Leases

6 Months Ended

Jun. 30, 2012

Leases [Abstract]

LEASES

5. LEASES:

Original lease terms for the majority of the Properties are generally five to twenty years from their inception. The leases generally provide for minimum rents and additional rents based upon percentages of gross sales in excess of specified breakpoints. The lessee is responsible for occupancy costs such as maintenance, insurance, real estate taxes, and utilities. Accordingly, these amounts are not reflected in the statements of income except in circumstances where, in Management’s opinion, the Partnership will be required to pay such costs to preserve its assets (i.e., payment of past-due real estate taxes). Management has determined that the leases are properly classified as operating leases; therefore, rental income is reported when earned on a straight-line basis and the cost of the property, excluding the cost of the land, is depreciated over its estimated useful life.

As of June 30, 2012, the aggregate minimum operating lease payments (including the aggregate total of the first and second quarters of 2012 collected revenues of $508,248) to be received under the current operating leases for the Partnership’s properties are as follows:

Year ending December 31,	$	1,002,830
2012		892,500
2013		856,500
2014		826,500
2015		813,882
2016		3,399,543
Thereafter	$	7,791,755

Operating percentage rents included in operating rental income for the three month periods ended June 30, 2012 and 2011 were approximately $26,000 and $19,000, respectively. Operating percentage rents included in operating rental income for the six month periods ended June 30, 2012 and 2011 were approximately $26,000 and $50,000, respectively. The percentage rents for 2012 and 2011 included percentage rent accruals for tenants who had reached their sales breakpoints. The 2011 percentage rents also included the amount related to the formerly owned Denny’s, Phoenix, AZ property, which was sold in November of 2011. Total operating percentage rents included in rental income from operations in 2011 were approximately $431,000. At June 30, 2012 and December 31, 2011, rents and other receivables included approximately $26,000 and $404,000, respectively, of unbilled percentage rents. As of June 30, 2012, all of the 2011 percentage rents had been billed and collected.

At June 30, 2012, six of the Properties are leased to Wendgusta, two of the Properties are leased to Wendcharles I, and one of the properties is leased to Wendcharles II. As of June 30, 2012, the three tenants’ operating base rents have accounted for approximately 54%, 15%, and 8%, respectively, of the total 2012 operating base rents to-date.