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, 2015, the Properties were leased to the operators of eleven fully constructed fast-food restaurants. The tenants are comprised of the following: nine Wendy’s restaurants, an Applebee’s restaurant, and a KFC restaurant. The eleven properties are located in a total of four states.

Property – 4875 Merle Hay Rd, Des Moines, IA (Formerly Daytona’s All-Sports Café “Daytona’s”)

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 December 31, 2014 Daytona’s has not made its monthly rent or real estate tax escrow payments for February, March, April or May 2014. On May 29, 2014, the Partnership filed a motion for default judgment, to which the tenant filed an answer denying all claims made against it. On July 10, 2014, the Partnership filed for summary judgment against the tenant for all amounts owing and as of June 30, 2015, is still pursuing collection against the tenant.

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. The Partnership completed the sale of the property on December 22, 2014 with net proceeds of approximately $490,000 paid to the Partnership.

Discontinued Operations

During the three month periods ended June 30, 2015 and 2014, the Partnership recognized income (loss) from discontinued operations of $75 and ($26,170), respectively. During the six month periods ended June 30, 2015 and 2014, the Partnership recognized loss from discontinued operations of $67 and $13,653, 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 discontinued operations included in the condensed statement of income (loss) for the three and six month periods ended June 30, 2015 and 2014 are outlined below:


	Three Month Period ended June 30, 2015			Three Month Period ended June 30, 2014			Six Month Period ended June 30, 2015			Six Month Period ended June 30, 2014
Statements of Income (Loss):
Revenues:
Rental income	$	0		$	11,100		$	0		$	27,750

Total Revenues	$	0		$	11,100		$	0		$	27,750

Expenses:
Bad debt expense	$	0		$	31,116		$	0		$	31,116
Insurance expense		0			235			0			235
Property tax expense		0			1,629			0			1,629
Other property expenses		(75	)		306			67			306
Legal expenses		0			0			0			0
Depreciation & amortization		0			3,984			0			8,117

Total Expenses	$	(75	)	$	37,270		$	67		$	41,403

Net Income (Loss) from Discontinued Operations	$	75		$	(26,170	)	$	(67	)	$	(13,653	)