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 September 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 September 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 Daytona’s remains 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 Daytona’s was expected to vacate the premises by May 31, 2014, and that Daytona’s is 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.

On July 8, 2014, the Partnership signed a listing agreement with a broker, Hubbell Commercial Brokers, L.C., (the “Broker”) to sell or lease the property during the term of the listing, which ends December 31, 2014. The sale asking price is $576,000, and the lease asking price is $14.45 per square foot on a triple net basis. In the event of a sale, a 6.5% to 8% commission on the sale price will be due to the Broker as outlined in the listing agreement. In the event of a lease, a 6% commission on the fixed rent payable during the lease term will be due to the Broker. The net book value of this property on the balance sheet is $261,616 as of September 30, 2014.

On September 12, 2014, the Partnership signed a purchase agreement with Sundance, Inc., for the sale of the property at a sale price of $555,000. Closing is expected to take place in the first quarter of 2015.

Discontinued Operations

During the three month periods ended September 30, 2014 and 2013, the Partnership recognized (loss) income from discontinued operations of ($14,283) and $16,200, respectively. During the nine month periods ended September 30, 2014 and 2013, the Partnership recognized (loss) income from discontinued operations of ($19,818) and $55,629, respectively. The income and loss is made up of revenues earned from the tenant Daytona’s during their occupancy through May 31, 2014, and the costs to maintain the vacant Des Moines, Iowa property while it is held for sale and since the tenant vacated. These costs include utilities, property insurance and real estate taxes.

The components of properties held for sale in the balance sheets as of September 30, 2014 and December 31, 2013 are outlined below:


	September 30, 2014		December 31, 2013

Balance Sheet:
Land	$	161,996	$	161,996
Net Building Value	$	99,620	$	107,273

Properties held for sale	$	261,616	$	269,269

Properties held for sale is related to the pending sale of the vacant property in Des Moines, Iowa, as discussed in further detail elsewhere in this Form 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, 2014 and 2013 are outlined below:


	Three Month Period Ended					Nine Month Period Ended
	September 30, 2014			September 30, 2013		September 30, 2014			September 30, 2013
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Statements of Income (Loss):
Revenues:
Rental income	$	0		$	16,200	$	27,750		$	55,629

Total Revenues	$	0		$	16,200	$	27,750		$	55,629

Expenses:
Bad Debt Expense	$	0		$	0	$	31,116		$	0

Insurance expense		1,409			0		1,643			0

Property tax expense		4,887			0		6,516			0

Other property expenses		3,647			0		3,953			0

Legal Expenses		4,340			0		4,340			0

Total Expenses	$	14,283		$	0	$	47,568		$	0

Net Income (Loss) from Discontinued Operations	($	14,283	)	$	16,200	($	19,818	)	$	55,629