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 September 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 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. The Partnership received Notice that the County, filed condemnation proceedings on October 12, 2011, which resulted in a partial taking of the Wendy’s- Mt. Pleasant property leased by tenant Wendcharles I, LLC (“Tenant”). In May 2013, The Partnership and Tenant settled the condemnation action for the sum of $871,500 and the widening of the remaining curb cut at the property. Subsequently, the Partnership and Tenant settled the adjudication of lease and just compensation award allocation of the $724,247 deposited with the Clerk of Court before a trial on the allocation of just compensation occurred. On July 19, 2013, the Partnership entered into a Release, evidencing the settlement that provides for a payout of the monies held by the Clerk of Court and an amendment to the lease with Tenant providing for a reduction in monthly rent of the property. The Release provides that the Tenant shall receive $181,062 of the monies on deposit with the Clerk of Court, the Tenant will execute an amendment of its Lease with the Partnership, the Tenant will receive the balance of $181,062 ratably over the balance of the original term of the lease effective August 1, 2013 in the form of a rent reduction in monthly savings of $1,829 in rent on the condition that Tenant continues to lease the property without default, and the Tenant’s annual rent under the lease will revert to the current annual fixed rent beginning in November 2021 at the onset of the five year renewal option lease term.

Contemporaneously with the Partnership’s execution of the Release, the Partnership entered into an Amendment of Lease with Tenant, dated July 19, 2013 (the “Amendment”), which amends the original lease, as amended (“Lease”), as a condition to the Release. The Amendment renews the Lease under the first extension term, commencing on November 7, 2021 and ending on November 6, 2026. The Amendment revised the legal description of the premises under the Lease and replaces Section 1.12 of the Lease to provide that the Base Monthly Rent for the remainder of the Lease, beginning on the Effective Date and ending on November 6, 2021, shall be $4,611.09 and for the first extension term beginning on November 7, 2021 and ending on November 6, 2026 and for the second extension term shall be $6,440. Finally, the Amendment further provides that it, together with the Release, settles all claims relating to the apportionment of the condemnation award and Article X of the Lease is deemed satisfied with respect to such condemnation proceedings. A Current Report on Form 8-K was filed with the SEC on July 24, 2013 further describing the terms of the agreement between the Partnership and the Tenant amending the Lease.

Discontinued Operations

During the three month periods ended September 30, 2013 and 2012, the Partnership recognized income (loss) from discontinued operations of $0 and ($10,144), respectively. During the nine month periods ended September 30, 2013 and 2012, the Partnership recognized income (loss) from discontinued operations of $302,704 and ($33,064), 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. 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 September 30, 2013 and December 31, 2012 are outlined below:


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

Properties held for sale	$	0	$	33,991

Properties held for sale is $0 at September 30, 2013 due to the sale of the portion of the Wendy’s – Mt. Pleasant property to the County of Charleston, SC in May 2013 as discussed in further detail elsewhere in this 10-Q.

The components of discontinued operations included in the condensed statement of income (loss) for the three and nine month periods ended September 30, 2013 and 2012 are outlined below:


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

Total Revenues	$	0	$	0		$	307,270	$	2,500

Expenses:
Insurance expense		0		698			0		2,078
Professional services		0		20			0		2,060
Property tax expense		0		3,785			0		11,356
Other property expenses		0		5,640			0		20,070
Legal Expenses		0		0			2,774		0
Travel Expenses		0		0			1,792		0

Total Expenses	$	0	$	10,144		$	4,566	$	35,564

Net Income (Loss) from Discontinued Operations	$	0		($10,144	)	$	302,704		($33,064	)