3. INVESTMENT PROPERTIES and PROPERTIES HELD FOR SALE:

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, 2013, the Partnership owned property leased to twelve fully constructed fast-food restaurants. The twelve tenants are composed of the following: nine Wendy’s restaurants, an Applebee’s restaurant, a KFC restaurant, and a Daytona’s All Sports Café. The Properties are located in a total of five states.

Wendy’s- 361 Highway 17 Bypass, Mt. Pleasant, SC Property

On November 30, 2010, the County of Charleston (the “County”) made a purchase offer (“Initial Offer”) of approximately $177,000 to the Partnership in connection with an eminent domain (condemnation) 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. In October of 2011, the Partnership received Notice (“Condemnation Notice”) that the County filed condemnation proceedings on October 12, 2011, which in effect permitted the County to take possession of approximately 5,000 square feet of the Wendy’s- Mt. Pleasant property and to begin construction of the planned road improvements. The Partnership had until November 11, 2011, to reject the Initial Offer for the purchase of the property, and did reject the tender of payment. However, the Initial Offer remained valid during the period the Partnership disputed the County’s position that the $177,000 reflected just compensation for the taking of the property. By and through respective legal counsel, the Partnership and the lessee, Wendcharles I, each filed a Notice of Court Appearance and requested a jury trial in October 2012. In addition, the Partnership and the lessee served one set of joint initial discovery requests with the County requesting information about and access to up-to-date project plans and any and all other information pertaining to this matter. As the Partnership continued to dispute the Initial Offer as fair value of the land acquisition, mediation between the Partnership and the County was scheduled for February 1, 2013. The County was to have provided an updated appraisal of the taking prior to the mediation date to incorporate the value impact of eliminating one of the two access drives among other unique impacts not previously addressed in the initial appraisal. However, the appraisal was not completed and the February 1, 2013 mediation was cancelled. Mediation was subsequently held on March 15, 2013 with no settlement achieved.

During April 2013, the County and the Partnership settled the total award for just compensation in the amount of $871,500. The combined contingent legal fees shared by legal counsel for the Partnership and the tenant totaled approximately$147,250.

Discontinued Operations

During the three month periods ended June 30, 2013 and 2012, the Partnership recognized income (loss) from discontinued operations of $304,338 and ($9,519), respectively. During the six month period ended June 30, 2013 and 2012, the Partnership recognized income (loss) from discontinued operations of $302,704 and ($22,921), respectively. The 2013 income is made up of the gain on the sale of the condemned property to the County of Charleston, SC, offset by the cost of traveling to attend the mediation held for the Mt. Pleasant, SC property on March 15, 2013 and related legal costs in negotiating a settlement with the Wendy’s, Mt. Pleasant, SC Tenant (See also Note 13 Subsequent Events for additional disclosures). The 2012 loss from discontinued operations is attributable to the cost of securing and maintaining the vacant Phoenix, AZ property that was subsequently sold in October 2012.

The components of properties held for sale in the balance sheets as of June 30, 2013 and December 31, 2012 are outlined below:


	June 30,		December 31,
	2013		2012
Balance Sheet:
Land	$	0	$	33,991

Properties held for sale	$	0	$	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, 2013 and 2012 are outlined below:


	Three Month Period Ended				Six Month Period Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Statements of Income (Loss):
Revenues:
Rental income	$	0	$	0	$	0	$	0
Other income		0		2,500		0		2,500
Net Gain on sale of condemned land		307,270		0		307,270		0

Total Revenues	$	307,270	$	2,500	$	307,270	$	2,500

Expenses:


Insurance expense	0	690		0	1,381
Professional services	0	480		0	2,040
Property tax expense	0	3,786		0	7,571
Other property expenses	0	7,063		0	14,429
Legal Expenses	2,774	0		2,774	0
Travel Expenses	158	0		1,792	0

Total Expenses	$2,932	$12,019		$4,566	$25,421

Net Income (Loss) from Discontinued Operations	$304,338	($9,519	)	$302,704	($22,921	)