Investment Properties and Properties Held for Sale

9 Months Ended

Sep. 30, 2015

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 September 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 had 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 Daytona’s filed an answer denying all claims made against it. On July 10, 2014, the Partnership filed for summary judgment against Daytona’s for all amounts owing as of June 30, 2015. On September 30, 2015, Daytona’s filed for Chapter 7 bankruptcy protection and a result, the bad debt allowance was written off by the Partnership as of that date.

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 September 30, 2015 and 2014, the Partnership recognized a loss from discontinued operations of $0 and ($14,283), respectively. During the nine month periods ended September 30, 2015 and 2014, the Partnership recognized losses from discontinued operations of ($67) and ($19,818) and, respectively. The losses are made up of revenues earned from the former tenant Daytona’s during their occupancy through May 31, 2014, offset by the costs to maintain the vacant Des Moines, Iowa property while it was held for sale after Daytona’s had vacated. These costs include utilities, property insurance and real estate taxes.

The components of discontinued operations included in the condensed statement of loss for the three and nine month periods ended September 30, 2015 and 2014 are outlined below:

	Three Month Period Ended					Nine Month Period Ended
	September 30, 2015		September 30, 2014			September 30, 2015			September 30, 2014
	(Unaudited)		(Unaudited)			(Unaudited)			(Unaudited)
Statements of Loss:
Revenues:
Rental income	$	0	$	0		$	0		$	27,750
Total Revenues	$	0	$	0		$	0		$	27,750
Expenses:
Bad Debt Expense	$	0	$	0		$	0		$	31,116
Insurance expense		0		1,409			0			1,643
Property tax expense		0		4,887			0			6,516
Other property expenses		0		3,647			67			3,953
Legal Expenses		0		4,340			0			4,340
Total Expenses	$	0	$	14,283		$	67		$	47,568
Loss from Discontinued Operations	$	0	$	(14,283	)	$	(67	)	$	(19,818	)