INVESTMENT PROPERTIES AND PROPERTIES HELD FOR SALE

6 Months Ended

Jun. 30, 2014

Real Estate [Abstract]

INVESTMENT PROPERTIES AND PROPERTIES HELD FOR SALE

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 of the Partnership.

As of June 30, 2014, the Partnership owned property leased to eleven fully constructed fast-food restaurants and owns one vacant property in Des Moines, Iowa (formerly operated as Daytona’s All Sports Café (“Daytona’s”)). The eleven tenants are comprised of the following: nine Wendy’s restaurants, an Applebee’s restaurant, and a KFC restaurant. The twelve properties are located in a total of five states.

Vacant Property – 4875 Merle Hay Rd, Des Moines, IA

Daytona’s lease expired May 31, 2014 and the tenant vacated the premises on or about the same date. On January 24, 2014, the Partnership sent Daytona’s a 30-day Notice of Default for failure to pay its January rent. On February 3, 2014 the Partnership received payment for a portion of Daytona’s January rent and real estate tax escrow payment. The 30-day Notice of Default expired on February 23, 2014. As of June 30, 2014 Daytona’s has not made its monthly rent or real estate tax escrow payments for February, March, April or May 2014. Notice was sent to the tenant on April 22, 2014 that they remain in default of the lease for failure to pay monthly rent and real estate tax escrow payments and that the Partnership will not renew the lease upon its expiration. The notice also advised the tenant that they are expected to vacate the premises by May 31, 2014, and that they are responsible for paying all rent and real estate tax obligations owed as of January 1, 2014, through the termination of the lease on May 31, 2014, each in accordance with the Lease Agreement between the Partnership and the tenant dated March 1, 2003. On May 29, 2014, the Partnership filed an application for default judgment, which the tenant filed an answer denying all claims made against it. Along with the application for default judgment, the Partnership filed for enforcement of its landlord lien against the furniture, fixtures and equipment (“FF&E”) at the property. However, the tenant sold all FF&E at an auction on May 28, 2014. The Partnership has subpoenaed the auctioneer for the sale records in an attempt to recover the FF&E. On July 10, 2014, the Partnership filed for summary judgment against the tenant for all amounts owing. The Partnership plans to sell the property and has signed a listing agreement (see Note 13 Subsequent Events, for additional information).