industrial, retail, and multifamily properties. From November 2007 to October 2009, Mr. O’Hanlon served as Chief Executive Officer and President for Inland Western Retail Real Estate Trust, Inc., a public non-traded REIT, where he was responsible for an $8.5 billion national retail and office portfolio consisting of 335 properties and 51 million square feet. From January 2005 to October 2007, Mr. O’Hanlon served as head of Asset Management for Inland Real Estate Group of Companies. In total, Mr. O’Hanlon has over 30 years of management experience with public and private firms with commercial real estate portfolios, with a broad range of responsibilities including overseeing acquisitions, dispositions, restructurings, joint ventures and capital raising, and with experience with a diverse group of real estate-related investments including multifamily and debt-related investments. Mr. O’Hanlon received a Masters of Business Administration, Finance-Money and Financial Markets degree in 1979 from Columbia University Graduate School of Business. Mr. O’Hanlon has also received a Bachelor of Science, Accounting degree in 1973 from Fordham University. Mr. O’Hanlon has served and been an active member of the Real Estate Roundtable, NAREIT, ICSC and ULI.

WeGerald ~~had~~J. ~~ownership~~Reihsen, III ~~interests~~serves inas ~~four~~the ~~properties~~Executive ~~and~~Vice ~~ten~~President ~~properties as~~ of ~~December~~Behringer ~~31,~~Advisors ~~2011~~II. ~~and~~Since ~~2010~~2001, ~~respectively~~Mr. ~~All~~Reihsen ~~investments~~has served in ~~partnerships~~this and ~~joint~~similar executive ~~ventures~~capacities ~~were consolidated~~ with ~~and into our accounts. During~~ the ~~year~~other ~~ended~~Behringer ~~December~~Harvard 31companies, ~~2011~~including weserving ~~sold~~as ~~Landmark~~President Iof ~~and~~Behringer IISecurities ~~and~~through March ~~5050 Quorum and returned~~ 2012.

41For over 20 years, Mr. Reihsen’s business and legal background has centered on sophisticated financial and transactional matters, including commercial real estate transactions, real estate partnerships, and public and private securities offerings. For the period from 1985 to 2000, Mr. Reihsen practiced as an outside corporate securities attorney. After serving from 1986 to 1995 in the corporate department of Gibson, Dunn & Crutcher, LLP, a leading international commercial law firm, Mr. Reihsen established his own firm, Travis & Reihsen, where he served as a corporate/securities partner until 1998. In 1998, Mr. Reihsen became the lead partner in the corporate/securities section of the law firm Novakov Davis, where he served until 2000. In 2000, he practiced law as a principal of Block & Balestri, a corporate and securities law firm. In 2000 and 2001, Mr. Reihsen was employed as the Vice President – Corporate Development and Legal of Xybridge Technologies, Inc., a telecommunications software company that Mr. Reihsen helped guide through venture funding, strategic alliances with international telecommunications leaders and its ultimate sale to Zhone Technologies, Inc. Mr. Reihsen holds FINRA Series 7, 24, 27 and 63 registrations. Mr. Reihsen received a Bachelor of Arts degree, magna cum laude, from the University of Mississippi and a Juris Doctorate degree, cum laude, from the University of Wisconsin.

~~TABLE~~Gary OFS. ~~CONTENTS~~Bresky is the Chief Financial Officer of Behringer Advisors II. Mr. Bresky also serves as Executive Vice President and Chief Financial Officer or in similar executive capacities with other entities sponsored by Behringer Holdings, including Behringer Harvard Advisors I LP who is the managing trustee of Behringer Harvard Mid-Term Value Enhancement Liquidating Trust. Mr. Bresky also serves as Executive Vice President of Behringer Harvard REIT I (since June 2002), Behringer Harvard Opportunity REIT I (since June 2007), Behringer Harvard Opportunity REIT II (since January 2007) and Behringer Harvard Multifamily REIT I (since August 2006). He previously served as Chief Financial Officer of Behringer Harvard REIT I (from June 2002 to May 2009), Behringer Harvard Opportunity REIT I (from November 2004 to November 2010), Behringer Harvard Opportunity REIT II (from January 2007 to November 2010) and Behringer Harvard Multifamily REIT (from August 2006 to September 2009).

~~Plaza~~Mr. Bresky ~~Skillman~~has been toactive ~~the~~in ~~lender.~~commercial Inreal ~~addition,~~estate ~~during~~and ~~the~~related ~~year~~financial ~~ended~~activities ~~December~~for ~~31,~~over ~~2011~~15 years. Prior to his employment with Behringer Advisors II, weMr. ~~sold~~Bresky ~~the~~served ~~remaining~~as ~~developed~~Senior ~~land~~Vice ~~lots~~President ~~and~~of ~~luxury~~Finance ~~homes~~with atHarvard ~~Bretton~~Property ~~Woods~~Trust, ~~five~~Inc. ~~previously~~from ~~leased~~1997 ~~condominiums~~to as2001. ~~well~~In asthis capacity, ~~one~~Mr. ~~model~~Bresky ~~unit~~was atresponsible ~~the~~for ~~Palomar~~directing ~~Residences~~all accounting and ~~returned~~financial ~~the~~reporting ~~undeveloped~~functions ~~land~~and inoverseeing ~~Melissa,~~all ~~Texas~~treasury management toand banking functions for the ~~lender~~company. WeMr. Bresky also ~~signed~~was aintegral ~~long-term~~in ~~full~~analyzing ~~building~~deal ~~lease~~and atcapital ~~1221~~structures ~~Coit~~as ~~Road~~well as ~~that~~participating ~~began~~ in ~~October~~all ~~2011.~~major decisions related to any acquisition or sale of assets.

~~Continuing~~From ~~Operations~~1995 until 1996, Mr. Bresky worked in the Real Estate Group at Coopers & Lybrand LLP in Dallas, Texas, where he focused on finance and accounting for both public and private REITs. His experience included conducting annual audits, preparing public securities reporting compliance filings and real estate securities registration statements for his clients. From 1989 to 1994, Mr. Bresky worked with Ten West Associates, LTD and Westwood Financial Corporation in Los Angeles, California as a real estate analyst and asset manager for two commercial real estate portfolios totaling in excess of $185 million. From 1988 until 1989, Mr. Bresky worked as an analysts’ assistant for both Shearson-Lehman Bros., Inc. and Hambrecht and Quist Inc. assisting brokers in portfolio management. Mr. Bresky holds FINRA Series 7, 24, 27 and 63 registrations. Mr. Bresky received a Bachelor of Arts degree from the University of California – Berkeley and a Masters of Business Administration degree from the University of Texas at Austin.

Rental Revenue. Rental revenue for the years ended December 31, 2011 and 2010 totaled $4.5 million and $4 million, respectively, and was comprised of revenue, including adjustments for straight-line rent and amortization of above-and below-market leases. The increase in rental revenues for the year ended December 31, 2011 is due to the new long-term full building lease at 1221 Coit Road. Excluding any non-recurring items, management expects rental revenue to remain relatively flat unless we are able to lease-up available space. 40

~~Hotel Revenue~~M. ~~Hotel~~ ~~revenue~~Jason ~~for~~Mattox is the ~~years~~Executive ~~ended~~Vice ~~December~~President ~~31,~~of ~~2011~~Behringer ~~and~~Advisors ~~2010~~II ~~was $14.2 million~~ and ~~$12.7~~serves ~~million, respectively, and was comprised of revenue generated by the hotel operations of Hotel Palomar. The increase~~ in ~~hotel~~a ~~revenue~~similar iscapacity ~~primarily~~with ~~due~~other toBehringer ~~the~~Harvard ~~hotel hosting Dallas-Fort Worth area Super Bowl events in February 2011~~companies. From ~~Excluding~~2002 ~~the~~until ~~effects~~March ~~of additional one-time events in the future~~2006, weMr. ~~anticipate~~Mattox ~~hotel~~served ~~revenue to increase~~ as the ~~hospitality~~Senior ~~industry~~Vice ~~continues~~President toof ~~recover.~~Behringer Advisors II.

~~Real~~From ~~Estate~~1997 ~~Inventory~~until ~~Sales~~joining Behringer ~~Revenue. Real~~Advisors ~~estate~~II ~~inventory~~in ~~sales revenue for the years ended December 31~~2002, ~~2011 and 2010 was $5~~Mr.6 ~~million~~Mattox ~~and~~served ~~$1.7~~as ~~million,~~a ~~respectively.~~Vice ~~Revenue~~President ~~for~~of ~~the~~Harvard ~~year~~Property ~~ended December 31~~Trust, ~~2011~~Inc. isand ~~the~~became ~~result~~a ofmember ~~sales~~ of ~~home~~its Investment ~~inventory~~Committee ~~and~~in ~~developed~~1998. ~~land~~From ~~lots~~1999 atuntil ~~Bretton~~2001, ~~Woods~~Mr. ~~and~~Mattox ~~condominiums~~served atas ~~the~~Vice ~~Palomar~~President ~~Residences.~~of ~~Revenue~~Sun ~~for~~Resorts ~~the~~International, ~~year~~Inc., ~~ended~~a ~~December~~recreational property 31investment company, ~~2010~~coordinating ~~was~~marina ~~generated~~acquisitions bythroughout the ~~sale~~southern ofUnited ~~home~~States ~~inventory~~ and ~~developed~~the ~~land at Bretton Woods. The~~ U.S. ~~housing~~Virgin ~~market~~Islands. From ~~continued~~1999 tountil ~~struggle~~2001, ~~from~~in aaddition ~~significant~~to ~~slowdown~~providing ~~that~~services ~~began~~related into ~~2006.~~investing, ~~The slowdown~~acquisition, ~~which~~disposition ~~began~~and ~~with~~operational ~~a decline in consumer confidence~~activities, ~~an overall~~ ~~softening~~Mr. ofMattox ~~demand~~served ~~for~~as ~~new homes and~~ an ~~oversupply~~asset ofmanager ~~homes~~with ~~available~~responsibility for ~~sale,~~over ~~has~~one ~~been~~million ~~exacerbated~~square ~~by,~~feet ~~among~~of ~~other~~Harvard ~~things,~~Property ~~a decline in the overall economy~~Trust, ~~increased~~Inc.’s commercial ~~unemployment,~~office aassets ~~decline~~ in ~~home~~Texas ~~prices~~ and ~~the~~Minnesota, ~~resulting~~overseeing ~~reduction~~property ~~in home equity~~performance, ~~and~~management ~~indirect impact of the turmoil in the mortgage loan market. If these conditions continue to exist~~offices, wepersonnel ~~will~~and ~~continue to experience slow sales of our real estate inventory in the future~~outsourcing relationships.

~~Property~~Mr. ~~Operating~~Mattox ~~Expenses. Property~~is ~~operating~~a ~~expenses~~continuing member ~~for~~of the ~~years~~Building ~~ended~~Owners ~~December 31, 2011~~ and ~~2010~~Managers ~~were~~Association ~~$14.6 million~~ and ~~$14.1~~the ~~million,~~National ~~respectively,~~Association ~~and were comprised~~ of ~~expenses~~Industrial ~~related~~and toOffice ~~the~~Properties. ~~daily operations of our properties~~Mr. ~~The~~Mattox holds ~~increase~~FINRA inSeries ~~operating expenses for the year ended December 31~~7, ~~2011~~24 isand ~~primarily~~63 ~~due~~registrations. toMr. ~~certain~~Mattox ~~costs~~received ~~for~~both ~~Cassidy Ridge no longer being capitalized as~~ a ~~result~~Bachelor of ~~construction~~Business ~~being~~Administration ~~complete~~degree, with honors, and ~~increased~~a ~~activity~~Bachelor atof ~~Hotel~~Science ~~Palomar.~~degree, Wecum ~~expect~~laude, ~~property~~from ~~operating~~Southern ~~expenses~~Methodist ~~to remain at current levels unless we are able to lease-up available space and lodging demand increases~~University.

~~Asset Impairment Loss~~S. ~~Asset~~ ~~impairment~~Jason ~~loss~~Hall is ~~for~~Treasurer ~~the~~of ~~years~~Behringer ~~ended~~Advisors ~~December~~II 31and, ~~2011~~in ~~and~~such ~~2010~~capacity, ~~was $11~~Mr.6 ~~million~~Hall ~~and~~served ~~$2.3~~as ~~million,~~principal ~~respectively.~~accounting ~~During~~officer of the ~~year~~Behringer ~~ended~~Harvard Short-Term ~~December~~Opportunity ~~31,~~Fund ~~2011~~I weLP ~~recorded~~and ~~impairment~~now ~~charges~~serves ofas ~~$10.2~~principal ~~million~~accounting ~~related~~officer toof ~~250/290~~the ~~John~~Liquidating ~~Carpenter~~Trust. ~~Freeway~~Mr. asHall aalso ~~result~~serves as ofthe ~~declining~~Senior ~~market~~Controller ~~rental~~and ~~rates~~Director ~~and~~of ~~continuing~~Financial ~~vacancies~~Reporting atfor the ~~property~~Behringer asHarvard ~~well~~Opportunity as

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