Investment Properties

6 Months Ended

Jun. 30, 2011

Investment Properties

Investment Properties

3. INVESTMENT PROPERTIES:

The total cost of the Properties includes the original purchase price plus acquisition fees and other capitalized costs paid to an affiliate of the former general partners.

As of June 30, 2011, the Partnership owned fourteen fully constructed fast-food restaurants, which includes one vacant property in Phoenix, AZ (formerly operated as China Buffet). The thirteen operating tenants are composed of the following: nine Wendy's restaurants, a Denny's restaurant, an Applebee's restaurant, a KFC restaurant, and a Daytona's All Sports Café ("Daytona's"). The fourteen properties are located in a total of six states.

The China Super Buffet restaurant ceased operations and vacated the Phoenix, AZ property in late June of 2011. Management had sent the former tenant a letter of default in June, due to its delinquent May and June of 2011 lease obligations. Management regained possession of the property in July and although China Buffet is responsible for lease obligations through its lease end date of January 20, 2013, Management does not anticipate any further rent collections and therefore lease obligation charges ceased as of June 30, 2011. The carrying amount of the vacant Phoenix, AZ property was reduced by $540,118 to its estimated fair value of $0 during the second quarter of 2011.

The Partnership had been unsuccessful in finding a new tenant for the vacant Park Forest property, and on December 31, 2009, the carrying value of this property had been written down to $0. The property was then sold to an unaffiliated party in December of 2010 for a gross sales price of $7,000.

On November 30, 2010, the County of Charleston made a purchase offer of approximately $177,000 to the Partnership in connection with an eminent domain land acquisition of approximately 5,000 square feet of the approximately 44,000 square feet of the Wendy's- Mt. Pleasant, SC ("Wendy's- Mt. Pleasant") property. The proposed land purchase is for "Right of Way" for planned road improvements. Unfortunately, the plan provides for the relocation of ingress and egress that could make the operations of the Wendy's restaurant uneconomic. Management continues to actively work with the lessee, Wendcharles, and legal counsel to facilitate the re-engineering of the County's plans to preserve the viability of the site for Wendy's-Mt. Pleasant's operational use. The net book value of the land to be purchased is $33,991 and was reclassified to a property held for sale during the fourth quarter of 2010.

The Partnership did not recognize income (loss) from discontinued operations during the three and six month periods ended June 30, 2011. During the three and six month periods ended June 30, 2010, the Partnership recognized a (loss) from discontinued operations of approximately $15,000 and $24,000, respectively. The 2010 (loss) from discontinued operations was attributable to the fourth quarter of 2010 reclassification of a small strip of the Wendy's- Mt. Pleasant property to property held for sale and the third quarter of 2010 reclassification of the vacant Park Forest property to property held for sale (the property was sold in December of 2010) upon the execution of an Agency and Marketing Agreement with an unaffiliated party in August of 2010 to sell the Park Forest property.

The components of property held for sale in the balance sheets as of June 30, 2011 and December 31, 2010 are outlined below:

	June 30, 2011		December 31, 2010
Balance Sheet:
Land	$	33,991	$	33,991
Property held for sale	$	33,991	$	33,991

The components of discontinued operations included in the condensed statement of income (loss) for the three and six month periods ended June 30, 2011 and 2010 are outlined below:

	Three Month Period ended June 30, 2011		Three Month Period ended June 30, 2010			Six Month Period ended June 30, 2011		Six Month Period ended June 30, 2010
	(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Statements of Income (Loss):
Revenues:
Rental income	$	0	$	0		$	0	$	0
Total Revenues		0		0			0		0
Expenses:
General and administrative		0		250			0		250
Professional services		0		4,578			0		4,646
Property tax expense		0		9,000			0		18,000
Other property expenses		0		1,107					1,107
Total Expenses		0		14,935			0		24,003
Net Income (Loss) from Discontinued Operations	$	0	$	(14,935	)	$	0	$	(24,003	)