UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

        FOR ANNUAL AND TRANSITION REPORTS PUSUANT TO SECTIONS 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                   For the fiscal year ended December 31, 2003
                                             -----------------

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from_____________to_____________

                         Commission file number 0-50268
                                                -------

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                     Delaware                                11-3636084
                     --------                                ----------
          (State or Other Jurisdiction of                (I.R.S. Employer
           Incorporation or Organization)               Identification No.)

7 Bulfinch Place, Suite 500, Boston, Massachusetts             02114
--------------------------------------------------             -----
     (Address of Principal Executive Offices)                (Zip Code)

                                 (617) 570-4600
                                 --------------
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

  Securities registered pursuant to Section 12(g) of the Act: Units of Limited
                              Partnership Interest

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes |X| No |_|

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

                                 Yes |_| No |X|

      There is no public market for the Units of Limited Partnership Interest.
Accordingly, information with respect to the aggregate market value of Units of
Limited Partnership Interest has not been supplied.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

FORWARD-LOOKING STATEMENTS.....................................................1

   PART I

   ITEM 1.     BUSINESS........................................................2
   ITEM 2.     PROPERTIES.....................................................14
   ITEM 3.     LEGAL PROCEEDINGS..............................................28
   ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............29

   PART II

   ITEM 5.     MARKET FOR LIMITED PARTNERSHIP UNITS, RELATED
               SECURITY HOLDER MATTERS AND ISSUER PURCHASES
               OF EQUITY SECURITIES...........................................30

   ITEM 6.     SELECTED CONSOLIDATED FINANCIAL DATA...........................32
   ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS............................33
   ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK......45
   ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................46
   ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE............................46
   ITEM 9A.    CONTROLS AND PROCEDURES........................................47

   PART III

   ITEM 10.    MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............48
   ITEM 11.    EXECUTIVE COMPENSATION.........................................50
   ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT AND RELATED SECURITY HOLDER MATTERS.................50
   ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................51
   ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................56

   PART IV

   ITEM 15.    EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
               FORM 8-K.......................................................57

<PAGE>

                           FORWARD-LOOKING STATEMENTS

      In addition to historical information, this document contains
forward-looking statements. Forward-looking statements include information
relating to our intent, belief or current expectations, primarily, but not
exclusively, with respect to:

      o     economic outlook;
      o     capital expenditures;
      o     cash flow;
      o     operating performance;
      o     financing activities;
      o     industry developments, including trends affecting our business; and
      o     financial condition and results of operations.

      We identify forward-looking statements in this registration statement by
using words or phrases such as "anticipate," "believe," "estimate," "expect,"
"intend," "may be," "objective," "plan," "predict," "project" and "will be" and
similar words or phrases (or the negative thereof).

      The forward-looking information involves important risks and uncertainties
that could cause our actual results, performance or achievements to differ
materially from our anticipated results, performance or achievements expressed
or implied by such forward-looking statements. These risks and uncertainties
include, but are not limited to:

      o     occupancy rates and market rents, which may be adversely affected by
            economic and market conditions which are beyond our control,
            including the financial condition of our tenants;
      o     uncertainties relating to potential changes in interest rates and
            the availability of financing;
      o     uncertainties relating to our property portfolio;
      o     uncertainties relating to our operations;
      o     uncertainties relating to unexpected capital expenditures;
      o     uncertainties relating to domestic and international economic and
            political conditions; and
      o     uncertainties regarding the impact of regulations, changes in
            government policy, rules or laws and industry competition.

      Although we believe the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, we cannot assure you that such
expectations will be attained or that any deviations will not be material. We
disclaim any obligation or undertaking to disseminate to you any updates or
revisions to any forward-looking statement contained in this registration
statement to reflect any change in our expectations or any changes in events,
conditions or circumstances on which any statement is based.

<PAGE>

                                     PART I

ITEM 1. BUSINESS

General

      Your partnership is a Delaware limited partnership that owns commercial
properties, most of which are net-leased to investment grade corporate tenants,
as well as other real estate assets. Your partnership commenced operations on
January 1, 2002 following the completion of a transaction that we refer to as
the exchange, involving the merger into wholly-owned subsidiaries of your
partnership of 90 limited partnerships, each of which owned commercial
properties, and the acquisition by your partnership of various assets, including
those related to the management or capital structure of those partnerships. See
"Structure Chart" below. Each of the 90 partnerships, which we refer to as the
"Newkirk partnerships", was organized and sponsored by Integrated Resources,
Inc. between 1978 and 1984 and owned one or more commercial properties that we
refer to as the "Newkirk properties". Integrated Resources filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in February 1991 and
is no longer in existence. Members of the Newkirk Group, which consists of
affiliates of Apollo Real Estate Fund III, L.P., executive officers of Winthrop
Financial Associates, and affiliates of Vornado Realty Trust, first acquired
interests in the Newkirk partnerships in 1997.

      Your partnership's initial capital structure consisted of units of limited
partnership interest, which we refer to as units, that were issued in the
exchange. These units were not registered under the Securities Act of 1933 (the
"Securities Act") in reliance on an exemption from registration under that Act.
There is no public market for the units, and there are substantial restrictions
on the transfer of units.

      As of March 29, 2004, there were 6,310,983 units outstanding, 6,121,990 of
which were issued in the exchange and the balance of which were issued in a
subsequent transaction. The outstanding units reflect the repurchase by your
partnership of 128,820 units issued in the exchange.

Description of Assets

      General. As of December 31, 2003, your partnership owned an interest in
225 of the Newkirk properties, subordinated interests in a securitized pool of
notes evidencing first mortgage indebtedness secured by certain of your
partnership's properties as well as other properties, limited partnership
interests in various partnerships that own commercial net-leased properties,
including 43 properties that are owned by partnerships whose operations are
consolidated for financial reporting purposes with those of your partnership,
substantially all of the interests in two entities that hold unsecured debt
obligations of your partnership, an interest in a management company that
provides services for your partnership as well as other real estate
partnerships, ground leases, remainder interests or the right to acquire
remainder interests in various properties and miscellaneous other assets. In
addition, your partnership or an affiliate of your partnership's general partner
controls the general partner of the real estate limited partnerships in which
your partnership owns limited partnership interests, and your partnership has an
option to acquire in the future second mortgage debt secured by a substantial
number of your partnership's properties as well as the properties owned by 9
other partnerships. As of December 31, 2003, your partnership's commercial
properties represented approximately 86% of the total value of your
partnership's assets.


                                       2
<PAGE>

      Properties. The table below summarizes as of December 31, 2003,
information on the 225 Newkirk properties and 43 properties owned by 7 limited
partnerships whose operations are consolidated for financial reporting purposes
with those of your partnership. We refer to the partnerships that own the 43
properties as the consolidated partnerships and their properties as the
consolidated properties.

      Property Type                            Number         Square Footage
      -------------                            ------         --------------

      Office                                         39          7,724,000
      Retail                                        206          6,441,000
      Other                                          23          5,277,000
                                             ----------         ----------
               TOTAL                                268         19,442,000
                                             ==========         ==========

      The primary lease terms on the properties generally range from 20 to 25
years from their original commencement dates (between 1977 and 1984) with
primary term rents, typically above market, which, in most cases, fully amortize
the first mortgage debt on the properties. In addition, tenants generally have
multiple renewal options, with rents, on average, below market.

      Below is a listing of tenants which accounted for 3% or more of the
aggregate rental revenues in 2003 from the Newkirk properties and the
consolidated properties:

<TABLE>
<CAPTION>
                                                    Square Feet             2003          Percentage of Aggregate
      Tenant                                           Leased           Revenues ($)         Rental Revenues
      ------                                           ------           ------------         ---------------
<S>                                                  <C>                <C>                       <C>
      Raytheon (1)                                   2,006,993          $40,421,162               13.63%
      Albertson's, Inc.                              2,609,979           29,857,244               10.07%
      USF&G/The St Paul Co.                            530,000           25,532,489                8.61%
      Honeywell                                        727,557           19,799,258                6.68%
      Federal Express                                  592,286           14,811,530                5.00%
      Cummins Engine Company, Inc.                     390,100           13,557,463                4.57%
      Owens-Illinois                                   707,482           13,363,280                4.51%
      Entergy Gulf States                              453,189           11,394,759                3.84%
      Stater Bros. Markets                           1,434,152            9,319,153                3.14%
</TABLE>

----------
(1)   Property leased to Raytheon represented approximately 12.4% of your
      partnership's total assets as of December 31, 2003. Raytheon is a public
      company subject to the reporting requirements under the Securities
      Exchange Act of 1934. As of December 31, 2003, no other lessee leased
      property representing more than 10% of your partnership's total assets.


                                       3
<PAGE>

      The following chart sets forth certain information as of December 31, 2003
concerning lease expirations on the Newkirk properties and the consolidated
properties (assuming no renewals) from 2004 to 2013:

<TABLE>
<CAPTION>
                Number of Properties    Approximate Aggregate
                      at which            sq/ft. Covered by               Rental for           Percentage of Total
                   Lease Expires           Expiring Leases          Leases Expiring ($) (1)    Annualized Rental (1)
                   -------------           ---------------          -----------------------    ---------------------
<S>                      <C>                   <C>                        <C>                          <C>
2004                     29                      405,063                    4,227,142                   1.60%
2005                     23                    1,003,143                    6,083,467                   2.30%
2006                     30                    2,410,240                   26,982,528                  10.22%
2007                     32                    3,005,442                   37,284,017                  14.12%
2008                     89                    7,588,666                  109,912,613                  41.62%
2009                     42                    2,622,307                   62,126,878                  23.52%
2010                     1                       820,868                    2,780,007                   1.05%
2011                     2                       154,700                    2,176,540                   0.82%
2012                     9                       395,000                    3,187,136                   1.21%
2013                     1                        39,600                      788,722                   0.30%
</TABLE>

----------
      (1) Based on estimated base rent for the year ended December 31, 2004 and
excludes rent on a property in Dallas, Texas with multiple tenants. See "ITEM 2.
PROPERTIES."

      Please see "ITEM 2. PROPERTIES" for more detailed information regarding
your partnership's properties.

      Limited Partnership Interests in Other Partnerships. Your partnership owns
between 32.1% and 60.5% of the limited partnerships interests in the
consolidated partnerships as well as between .5% and 36.88% of the limted
partnerships interests in 8 other partnerships that own commercial net leased
properties. We refer to these latter partnerships as the unconsolidated
partnerships.

      General Partner Interests. Your partnership or an affiliate of your
general partner controls each of the general partners of (i) the 7 consolidated
partnerships, (ii) the 8 unconsolidated partnerships and (iii) 6 other
partnerships that own commercial net leased properties. Your partnership has
only a negligible economic interest, if at all, in each general partner entity
that it controls.

      The Management Company. Your partnership holds a 50.01% interest in
Newkirk Capital LLC. Newkirk Capital's wholly-owned subsidiary, Newkirk Asset
Management LLC, provides asset management services for your partnership and 9
other limited partnerships, the general partners of which are controlled by your
partnership. In 2002, $7,373,196 of asset management fees were paid, or accrued
for payment, to Newkirk Asset Management for services to your partnership and
the other partnerships. In 2003 approximately $7,000,000 of asset management
fees were paid, or accrued for payment, to Newkirk Asset Management. For
financial statement purposes, management fees received from the partnerships
that own the Newkirk properties and the consolidated properties are eliminated
in consolidation. Newkirk Asset Management also provides services in connection
with the sale, refinancing and re-leasing of properties owned by your
partnership and other partnerships for additional fees. In turn, Newkirk Asset
Management presently retains Winthrop Financial Associates, an affiliate of your
partnership's general partner, to perform accounting, asset management and
investor relations services for an annual fee of $1,800,000, subject to
adjustment based on increases in the Consumer Price Index (the "CPI"). The
adjustment for 2003 was 2.4%


                                       4
<PAGE>

bringing the fee to $1,843,200. All of the fees paid to Newkirk Asset Management
inure to the benefit of your partnership and its partners. Your partnership
realizes the benefits of the fee payments through its ownership interest in
Newkirk Capital and through its ownership of Newkirk Finco LLC (discussed
below). A substantial portion of these fees are not reflected in your
partnership's financial statements as they are eliminated in consolidation.

      Pursuant to the terms of Newkirk Capital's Limited Liability Company
Agreement, Administrator LLC, which holds the 49.99% interest in Newkirk
Capital, is entitled to receive 100% of the distributions paid by Newkirk
Capital until Administrator LLC receives $2,568,000 annually and thereafter, the
balance of the distributions are paid to your partnership. Administrator LLC is
owned by former principals and employees of Integrated Resources, Inc. and is
not affiliated with the Newkirk Group. Those individuals owned various assets,
including interests in the general partners, related to the Newkirk
partnerships. In 1997, entities controlled by those individuals sold to members
of the Newkirk Group assets related to the Newkirk partnerships which assets
were eventually acquired by your partnership in the exchange. As part of the
1997 transaction members of the Newkirk Group made a $40 million loan to
Administrator LLC. The priority distribution to Administrator LLC enables
Administrator LLC to pay interest on the promissory note evidencing the loan.
The note is held by Newkirk Finco LLC which is wholly-owned by your partnership.
Accordingly, your partnership effectively receives 100% of the fees paid to
Newkirk Capital. The note bears interest at a rate of 6.42% per annum and
matures on November 20, 2007. Prior to maturity, the note requires payments of
interest only. The note is secured solely by Administrator LLC's 49.99%
membership interest in Newkirk Capital and is otherwise non-recourse.
Accordingly, if Administrator LLC were to default on the note, Newkirk Finco LLC
would have the ability to foreclose on Administrator LLC's interest in Newkirk
Capital. To ensure payment of interest on the note, Administrator LLC has
directed Newkirk Capital to pay directly to Newkirk Finco LLC all distributions
payable to Administrator LLC in respect of its interest in Newkirk Capital. As
owner of Newkirk Finco LLC, your partnership will receive as interest payments
the amount of any distributions made by Newkirk Capital to Administrator LLC.
Your partnership's ownership interest in Newkirk Capital is pledged to
Administrator LLC to secure certain obligations owed to Administrator LLC by the
Newkirk Group. Creditworthy affiliates of the Newkirk Group have agreed to
indemnify your partnership for losses that it may incur as a result of the
failure of the Newkirk Group to satisfy such obligations.

      First Mortgage Interests. Your partnership owns the three most junior
classes of interests in a securitized pool of first mortgages with respect to 31
first mortgage loans encumbering a total of 65 of the Newkirk properties, two of
the consolidated properties and one other property owned by partnerships that
are controlled by affiliates of your partnership's general partner. In general,
the classes of interests in the pool of first mortgage loans represent
priorities of payments. When a payment is made by your partnership on one of
these loans, the first amounts are used to make the required payments to the
holders of senior interests. As a result, if the number of loan defaults results
in loan payments insufficient to fully satisfy the payments due on all
interests, payments will be made in the order of priority until all required
payments are made. If there is a default in the payment due on any interest the
entire loan is in default. However, in determining whether and when to exercise
various remedies upon a default, the servicer (the entity that manages the trust
fund into which the loans are pooled) must take into consideration what is best
for all interest holders.

      The interests held by your partnership are subordinate to interests which
had an original principal balance of $371,506,000 and a balance at December 31,
2003 of $179,257,000.. The following table provides certain information with
respect to each of the first mortgage interests held by your partnership.


                                       5
<PAGE>

                                        Class E         Class F        Class G
                                      Certificate     Certificate    Certificate
                                      -----------     -----------    -----------

Contractual Principal Amount
   at December 31, 2003               $4,824,000       $3,859,000     $5,794,000
Interest Rate                             8.33%           8.38%          8.33%
Rating (Standard & Poor's)                 BB               B          Not Rated

      Unsecured Loans. Your partnership beneficially owns 97.775% of the
interests in NK-Leyden Loan, L.P. which holds a $1,905,000 unsecured note of
your partnership and 97.324% of the interests in NK-Dautec Loan, L.P., which
holds a $1,075,000 unsecured note of your partnership. Your partnership acquired
these interests in connection with the exchange in order to substantially reduce
debt service costs associated with two properties owned by your partnership and
to eliminate potential conflicts relating to the unsecured loans in each case,
by owning a significant portion of the entity to which your partnership is
indebted. The remaining interests in these two entities are held by unaffiliated
third parties.

      The $1,905,000 note provides for the payment of interest only at a basic
rate of 8% per annum until maturity on December 31, 2006. Additional interest,
which together with the basic interest can aggregate up to 25% per annum, is
payable after the establishment of reserves. Interest is payable solely out of
excess cash flow (as defined under the loan) from a property owned by your
partnership in Toledo, Ohio. Your partnership has the right to extend the loan
for 10 years. In that event the unpaid balance on the loan (including accrued
but unpaid interest) will thereafter bear interest at 18% per annum and be
required to be self-amortized over the remaining term of the loan. The principal
amount outstanding on this note at December 31, 2003 and 2002 was $1,905,000.
For financial statement purposes, the principal balance and interest income are
eliminated in consolidation.

      The $1,075,000 note matures on May 1, 2008 and provides for payments of
principal and interest solely out of excess cash flow (as defined under the
loan) from a property owned by your partnership in New Kingston, Pennsylvania.
The basic interest rate is 8% per annum and additional interest, which together
with the basic interest can aggregate up to 18% per annum, is payable if excess
cash flow exceeds specified levels. The principal amount outstanding on this
note at December 31, 2003 and December 31, 2002 was $685,958 and $865,834,
respectively. For financial statement purposes, the principal balance and
interest income are eliminated in consolidation.

      The Subordinate Mortgage Interests. In addition to being encumbered by
first mortgage loans, 181 of your partnership's Newkirk properties are
encumbered by second mortgage loans which as of December 31, 2003 had an
outstanding balance, including accrued interest, of approximately $354,952,000.
Prior to the transactions described below, affiliates of your partnership's
general partner, through a limited partnership called T-Two Partners, owned
subordinated beneficial interests in these and certain other second mortgage
loans. Senior beneficial interests in the second mortgage loans were held by an
unaffiliated entity and three junior tranches of such senior beneficial
interests were held by certain members of the Newkirk Group. Also prior to the
transactions described below, the owners of T-Two Partners had an option, which
we refer to as the put option, to require your partnership to purchase T-Two
Partners in December 2007 in exchange for units in your partnership and your
partnership had an option, which we refer to as the call option, to purchase
T-Two Partners in January 2008 in exchange for units in your partnership.

      On November 24, 2003, your partnership obtained a $208,473,427 loan from
Fleet National Bank that bears interest at a rate elected by your partnership
equal to either (1) LIBOR plus 450 basis points or (2)


                                       6
<PAGE>

the prime rate charged by Fleet National Bank plus 250 basis points. The loan
was obtained to replace your partnership's existing loan from Fleet National
Bank, and effectively reduced the interest rate on such borrowing from a minimum
of 8.5% to a floating rate which is presently 5.71% and that will in no event
exceed 9.5%, after giving effect to the three-year interest rate protection
agreement entered into by your partnership. The loan is scheduled to mature on
November 24, 2006, subject to two one-year extensions. The loan requires monthly
payments of interest only which are currently approximately $976,000 per month.
In addition, mandatory prepayments of principal are required from the proceeds
of property sales and refinancings and other asset sales, as well as up to
$1,312,500 per quarter to the extent that T-Two Partners does not make the
required principal payments on the T-Two Loan that is described below. Your
partnership can prepay the loan in whole or in part at any time together with a
premium of 1% if such prepayment occurs on or before November 24, 2004, 1/2% if
such prepayment occurs between November 25, 2004 and November 24, 2005 and
thereafter with no premium. In addition, your partnership and T-Two Partners may
prepay up to $50,000,000 annually of this loan and the T-Two Loan without a
premium. The loan is secured by substantially all of the assets of your
partnership, and contains customary financial and other covenants consistent
with the prior loan from Fleet National Bank. The loan balance at December 31,
2003 was $208,355,757.

      On November 24, 2003, at the same time as your partnership obtained its
loan from Fleet National Bank, T-Two Partners obtained a $316,526,573 loan from
Fleet National Bank. We refer to this loan as the T-Two Loan. The interest rate,
maturity date and principal terms of the T-Two Loan are the same as your
partnership's loan. T-Two Partners used part of the proceeds of the T-Two Loan
to purchase the senior beneficial interests in the second mortgage loans
encumbering your partnership's and certain other partnerships' properties so
that T-Two Partners is now the 100% beneficial owner of these second mortgage
loans. We refer to these senior beneficial interests as the T-1 Certificate. The
T-Two Loan is secured by all the assets of T-Two Partners, including the second
mortgage loans receivable from your partnership. Your partnership guaranteed
repayment of the T-Two Loan to Fleet National Bank. In consideration for your
partnership's guarantee, the owners of T-Two Partners agreed to the elimination
of their put option, and to provide a credit line to your partnership bearing
interest at LIBOR plus 450 basis points. Any amounts advanced to your
partnership under the credit line would have to be repaid in full before your
partnership could purchase the interests in T-Two Partners if your partnership
exercises the purchase option described below. The loan balance at December 31,
2003 was $315,901,500.

      T-Two Partners will reimburse your partnership for approximately
$7,346,000 of closing costs incurred in connection with the Fleet loan and the
T-Two Loan, together with interest thereon at a rate equal to LIBOR plus 450
basis points.

      Your partnership's call option had previously provided for the acquisition
of the interests in T-Two Partners in January 2008 in exchange for a number of
units in your partnership to be determined at the time of exercise based on an
agreed-upon formula. Your partnership and the owners of T-Two Partners modified
your partnership's option in certain respects. First, the option can now be
exercised by your partnership at any time between November 24, 2006 and November
24, 2009. Second, the purchase price is payable in cash rather than units in
your partnership. Finally, the formula for determining the purchase price
payable by your partnership if it exercises the option has been revised in a
manner that your partnership's general partner believes to be significantly more
favorable to your partnership than the formula previously in effect.
Specifically, the purchase price is calculated as follows: the sum of
$316,526,573 plus T-Two Partners' costs of obtaining the T-Two Loan
(approximately $7,346,000) and administering the trust that holds the second
mortgage loans, together with interest on the foregoing sum at the effective
rate of interest paid by T-Two Partners on the T-Two Loan, less all payments
made from and after November 24, 2003 on the second mortgage loans.


                                       7
<PAGE>

      All of the above transactions were entered into in connection with the
settlement of an action that had been brought in the Connecticut Superior Court
against your partnership's general partner and various of its affiliates. See
"ITEM 3. LEGAL PROCEEDINGS."

      On November 23, 2003, your partnership also acquired from T-Two Partners a
second mortgage loan on a property in El Segundo, California in which your
partnership has a 53% interest. The mortgage loan was acquired for $6,250,000
which represented its principal balance and accrued interest. The mortgage loan
bears interest at 8.0% per annum and matures in December 2023.


                                       8
<PAGE>

STRUCTURE CHART

      Set forth below is a chart setting forth the structure of your
partnership.

                          MASTER PARTNERSHIP STRUCTURE

<TABLE>
<S>                                                   <C>                                    <C>
          ----------------------------                ---------------------------            ---------------------------
           Former Limited Partners of
          the Newkirk Partnerships (1)                        MLP GP LLC (2)                     The Newkirk Group (3)
            (Other than the Newkirk
                      Group)
          ----------------------------                ---------------------------            ---------------------------
              LIMITED PARTNER      \             GENERAL  PARTNER  |           LIMITED PARTNER /
                                    \                              |                          /
                              19.5%  \                             |                         /  80.5%
                                      \                            |                        /
                                       \                           |                       /
                                        \                          |                      /
                             -------------------------------------------------------------------------

                                                          THE NEWKIRK MASTER
                                                         LIMITED PARTNERSHIP

                             -------------------------------------------------------------------------
                                  /            /        |          |            \                    \
                                 /            /         |          |             \                    \
                                /            /          |          |              \                    \
                               /            /           |          |               \                    \
                              /  100%      /  100%      |          |  100%          \  100%              \  50.01%
                             /            /             |          |                 \                    \
-------------------------------    -------------------  | ------------------    ---------------------    -----------------------
Subsidiary Limited Partnerships    Limited Partnership  | Newkirk GP LLC (6)    Newkirk Finco LLC (7)    Newkirk Capital LLC (8)
which hold the Newkirk             interests (5)        |
properties (4)                                          |
-------------------------------    -------------------  | ------------------    ---------------------    -----------------------
                                                        |
                                                        |
       |-------------------|------------------|------------------|----------------|---------------------------|
       |  100%             |  100%            |  97.775%         |  97.324%       |  100%                     |  100%
       |                   |                  |                  |                |                           |
----------------   -----------------   ---------------   ---------------   ---------------   ------------------------------------
NK-Remainder       Option to Acquire   NK-Leyden         NK-Dautec         Secured Debt      NK First Loan E Certificate LLC
Interest LLC (9)   Subordinate         Loan, L.P. (11)   Loan, L.P. (11)   Obligation (12)   NK First Loan F Certificate LLC
                   Mortgage                                                                  NK First Loan G Certificate LLC (13)
                   Interests (10)
----------------   -----------------   ---------------   ---------------   ---------------   ------------------------------------
</TABLE>


                                       9
<PAGE>

(1)   As a result of the exchange, the outstanding limited and general
      partnership interests in the Newkirk partnerships held by "accredited
      investors" (as that term is defined pursuant to Regulation D under the
      Securities Act) were converted into the right to receive units. Limited
      partners in Newkirk partnerships who were not "accredited investors"
      received a one-time cash payment in exchange for their limited partnership
      interests.

(2)   This entity is the general partner of your partnership, but has no
      economic interest in your partnership. It is owned by affiliates of
      Vornado Realty Trust and executives of Winthrop Financial Associates.

(3)   The Newkirk Group consists of affiliates of Apollo Real Estate Investment
      Fund III, L.P., executive officers of Winthrop Financial Associates and
      affiliates of Vornado Realty Trust. See "ITEM 12. SECURITY OWNERSHIP OF
      CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY HOLDER
      MATTERS" for more information on the allocation of units in your
      partnership among members of The Newkirk Group.

(4)   As part of the exchange, which took place on January 1, 2002, each Newkirk
      partnership was merged with and into a separate newly formed limited
      partnership that is wholly owned by your partnership, as a result of which
      your partnership became the owner of the properties and other assets
      previously owned by the Newkirk partnerships, subject to the liabilities
      of such partnerships.

(5)   Consists of limited partnership interests in the consolidated partnerships
      and the unconsolidated partnerships. See "- Description of Assets -
      Properties" above.

(6)   Controls the general partner interests in (i) 3 of the consolidated
      partnerships, (ii) 3 of the unconsolidated partnerships and (iii) 6
      additional partnerships that own net leased property. See "- Description
      of Assets - The Management Company" above.

(7)   Holds a non-recourse note from the minority partner in Newkirk Capital
      LLC, your partnership's management company, secured solely by the minority
      partner's membership interest in Newkirk Capital LLC. See "- Description
      of Assets - The Management Company" above.

(8)   Performs management services for your partnership and 9 other affiliated
      partnerships for which it receives fees. See "- Description of Assets -
      The Management Company" above.

(9)   Owns ground leases, or owns or has the right to acquire remainder
      interests, in the land underlying certain properties owned by your
      partnership and other real estate limited partnerships.

(10)  The subordinated mortgage interests are held by T-Two Partners, L.P.,
      which is owned by NK-CR Holdings LLC and Holdings Subsidiary LLC,
      affiliates of The Newkirk Group. Your partnership has the right to acquire
      T-Two Partners, L.P. between November 2006 and November 2009. See "-
      Description of Assets - The Subordinate Mortgage Interests" above.


                                       10
<PAGE>

(11)  Holds an unsecured debt obligation of your partnership. See "- Description
      of Assets - Unsecured Loans" above.

(12)  Secured debt obligation of Cenland Associates Limited Partnership. This
      obligation was fully satisfied in 2003. See "ITEM 2. PROPERTIES - Property
      Matters.

(13)  Own subordinated interests in a securitized pool of first mortgage
      indebtedness with respect to 31 first mortgage loans encumbering a total
      of 65 of the Newkirk properties, two of the consolidated properties and
      one other property owned by affiliated partnerships. See "- Description of
      Assets - First Mortgage Interests" above.

Description of Indebtedness

      See "- Description of Assets - The Subordinate Mortgage Interests" for a
description of your partnership's loan with Fleet National Bank and the related
T-Two Loan to T-Two Partners. The loan requires your partnership and T-Two
Partners to maintain an aggregate minimum consolidated debt service coverage
ratio (i.e., the ratio of your partnership's and T-Two Partners' consolidated
net cash revenues from investments, exclusive of debt payable to T-Two Partners,
before property-level debt service to their total consolidated debt service) of
at least 1.15 during the initial 36 month term and at least 1.25 during the
extension periods. Your partnership and T-Two Partners are also required to
maintain an aggregate minimum debt service coverage ratio (i.e., the ratio of
your partnership's and T-Two Partners' net cash revenue from investments,
exclusive of debt payable to T-Two Partners, after property-level debt service
to unconsolidated debt service) of at least 1.75 during the initial 36 month
term or 2.0 during the extension periods. If your partnership's and T-Two
Partners' aggregate debt service coverage ratio falls below 1.75 during the
initial 36 month term or 2.0 during the extension periods, then all cash flow of
your partnership and T-Two Partners will be deposited into a cash sweep account
as additional collateral for the loan and your partnership would be prohibited
from making distributions. As of December 31, 2003, your partnership's and T-Two
Partners aggregate consolidated debt service coverage ratio was 1.28 and their
debt service coverage ratio was 3.57. Your partnership's general partner
believes that your partnership will be able to maintain the required ratios and
does not anticipate that the maintenance of these ratios will have an adverse
impact on your partnership's financial condition.

      Your partnership is also required to maintain a consolidated leverage
ratio (i.e., the ratio of (i) your partnership's and T-Two Partners' allocable
share of all indebtedness with respect to investments plus the outstanding
balance under the loan and the T-Two Loan, but exclusive of the mortgage
indebtedness of your partnership owed to T-Two Partners, to (ii) your
partnership's allocable share of its investments, with your partnership's
properties being valued based on discounted cash flow, during the first, second
and third years of the initial term of the loan and during the extension
periods, if any, of not more than 70%, 67%, 65%, 60% and 55%, respectively. In
addition, your partnership is required to maintain minimum liquid assets of at
least $5,000,000 and a minimum consolidated net worth, with your partnership's
properties being valued based on discounted cash flow, equal to $500,000,000
during the initial loan term, $525,000,000 during the first extended term and
$550,000,000 during the second extended term. The loan also limits your
partnership's ability to incur any direct debt or contingent liabilities.


                                       11
<PAGE>

      See "ITEM 2. PROPERTIES" for information on your partnership's mortgage
indebtedness.

Unit Repurchase

      On February 1, 2004, your partnership purchased from its limited partners
8,408 units at a price of $35 per unit. Your partnership had purchased 115,000
units from its limited partners for $35 per unit in February 2003.

Business Objectives and Strategies; Future Intentions

      In general, your partnership seeks to enhance the value of your units by
availing itself of investment and development opportunities relating to existing
properties as well as by seeking other potential strategic transactions such as
the sale of your partnership to a third party.

Industry Segments and Seasonality

      Your partnership's primary business is the ownership and management of
commercial net-leased properties. Most of your partnership's tenants are
investment-grade corporate tenants. The largest single tenant leased multiple
properties and accounted for approximately 13.63% of your partnership's rental
revenues from the Newkirk properties and the consolidated properties for 2003.
Reference is made to " - Description of Assets - Properties" above for
additional information on your partnership's most significant tenants. Our
business is not seasonal.

Competition

      Numerous lessors and developers compete with your partnership's properties
in attracting tenants and corporate users. The principal means of competition
are rent charged, location, services provided and the nature and condition of
the facility to be leased. Some of these competing properties may be newer or
better located than your partnership's properties. The number of competitive
commercial properties in a particular area could have a material effect on your
partnership's ability to lease or develop space. In addition, your partnership
may not be in a position to materially benefit from any real estate market
appreciation for a number of years due to the fixed rate renewal term rates
under the various lease agreements encumbering the properties. Likewise, your
partnership will remain subject, after the initial lease terms expire, to
downturns in the real estate market and general economic conditions. Your
partnership does not operate outside of the United States.

Environmental Regulations

      Under various federal, state and local laws and regulations, an owner or
operator of real estate may be held liable for the costs of removal or
remediation of hazardous or toxic substances located on or in the property.
These laws often impose such liability without regard to whether the owner knows
of, or was responsible for, the presence of such hazardous or toxic substances.
The cost of any required remediation or removal of such substances may be
substantial. In addition, the owner's liability as to any property is generally
not limited under such laws and regulations and could exceed the value of the
property and/or the aggregate assets of the owner. The presence of such
substances, or the failure to remediate such substances properly, may also
adversely affect the owner's ability to sell or lease the property or to borrow
using the property as collateral. Under such laws and regulations, an owner or
entity who arranges for the disposal or treatment of hazardous or toxic
substances at a disposal or


                                       12
<PAGE>

treatment facility may also be liable for the costs of removal or remediation of
all such substances at such facility, whether or not such facility is owned or
operated by such person. Some laws and regulations impose liability for the
release of certain materials into the air or water from a property, including
asbestos, and such release can form the basis for liability to third parties for
personal injury or other damages. Other laws and regulations can limit the
development of and impose liability for the disturbance of wetlands or the
habitats of threatened or endangered species.

      Almost all of your partnership's properties are net-leased, and tenants
are therefore generally required to pay all of the expenses relating to the
leased property. Accordingly, your partnership's general partner believes that
compliance with federal, state and local provisions otherwise relating to the
properties or the environment will not have a material effect on the capital
expenditures, earnings or competitive position of your partnership. However, no
assurance can be given that material environmental liabilities do not exist,
that despite the leases in place your partnership will not be held liable for
environmental liabilities, that any prior owner or operator of a property or
land held for development did not create any material environmental condition
not known to your partnership, that a material environmental condition does not
otherwise exist as to any one or more of your partnership's properties or land
held for development, or that future uses and conditions (including changes in
applicable environmental laws and regulations and the uses and conditions of
properties in the vicinity, such as leaking underground storage tanks and the
activities of the tenants) will not result in the imposition of environmental
liability. No material expenditures have been made by your partnership to date
relating to environmental matters.

Employees

      Your partnership has no employees. Winthrop Financial Associates, A
Limited Partnership, executive officers of which jointly own your partnership's
general partner with an affiliate of Vornado Realty Trust, provides the services
of some of its employees, including the executive officers of the manager of
your partnership's general partner, to perform asset management services for us.
Your partnership anticipates that each executive officer of the manager of our
general partner will devote a significant portion of his or her time to the
business of Winthrop Financial Associates and its other affiliates. Winthrop
receives an annual fee of $1,800,000 (subject to adjustment based on increases
in the CPI) for its services to your partnership and to 9 other partnerships,
the general partners of which are controlled by your partnership. The CPI
adjustment for 2003 was 2.4% bringing the fee to $1,843,200.


                                       13
<PAGE>

ITEM 2. PROPERTIES

General

      Substantially all of the Newkirk properties and the consolidated
properties are net-leased to investment grade corporate tenants. At December 31,
2003 your partnership had six vacant properties that were not subject to leases.
These properties contained an aggregate of 111,000 square feet or approximately
..6% of the total space of all properties. Your partnership also had one
multi-tenanted property containing approximately 151,000 square feet or
approximately .8% of the total space of all properties. This property was sold
in January 2004. Your partnership's remaining properties are net leased to
various tenants. The leases are similar in many respects and generally: (i)
provide for fixed rent payments and obligate the tenant to pay all capital and
operating expenses for a property; (ii) obligate the tenant to perform all
responsibilities (other than the payment of debt service) relating to the
property; (iii) require the tenant to maintain insurance against casualty and
liability losses; (iv) permit the tenant to sublet the property; and (v) afford
the tenant in many instances the right to terminate the lease at certain points
during the primary term if it determines that continued use and occupancy of the
property would be uneconomic or unsuitable. Many of the leases grant the tenant
an option to purchase the property upon the expiration of the primary term of
the lease and at the end of one or more renewal terms for a purchase price equal
to the fair market value of such property. Your partnership maintains insurance
on properties that are not leased and the general partner believes that your
partnership's properties are adequately covered by insurance.

      The following table sets forth certain information on the Newkirk
properties and the consolidated properties as of December 31, 2003. Except as
otherwise indicated in the table, the ownership interest is a fee interest in
the underlying land.

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                             <C>                <C>          <C>                                 <C>
OFFICE:
  Arkansas            Little Rock                      36,000            12.31        Entergy Gulf States                 2005/2030
                      Pine Bluff                       27,000            13.63        Entergy Gulf States                 2005/2030

  California          El Segundo (4)                  185,000            16.10        Raytheon                            2008/2038
                      El Segundo (4)                  185,000            16.10        Raytheon                            2008/2038
                      Long Beach (1)(3)               478,000            35.51        Raytheon                            2008/2038
                      Walnut Creek (1)                 55,000            37.52        Hercules Credit, Inc.               2007/2037

  Colorado            Colorado Springs                 71,000            31.13        Federal Express Corporation         2008/2038

  Connecticut         Clinton (1) (14)                 41,000            15.12        Cheeseborough Ponds                 2008/2033

  Florida             Orlando(1)                      184,000             5.22        Martin Marietta Corporation         2008/2038
                      Orlando(1)                      357,000            12.97        Harcourt Brace & Company            2009/2039

  Indiana             Columbus (1)                    390,000            23.46        Cummins Engine Company Inc.         2009/2039
</TABLE>


                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                           <C>                  <C>          <C>                                 <C>
  Kentucky            Owensboro (1) (14)              443,000             9.19        Ragu Foods                          2008/2033

  Louisiana           New Orleans (1) (15)            222,000            20.86        Hibernia Bank                       2008/2033
                      New Orleans                     181,000            20.19        Hibernia Bank                       2008/2033

  Maryland            Baltimore(1)                    530,000            48.14        USF&G/The Saint Paul Co.            2009/2039

  Missouri            Bridgeton(1)                     54,000            10.58        The Kroger Co.                      2006/2031

  New Jersey          Carteret                         96,000            18.25        Supermarkets General Corp.          2011/2036
                      Elizabeth                        30,000            25.73        Summit Bank                         2008/2038
                      Morris Township(1)(5)           225,000            26.20        Honeywell                           2008/2038
                      Morris Township(1)(5)            50,000            29.41        Honeywell                           2008/2038
                      Morris Township(1)(5)           137,000            25.99        Honeywell                           2008/2038
                      Morris Township (9)             221,000            23.05        Crum & Forster                      2022/2042
                      Morristown(1)                   316,000            27.87        Honeywell                           2008/2038
                      Plainsboro(1)                     2,000            77.97        Summit Bank                         2008/2038

  Nevada              Las Vegas                       282,000            24.63        Nevada Power Company                2014/2039

  Ohio                Miamisburg(1)                    61,000            11.62        The Mead Corporation                2008/2038
                      Miamisburg(1)                    86,000             6.01        Reed Elsevier, Inc.                 2008/2038
                      Toledo(1)                       707,000            18.89        Owens-Illinois                      2006/2036

  Pennsylvania        Allentown                        71,000             6.54        First Union Corp.                   2005/2025

  Tennessee           Johnson City                     64,000            10.58        SunTrust Bank                       2006/2031
                      Kingport                         43,000            10.98        American Electric Power             2008/2038
                      Memphis(1)                      521,000            24.65        Federal Express Corporation         2009/2039
                      Memphis(1)                       75,000            16.57        The Kroger Co.                      2008/2038

  Texas               Beaumont(1)                     426,000            26.46        Entergy Gulf States                 2007/2037
                      Beaumont                         50,000            29.10        Allied Lakewood Bank                2007/2037
                      Bedford(1)                      207,000            12.65        Team Bank                           2004/2039
                      Dallas (3 buildings)            185,000            16.39        Allied Lakewood Bank                2007/2037
                      Dallas(6)                       151,000            18.66        (6)                                    (6)
                      Garland (18)                    279,000            19.13        E-Systems, Inc.                     2006/2036
                                                  -----------           ------

             TOTAL/AVERAGE OFFICE                   7,724,000            21.90
                                                  ===========           ======

RETAIL:
  Alabama             Dothan(1)                        54,000             3.94        Albertson's Inc.                    2005/2035
                      Florence(1)                      42,000            15.65        The Kroger Co.                      2008/2038
                      Hunstville(1)                    60,000             7.45        Albertson's Inc.                    2007/2037
                      Huntsville(1)                    58,000             5.98        Albertson's Inc.                    2006/2036
                      Montgomery(1)                    54,000             3.14        Albertson's Inc.                    2005/2010
                      Montgomery                       66,000            10.35        Albertson's Inc.                    2007/2037
</TABLE>


                                       15
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                             <C>                <C>          <C>                                 <C>
                      Tuscaloosa(1)                    53,000             4.22        Albertson's Inc.                    2005/2020

  Arizona             Ajo                              10,000             7.16        Albertson's Inc.                    2004/2039
                      Bisbee(1)                        30,000             9.06        Safeway, Inc.                       2009/2039
                      Glendale                          3,000            13.74        CSK Auto                            2004/2039
                      Mesa                              3,000            15.08        CSK Auto                            2004/2039
                      Mesa                              3,000            11.10        CSK Auto                            2009/2039
                      Mesa                              3,000            15.06        CSK Auto                            2004/2039
                      Phoenix                           3,000            10.40        CSK Auto                            2004/2039
                      Phoenix (9)                       3,000            12.07        CSK Auto                            2004/2039
                      Tucson                            3,000            37.21        CSK Auto                            2004/2039
                      Tucson(1)                        37,000             9.77        Safeway, Inc.                       2009/2039

  California          Anaheim(1)                       26,000             7.02        Stater Bros. Markets                2008/2038
                      Atascadero                        4,000            18.29        CSK Auto                            2009/2039
                      Barstow                          30,000             7.15        Stater Bros. Markets                2008/2038
                      Beaumont                          4,000            17.36        CSK Auto                            2009/2039
                      Beaumont                         29,000             5.58        Stater Bros. Markets                2008/2038
                      Calimesa                         29,000             6.99        Stater Bros. Markets                2008/2038
                      Colton                           73,000             4.44        Stater Bros. Markets                2008/2038
                      Colton                           26,000             6.03        Stater Bros. Markets                2008/2038
                      Corona(1)                        33,000             7.76        Stater Bros. Markets                2008/2038
                      Corona(1)                         9,000            26.43        Mark C. Bloome                      2007/2037
                      Costa Mesa(1)                    18,000            10.56        Stater Bros. Markets                2008/2038
                      Costa Mesa(1)                    17,000            11.63        Stater Bros. Markets                2008/2038
                      Desert Hot Springs(1)            29,000             5.61        Stater Bros. Markets                2008/2038
                      Downey                           39,000            12.09        Albertson's Inc.                    2007/2037
                      El Toro                          11,000            13.20        GoodYear Tire                       2009/2039
                      Fontana                          26,000             6.26        Stater Bros. Markets                2008/2038
                      Garden Grove(1)                  26,000             6.82        Stater Bros. Markets                2008/2038
                      Glen Avon Heights(1)             42,000             6.00        Stater Bros. Markets                2008/2038
                      Huntington Beach                 44,000            12.61        Albertson's Inc.                    2009/2039
                      Indio(1)                         10,000            22.70        Mark C. Bloome                      2007/2037
                      Lancaster                        42,000            12.75        Albertson's Inc.                    2009/2039
                      Livermore(1) (13)                53,000            10.73        Albertson's Inc.                    2006/2036
                      Lomita(1)                        33,000            10.24        Alpha Beta Company                  2006/2033
                      Mammoth Lakes(1)                 44,000            18.33        Safeway, Inc.                       2007/2037
                      Mojave(1)                        34,000             6.55        Stater Bros. Markets                2008/2038
                      Morgan Hill                      10,000             7.60        GoodYear Tire                       2009/2039
                      Ontario(1)                       24,000             7.64        Stater Bros. Markets                2008/2038
                      Orange(1)                        26,000             9.81        Stater Bros. Markets                2008/2038
                      Paso Robles                       7,000            10.72        CSK Auto                            2009/2039
                      Pinole(1)                        58,000             7.16        Alpha Beta Company                  2011/2036
                      Pleasanton                      175,000             6.73        Federated Department Stores         2012/2040
                      Rancho Cucamonga                 24,000             7.26        Stater Bros. Markets                2008/2038
                      Redlands                         11,000             6.21        GoodYear Tire                       2009/2039
                      Rialto                           29,000             5.74        Stater Bros. Markets                2008/2038
                      Rubidoux                         39,000             4.97        Stater Bros. Markets                2008/2038
                      San Bernadino                    30,000            10.02        Stater Bros. Markets                2008/2038
</TABLE>


                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                             <C>                <C>          <C>                                 <C>
                      San Bernadino                    40,000             7.23        Stater Bros. Markets                2008/2038
                      San Diego(1)                    226,000             7.08        Nordstrom, Inc.                     2016/2036
                      San Pablo                         5,000            15.08        CSK Auto                            2004/2039
                      Santa Ana(1)                     26,000             7.23        Stater Bros. Markets                2008/2038
                      Santa Monica                    150,000             5.74        Federated Department Stores         2012/2040
                      Santa Rosa (13)                  22,000             8.34        Albertson's Inc.                    2006/2036
                      Simi Valley(1)                   40,000            12.03        Albertson's Inc.                    2008/2038
                      Sunnymead                        30,000             7.18        Stater Bros. Markets                2008/2038
                      Tustin (1) (16)                  72,000             1.99        Mervyn's                            2009/2033
                      Union City                       10,000             8.13        GoodYear Tire                       2009/2039
                      Ventura(1)                       40,000            19.92        City of Buenaventura                2013/2013
                      Westminster                      26,000             9.09        Stater Bros. Markets                2008/2038
                      Yorba Linda                      11,000             8.56        GoodYear Tire                       2009/2039
                      Yucaipa                          31,000             4.13        Stater Bros. Markets                2008/2038

  Colorado            Aurora(13)                       41,000             6.88        Albertson's Inc.                    2005/2035
                      Aurora(13)                       29,000             9.25        Albertson's Inc.                    2005/2035
                      Aurora(1)                        42,000             5.06        Albertson's Inc.                    2006/2036
                      Aurora(1)                        24,000            21.26        Safeway, Inc.                       2007/2037
                      Federal Heights                   3,000            14.16        CSK Auto                            2004/2039
                      Littleton(13)                    29,000             8.85        Albertson's Inc.                    2005/2035
                      Littleton                        39,000            12.17        Albertson's Inc.                    2009/2039
                      Pueblo                            3,000            14.39        CSK Auto                            2004/2039

  Florida             Bradenton                        60,000            12.16        Albertson's Inc.                    2007/2037
                      Cape Coral                       30,000            14.85        Albertson's/Lucky Stores            2008/2038
                      Casselberry(1)                   68,000            11.26        Albertson's Inc.                    2007/2037
                      Gainesville                      41,000            12.53        Albertson's/Lucky Stores            2008/2038
                      Largo(13)                        54,000             6.90        Albertson's Inc.                    2005/2035
                      Largo                            40,000            14.86        Albertson's/Lucky Stores            2008/2038
                      Largo                            30,000            12.95        Albertson's/Lucky Stores            2008/2038
                      Orlando(1)                       58,000             5.67        Albertson's Inc.                    2006/2036
                      Pinellas Park                    60,000            11.74        Albertson's Inc.                    2007/2037
                      Port Richey(1)                   54,000             4.02        Albertson's Inc.                    2005/2035
                      Stuart(1) (7)                    54,000               --        Vacant
                      Tallahassee(1)(13)               54,000             4.15        Albertson's Inc.                    2005/2035
                      Venice                           42,000            12.60        Albertson's Inc.                    2006/2036

  Georgia             Atlanta(1)                        6,000            33.11        Bank South, N.A.                    2009/2039
                      Atlanta(1)                        4,000            37.25        Bank South, N.A.                    2009/2039
                      Chamblee(1)                       5,000            35.81        Bank South, N.A.                    2009/2039
                      Cumming(1)                       14,000            25.83        Bank South, N.A.                    2009/2039
                      Duluth(1)                         9,000            26.52        Bank South, N.A.                    2009/2039
                      Forest Park(1)                   15,000            24.84        Bank South, N.A.                    2009/2039
                      Jonesboro(1)                      5,000            29.19        Bank South, N.A.                    2009/2039
                      Stone Mountain (1)                6,000            30.84        Bank South, N.A.                    2009/2039

  Idaho               Boise                            37,000            15.76        Albertson's Inc.                    2007/2037
                      Boise(1)                         43,000             8.05        Albertson's Inc.                    2008/2038
</TABLE>


                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                             <C>                <C>          <C>                                 <C>
  Illinois            Champaign                        31,000             5.55        Albertson's/Lucky Stores            2008/2038
                      Freeport                         30,000            12.77        Albertson's/Lucky Stores            2008/2038
                      Rock Falls                       28,000            14.57        Albertson's/Lucky Stores            2008/2038

  Indiana             Carmel                           39,000             4.11        Marsh Supermarkets, Inc.            2008/2038
                      Lawrence                         29,000             6.72        Marsh Supermarkets, Inc.            2008/2038

  Kentucky            Louisville(1)                    10,000            11.57        The Kroger Co.                      2006/2011
                      Louisville(1)                    40,000            16.45        The Kroger Co.                      2006/2036

  Louisiana           Baton Rouge                      58,000            12.21        Albertson's Inc.                    2007/2037
                      Minden                           35,000            11.55        Safeway, Inc.                       2007/2037

  Montana             Billings(1)                      41,000             9.05        Safeway, Inc.                       2007/2015
                      Bozeman(1)(13)                   21,000             5.83        Albertson's Inc.                    2005/2030

  Nebraska            Omaha                            73,000             5.32        Albertson's Inc.                    2006/2036
                      Omaha                            66,000            10.71        Albertson's Inc.                    2007/2037
                      Omaha                            67,000            10.99        Albertson's Inc.                    2007/2037

  Nevada              Las Vegas(13)                    38,000             7.68        Albertson's Inc.                    2005/2035
                      Las Vegas(1)                     60,000             7.57        Alpha Beta Company                  2006/2021
                      Las Vegas(1)                     38,000            14.13        Albertson's Inc.                    2008/2023
                      Las Vegas                         3,000            20.58        CSK Auto                            2009/2039
                      Las Vegas                         3,000            12.35        CSK Auto                            2004/2039
                      Reno(1)                          42,000            13.16        Albertson's Inc.                    2007/2037

  New Jersey          Garwood(1)                       52,000            11.91        Supermarkets General Corp.          2006/2021

  New Mexico          Albuquerque (9)                   3,000            12.61        CSK Auto                            2004/2039
                      Albuquerque(1)                   35,000            18.70        Safeway, Inc.                       2007/2037
                      Deming                            3,000            13.74        CSK Auto                            2004/2039
                      Farmington                        3,000            11.87        CSK Auto                            2009/2039
                      Las Cruces                       30,000            14.64        Albertson's Inc.                    2007/2037

  New York            Portchester(1)                   59,000            18.89        Supermarkets General Corp.          2008/2023

  North Carolina      Charlotte                        34,000             2.90        Food Lion Stores, Inc.              2008/2038
                      Concord                          32,000             6.09        Food Lion Stores, Inc.              2008/2038
                      Jacksonville                     23,000             3.63        Food Lion Stores, Inc.              2008/2038
                      Jefferson(1)                     23,000             3.17        Food Lion Stores, Inc.              2008/2013
                      Lexington(1)                     23,000             6.02        Food Lion Stores, Inc.              2008/2038
                      Mint Hill(10)                    23,000               --        Vacant
                      Thomasville                      21,000             5.07        Food Lion Stores, Inc.              2008/2038

  Ohio                Cincinnati(1)                    26,000            14.39        The Kroger Co.                      2006/2011
</TABLE>


                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                             <C>                <C>          <C>                                 <C>
                      Columbus(1)                      34,000            23.44        The Kroger Co.                      2006/2036
                      Franklin                         29,000             3.83        Marsh Supermarkets, Inc.            2008/2038

  Oklahoma            Bethany                           3,000            13.45        CSK Auto                            2004/2039
                      Lawton(1)                        31,000            10.84        Safeway, Inc.                       2009/2039
                      Midwest City                      3,000            15.73        CSK Auto                            2004/2039
                      Oklahoma City (9)                 3,000            13.32        CSK Auto                            2004/2039
                      Warr Acres (9)                    3,000            13.52        CSK Auto                            2004/2039

  Oregon              Beaverton                        42,000            13.02        Albertson's Inc.                    2009/2039
                      Grants Pass(1)                   34,000             8.65        Safeway, Inc.                       2009/2039
                      Portland                         42,000             8.29        Albertson's Inc.                    2006/2036
                      Salem                            52,000             7.81        Albertson's Inc.                    2009/2039

  Pennsylvania        Doylestown                        4,000            38.81        Meritor Savings Bank                2008/2038
                      Lansdale                          4,000            41.04        Meritor Savings Bank                2008/2038
                      Lima                              4,000            44.66        Meritor Savings Bank                2008/2038
                      Philadelphia                     50,000            14.49        Supermarkets General Corp.          2005/2035
                      Philadelphia(8)                   4,000               --        Vacant
                      Philadelphia                      4,000            36.58        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            52.19        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            11.77        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            42.99        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            49.12        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            38.81        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            39.09        Meritor Savings Bank                2008/2038
                      Philadelphia                      4,000            55.26        Meritor Savings Bank                2008/2038
                      Richboro                          4,000            36.02        Meritor Savings Bank                2008/2038
                      Wayne                             4,000            52.75        Meritor Savings Bank                2008/2038

  South Carolina      Moncks Corner(1)                 23,000             2.69        Food Lion Stores, Inc.              2008/2018

  Tennessee           Chattanooga(1)                   42,000            16.81        The Kroger Co.                      2008/2038
                      Paris(1)                         31,000            15.04        The Kroger Co.                      2008/2038

  Texas               Carrolton(1)                     61,000             8.24        Skaggs Alpha Beta                   2006/2036
                      Dallas(1)                        68,000             7.89        The Kroger Co.                      2006/2019
                      Dallas                            3,000            13.34        CSK Auto                            2004/2039
                      Dallas                            3,000            15.15        CSK Auto                            2004/2039
                      El Paso                           3,000            15.66        CSK Auto                            2009/2039
                      El Paso                           3,000            16.66        CSK Auto                            2009/2039
                      Euless                            5,000             8.82        CSK Auto                            2004/2039
                      Fort Worth(1)                    44,000            13.72        Safeway, Inc.                       2007/2037
                      Garland                          40,000            17.05        Safeway, Inc.                       2007/2037
                      Garland (9)                       3,000            14.98        CSK Auto                            2004/2039
                      Granbury(1)                      35,000            12.15        Safeway, Inc.                       2007/2037
                      Grand Prairie(1)                 49,000            10.02        Safeway, Inc.                       2009/2039
                      Greenville(1)                    48,000             4.20        Safeway, Inc.                       2006/2036
                      Hillsboro(1)                     35,000             9.62        Safeway, Inc.                       2007/2037
</TABLE>


                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                           <C>                  <C>          <C>                                 <C>
                      Houston(1)                       52,000            14.45        The Kroger Co.                      2006/2036
                      Lubbock(1)(13)                   54,000             3.62        Albertson's Inc.                    2005/2035
                      Lubbock                           3,000            15.55        CSK Auto                            2009/2039
                      Midland                          60,000            10.53        Albertson's Inc.                    2009/2039
                      Odessa (9)                        3,000            14.30        CSK Auto                            2004/2039
                      Rockdale                         44,000             3.80        Wal-Mart Stores, Inc.               2005/2035
                      Taylor                           62,000             3.44        Wal-Mart Stores, Inc.               2005/2035
                      Texarkana (13)                   46,000             7.50        Albertson's Inc.                    2006/2036
                      Woodville                        44,000             3.65        Wal-Mart Stores, Inc.               2005/2035

  Utah                Bountiful(1)                     50,000             7.85        Skaggs Alpha Beta                   2006/2016
                      Sandy(1)                         42,000             4.78        Albertson's Inc.                    2006/2016

  Virginia            Staunton(1)                      23,000             7.20        Food Lion Stores, Inc.              2008/2038

  Washington          Bothell(1)(13)                   28,000             4.69        Albertson's Inc.                    2005/2035
                      Edmonds(1)(13)                   35,000             4.75        Albertson's Inc.                    2005/2025
                      Everett                          35,000            17.22        Albertson's Inc.                    2007/2037
                      Federal Way                      42,000             9.76        Albertson's Inc.                    2007/2037
                      Graham(1)                        45,000             9.22        Safeway, Inc.                       2009/2039
                      Kent                             42,000            12.99        Albertson's Inc.                    2009/2039
                      Milton(1)                        45,000            10.63        Safeway, Inc.                       2009/2039
                      Port Orchard(1)                  28,000             3.57        Albertson's Inc.                    2005/2025
                      Redmond(1)                       45,000            11.26        Safeway, Inc.                       2009/2039
                      Spokane(13)                      42,000             7.03        Albertson's Inc.                    2005/2035
                      Spokane(1)                       39,000             9.63        Safeway, Inc.                       2009/2039
                      Woodinville(1)                   30,000             5.77        Albertson's Inc.                    2006/2031

  Wyoming             Cheyenne(11)                     12,000             5.70        Key Bancshares of Wyoming           2004/2039
                      Cheyenne(13)                     31,000             6.11        Albertson's Inc.                    2006/2036
                      Douglas(11)                      12,000             5.96        Key Bancshares of Wyoming           2004/2039
                      Evanston                         28,000             4.94        Key Bancshares of Wyoming           2004/2039
                      Evanston                         10,000             7.55        Key Bancshares of Wyoming           2004/2039
                      Torrington(11)                   12,000             4.95        Key Bancshares of Wyoming           2004/2039
                                                  -----------           ------

             TOTAL/AVERAGE RETAIL                   6,441,000             9.38
                                                  ===========           ======

OTHER:

  Arizona             Flagstaff                        10,000               --        Vacant  (2)                            --
                      Sun City                         10,000            15.00        Furr's Restaurant Group (2)           2012

  California          Colton                          668,000             3.52        Stater Bros. Markets                2008/2038
                      El Segundo(4)                   959,000            16.10        Raytheon                            2008/2038
                      Long Beach(1)(3)                201,000            14.88        Raytheon                            2008/2038
                      Palo Alto(1)                    123,000            32.37        Xerox Corporation                   2008/2013

  Colorado            Ft. Collins                      10,000            24.96        Lithia Motors (2)                     2012
</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                    Approximate           2004                                              Lease
                                                     Leaseable       Annualized Base                                     Expiration/
                                                      Building      Rent Per sq. ft.                                        Option
                           Location               Square Footage          ($)               Principal Tenant             Expiration
                           --------               --------------    ----------------        ----------------             -----------
<S>                   <C>                          <C>                   <C>          <C>                                 <C>
  Florida             Orlando(1)                      205,000             5.89        Walgreen Co.                        2006/2031

  Maine               North Berwick                   821,000             3.39        United Technologies Corp.           2010/2035

  New Mexico          Carlsbad                         10,000            15.00        Furr's Restaurant Group (2)           2012

  New York            Saugerties (17)                  52,000             4.41        Rotron, Inc.                        2004/2029

  Pennsylvania        New Kingston(1)                 430,000             8.52        Hershey Foods Corporation           2008/2038

  South Carolina      Myrtle Beach(1)                  37,000             3.88        Food Lion Stores, Inc.              2008/2028

  Tennessee           Franklin(1)                     289,000             5.10        United Technologies Corp.           2008/2038
                      Memphis                         780,000             3.67        Sears Roebuck & Company             2007/2037

  Texas               Lewisville                      256,000             5.89        Xerox Corporation                   2008/2038
                      Corpus Christi                   10,000            15.00        Furr's Restaurant Group (2)           2012
                      El Paso                          10,000            15.00        Furr's Restaurant Group (2)           2012
                      Euless                           10,000               --        Vacant  (2)
                      Lewisville                       10,000               --        Vacant (2) (12)
                      McAllen                          10,000            15.00        Furr's Restaurant Group (2)           2012
                      Victoria                         10,000            15.00        Furr's Restaurant Group (2)           2012

  Wisconsin           Windsor(1)                      356,000             7.52        Walgreen Co.                        2007/2032
                                                  -----------           ------

             TOTAL/AVERAGE OTHER                    5,277,000             8.05
                                                  ===========           ======

             GRAND TOTAL/AVERAGE                   19,442,000            14.00
                                                  ===========           ======
</TABLE>

----------
(1)   Land held in land estate or pursuant to ground lease.
(2)   See "- Property Matters" below for information on these properties.
(3)   55% interest owned by your partnership.
(4)   53% interest owned by your partnership.
(5)   99% interest owned by your partnership.
(6)   The property, an office building leased to multiple tenants, was sold in
      January 2004. See "- Property Matters" below for information on the sale.
(7)   In November 2002, your partnership received notice from the tenant
      exercising the economic discontinuance provisions of its lease. Under the
      terms of the notice, the tenant proposed to terminate the lease effective
      July 11, 2003 and to purchase the property for $630,797, an amount which
      would have been insufficient to satisfy existing mortgage indebtedness.
      Your partnership rejected the offer and satisfied the existing first
      mortgage of approximately $531,000. Your partnership has entered into a
      contract to sell the property for an amount in excess of the amount which
      would have been paid by the prior tenant. The contract is subject to
      completion of due diligence by the purchaser.
(8)   The lease on this property was terminated effective June 1, 2003. The
      tenant made a $276,576 early termination payment, $160,803 of which was
      applied to existing mortgage indebtedness.
(9)   These properties were sold in January 2004 (Morristown Township) and
      February and March 2004 (6 properties leased to CSK Auto). See "- Property
      Matters" below for information on the sale.
(10)  The lease on this property expired during the fourth quarter of 2003 and
      the property is now vacant.


                                       21
<PAGE>

(11)  These properties were sold on March 31, 2004. See "- Property Matters"
      below for information on the sale.
(12)  The tenant defaulted on its lease and vacated this property during the
      fourth quarter of 2003.
(13)  Your partnership has received notice from Albertsons exercising a purchase
      option in accordance with their lease on fifteen of your partnership's
      properties. Your partnership has a right to reject this offer. If your
      partnership accepts the offer, the sale would be effective July 1, 2004
      for 11 properties, October 1, 2004 for 3 properties and February 1, 2005
      for 1 property. If your partnership rejects this offer, the tenant can
      elect to terminate the lease on July 1, 2004, October 1, 2004 and February
      1, 2005, respectively, or extend its lease for eighteen months until
      December 31, 2005, March 31, 2006 or July 31, 2006. Rent during the
      eighteen month period would be at the renewal rates. If Albertsons elects
      to renew for the eighteen month period it will still have a series of five
      year renewal options. For all 15 of the properties Albertsons has elected
      to renew the lease for eighteen months assuming the purchase offer is
      rejected. Your partnership is currently reviewing all of the purchase
      offers in order to determine a course of action.
(14)  47.52% interest owned by your partnership as of December 31, 2003. This
      percentage will be increased to 55.28% effective April 1, 2004.
(15)  35.34% interest owned by your partnership.
(16)  40.68% interest owned by your partnership as of December 31, 2003. This
      percentage will be increased to 68.68% effective April 1, 2004.
(17)  57.75% interest owned by your partnership. (18) 60.5% interest owned by
      your partnership.
(18)  60.5% interest owned by your partnership.

      Property Matters. On January 22, 2002, Kmart Corporation, a tenant at 12
of your partnership's properties, filed for protection under Chapter 11 of the
United States Bankruptcy Code. Kmart had the right to either accept or reject
the leases. Kmart elected to reject the leases, which caused an immediate
termination of such leases. Your partnership re-leased 9 of the properties to
Furr's Restaurant Group for 10-year lease terms, one of the properties to Lithia
Motors for a 10-year lease term and another property for use as a Chinese food
restaurant for a 5-year lease term. The tenant of the Chinese restaurant
subsequently defaulted on its lease. Your partnership is pursuing a claim
against Kmart in the Bankruptcy Court. In January 2003, Furr's Restaurant Group
filed for protection under Chapter 11 of the Bankruptcy Code and subsequently
rejected the lease on 3 sites. The remaining sites continue to be leased to
Furr's through 2012, and your partnership is pursuing a claim against Furr's in
the Bankruptcy Court for the 3 rejected sites. Furr's also has the right to
reject the lease that now covers the remaining sites. The aggregate annual rent
for the 7 sites that are presently leased is approximately $1,269,600 compared
to the approximately $1,885,000 that was scheduled to be received from Kmart on
the 12 properties during its first renewal term, which would have begun in
February 2003. Your partnership has purchased the land underlying all of the 12
original Kmart sites for $250,000, sold two of the vacant sites in the third
quarter of 2003 and is seeking to sell or re-lease the three remaining vacant
sites. The two sites were sold for $2,525,000. After satisfying existing
mortgage indebtedness and closing costs, there were no net proceeds to your
partnership.

      On February 12, 2002, Kaiser Aluminum & Chemical Corp., the tenant at your
partnership's property located in Oakland, California, filed for protection
under Chapter 11. In an effort to protect your partnership's equity investment
in the property, your partnership, from its cash reserve account, purchased the
first mortgage debt that encumbered the property for $15,500,000. Your
partnership subsequently secured approximately $14,530,000 of replacement
financing from a third party lender. The note bore interest at LIBOR plus 4.5%
per annum (6.42% at December 31, 2002), had a maturity date of September 1, 2003
and required monthly payments of principal and interest. Your partnership sold
its interest in this property in March 2003 for approximately $122,918,000.
After satisfying existing mortgage indebtedness, the net sales proceeds were
approximately $28,000,000, half of which was applied to a principal payment
required to be made on your partnership's loan with Fleet National Bank.


                                       22
<PAGE>

      In November 2002 and January 2003, your partnership sold two properties
owned by it in Oklahoma City, Oklahoma to the tenants of those properties. One
property, leased to Safeway, Inc., was sold for $1,444,000 and the other
property, leased to Fleming Companies, Inc., was sold for $945,611. Both
properties were sold under the economic discontinuance provisions of their
respective leases. As provided in the leases, the tenants had made rejectable
offers to purchase the properties for specified amounts, and your partnership
accepted the offers after it was unable to locate purchasers who would pay a
higher price or secure new tenants for the properties. $1,023,689 of the price
paid by Safeway, Inc. represented the rejectable offer price, and $420,323
represented deferred rent.

      In January 2003, your partnership sold five properties owned by it in
Allen, Ennis, Huntsville, Rockwell, and Waxahachie, Texas to Wal-Mart Stores,
Inc., the tenant, for approximately $8,259,000. After satisfying existing
mortgage indebtedness, the net sales proceeds were approximately $4,500,000,
half of which was applied to a principal payment required to be made on your
partnership's loan with Fleet National Bank. During 2002, Wal-Mart paid rent of
$994,894 for the properties.

      In February 2003, your partnership received the remaining balance due on a
secured note of Cenland Associates Limited Partnership that it acquired in the
exchange. The note had an outstanding balance of $1,342,000 at the time of the
exchange that had been reduced to $158,000 as of December 31, 2002.

      In May 2003 your partnership sold its distribution facility located in
Flagstaff, Arizona to Walgreen Co., the tenant at the facility, after receiving
notice from Walgreen that it was exercising its option to purchase the property.
The purchase price was $9,500,000. After satisfying existing mortgage
indebtedness and other costs and adjustments, the net sales proceeds were
approximately $5,900,000, half of which was applied to a principal payment
required to be made on your partnership's loan with Fleet National Bank.

      In June 2003, one of the consolidated partnerships sold a property owned
by it in Trumbull, Connecticut for $9,079,000, net of closing costs. $4,557,000
was used to pay mortgage indebtedness and your partnership received $2,149,000
of the remaining proceeds. Your partnership applied $1,075,000 to a prepaid
payment on your partnership's loan to Fleet National Bank. Interests in this
consolidated partnership had been acquired by your partnership from an affiliate
of your partnership's general partner in January 2003. See "ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" for additional information.

      In September 2003 your partnership sold a property owned by it in Sioux
Falls, South Dakota for $2,700,000. After satisfying existing mortgage
indebtedness and closing costs, the net sales proceeds of approximately $150,000
were applied to a principal payment required to be made on your partnership's
loan with Fleet National Bank. The property had formerly been leased to
Albertson's Inc. and your partnership had previously rejected an offer by
Albertson's to purchase the property for $1,551,000 pursuant to the economic
discontinuance provisions of its lease. Your partnership also received a
$1,497,000 lease termination fee.


                                       23
<PAGE>

      During the fourth quarter of 2003, your partnership sold the properties
owned by it in Liberal, Kansas and New Bern, North Carolina for $775,000. After
satisfying existing mortgage indebtedness and closing costs, the net sales
proceeds were approximately $157,000, $117,700 of which was applied to a
principal payment required to be made on your partnership's loan with Fleet
National Bank.

      In January 2004, your partnership sold the property owned by it in
Morristown, New Jersey for $36,500,000. After satisfying existing mortgage
indebtedness and closing costs, the net sales proceeds were approximately
$7,532,000 which was applied to a principal payment on your partnership's loan
with Fleet National Bank.

      In January 2004, your partnership sold the multi-tenanted office building
owned by it in Dallas, Texas for $13,000,000. After closing costs and
adjustments, the net sales proceeds were approximately $11,939,000, $8,954,000
of which was applied to a principal payment on your partnership's loan with
Fleet National Bank.

      In February and March 2004, your partnership sold 6 retail properties
owned by it and formerly leased to CSK Auto for $1,073,000. After closing costs
and adjustments, the net sales proceeds were approximately $975,000,
approximately $319,000 of which was used to pay off debt to T-Two Partners.

      In March 2004, your partnership sold 3 retail properties formerly leased
to Key Bancshares of Wyoming for $1,948,000. After closing costs and
adjustments, the net sales proceeds were approximately $1,860,000, approximately
$1,351,000 of which was used to pay off debt to T-Two Partners.

      Land Estates and Ground Leases. As indicated above, your partnership holds
either an estate for years with an option to lease the land upon expiration of
the estate for years or leases a number of its properties pursuant to ground
leases. Where your partnership holds an estate for years, the arrangement is for
a stated period of time, which is typically one day longer than the primary term
of the underlying lease. At the expiration of the estate for years, title to the
land will automatically vest in a remainderman. Your partnership then has the
option to lease the land from the remainderman for a stated period of time,
which would in all cases exceed the aggregate number of years that a building
lessee could extend its underlying lease by exercising all of its renewal terms.
In general, the rentals due under the ground leases are nominal through the last
renewal term of the improvements lease and then increase to fair market rent.
The remainderman in almost all cases has subordinated its interest in the land
to any first mortgage encumbering the property, but has not, in any case,
subordinated its interest in the land to the second mortgage encumbering the
property. Any second mortgage encumbers your partnership's option to lease the
land at the expiration of your partnership's estate for years, and will encumber
the leasehold interest in the land created upon any exercise of the option to
lease by your partnership. Your partnership is continually seeking to acquire
the "remainder" interests in its properties in an effort to acquire fee title to
the properties.

      With respect to those properties subject to a ground lease, your
partnership has the right to extend the ground lease for at least as long as the
aggregate number of years that a building lessee could extend its underlying
lease by exercising all of its renewal terms. In general, the ground rent is
passed through to the building lessee under the improvements lease.


                                       24
<PAGE>

      On January 15, 2003, your partnership purchased the land underlying 12
sites formerly leased to Kmart Corporation for $250,000. Your partnership
previously leased the land under ground leases.

      In May and June 2003, your partnership purchased the remainder interest in
the land underlying 25 properties for an aggregate of $1,193,000 and, as a
result, now owns a fee interest in the underlying land. The improvements on 23
of the properties are owned by your partnership and the improvements on the two
other properties are owned by partnerships in which your partnership owns
limited partnership interests and controls the general partner.

Mortgage Indebtedness of Your Partnership

      Mortgage Loans. Of your partnership's properties, all but 69 properties
are secured by one or more mortgage loans. As of December 31, 2003, the first
mortgage indebtedness, together with the second mortgage indebtedness described
below on the El Segundo property, had an aggregate outstanding principal balance
of $602,919,000 with interest at rates ranging from 4.2% per annum to 11.3% per
annum and maturities at various dates from February 1, 2004 to January 1, 2024.
Most of these mortgage loans are prepayable only with a yield maintenance
payment or prepayment penalty. The weighted average interest rate on these loans
is 8% per annum, and there were no variable rate loans at December 31, 2003.

      The following is a summary of scheduled principal maturities, by year,
under the mortgage debt described in the previous paragraph.

                 Year                                        Amount
                 ----                                        ------

                 2004...............................    $ 116,964,000
                 2005...............................      103,848,000
                 2006...............................      134,805,000
                 2007...............................       94,653,000
                 2008...............................       70,390,000
                 Thereafter.........................       82,259,000
                                                        -------------
                 Total..............................    $ 602,919,000
                                                        =============

      In December 2002, a substantial portion of the mortgage indebtedness
encumbering properties in El Segundo, California in which your partnership owns
a 53% interest was refinanced with (i) an $88,724,702 first mortgage, secured by
the buildings and the land estate, bearing interest at 6% per annum and
self-amortizing by January 1, 2009 and (ii) $25,352,919 of second mortgages,
secured by the buildings and the land estate, bearing interest at 4.86% per
annum, and maturing on January 1, 2024, at which time a $25,988,645 balloon
payment will be due. In addition, a $3,235,880 prepayment penalty was paid as
part of the refinancing. As part of the refinancing, your partnership purchased
the land underlying the property for $1,700,000, which was provided by the
proceeds of a new first mortgage secured by the land underlying the property.
This mortgage, which is the responsibility of your partnership, bears interest
at 6% per annum and is self-amortizing by January 1, 2009. Members of the
Newkirk Group acquired approximately 55% of the second mortgage indebtedness in
the refinancing for a purchase price of $1,012,486, exclusive of closing costs.
See "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" for additional
information. Prior to the refinancing, the property was encumbered by
approximately $56,800,000 of first mortgage indebtedness,


                                       25
<PAGE>

$50,500,000 of which bore interest at 13.25% and $6,300,000 of which bore
interest at 13.6% per annum, as well as $51,611,251 of second mortgage
indebtedness bearing interest at 15.5% per annum.

      In August 2003, your partnership obtained a new $3,400,000 first mortgage
loan on its property in Beaumont, Texas. The loan bears interest at 6.2% per
annum and matures on November 30, 2007, at which time it is scheduled to be
fully amortized.

      In June 2003, your partnership obtained a new first mortgage on its
property in Morris Township, New Jersey, that is leased to Crum & Forster. The
$21,000,000 mortgage loan bore interest at LIBOR plus 2.875% per annum (4.1% at
June 30, 2003), payable monthly, and had an initial term of three years.
Principal payments of $25,000 were due monthly commencing February 1, 2005.
$6,700,000 of the proceeds of the new loan were used to repay the existing first
mortgage loan that had an interest rate of 12.5% per annum and $13,100,000 was
used to satisfy the remaining balance payable by your partnership with respect
to the second mortgage acquired by your partnership in January 2003. In October
2003 your partnership refinanced this loan. The new loan had a principal balance
of $28,500,000, bore interest at 5.55% per annum and had a term of ten years.
After payment of closing costs, $21,100,000 of proceeds were used to satisfy the
existing first mortgage and $5,000,000 was applied to a principal payment on
your partnership's loan with Fleet National Bank. This property was sold in
January 2004. See "- Property Matters" above and "- Second Mortgage Loans"
below.

      Second Mortgage Loans. A number of your partnership's properties are
encumbered by second mortgage loans. As of December 31, 2003, this second
mortgage indebtedness, which is referred to in our financial statements as
contract right mortgage notes, had an aggregate outstanding balance, including
accrued interest, of $460,860,000, bore simple interest at contractual rates
ranging from 5.31% per annum to 16.25% per annum and matured at various dates
from January 1, 2008 to January 1, 2025. Each of the loans is prepayable at any
time without premium or penalty subject to the prior or simultaneous
satisfaction of the underlying first mortgage loans. The weighted average
interest rate on these mortgage loans is 13.66% per annum. There are no variable
interest rates on these loans.

      The following is a summary of scheduled principal and accrued interest
payable as of Dcember 31, 2003, by year, under the junior mortgage debt
described in the previous paragraph.

                Year                                         Amount
                ----                                         ------

                2004...............................     $  16,821,000
                2005...............................        28,589,000
                2006...............................        29,980,000
                2007...............................        30,825,000
                2008...............................        33,392,000
                Thereafter.........................       321,253,000
                                                        -------------
                Total..............................     $ 460,860,000
                                                        =============

      The foregoing debt amounts represent amounts contractually due and owing,
while your partnership's financial statements reflect the debt balance after
making an adjustment to fair value in accordance with generally accepted
accounting principles.


                                       26
<PAGE>

      In January 2003, your partnership acquired a second mortgage loan that
encumbered your partnership's property in Morris Township, New Jersey that is
leased to Crum & Forster. Outstanding principal and accrued and unpaid interest
on the mortgage was $28,100,000. The mortgage bore interest at 10.25% per annum.
It was acquired for $22,100,000, $9,300,000 of which was initially paid and
$12,800,000, together with interest at 6% per annum, of which was payable on the
earlier of September 30, 2003 or the date on which your partnership obtained a
new first mortgage loan on the property. In June 2003, your partnership obtained
a new first mortgage loan on the property and satisfied the balance of the
purchase price. See "- First Mortgage Loans" above. This property was sold in
the first quarter of 2004. See "- Property Matters" above.

      All rights of the mortgagee under each of the second mortgages are fully
subject and subordinate to the rights granted the holders of the first
mortgages. The second mortgages generally grant the mortgagee a security
interest in and include a subordinate assignment of, among other things, your
partnership's interest in its underlying lease. Each second mortgage contains an
assignment of your partnership's interest in all rents, income, revenues,
claims, issues and profits from and in respect of all of the property encumbered
by that second mortgage.

      Substantially all of the second mortgages contain restrictions affecting
the ability of the applicable property-owning subsidiary of your partnership to
refinance its existing first mortgage loan or incur additional financing during
the primary term of the relevant lease. The principal restriction on such first
mortgage financing is a debt service coverage test under which the scheduled
rental payments from the properties at the time of such financing must be at
least 103% of your partnership's aggregate debt service payments due under the
second mortgage and such financing (except that if a lease is no longer in
effect, the debt service coverage test may be satisfied based on the scheduled
rent payments that otherwise would have been payable under the lease for the
period that the financing is to be in place). There is also a general risk that
a property encumbered by a second mortgage will not generate sufficient cash
flow to satisfy the debt service payments on the second mortgage loan after
satisfying payments on the first mortgage encumbering the property. However, the
combination of the Newkirk properties pursuant to the exchange has lessened this
risk to your partnership by substantially increasing the capital resources of
your partnership and thereby enhancing your partnership's ability to respond to
the capital needs of any particular property. In addition, as described under
"ITEM 1. BUSINESS - Description of Assets - The Subordinate Mortgage Interests,"
your partnership has an option to acquire the interests in T-Two Partners and
thereby effectively eliminate substantially all of its subordinate indebtedness.


                                       27
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

      In July 2002, an action was commenced in the Connecticut Superior Court by
four limited partners of three Newkirk Partnerships against, among others, your
partnership's general partner and various affiliates of your partnership's
general partner. The action alleges, among other things, that the price paid to
non-accredited investors in connection with the exchange was unfair and did not
fairly compensate them for the value of their partnership interests. The
complaint also alleges that the exchange values assigned in the exchange to
certain assets contributed by affiliates of your partnership's general partner
were too high in comparison to the exchange values assigned to the Newkirk
partnerships, that the option arrangement relating to your partnership's
potential acquisition in the future of T-Two Partners was unfair to limited
partners and that the disclosure document used in connection with the exchange
contained various misrepresentations and/or omissions of material facts. The
complaint seeks to have the action classified as a class action as well as
compensatory and punitive damages in an unspecified amount. The defendants have
denied and continue to deny the allegations of the complaint. In order to avoid
the expenses, distractions and uncertainties of litigation, the defendants
entered into a settlement agreement dated December 31, 2003 to settle the
litigation, which settlement agreement is subject to court approval. A court
hearing on whether to approve the settlement is currently scheduled to take
place on April 12, 2004. The settlement provides for the following material
terms: (i) the Newkirk Group will convey to unitholders of the Newkirk
partnerships who are unaffiliated with your general partner and who received
limited partnership units in the exchange, units in your partnership equal to 1%
of the outstanding units; (ii) your partnership will pay $1.5 million to an
escrow agent for the benefit of unaffiliated unitholders; and (iii) your
partnership will pay $2 million to an escrow agent for the benefit of
unitholders of the Newkirk partnerships who were entitled to receive cash in the
exchange. In addition, as described in "ITEM 1. BUSINESS" under the heading " -
Description of Assets - The Subordinate Mortgage Interests," your partnership,
in order to facilitate the settlement, entered into an agreement with T-Two
Partners and its equityholders pursuant to which your partnership has the right
to acquire substantially all of the assets of T-Two Partners or a 100% ownership
interest in T-Two Partners at any time between November 24, 2006 and November
24, 2009. In addition, as part of the settlement agreement, defendants have also
agreed not to object to the payment of reasonable attorneys fees expenses, and
incentive awards to be paid from the consideration payable under the settlement
agreement.

      On December 31, 2002, a derivative action was commenced in the Dallas
County Texas District Court by a limited partner of Eastgar Associates, L.P.
against, among others, (i) the general partners of Eastgar and (ii) the Newkirk
Group. Your partnership owns a 60.5% limited partnership interest in Eastgar and
also controls the general partner of that partnership. The complaint alleges
that the defendants have charged Eastgar excessive management fees and have
unfairly prevented Eastgar from prepaying and refinancing its mortgage
indebtedness. The complaint seeks compensatory and punitive damages in an
unspecified amount, attorneys' fees and expenses, an accounting, and a
declaration of the parties' future rights and obligations regarding management
fees and the refinancing of mortgage indebtedness. The defendants have denied
and continue to deny the allegations of the complaint. In order to avoid the
expenses, distraction and uncertainties of litigation, the defendants entered
into an agreement to settle the litigation for a $137,500 payment by the
defendants other than Eastgar and to charge an asset management fee of $35,000
per year, adjusted for changes in the Consumer Price Index and as may be
adjusted for extraordinary circumstances by Eastgar's general partner. After
payment of


                                       28
<PAGE>

court-approved attorneys' fees and expenses, the remaining balance would be
distributed to Eastgar's limited partners other than your partnership or its
affiliates. The settlement also fixes the management fees to be charged to
Eastgar, subject to any changes that Eastgar may approve in the future
consistent with its fiduciary duty. The settlement has been, as required,
approved by the trial court after notice to the limited partners of Eastgar.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.


                                       29
<PAGE>

                                     PART II

ITEM 5. MARKET FOR LIMITED PARTNERSHIP UNITS, RELATED SECURITY HOLDER MATTERS
        AND ISSUER PURCHASES OF EQUITY SECURITIES

General

      There is no established public trading market for the units. As of
December 31, 2003 , there were 1,372 holders of record of units. In addition, as
of December 31, 2003, there were no units that could be sold pursuant to Rule
144 under the Securities Act, or that your partnership has agreed to register
under the Securities Act for sale by unit holders, and there were no units that
are being, or have been publicly proposed to be, publicly offered by your
partnership.

      Except as described under "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS - Acquisition of Limited Partnership Interests", as of December 31,
2003, there were no options or warrants to purchase units in your partnership.

Distributions

      Since January 1, 2002 your partnership has made the following
distributions aggregating approximately $242,670,000

                 Date                         Per Unit Distribution
                 ----                         ---------------------

                 2/02                                $30.31 (1)
                 4/02                                  $.50
                 7/02                                  $.65
                 10/02                                 $.70
                 2/03                                  $.75
                 4/03                                 $2.22 (2)
                 5/03                                  $.80
                 8/03                                  $.85
                 11/03                                 $.90
                 2/04                                 $1.75

----------
(1)   This distribution represented proceeds received from the $225,000,000 loan
      obtained from Fleet National Bank. The consent solicitation statement sent
      to limited partners in the Newkirk partnerships in respect of the exchange
      had disclosed that your partnership was attempting to obtain the Fleet
      loan and that there would be a substantial distribution of the loan
      proceeds.

(2)   This distribution represents proceeds from the sale of your partnership's
      property that was leased to Kaiser Aluminum.

      Your partnership currently anticipates making regular quarterly
distributions in respect of your partnership's operations as well as special
distributions in respect of future property sales. However, future distributions
are dependent upon many factors, including your partnership's earnings, capital
requirements, property sales, financial condition and available cash flow. In
this regard, your partnership's Fleet loan requires your partnership to maintain
liquid assets of at


                                       30
<PAGE>

least $5,000,000 and a minimum consolidated net worth equal to $500,000,000
during the initial loan term and up to $550,000,000 during the last extended
term. In addition, under the terms of the loan, your partnership is prohibited
from making distributions if its unconsolidated debt service coverage ratio
falls below 1.75 during the initial period of the loan or 2.0 during the
extension periods. These and other restrictions relating to the Fleet loan that
are discussed above under "ITEM 1. BUSINESS - Description of Indebtedness" could
impact your partnership's ability to make distributions in the future.

Recent Sales of Unregistered Securities

      In January 2003, your partnership issued 317,813 units to the Newkirk
Group in exchange for a contribution of limited partnership interests in various
partnerships that own net-leased properties. In January 2004, your partnership
sent notice of its intention to exercise an option to purchase additional
limited partnership interests in two of the above mentioned partnerships. It is
anticipated that these additional limited partnership interests will be acquired
on April 1, 2004 in exchange for 15,539 units. See "ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS - THE EXCHANGE". These units were issued
in reliance on an exemption from registration under the Securities Act provided
by Section 4(2) thereof.


                                       31
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

      The following financial data are derived from the audited consolidated
financial statements of your partnership for the year ended December 31, 2002
and 2003 and from the combined consolidated financial statements of Newkirk RE
Holdings, LLC and Newkirk NL Holdings, LLC ("Predecessor Entity") for the years
ended December 31, 1999, 2000 and 2001. The financial data set forth below
should be read in conjunction with "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" below and "The Consolidated
Financial Statements" and the notes thereto appearing elsewhere in this report.

      During the years ended December 31, 2001 and 2000 the Predecessor Entity
acquired additional limited partnership interests in entities it had recorded on
an equity basis. At the point sufficient limited partnership interests were
acquired to assert control over the limited partnership the Predecessor Entity
consolidated the respective limited partnership resulting in the recognition of
cash balances and other assets and liabilities as shown below.

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                            (In thousands, except unit data)
                                -------------------------------------------------------------------------------------------

                                    2003                2002                2001                2000                1999

                                                                        Predecessor         Predecessor         Predecessor
---------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                 <C>                 <C>                 <C>                 <C>
Total Revenue                   $  278,372          $  270,866          $  258,975          $   35,255          $   36,070

Income from Continuing
   Operations                      100,088             105,397              46,387              40,004              27,194

Income from Continuing
   Operations per Unit               15.81               17.22                  --                  --                  --

Total Assets                     1,384,094           1,476,623           1,476,922             434,974             371,811

Long Term Debt                   1,104,231           1,238,494           1,024,539             157,058             128,573
Cash Distributions
   per Unit                     $     5.52          $    32.16          $       --          $       --          $       --
</TABLE>


                                       32
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Liquidity and Capital Resources

      At December 31, 2003 your partnership owned an interest in 225 Newkirk
properties and limited partnership interests in seven partnerships which own 43
properties whose operations are consolidated for financial reporting purposes.
Almost all of the properties are leased to one or more tenants pursuant to net
leases with original lease terms, subject to extensions, ranging between
approximately twenty and twenty-five years. Approximately 90% of the original
lease terms expire between 2005 and 2009. There are six properties which are
vacant and not leased which represent approximately 111,000 square feet of your
partnership's Newkirk properties. The remaining 19,331,000 square feet or 99.4%
are leased. Your partnership also holds subordinated interests in a securitized
pool of notes evidencing first mortgage indebtedness secured by certain of your
partnership's properties as well as other properties, limited partnership
interests in various partnerships that own commercial net-leased properties, an
interest in a management company that provides services for your partnership as
well as other real estate partnerships, ground leases, remainder interests or
the right to acquire remainder interests in various properties and miscellaneous
other assets. In addition, your partnership, or an affiliate of your general
partner, controls the general partner of the real estate limited partnerships in
which your partnership owns limited partnership interests, and your partnership
has an option to acquire in the future second mortgage debt secured by a
substantial number of your partnership's properties as well as the properties
owned by nine other partnerships.

      Your partnership receives rental income from its properties which is its
primary source of liquidity. Pursuant to the terms of the leases, the tenants
are responsible for substantially all of the operating expenses with respect to
the properties, including maintenance, capital improvements, insurance and
taxes. If a tenant fails to exercise its renewal option or exercises its option
to terminate its lease early, your partnership will be required to either sell
the property or procure a new tenant. If your partnership attempts to procure a
new tenant, it will be competing for new tenants in the then current rental
markets, which may not be able to support terms as favorable as those contained
in the original lease options.

      The level of liquidity based on cash and cash equivalents experienced a
$4,399,000 increase at December 31, 2003 as compared to December 31, 2002. The
increase was due to net cash provided by operating activities of $162,017,000
and net cash provided by investing activities of $58,316,000, which were
substantially offset by net cash used in financing activities of $215,934,000.
Cash provided by operations consisted of $148,850,000 from continuing operations
and $13,167,000 from discontinued operations. Cash provided by investing
activities included $650,000 of cash related to previously unconsolidated
limited partnerships and $61,491,000 of net proceeds from disposal of real
estate, which were partially offset by land acquisitions of $2,518,000 and
investments in limited partnership interests of $1,307,000. Cash used in
financing activities consisted primarily of mortgage loan and contract right
mortgage loan payoffs of $266,599,000, principal payments on mortgage, contract
right and notes payable of $158,381,000, deferred costs expenditures of
$8,550,000 and partner distributions of $34,731,000, which were partially offset
by loan proceeds of $262,338,000. At December 31, 2003, your partnership had
$37,851,000, of which $5,148,000 is restricted, in cash reserves which were
invested primarily in money market mutual funds.


                                       33
<PAGE>

A summary of your partnership's contractual obligations is as follows:

<TABLE>
<CAPTION>
                                                          (in thousands)
                                                      Payment due by period
                             ----------------------------------------------------------------------
                                             Less than         1-3            3-5         More than
Contractual Obligations         Total         1 year          years          years         5 years
                             ----------     ----------     ----------     ----------     ----------
<S>                          <C>            <C>            <C>            <C>            <C>
Mortgage Notes Payable       $  602,919     $  116,964     $  238,653     $  165,043     $   82,259

Contract Right Mortgage
  Notes Payable (1)             460,860         16,821         58,569         64,217        321,253

Note Payable                    208,356             --        208,356             --             --

Ground Lease Obligations         12,530          3,191          5,556          2,953            830
                             ----------     ----------     ----------     ----------     ----------

Total                        $1,284,665     $  136,976     $  511,134     $  232,213     $  404,342
                             ==========     ==========     ==========     ==========     ==========
</TABLE>

----------
(1) The debt amounts represent amounts contractually due based upon December 31,
2003 principal and accrued interest payable. Your partnership's financial
statements reflect the debt balance after making an adjustment to fair value in
accordance with generally accepted accounting principles.

Off-Balance Sheet Arrangements

      On November 24, 2003, at the same time as your partnership obtained its
loan from Fleet National Bank, T-Two Partners obtained a $316,526,573 loan from
Fleet National Bank. We refer to this loan as the T-Two Loan. The interest rate,
maturity date and principal terms of the T-Two Loan are the same as your
partnership's loan. The T-Two Loan is secured by all the assets of T-Two
Partners, including the second mortgage loans receivable from your partnership.
Your partnership guaranteed repayment of the T-Two Loan to Fleet National Bank.
In consideration for your partnership's guarantee, the owners of T-Two Partners
agreed to the elimination of their put option, and to provide a credit line to
your partnership bearing interest at LIBOR plus 450 basis points. Any amounts
advanced to your partnership under the credit line would have to be repaid in
full before your partnership could purchase the interests in T-Two Partners if
your partnership exercises the purchase option described below.

      Your partnership's call option had previously provided for the acquisition
of the interests in T-Two Partners in January 2008 in exchange for a number of
units in your partnership to be determined at the time of exercise based on an
agreed-upon formula. Your partnership and the owners of T-Two Partners modified
your partnership's option in certain respects. First, the option can now be
exercised by your partnership at any time between November 24, 2006 and November
24, 2009. Second, the purchase price is payable in cash rather than units in
your partnership. Finally, the formula for determining the purchase price
payable by your partnership if it exercises the option has been revised in a
manner that your partnership's general partner believes to be significantly more
favorable to your partnership than the formula previously in effect.
Specifically, the purchase price is calculated as follows: the sum of
$316,526,573 plus T-Two Partners' costs of obtaining the T-Two Loan


                                       34
<PAGE>

(approximately $7,346,000) and administering the trust that holds the second
mortgage loans, together with interest on the foregoing sum at the effective
rate of interest paid by T-Two Partners on the T-Two Loan, less all payments
made from and after November 24, 2003 on the second mortgage loans.


                                       35
<PAGE>

Other Matters

      On January 1, 2003, your partnership acquired from the Newkirk Group, an
affiliate of your partnership's general partner, limited partnership interests
in nine real estate limited partnerships that own net-leased commercial
properties. The limited partnership interests acquired by your partnership
ranged between 4.9% and 57.75% of each partnership and were acquired in exchange
for 317,813 limited partnership units of your partnership. In January 2004, your
partnership notified the Newkirk Group that it intends to exercise its option to
purchase the additional limited partnership interests in two of the
partnerships. It is anticipated that these additional limited partnership
interests will be acquired as of April 1, 2004 in exchange for approximately
15,539 units. In determining the number of units issuable to the affiliate in
exchange for such interests, your partnership's general partner estimated the
value of nine real estate limited partnerships utilizing a discounted cash flow
approach similar to that which was used to determine exchange values for Newkirk
partnerships as part of the exchange to arrive at a value of $22,704,776 for the
limited partnership interests. Your partnership's general partner then estimated
the per unit value of your partnership in order to determine the number of units
allocable to the affiliate for its interest in the limited partnerships. The
$71.44 estimated per unit value of your partnership was derived from the
aggregate value ascribed to your partnership in the exchange, as adjusted to
reflect the proceeds from your partnership's indebtedness to Fleet National Bank
that were distributed to limited partners following the exchange. During 2002,
appraisals were obtained for each of the properties owned by the nine real
estate limited partnerships. The aggregate appraised value of all of the
properties was $288,675,000. Based solely on your partnership's ownership
interests in the nine partnerships, $25,049,842 of the appraised value would be
attributable to the interests owned by your partnership. In August 2003, your
partnership acquired an additional 9.9% interest in one of those limited
partnerships for a cash purchase price of $525,000.

      In January 2003, your partnership acquired the land underlying the
property owned by one of the net-leased partnerships referred to immediately
above. The land was acquired from a company affiliated with your general partner
for $1,000,000, $50,000 of which was paid in cash and the balance in the form of
a $950,000 note due September 8, 2008. The note bore interest at the rate of 6%
per annum, compounded annually, and was payable interest-only until maturity, at
which time the full balance of the note was to be due. In October 2003, the note
was satisfied by your partnership from cash reserves. The purchase price for the
land sale was determined without arms-length negotiations. An independent
appraisal was obtained on the value of the land that was acquired.

      In February 2003, your partnership acquired from its limited partners
115,000 of its units of limited partnership interest at a purchase price of $35
per unit.

      In January 2003, your partnership acquired a second mortgage loan that
encumbered your partnership's property in Morris Township, New Jersey. The
mortgage and accrued interest amounted to $28,100,000 at December 31, 2002. It
was acquired for $22,100,000, $9,300,000 of which was initially paid and
$12,800,000 of which was payable on or before September 30, 2003. The deferred
portion of the purchase price bore interest at a rate of 6% per annum. Your
partnership acquired this mortgage in connection with an extension of the lease
on the property and obtained new first mortgage financing in June 2003 to
satisfy the balance of the purchase price. The new first mortgage loan that was
obtained in June 2003 had a principal balance of $21,000,000 and an initial term


                                       36
<PAGE>

of three years. The loan bore interest at LIBOR plus 2.875% per annum, payable
monthly beginning August 1, 2003. Principal payments of $25,000 were due monthly
commencing February 1, 2005. After payment of closing costs, $6,700,000 of
proceeds were used to satisfy the existing first mortgage and the balance was
used to satisfy the deferred portion of the second mortgage purchase price. This
Loan was refinanced in October 2003.

      In August 2003, your partnership obtained a new $3,400,000 first mortgage
loan on its property in Beaumont, Texas. The loan bears interest at 6.2% per
annum and matures on November 30, 2007, at which time it is scheduled to be
fully amortized.

      In October 2003, your partnership refinanced its first mortgage loan on
its property in Morris Township, New Jersey. The new first mortgage loan had a
principal balance of $28,500,000, bears interest at 5.55% per annum and had a
term of ten years. After payment of closing costs, $21,100,000 of proceeds were
used to satisfy the existing first mortgage and accrued interest. Additionally,
$5,000,000 was applied to a principal payment on your partnership's loan with
Fleet National Bank. This property was sold in the first quarter of 2004.

      In February 2003, your partnership received a notice from Albertson's,
Inc., the tenant at your partnership's Sioux Falls, South Dakota property,
exercising the economic discontinuance provisions of the lease. Under the terms
of the notice, Albertson's had proposed to terminate the lease effective
November 5, 2003 and had made a rejectable offer to purchase the property for
$1,551,000. Your partnership had until October 2003 to accept or reject this
offer. Your partnership elected to reject the offer and sold the property in
September 2003 for $2,700,000. Your partnership also received notice from
Albertson's indicating that it intended to exercise its right to terminate the
lease for the supermarket property located in Stuart, Florida. In accordance
with the economic discontinuance provision of its lease, Albertson's made a
rejectable offer to purchase the property for an amount stipulated in the lease
of approximately $631,000. Your partnership elected to reject the offer. As a
result of the rejection, your partnership was required to payoff the first
mortgage encumbering the property, which had a balance of approximately
$531,000. Your partnership satisfied the first mortgage using its cash reserves.
Your partnership has entered into a contract to sell the property for a price in
excess of the rejectable offer price. The sale, which is contingent upon the
purchaser completing its due diligence, is expected to occur, if at all, in the
second quarter of 2004.

      Your partnership has also received notice from Albertsons exercising a
purchase option in accordance with their lease on fifteen of your partnership's
properties. Your partnership has a right to reject this offer. If your
partnership accepts the offer, the sale would be effective July 1, 2004 for 11
properties, October 1, 2004 for 3 properties and February 1, 2005 for 1
property. If your partnership rejects this offer, the tenant can elect to
terminate the lease on July 1, 2004, October 1, 2004 and February 1, 2005,
respectively, or extend its lease for eighteen months until December 31, 2005,
March 31, 2006 or July 31, 2006. Rent during the eighteen month period would be
at the renewal rates. If Albertsons elects to renew for the eighteen month
period it will still have a series of five year renewal options. For all 15 of
the properties Albertsons has elected to renew the lease for eighteen months
assuming the purchase offer is rejected. Your partnership is currently reviewing
all of the purchase offers in order to determine a course of action.


                                       37
<PAGE>

      During February 2003, your partnership received the remaining balance due
on a secured note of Cenland Associates Limited Partnership that it acquired in
the exchange. The note had an outstanding balance of $1,342,000 at the time of
the exchange that had been reduced to $158,000 as of December 31, 2002.

      In April and June 2003 your partnership acquired 30.6% and 46.1%,
respectively, of the outstanding limited partnership interests in two
partnerships that own commercial net-leased properties. The partnership
interests were acquired for an aggregate cash purchase price of $711,250. Your
partnership previously owned 1.5% and 3.8%, respectively, of the outstanding
limited partnership interests in these two partnerships. Your partnership
controls the general partners of each of these partnerships. Your partnership
has consolidated these partnerships in accordance with the guidance provided by
Statement of Position 78-9 "Accounting for Investments in Real Estate Ventures."

Results of Operations

Comparison of the year ended December 31, 2003 to the year ended December 31,
2002.

Income from Continuing Operations

      Income from continuing operations decreased by $5,309,000 to $100,088,000
for the year ended December 31, 2003 from $105,397,000 for the year ended
December 31, 2002. As more fully described below, this decrease is attributable
to an increase in total expenses of $7,477,000 and an increase in minority
interest expense of $7,392,000, which was partially offset by an increase in
total revenue of $7,506,000 and an increase in equity in income from investments
in limited partnerships of $2,054,000.

Rental Income

      Rental income increased by $8,155,000 or approximately 3% to $274,971,000
for the year ended December 31, 2003 from $266,816,000 for the year ended
December 31, 2002. The increase was primarily due to five newly acquired
consolidated partnerships which contributed approximately $13,810,000 in rental
income. This increase was partially offset by lower rental income received from
properties previously leased by Kmart of $1,506,000 and lower rental income on
lease renewals or renegotiations of $4,149,000.

Interest Income

      Interest income decreased by $305,000 or approximately 9% to $2,983,000
for the year ended December 31, 2003 from $3,288,000 for the year ended December
31, 2002. The decrease was due to the payoff of a loan receivable and overall
lower interest rates on the invested cash balances.


                                       38
<PAGE>

Management Fees

      Management fees decreased by $344,000 or approximately 45% to $418,000 for
the year ended December 31, 2003 from $762,000 for the year ended December 31,
2002. The decrease is attributable to fewer properties under management.

Interest Expense

      Interest expense decreased by $5,868,000 or approximately 5% to
$106,898,000 for the year ended December 31, 2003 compared to $112,766,000 for
the year ended December 31, 2002. The decrease was primarily due to loan payoffs
during the period and normal scheduled principal payments.

Depreciation

      Depreciation expense increased by $10,096,000 or approximately 37% to
$37,705,000 for the year ended December 31, 2003 compared to $27,609,000 for the
year ended December 31, 2002. The increase is primarily attributable to changing
the estimated useful lives of the real estate and additional depreciation
expense from five newly acquired consolidated partnerships. A significant
percentage of the increase in depreciation expense relating to the change in
estimated useful lives is offset by a corresponding decrease in minority
interest expense.

General and Administrative

      General and administrative expenses increased by $2,368,000 or
approximately 26% to $11,486,000 for the year ended December 31, 2003 compared
to $9,118,000 for the year ended December 31, 2002. The increase is the result
of $3,600,000 incurred related to legal settlements. This increase was
substantially offset by one-time organizational expenses relating to the
formation of your partnership in 2002.

Amortization Expense

      Amortization expense increased by $917,000 or approximately 24% to
$4,771,000 for the year ended December 31, 2003 as compared to $3,854,000 for
the year ended December 31, 2002. The increase in amortization expense is the
result of the refinancing of the Fleet debt which was partially offset by
savings from loans which have been paid off.

Ground Rent

      Ground rent expense increased by $37,000 to $3,202,000 for the year ended
December 31, 2003 as compared to $3,165,000 for the year ended December 31,
2002. The increase in ground rent expense is the result of the addition of new
properties in 2003 partially offset by land purchases made in 2003.

State Income Taxes

      State income tax expense decreased by $73,000 or approximately 9% to
$767,000 for the year ended December 31, 2003 compared to $840,000 for the year
ended December 31, 2002. The decrease is the result of tax savings in the State
of New Jersey.


                                       39
<PAGE>

Equity in Income from Investments in Limited Partnerships

      Equity in income from investments in limited partnerships is the result of
the January 2003 purchase of equity positions in five new partnerships.

Minority Interest Expense

      Minority interest expense increased by $7,392,000 or approximately 91% to
$15,509,000 for the year ended December 31, 2003 compared to $8,117,000 for the
year ended December 31, 2002. The increase was the result of minority interests
in the amount of $5,365,000 related to the five newly consolidated partnerships.
The remaining increase of $2,027,000 related to increased profitability at the
previous partially owned partnerships.

Discontinued Operations

      During the year ended December 31, 2003, your partnership sold fourteen
properties for a combined net sales price of $156,409,000. Your partnership
recognized a net gain on disposal of these properties of $29,514,000. The sale
and operation of these properties for all periods presented have been recorded
as discontinued operations in compliance with the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
or Disposal of Long Lived Assets."

Comparison of the year ended December 31, 2002 to the year ended December 31,
2001 (Pro-Forma).

Pro-Forma Information

      Your partnership commenced operations on January 1, 2002 following
completion of the Exchange. In the Exchange the 90 Newkirk partnerships, each of
which owned commercial properties, were merged into wholly- owned subsidiaries
of your partnership, and your partnership acquired various assets including
those related to the management or capital structure of the Newkirk
partnerships. The financial information contained in the audited financial
statements for all periods, and as of all dates, prior to January 1, 2002 is
comprised of the assets, liabilities, revenue and expenses of Newkirk RE
Holdings, LLC and Newkirk NL Holdings, LLC, which are considered to be the
Predecessor Entity. The equity method of accounting was used to reflect the
Predecessor Entity's interest in Newkirk partnerships in which it did not own a
controlling interest. Accordingly, the Predecessor Entity's share of assets and
liabilities and revenue and expenses in those Newkirk partnerships was presented
as a single item on the balance sheet and statement of operations. In addition,
only a portion of the assets of the Predecessor Entity were contributed to your
partnership in the Exchange.

      In view of the foregoing facts, and in order to facilitate a comparison of
the 2002 and 2001 results of operations in management's discussion and analysis
of financial condition and results of operations, we have prepared pro-forma
information. The pro-forma information has been prepared on the assumption that
the Exchange had been consummated on January 1, 2001.


                                       40
<PAGE>

      The pro-forma information is presented as a tool to facilitate the
Management Discussion and Analysis of the Predecessor Entity and your
partnership. The operations of your partnership are essentially the Newkirk
properties (originally 230 properties), substantially all of which are
net-leased to tenants that typically have high credit ratings and are stock
exchange listed. Given the lease structure and the absence of tenant defaults,
underlying operations do not vary significantly from year to year.

      The components of the Predecessor Entity's operations do vary
significantly from those of your partnership due to the acquisition by the
Predecessor Entity of limited partnership interests in the Newkirk partnerships
(certain assets, liabilities and operations of the Newkirk partnerships were
accounted for on the equity method for various periods depending on the point at
which control was achieved) and the inclusion of certain assets that were not
ultimately contributed in the Exchange.

      Rather than continually referring to a core set of reasons (assets not
contributed to your partnership or liabilities not assumed by your partnership)
for differences between the periods discussed it was considered more meaningful
to highlight the changes in the underlying operations of what is now your
partnership and reconcile those operations to the Predecessor Entity's reported
financial position and results of operations.


                                       41
<PAGE>

      The following table shows (i) the pro-forma consolidated statement of
operations for the year ended December 31, 2001, reflecting the pro-forma impact
had all the Newkirk partnerships' activities been consolidated effective January
1, 2001 and the assets not contributed by the Predecessor Entity were excluded.

                 CONSOLIDATED PRO-FORMA STATEMENT OF OPERATIONS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                         Predecessor                                  Predecessor
                                                 As Reported             As Reported            Pro-Forma              Pro-Forma
                                              December 31, 2002       December 31, 2001        Adjustments         December 31, 2001
                   -----------------------------------------------------------------------------------------------------------------
<S>                                              <C>                     <C>                  <C>                    <C>
   Revenue:
                   Rental income                 $    266,816            $    235,653         $      34,993 (1)      $     270,646
                   Interest income                      3,288                  21,749              (17,184) (2)              4,565
                   Management fees                        762                   1,573                 (705) (1)                868
                                                 ------------            ------------         ------------           -------------

                      Total revenue                   270,866                 258,975               17,104                 276,079
                                                 ------------            ------------         ------------           -------------

   Expenses
                   Interest                           112,766                 104,823                4,343  (1)            109,166
                   Depreciation                        27,609                  32,444               (2,987) (4)             29,457
                   General and
                      administrative                    9,118                   8,075               (2,826) (4)              5,249
                   Amortization                         3,854                  13,138              (10,007) (3)              3,131
                   Ground rent                          3,165                   3,177                   68  (1)              3,245
                   Federal and state income
                   taxes                                  840                   2,918               (2,054) (2)                864
                                                 ------------            ------------         ------------           -------------

                      Total expenses                  157,352                 164,575              (13,463)                151,112
                                                 ------------            ------------         ------------           -------------

   Equity in income from  limited
        partnerships                                       --                   7,649               (7,649) (1)                 --
                                                 ------------            ------------         ------------           -------------

Income from continuing operations before
   minority interest and discontinued
   operations                                    $    113,514            $    102,049         $     22,918           $     124,967
                                                 ============            ============         ============           =============
</TABLE>

Footnotes to Pro-Forma Statement of Operations:

(1)   Reflects the consolidation of partnerships previously accounted for by the
      Predecessor Entity as an equity investment.

(2)   Primarily the result of the Predecessor Entity not contributing its
      investments in contract right mortgages.

(3)   Primarily the result of the Predecessor Entity not contributing Goodwill
      to the Partnership.

(4)   Certain assets were not contributed and expenditures related thereto will
      not be incurred by the Partnership.


                                       42
<PAGE>

      In order to provide a more meaningful comparison of the results of
operations, the following analysis compares the years ended December 31, 2002
and 2001 as if the exchange had occurred on January 1, 2001.

Income from Continuing Operations before Minority Interest

      Income from continuing operations before minority interest decreased by
$11,453,000 to $113,514,000 for the year ended December 31, 2002 from
$124,967,000 for the year ended December 31, 2001. As more fully described
below, this decrease is attributable to a decrease in total revenue of
$5,213,000 and an increase in total expenses of $6,240,000.

Rental Income

      Rental income decreased by $3,830,000 or approximately 1% to $266,816,000
for the year ended December 31, 2002 from $270,646,000 for the year ended
December 31, 2001. The decrease was primarily due to the January 2002 K-Mart
Corporation Chapter 11 bankruptcy filing. K-Mart Corporation rejected the leases
on 12 of your partnership's properties, which reduced 2002 revenues by
$2,482,000. Eight of the properties have been re-leased. The aggregate rental
rates under these leases is significantly less than the aggregate rent that was
scheduled to be received during the renewal term under the K-Mart leases.

      Additionally, rental income decreased as a result of lease renewals at
lower rental rates.

Interest Income

      Interest income decreased by $1,277,000 or approximately 28% to $3,288,000
for the year ended December 31, 2002 from $4,565,000 for the year ended December
31, 2001. The decrease was due to principal payments received by your
partnership on loans receivable and overall lower interest rates on the invested
cash balances.

Management Fees

      Management fees decreased by $106,000 or approximately 12% to $762,000 for
the year ended December 31, 2002 from $868,000 for the year ended December 31,
2001. The decrease is attributable to fewer properties under management.

Interest Expense

      Interest expense increased by $3,600,000 or approximately 3% to
$112,766,000 for the year ended December 31, 2002 compared to $109,166,000 for
the year ended December 31, 2001. The increase was due to $20,314,000 in
interest expense attributable to your partnership's mezzanine loan in the amount
of $225,000,000 which was obtained in January 2002, which was substantially
offset by decreases in the mortgage loan and contract right mortgage loan
interest of $10,920,000 as a result of loan payoffs during the year, through
scheduled principal payments and the net gain from the extinguishment of debt of
$5,794,000 for the year ended December 31, 2002, compared to zero for the year
ended December 31, 2001.


                                       43
<PAGE>

Depreciation

      Depreciation expense decreased by $1,848,000 or approximately 6% to
$27,609,000 for the year ended December 31, 2002 compared to $29,457,000 for the
year ended December 31, 2001. The decrease is attributable to the completion of
the useful lives of various partnership assets while no further additions to
real estate were expended.

General and Administrative

      General and administrative expenses increased by $3,869,000 or
approximately 74% to $9,118,000 for the year ended December 31, 2002 compared to
$5,249,000 for the year ended December 31, 2001. The increase was primarily the
result of one-time organizational expenses relating to the formation of your
partnership of $3,168,000. Additionally, legal expenses related to pending law
suits were also incurred.

Amortization Expense

      Amortization expense increased by $723,000 or approximately 23% to
$3,854,000 for the year ended December 31, 2002 compared to $3,131,000 for the
year ended December 31, 2001. The increase is primarily the result of mortgage
cost amortization expense in the amount of $981,000 related to your
partnership's mezzanine loan partially offset by savings in land lease
amortization from 2001 land purchases.

Ground Rent

      Ground rent expense decreased by $80,000 or approximately 2% to $3,165,000
for the year ended December 31, 2002 compared to $3,245,000 for the year ended
December 31, 2001. The decrease is the result of a June 2001 acquisition of land
previously leased resulting in no rent expense for the property in 2002.

State Income Taxes

      State income taxes decreased by $24,000 or approximately 3% to $840,000
for the year ended December 31, 2002 compared to $864,000 for the year ended
December 31, 2001.

Critical Accounting Policies

      The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions in certain circumstances
that affect amounts reported in the accompanying consolidated financial
statements and related notes. In preparing these consolidated financial
statements, management has made its best estimates and judgments of certain
amounts included in the consolidated financial statements, giving due
consideration to materiality. Your partnership does not believe there is a great
likelihood that materially different amounts would be reported related to the
accounting policies described below. However, application of these accounting
policies involves the exercise of judgment and use of assumptions as to future
uncertainties and, as a result, actual results could differ from these
estimates.


                                       44
<PAGE>

      Impairment of long-lived assets. At December 31, 2003, your partnership
had $1,129,237,000 of real estate (net) and $59,481,000 of real estate held for
sale (net), which combined,,account for approximately 86% of your partnership's
total assets. Buildings and improvements are carried at cost net of adjustments
for depreciation and amortization. The fair values of your partnership's
buildings and improvements are dependent on the performance of the properties.

      Your partnership evaluates recoverability of the net carrying value of its
real estate and related assets at least annually, and more often if
circumstances dictate. If there is an indication that the carrying value of a
property might not be recoverable, your partnership prepares an estimate of the
future undiscounted cash flows expected to result from the use of the property
and its eventual disposition, generally over a five-year holding period. In
performing this review, management takes into account, among other things, the
existing occupancy, the expected leasing prospects of the property and the
economic situation in the region where the property is located.

      If the sum of the expected future undiscounted cash flows is less than the
carrying amount of the property, your partnership recognizes an impairment loss
and reduces the carrying amount of the asset to its estimated fair value. Fair
value is the amount at which the asset could be bought or sold in a current
transaction between willing parties, that is, other than in a forced or
liquidation sale. Management estimates fair value using discounted cash flows or
market comparables, as most appropriate for each property. Independent certified
appraisers are utilized to assist management when warranted. During the year
ended December 31, 2003, your partnership recorded $1,560,000 in allowances for
impairment.

      Because the cash flows used to evaluate the recoverability of the assets
and their fair values are based upon projections of future economic events, such
as property occupancy rates, rental rates, operating cost inflation and market
capitalization rates, which are inherently subjective, the amounts ultimately
realized at disposition may differ materially from the net carrying values at
the balance sheet dates. The cash flows and market comparables used in this
process are based on good faith estimates and assumptions developed by
management.

      Unanticipated events and circumstances may occur, and some assumptions may
not materialize; therefore, actual results may vary from the estimates, and
variances may be material. The Partnership may provide additional write-downs,
which could be material in subsequent years if real estate markets or local
economic conditions change.

      Useful lives of long-lived assets. Building and improvements and certain
other long-lived assets are depreciated or amortized over their useful lives.
Depreciation and amortization are computed using the straight-line method over
the useful life of the building and improvements. The cost of properties
represents the initial cost of the properties to your partnership plus
acquisition and closing costs less impairment adjustments.

      During 2003, the Partnership made a change to its accounting estimates
with respect to the depreciable lives of its real estate assets. The change in
accounting estimates resulted in a decrease in net income of approximately
$6,823,000 and a decrease in net income per limited partnership unit of
approximately $ 1.08 per unit for the year ended December 31, 2003.


                                       45
<PAGE>

Recently Issued Accounting Standards

      None of the recently issued accounting standards had any effect on the
partnership's consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Your partnership has both fixed and variable rate debt, as well as one
interest rate cap. All financial instruments were entered into for other than
trading purposes. A change in interest rates on the fixed rate portion of the
debt portfolio or the interest rate cap impacts the net financial instrument
position, but has no impact on interest incurred or cash flows. A change in
interest rates on the variable portion of the debt portfolio impacts the
interest incurred and cash flows, but does not impact the net financial
instrument position.

      The fair value of your partnership's debt, based on discounted cash flows
at the current market conditions and interest rates for the remaining term of
such debt was less than the aggregate carrying amount by approximately
$13,700,000 at December 31, 2003. The change in the fair value of your
partnership's debt as of December 31, 2003 reflects the impact of the T-Two
Partners refinancing affected by your partnership in November 2003.

      At December 31, 2003, your partnership had one loan which had a variable
interest rate. The loan which had an outstanding balance of $208.4 million at
December 31, 2003, was obtained in November 2003 and has a three-year term.
Interest on the outstanding balance accrues at a rate equal to, at your
partnership's option, either, (i) LIBOR rate (as defined) plus 450 basis points
or (ii) the bank's prime rate plus 250 basis points. Your partnership purchased
an interest rate cap on the loan so that the interest rate would be capped at
9.5%.

      Your partnership elected to pay the loan based on the LIBOR rate. The
following table shows what the annual effect of a change in the LIBOR rate
(1.21% at December 31, 2003) will have on interest expense based upon increases
up to the cap of 9.5% all in interest rate.

                                                   Change in LIBOR
                                                    (In thousands)
                                      ------------------------------------------
                                        1%          2%          3%         3.79%
                                        --          --          --         -----

Additional interest expense           $2,084      $4,167      $6,251      $7,898


                                       46
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See "Index to Financial Statements" under "ITEM 15. EXHIBITS, FINANCIAL
STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

      Effective September 30, 2002, your partnership dismissed its prior
Independent Auditors, Deloitte & Touche LLP (the "Prior Auditors"). The Prior
Auditors auditors' report on the consolidated balance sheet of the Predecessor
Entity as of December 31, 2001, and the related statements of operations,
partner's equity and cash flows for each of the two years in the period ended
December 31, 2001, did not contain an adverse opinion or a disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. The decision to change Independent Auditors was approved
by your partnership's general partner. During calendar year ended 2001 and 2000
and through September 30, 2002, there were no disagreements between your
partnership and the Prior Auditors on any matter or accounting principles or
practices, financial statement disclosure, or auditing scope of procedure.

      Effective October 10, 2002, your partnership engaged Imowitz, Koenig &
Co., LLP as its Independent Auditors. Your partnership did not consult Imowitz
Koenig & Co., LLP regarding any of the matters or events set forth in Item
304(a)(2) of Regulation S-K prior to October 10, 2002.


                                       47
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES

      In accordance with Exchange Act Rules 13a-15 and 15d-15, your partnership
carried out an evaluation, under the supervision and with the participation of
the Chief Executive Officer and Chief Financial Officer of your general
partner's manager, as well as other key members of your partnership's
management, of the effectiveness of your partnership's disclosure controls and
procedures as of the end of the period covered by this report. Based on that
evaluation, your partnership's Chief Executive Officer and Chief Financial
Officer concluded that your partnership's disclosure controls and procedures
were effective, as of the end of the period covered by this report, to provide
reasonable assurance that information required to be disclosed in your
partnership's reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

      No change occurred in your partnership's internal controls concerning
financial reporting during the fourth quarter of the fiscal year ended December
31, 2003 that has materially affected, or is reasonably likely to materially
affect, your partnership's internal controls over financial reporting.


                                       48
<PAGE>

                                    PART III

ITEM 10. MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The general partner of your partnership is MLP GP LLC, a Delaware limited
liability company, that is owned by affiliates of Vornado Realty Trust and
executive officers of Winthrop Financial Associates. In addition, Winthrop
Financial Associates performs asset management services for your partnership.
MLP GP LLC has no assets, liabilities or equity and does not have an equity
interest in your partnership.

      The manager of your partnership's general partner is Newkirk MLP Corp.,
the principal officers of which are Michael L. Ashner, Chief Executive Officer;
Peter Braverman, Executive Vice President; Thomas C. Staples, Chief Financial
Officer; and Carolyn Tiffany, Chief Operating Officer. Such persons also serve
in those capacities for Winthrop Financial Associates. These officers manage and
control the day-to-day operations of your partnership on behalf of your
partnership's general partner. However, significant transactions, whether by
your partnership or any subsidiary partnership, such as sales, acquisitions,
debt refinancings and mergers, require the consent of the members of the general
partner under the limited liability company agreement of the general partner.

      The principal occupations and relevant affiliations of the officers of
your partnership's general partner are as follows:

      Michael L. Ashner. Mr. Ashner, age 51, serves as the Chief Executive
Officer of Winthrop Financial Associates and its affiliates, a position he has
held since January 15, 1996, as well as the Chief Executive Officer of Newkirk
MLP Corp., the manager of your partnership's general partner. Mr. Ashner has
served as Chief Executive Officer of First Union Real Estate Equity and Mortgage
Investments, a publicly traded real estate investment trust which we refer to as
First Union, since December 31, 2003. Since August 2002, Mr. Ashner has also
served as the Chief Executive Officer and a Director of Shelbourne Properties I,
II and III, three separate publicly traded real estate investment trusts. Since
1981, Mr. Ashner has been Chairman of Exeter Capital Corporation, a firm that
has organized and administered real estate limited partnerships. Since August
2001, Mr. Ashner has also served as Chief Executive Officer of AP-Fairfield GP,
LLC, the general partner of Fairfield Inn by Marriott Limited Partnership, an
entity that owns and operates 50 Fairfield Inns. Mr. Ashner also currently
serves on the Boards of Directors of the following publicly traded companies:
Greate Bay Hotel and Casino Inc., a hotel and casino operator, and NBTY Inc., a
manufacturer, marketer and retailer of nutritional supplements.

      Peter Braverman. Mr. Braverman, age 52, has served as the Executive Vice
President of Winthrop Financial Associates and its affiliates since January
1996. Mr. Braverman also serves as the Executive Vice President of Newkirk MLP
Corp., the manager of your partnership's general partner. Mr. Braverman has
served as the Executive Vice President of First Union since January 2004. He has
also been an Executive Vice President of AP-Fairfield GP, LLC since August 2001.
Since August 2002, Mr. Braverman has also served as the Executive Vice President
and a Director of Shelbourne Properties I, II and III.

      Thomas C. Staples. Mr. Staples, age 48, has been with Winthrop Financial
Associates since 1995. Since January 1999, Mr. Staples has served as the Chief
Financial Officer of Winthrop Financial Associates. Mr. Staples has also served
as the Treasurer and Chief Financial Officer of First Union since January 2004.
Since August 2002, Mr. Staples has also served as Assistant Treasurer of


                                       49
<PAGE>

Shelbourne Properties I, II and III. In addition, Mr. Staples is the Chief
Financial Officer of the Newkirk Group. He also serves as Chief Financial
Officer and Treasurer of AP-Fairfield GP, LLC. Mr. Staples is a certified public
accountant.

      Carolyn Tiffany. Ms. Tiffany, age 37, has been with Winthrop Financial
Associates since January 1993. Since December 1997, Ms. Tiffany has served as
the Chief Operating Officer of Winthrop Financial Associates. Ms. Tiffany has
served as the Chief Operating Officer and Secretary of First Union since January
2004. Ms. Tiffany also serves as Vice President, Treasurer, Secretary and Chief
Financial Officer of Shelbourne Properties I, II and III. In addition, Ms.
Tiffany is the Chief Operating Officer of The Newkirk Group. She has also been
Chief Operating Officer of AP-Fairfield GP, LLC since August 2001.

      One or more of the above persons are also directors or officers of a
general partner (or general partners of a general partner) of a number of
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section15(d) of such Act. In addition, each of the
foregoing individuals hold similar positions with AP-PCC III, L.P., an entity
that through one or more subsidiaries manage several limited partnerships that
hold title to real property including, commercial properties and residential
properties.

      Except as indicated above, neither your partnership nor your general
partner or its manager has any significant employees within the meaning of Item
401(c) of Regulation S-K. There are no family relationships among the officers
and directors of the general partner.

Compliance with Section 16(a) of the Exchange Act.

      Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to your partnership under Rule 16a-34(e) during your partnership's
most recent fiscal year and Forms 5 and amendments thereto furnished to your
partnership with respect to its most recent fiscal year, your partnership is not
aware of any manager, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in your partnership that failed to
file on a timely basis, as disclosed in the above Forms, reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year or prior
fiscal years.

Code of Ethics

      Your partnership has adopted a Code of Ethics that applies to the chief
executive officer and chief financial officer of the manager of your
partnership's general partner, who perform functions similar to principal
executive officer and principal financial officer, respectively, for the
partnership. A copy of the Code of Ethics will be provided without charge to any
person who requests it by writing to the attention of Thomas Staples at the
address set forth on the cover page to this Form 10-K.

      Your partnership has no directors and is not a "listed-issuer" under Item
401 to Regulation S-K. Accordingly, your partnership does not have an audit
committee or an audit committee financial expert under Item 401 of Regulation
S-K.


                                       50
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

      Your partnership has no employees. Winthrop Financial Associates, an
affiliate of your general partner and of the Newkirk Group, provides the
services of some of its employees, including the executive officers of the
manager of your partnership's general partner, to perform asset management
services. Winthrop Financial Associates receives an annual fee of $1,800,000
(subject to adjustment based on increases in the CPI) for its services to your
partnership and 15 other affiliated partnerships. The CPI adjustment for 2003
was 2.4% bringing the fee to $1,843,200. See "ITEM 1. BUSINESS - Employees."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTER

Security Ownership.

      The following table sets forth the number of units held as of March 29,
2004 by (i) each person that, to our knowledge, beneficially owns more than 5%
of the total number of units, (ii) each officer or director of Newkirk MLP
Corp., the manager of your partnership's general partner, and (iii) the
directors and executive officers of Newkirk MLP Corp. as a group.

Name and Address of                                                   Percent of
Beneficial Owner                                 Number of Units     Total Units
----------------                                 ---------------     -----------

Michael L. Ashner                                3,657,230 (2)(3)       57.95%
Apollo Real Estate Investment Fund III, L.P.
Apollo Real Estate Advisors III, L.P.
Apollo Real Estate Management III, L.P. (1)
Vornado Realty Trust                             1,639,818 (3)(4)       25.98%
888 Seventh Avenue
New York, NY  10019
Peter Braverman                                          0                 --
Thomas Staples                                           0                 --
Carolyn Tiffany                                          0                 --
All executive officers and directors             3,657,230 (2)(3)       57.95%
as a group (4 individuals)

----------
(1)   The address for Apollo Real Estate Investment Fund III, L.P. ("Apollo
      Fund"), Apollo Real Estate Advisors III, L.P. ("Apollo Advisors"), and
      Apollo Real Estate Management III, L.P. ("Apollo Management") is 2
      Manhattanville Road, Purchase, New York 10577. The address for Mr. Ashner
      is 100 Jericho Quadrangle, Jericho, New York 11753.


                                       51
<PAGE>

(2)   Comprised of units that are held by Newkirk RE Holdings LLC, Newkirk NL
      Holdings LLC, Newkirk Tender Holdings LLC, Marbax Venture LLC, AP-WIN
      Associates, L.L.C., AP-III WEM WIN Tender LLC and AP-IV WEM WIN Tender
      LLC, each of which is directly or indirectly controlled by either
      WEM-Brynmawr Associates LLC, WEM Fund 1998 Limited Partnership or WEM-WIN
      Tender Associates (the "WEM Entities") and by Apollo Fund. For purposes of
      Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act"), as
      the sole manager of each of the WEM Entities, Mr. Ashner may be deemed to
      be the beneficial owner of all units beneficially owned by the WEM
      Entities. In addition, for purposes of Section 13 of the Exchange Act, as
      the general partner of Apollo Fund, Apollo Advisors may be deemed to be
      the beneficial owner of all units beneficially owned by Apollo Fund, and
      all such units may be deemed to be beneficially owned by Apollo Management
      as the day-to-day manager of Apollo Fund. Also includes 217,418 units that
      Newkirk NL Holdings and Newkirk RE Holdings have a right to acquire from
      Vornado Newkirk L.L.C. and an aggregate of 15,539 units which will be
      issued to AP3-WEM WIN Tender LLC and AP-WIN Associates LLC on April 1,
      2004. See "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -
      ACQUISITION OF LIMITED PARTNERSHIP INTERESTS."

(3)   Due to the relationships between the individual and entities referred to
      on this chart and in notes (2) and (4) thereto, such individual and
      entities may be deemed to constitute a "group" for purposes of Section
      13d-3 of the Exchange Act.

(4)   Comprised of units that are held by VNK Corp., Vornado Newkirk L.L.C. and
      Vornado Realty L.P., each of which is controlled by Vornado Realty Trust.

      Changes in Control.

      There exists no arrangement known to the partnership the operation of
which may at a subsequent date result in a change in control of the partnership.

      Securities Authorized for Issuance under Equity Compensation Plans.

      The partnership has no securities authorized for issuance under any equity
compensation plans.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

OPTION MODIFICATION

      As part of the exchange, your partnership and the Newkirk Group entered
into an option arrangement that gave your partnership an option to acquire in
January 2008 indirect interests in a pool of second mortgages of the Newkirk
partnerships and various other partnerships. The Newkirk Group also had a put
option to require your partnership to acquire these indirect interests in
December 2007. In November 2003 your partnership's option was modified and the
Newkirk Group's put option was eliminated. We refer you to "ITEM 1. BUSINESS -
Description of Assets - The Subordinate Mortgage Interests" for additional
information on the option arrangement and those interests.


                                       52
<PAGE>

ACQUISITION OF LIMITED PARTNERSHIP INTERESTS

      In January 2003, your partnership acquired from the Newkirk Group limited
partnership interests, ranging from a 4.9% interest to a 57.75% interest in nine
partnerships that own net leased property in exchange for 317,813 units. We
refer to these partnerships as the additional partnerships. Four of the
additional partnerships are included in the consolidated partnerships and five
of the additional partnerships are included in the unconsolidated partnerships.
The 317,813 units were divided among the Newkirk Group as follows: 133,400 units
to AP-WIN Associates L.L.C., 23,319 units to AP3-WEM WIN Tender LLC, 59,433
units to AP4-WEM WIN Tender LLC and 101,662 units to Vornado Realty L.P. In
addition, in connection with this transaction, your partnership also acquired an
option to purchase additional limited partnership interests in two of these
partnerships. In January 2004, your partnership notified the Newkirk Group that
it intends to exercise its option to purchase the additional limited partnership
interests. It is anticipated that these additional limited partnership interests
will be acquired as of April 1, 2004 in exchange for 15,539 units: 13,139 will
be issued to AP-WIN Associates LLC and 2,400 will be issued to AP3-WEM Win
Tender LLC. This acquisition will increase your partnership's ownership of
interest in these partnerships to 68.68% and 55.28% from 40.68% and 47.52%,
respectively.

      In determining the number of units issuable to the Newkirk Group in
exchange for such interests, your partnership's general partner estimated the
value of the additional partnerships utilizing a discounted cash flow approach
similar to that which was used to determine exchange values for Newkirk
partnerships as part of the exchange to arrive at a value of $22,704,776 for the
limited partnership interests acquired in January 2003. The limited partnership
units to be acquired in April 2004 are being valued at $1,110,000. This value
includes a $394,000 deduction from the original valuation in order to reflect a
2003 property sale. Your partnership's general partner estimated the per unit
value of your partnership in order to determine the number of units allocable to
the Newkirk Group for their interests in the additional partnerships. The
estimated per unit value of your partnership ($71.44 per unit) was derived from
the aggregate value ascribed to your partnership in the exchange, as adjusted to
reflect the proceeds from your partnership's indebtedness to Fleet that were
distributed to limited partners following the exchange. 47,743 of the units
allocated to the Newkirk Group were in respect of limited partnership interests
in the additional partnerships that the Newkirk Group had acquired in 2001 and
2002 for $1,305,204.

      During 2002, appraisals were obtained for each of the properties owned by
the additional partnerships. The aggregate appraised value of all of the
properties was $288,675,000. Based solely on your partnership's ownership
interests in the additional partnerships following its January 2003 acquisition,
$25,049,842 of the appraised value would have been attributable to the interests
owned by your partnership at that time.

LAND ACQUISITIONS

      In January 2003, your partnership acquired the land underlying the
property owned by one of its unconsolidated partnerships. The property is a
200,000 square foot office building that is net-leased to Associates
First-Financial Corp. until September 2008 with renewal options extending until
September 2038. This additional partnership has an estate for years in the land
that runs until September 2013 followed by an option to ground lease the land
for up to 45 years. The land was acquired from a company wholly-owned by
Winthrop Financial Associates, an affiliate of your partnership's general


                                       53
<PAGE>

partner, for $1,000,000, $50,000 of which was paid in cash and the balance in
the form of a $950,000 note due September 8, 2008. The note bears interest at
the rate of LIBOR plus 6% per annum, compounded annually, and payable
interest-only until maturity, at which time the full balance of the note is due.
In determining the purchase price for this land sale described above, your
partnership's general partner obtained a property appraisal.


                                       54
<PAGE>

MORTGAGE INDEBTEDNESS

      Certain members of the Newkirk Group owned the three most junior tranches
of the T-1 Certificate that is described in "ITEM 1. BUSINESS" under the heading
"- Description of Assets - The Subordinate Mortgage Interests.". During the year
ended December 31, 2003 and prior to November 24, 2003, approximately $1,800,000
of interest was paid on these three junior tranches. On November 24, 2003,
$152,001,000 of the proceeds of the T-Two Loan referred to in Item 1 were used
by T-Two Partners to acquire the T-1 Certificate, which payment included
approximately $2,400,000 for accrued interest and approximately $4,400,000 of
prepayment penalties. Approximately $17,806,000 of the payments made by T-Two
Partners to acquire the T-1 Certificate were received by members of the Newkirk
Group for their interests in the three junior tranches of the T-1 Certificate.

MORTGAGE REFINANCING

      See "ITEM 2. PROPERTIES - Mortgage Indebtedness of Your Partnership" for
information on the acquisition by members of the Newkirk Group of second
mortgage indebtedness on properties owned by your partnership. During 2003, your
partnership incurred approximately $685,000 of interest expense payable to
members of the Newkirk Group on the mortgage indebtedness. At December 31, 2004,
your partnership owed approximately $14,583,000 on the second mortgage to
members of the Newkirk Group.

T-TWO PARTNERS

      See "ITEM 1. BUSINESS - Description of Assets - The Subordinate Mortgage
Interests" for a description of T-Two Partners, its ownership of second mortgage
loans on your partnership's properties and the sale to your partnership of a
mortgage loan encumbering a property in which your partnership has a 53%
interest. During 2003, your partnership incurred approximately $14,295,000 of
interest expense payable to T-Two Partners. T-Two Partners is owned by NK-CR
Holdings and Holdings Subsidiary, both of which are owned by members of the
Newkirk Group. After payment of the cost of acquiring the T-1 Certificate,
approximately $164,526,000 of the proceeds of the T-Two Loan referred to in Item
1 were distributed to the owners of T-Two Partners. At the time of the closing
of the T-Two Loan, T-Two Partners also distributed to its beneficial owners
$29,475,000 that was being held by T-Two Partners. This additional amount
represented payments that had previously been made on the second mortgage loans,
including second mortgage loans on your partnership's properties, in which T-Two
Partners owned subordinated beneficial interests, as well as proceeds from the
sale to your partnership of the mortgage loan referred to above. A substantial
portion of these amounts had previously been held in a reserve fund for the
holders of the T-1 Certificate.

MORTGAGE ON PROPERTY OF AFFILIATE

      See "ITEM 1. BUSINESS - Description of Assets - First Mortgage Interests"
for information on a securitized pool of first mortgages held by your
partnership that is partially secured by properties owned by partnerships that
are controlled by affiliates of your partnership's general partner.


                                       55
<PAGE>

ASSET MANAGEMENT AGREEMENT

      See "ITEM 1. BUSINESS - Description of Assets - The Management Company"
for a description of fees paid to Winthrop Financial Associates by Newkirk Asset
Management LLC for services rendered for your partnership and certain other
partnerships.


                                       56
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The aggregate fees for professional services rendered by Imowitz, Koenig &
Co. during 2003 and 2002 were as follows:

      Audit Fees. Fees for the audit of your partnership's annual financial
statements, the reviews of the financial statements in the Partnership's Forms
10-Q, the review of the financial statements in the Partnership's Form 10 and
amendments thereto, and other services in connection with statutory and
regulatory filings and engagements were $338,000 and $147,000, in 2003 and 2002,
respectively.

      Audit Related Fees. The aggregate audit-related fees billed during 2003
and 2002 for assurance and related services that were reasonably related to the
performance of the audit or review of your partnership's financial statements
and not reported under "Audit Fees" were in the amount of $15,000 and 0,
respectively, billed by Imowitz, Koenig & Co. and covered agreed upon procedures
related to a bank financing.

      Tax Fees. Fees for tax services relating to tax compliance were $366,000
and $294,000 in 2003 and 2002, respectively.

      All Other Fees. None.


                                       57
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

      (a)   Financial Statements

            See "Index to Financial Statements" below.

      (b)   Reports on Form 8-K

            Date                 Items Reported             Financial Statements
            ----                 --------------             --------------------

            11/26/03                    5                           None

      (c)   Exhibits

Exhibit No.                            Description
-----------                            -----------

   * 2.1      Agreement and Plan of Merger between the Newkirk Master Limited
              Partnership and each of the Merger Partnerships set forth on
              Schedule A, dated December 6, 2001.

   * 2.2      Assignment and Assumption Agreement by and between Newkirk Stock
              LLC, The Newkirk Master Limited Partnership, Newkirk NL Holdings
              LLC and VNK Corp. dated as of December 26, 2001.

   * 2.3      Assignment and Assumption Agreement by and between Newkirk Eastgar
              LLC, Newkirk Partner Interest LLC, The Newkirk Master Limited
              Partnership and Newkirk MLP Unit LLC dated as of December 26,
              2001.

   * 2.4      Assignment and Assumption Agreement by and between Vornado Realty
              L.P., Vornado Newkirk L.L.C., The Newkirk Master Limited
              Partnership, and Newkirk MLP Unit LLC, dated as of December 26,
              2001.

   * 2.5      Assignment and Assumption Agreement between Newkirk RE Associates
              LLC, The Newkirk Master Limited Partnership, Newkirk RE Holdings
              and Vornado Newkirk L.L.C. dated as of December 26, 2001.

   * 2.6      Assignment and Assumption Agreement by and between Newkirk
              Associates LLC, The Newkirk Master Limited Partnership, Newkirk NL
              Holdings LLC and Vornado Newkirk L.L.C. dated as of December 26,
              2001.

   * 2.7      Agreement and Plan of Merger by and between The Newkirk Master
              Limited Partnership, Lanmar Associates Limited Partnership and
              Newkirk Lanmar L.P., dated as of December 6, 2001.

   * 3        Certificate of Limited Partnership of the Newkirk Master Limited
              Partnership.

   * 4.1      Agreement of Limited Partnership of The Newkirk Master Limited
              Partnership, by and among MLP GP LLC, Newkirk Manager Corp. and
              all other persons who shall, pursuant to the Exchange or otherwise
              become limited partners of the Partnership, dated as of October
              23, 2001.

   * 4.2      Additional provisions incorporated by reference into the Agreement
              of Limited Partnership of the Newkirk Master Limited Partnership.

   * 4.3      Limited Liability Agreement of MLP GP LLC.


                                       58
<PAGE>

Exhibit No.                         Description
-----------                         -----------

   * 10.1     Amended and Restated Cash Participation Agreement, dated as of
              January 1, 2002, by and among Newkirk GP LLC, Newkirk Capital LLC,
              Newkirk RE Associates LLC, Newkirk Stock LLC, Newkirk Associates
              LLC, Vornado Realty L.P., Vornado Newkirk L.L.C., VNK Corp., on
              the one hand, and Administrator LLC, as agent for itself and as
              agent for the persons listed on Schedule A thereto.

   * 10.2     Amended and Restated Pledge Agreement, dated as of January 1,
              2002, by and between The Newkirk Master Limited Partnership and
              Administrator LLC, for itself and as agent for the parties listed
              on Schedule A thereto.

   * 10.3     Put-Call Option Agreement, dated as of January 1, 2002, by and
              among The Newkirk Master Limited Partnership,, NK-CR Holdings LLC
              and Holdings Subsidiary LLC.

   * 10.4     Asset Management Agreement dated as of January 1, 2002, by and
              between Newkirk Asset Management LLC and Winthrop Financial
              Associates.

   * 10.5     Loan Agreement, dated January 30, 2002, among The Newkirk Master
              Limited Partnership and Fleet National Bank and the lenders party
              thereto.

   * 10.6     Promissory Note, dated as of January 30, 2002, by The Newkirk
              Master Limited Partnership in favor of Fleet National Bank.

   * 10.7     Security Agreement, dated as of January 30, 2002, between The
              Newkirk Master Limited Partnership and Fleet National Bank.

   * 10.8     Ownership Interest Pledge and Security Agreement, dated as of
              January 30, 2002, from The Newkirk Master Limited Partnership,
              Newkirk GP Holding LLC and General Partners of Participating
              Limited Partnerships to Fleet National Bank.

   * 10.9     Ownership Interest Pledge and Security Agreement, dated as of
              January 30, 2002, from The Newkirk Master Limited Partnership to
              Fleet National Bank.

   * 10.10    Ownership Interest Pledge and Security Agreement, dated as of
              January 30, 2002, from The Newkirk Master Limited Partnership to
              Fleet National Bank.

   * 10.11    Ownership Interest Pledge and Security Agreement, dated as of
              January 30, 2002, from The Newkirk Master Limited Partnership to
              Fleet National Bank.

  ** 10.12    Indemnity Agreement, dated as of January 30, 2002, among Newkirk
              NL Holdings, LLC, Newkirk MLP Corp., Vornado Realty, L.P., Vornado
              Newkirk, LLC, VNK Corp., Apollo Real Estate Fund III, L.P., The
              Newkirk Master Limited Partnership and Fleet National Bank.

 *** 10.13    Master Loan Agreement, dated November 24,2003, among The Newkirk
              Master Limited Partnership, T-Two Partners, L.P., and Fleet
              National Bank and the lender's party thereto.

 *** 10.14    Master Promissory Note, dated as of November 24, 2003, by The
              Newkirk Master Limited Partnership in favor of Fleet National
              Bank.

 *** 10.15    Security Agreement, dated as of November 24, 2003, between The
              Newkirk Master Limited Partnership and Fleet National Bank.

 *** 10.16    Ownership Interest Pledge and Security Agreement, dated as of
              November 24, 2003, from The Newkirk Master Limited Partnership,
              Newkirk GP Holding LLC and General Partners of certain Limited
              Partnerships to Fleet National Bank.


                                       59
<PAGE>

Exhibit No.                         Description
-----------                         -----------

 *** 10.17    Ownership Interest Pledge and Security Agreement (GMAC
              Partnerships), dated as of November 24, 2003, from The Newkirk
              Master Limited Partnership to Fleet National Bank.

 *** 10.18    Ownership Interest Pledge and Security Agreement (Subsidiaries),
              dated as of November 24, 2003, from The Newkirk Master Limited
              Partnership to Fleet National Bank.

 *** 10.19    Ownership Interest Pledge and Security Agreement (Finco and
              Capital), dated as of November 24, 2003, from The Newkirk Master
              Limited Partnership to Fleet National Bank.

 *** 10.20    Amended and Restated Indemnity Agreement, dated as of November 24,
              2003, among Newkirk NL Holdings, LLC, Newkirk MLP Corp., Vornado
              Realty, L.P., Vornado Newkirk, LLC, VNK Corp., Apollo Real Estate
              Fund III, L.P., The Newkirk Master Limited Partnership and Fleet
              National Bank.

 *** 10.21    Guaranty from The Newkirk Master Limited Partnership to Fleet
              National Bank.

**** 10.22    Amended Stipulation of Settlement of Albert McCall, et. al., v.
              Newkirk Capital LLC, et al.

**** 16       Letter from Deloitte & Touche LLP.

   * 21       List of subsidiaries of the Registrant.

     31.1     Certificates of Chief Executive Officer pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

     31.2     Certificates of Chief Financial Officer pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

     32.1     Chief Executive Officer's Certificate, pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

     32.2     Chief Financial Officer's Certificate, pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

----------
*      Previously filed as an Exhibit to Form 10 filed on April 30, 2003.

**     Previously filed as an Exhibit to Amendment No. 1 to Form 10 filed on
       September 10, 2003.

***    Incorporated by reference to Exhibits filed with Form 8-K dated November
       24, 2003.

****   Previously filed as an Exhibit to Amendment No. 2 to Form 10 filed on
       February 12, 2004.

(d)(3) Financial Statement Schedule

       Independent Auditor's Report on Financial Statement Schedule

       Schedule of Real Estate and Accumulated Depreciation


                                       60
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: April 2, 2004

                                        THE NEWKIRK MASTER LIMITED PARTNERSHIP

                                        By: MLP GP LLC, its General Partner

                                        By: Newkirk MLP Corp., its Manager


                                        By: /s/ Michael L. Ashner
                                            ------------------------------------
                                        Name:  Michael L. Ashner
                                        Title: Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:

<TABLE>
<CAPTION>
              Signature                                     Title                                        Date
              ---------                                     -----                                        ----
<S>                                       <C>                                                        <C>

By: /s/ Michael L. Ashner                 Chief Executive Officer of the Manager of the              April 2, 2004
    -------------------------------       General Partner of the Registrant
    Michael L. Ashner


By: /s/ Thomas Staples                    Chief Financial Officer of the Manager of the              April 2, 2004
    -------------------------------       General Partner of the Registrant
    Thomas Staples
</TABLE>


                                       61
<PAGE>

                                 Exhibit Index

Exhibit No.                         Description
-----------                         -----------

     14       Code of Ethics.

     31.1     Certificates of Chief Executive Officer pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

     31.2     Certificates of Chief Financial Officer pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

     32.1     Chief Executive Officer's Certificate, pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

     32.2     Chief Financial Officer's Certificate, pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                        <C>
INDEPENDENT AUDITORS' REPORT AS OF AND FOR THE YEARS ENDED
     DECEMBER 31, 2003 and 2002                                                                                  F - 1

INDEPENDENT AUDITORS' REPORT FOR THE YEAR ENDED
     DECEMBER 31, 2001 (PREDECESSOR)                                                                             F - 2

FINANCIAL STATEMENTS

Consolidated Balance Sheets at December 31, 2003 and 2002                                                        F - 3

Consolidated Statements of Operations for the Years Ended December 31, 2003 and
     2002 and Combined Consolidated Statement of Operations for the Year Ended
     December 31, 2001 (Predecessor)                                                                             F - 4

Consolidated Statements of Partners' Equity for the Years Ended December 31, 2003
     and 2002 and Combined Consolidated Statement of Members' Capital for the
     Year Ended December 31, 2001 (Predecessor)                                                                  F - 5

Consolidated Statements of Cash Flows for the Years Ended December 31, 2003 and
     2002 and Combined Consolidated Statement of Cash Flows for the Year Ended
     December 31, 2001 (Predecessor)                                                                        F - 6 to F - 10

Notes to Consolidated Financial Statements                                                                 F - 11 to F - 36
</TABLE>

<PAGE>

                          Independent Auditors' Report

To the Partners of
The Newkirk Master Limited Partnership

We have audited the accompanying consolidated balance sheets of The Newkirk
Master Limited Partnership (a Delaware limited partnership) (the "Partnership")
as of December 31, 2003 and 2002 and the related consolidated statements of
operations, partners' equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Partnership as
of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.


                                              /s/ Imowitz Koenig & Co., LLP

New York, New York
January 30, 2004


                                      F - 1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Members of Newkirk RE Holdings, LLC and Newkirk NL Holdings, LLC:

We have audited the accompanying combined consolidated statements of operations,
changes in members' capital, and cash flows of Newkirk RE Holdings, LLC and
Newkirk NL Holdings, LLC and subsidiaries (the "Predecessor Company") for the
year ended December 31, 2001. These financial statements are the responsibility
of the Predecessor Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the combined
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the combined consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such combined consolidated financial statements present fairly,
in all material respects, the results of operations and cash flows of the
Predecessor Company for the year ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
April 11, 2002


                                      F - 2
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except unit data)

<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                       2003            2002
                                                                                   -----------     -----------
<S>                                                                                <C>             <C>
ASSETS

Real estate investments:
      Land                                                                         $    37,674     $    37,904
      Land estates                                                                      45,204          54,524
      Buildings and improvements                                                     1,619,199       1,624,140
                                                                                   -----------     -----------

         Total real estate investments                                               1,702,077       1,716,568

      Less accumulated depreciation and amortization                                  (572,840)       (512,678)
                                                                                   -----------     -----------

         Real estate investments, net                                                1,129,237       1,203,890

Real estate held for sale, net of accumulated depreciation of
      $19,692 and $61,027                                                               59,481         105,331

Cash and cash equivalents, of which $5,148 and $8,109 is restricted                     37,851          33,452
Receivables and deferred rental income (including $7,346 and $0 from a
      related party)                                                                    97,845          77,855
Equity investments in limited partnerships                                               8,492              --
Deferred costs, net of accumulated amortization of $29,638 and $26,656                  22,993          24,418
Other assets                                                                            27,240          29,387
Other assets of discontinued operations                                                    955           2,290
                                                                                   -----------     -----------

         Total Assets                                                              $ 1,384,094     $ 1,476,623
                                                                                   ===========     ===========

LIABILITIES, MINORITY INTERESTS AND EQUITY

Liabilities:

Mortgage notes and accrued interest payable (including $14,583 and                 $   615,993     $   717,968
      $13,964 to a related party)
Note payable                                                                           208,356         221,650
Contract right mortgage notes and accrued interest payable
      (including $296,035 and $223,183 to related parties)                             401,132         425,441
Accounts payable and accrued expenses                                                   15,427          10,467
Liabilities of discontinued operations                                                  35,997         105,500
                                                                                   -----------     -----------

         Total Liabilities                                                           1,276,905       1,481,026

Contingencies

Minority interests                                                                     (39,822)        (29,096)
Partners' equity (6,319,391 and 6,116,578 limited partnership units outstanding
      at December 31, 2003 and 2002, respectively)                                     147,011          24,693
                                                                                   -----------     -----------

         Total Liabilities, Minority Interests and Equity                          $ 1,384,094     $ 1,476,623
                                                                                   ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.


                                      F - 3
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                  (In thousands, except unit and per unit data)

<TABLE>
<CAPTION>
                                                                                                           2001
                                                                          2003            2002         Predecessor
                                                                     --------------  --------------   -------------
                                                                     (Consolidated)  (Consolidated)    (Combined
                                                                                                      Consolidated)
<S>                                                                    <C>             <C>             <C>
Revenue:
     Rental income                                                     $   274,971     $   266,816     $   235,653
     Interest income                                                         2,983           3,288          21,749
     Management fees                                                           418             762           1,573
                                                                       -----------     -----------     -----------

         Total revenue                                                     278,372         270,866         258,975
                                                                       -----------     -----------     -----------

Expenses:
     Interest (including $14,521, $11,851 and $5,656 to
         related parties, respectively)                                    106,898         112,766         104,823
     Depreciation                                                           37,705          27,609          32,444
     General and administrative (including $1,843, $1,800 and               11,486           9,118           8,075
          $3,000 to related parties, respectively)
     Amortization                                                            4,771           3,854          13,138
     Ground rent                                                             3,202           3,165           3,177
     Federal and state income taxes                                            767             840           2,918
                                                                       -----------     -----------     -----------

         Total expenses                                                    164,829         157,352         164,575
                                                                       -----------     -----------     -----------

Income from continuing operations before equity in income
     from investments in limited partnerships and minority interest        113,543         113,514          94,400

     Equity in income from investments in limited partnerships               2,054              --           7,649
     Minority interest                                                     (15,509)         (8,117)        (55,662)
                                                                       -----------     -----------     -----------

Income from continuing operations                                          100,088         105,397          46,387
                                                                       -----------     -----------     -----------

Discontinued operations:
     Income from discontinued operations                                    20,334          18,448          15,679
     Gain (loss) from disposal of real estate                               29,514            (983)         (2,936)
     Minority interest                                                          --              --          (9,519)
                                                                       -----------     -----------     -----------

         Income from discontinued operations                                49,848          17,465           3,224
                                                                       -----------     -----------     -----------

Net income                                                             $   149,936     $   122,862     $    49,611
                                                                       ===========     ===========     ===========

Income from continuing operations per limited partnership unit         $     15.81     $     17.22
Income from discontinued operations per limited partnership unit              7.88            2.86
                                                                       -----------     -----------

Net income per limited partnership unit                                $     23.69     $     20.08
                                                                       ===========     ===========

Distributions per limited partnership unit                             $      5.52     $     32.16
                                                                       ===========     ===========

Weighted average limited partnership units                               6,329,204       6,119,942
                                                                       ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.


                                      F - 4
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP

                   CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2003 and 2002
                        (In thousands, except unit data)

                                                    Limited
                                                  Partnership         Partners'
                                                     Units             Equity
                                                  -----------        ----------

Equity Contributions                               6,121,990         $   98,893

Distributions                                             --           (196,880)

Limited partner buyouts                               (5,412)              (182)

Net income                                                --            122,862
                                                  ----------         ----------

Balance at December 31, 2002                       6,116,578             24,693

Equity Contributions                                 317,813             11,050

Distributions                                             --            (34,731)

Limited partner buyouts                             (115,000)            (3,937)

Net income                                                --            149,936
                                                  ----------         ----------

Balance at December 31, 2003                       6,319,391         $  147,011
                                                  ==========         ==========

                   PREDECESSOR COMBINED CONSOLIDATED STATEMENT
                               OF MEMBERS' CAPITAL
                      FOR THE YEAR ENDED DECEMBER 31, 2001
                                 (In thousands)

                                                                       Members'
                                                                        Capital
                                                                      ---------

Balance at January 1, 2001                                            $ 209,962

Contributions                                                             5,329

Distributions                                                            (7,384)

Net income                                                               49,611
                                                                      ---------

Balance at December 31, 2001                                          $ 257,518
                                                                      =========

                 See notes to consolidated financial statements.


                                      F - 5
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                                         2001
                                                                                        2003            2002         Predecessor
                                                                                   --------------  --------------   -------------
                                                                                   (Consolidated)  (Consolidated)     (Combined
                                                                                                                    Consolidated)
<S>                                                                                 <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Continuing Operations:
      Income from continuing operations                                             $    100,088    $    105,397    $     46,387
         Adjustments to reconcile income from continuing
            operations to net cash provided by continuing
            operations:
            Amortization of deferred costs and land estates                               13,678           9,240              --
            Depreciation expense                                                          37,705          27,609          45,319
            Net loss (gain) from early extinguishment of debt                                 28          (5,729)             --
            Amortization of discount on contract rights                                       --              --         (13,190)
            Amortization of discount on mortgage loans                                        --              --            (159)
            Minority interest expense                                                     15,509           8,117          55,662
            Equity in income of limited partnerships                                      (2,054)             --          (7,649)

      Changes in operating assets and liabilities:
         Notes receivable and accrued interest                                                --              --          (3,707)
         Income taxes payable                                                                 --              --            (501)
         Increase in receivables and deferred rental income                              (14,325)         (1,100)        (11,550)
         Increase (decrease) in accounts payable and accrued expenses                      3,344         (16,698)        (23,158)
         Decrease in accrued interest-mortgages and contract rights                       (6,994)        (13,035)             --
         Decrease in other assets                                                          1,871           5,044              --
         Other liabilities                                                                    --              --             628
                                                                                    ------------    ------------    ------------

              Net cash provided by continuing operations                                 148,850         118,845          88,082
                                                                                    ------------    ------------    ------------

Discontinued Operations:
      Income from discontinued operations                                                 49,848          17,465           3,224
         Adjustments to reconcile income from discontinued
            operations to net cash provided by discontinued
            operations:
            Amortization of deferred costs and land estates                                  211             579              --
            Depreciation expense                                                           2,634           6,414           5,054
            Net gain from early extinguishment of debt                                    (8,733)           (553)             --
            (Gain) loss on sales of real estate                                          (29,514)            983           2,936
            Minority interest expense                                                        781              --           9,519
            Impairment loss                                                                1,560              --              --

      Changes in assets and liabilities:
         Net (decrease) increase in assets and liabilities of discontinued
            operations                                                                    (3,620)           (241)          1,137
                                                                                    ------------    ------------    ------------

              Net cash provided by discontinued operations                                13,167          24,647          21,870
                                                                                    ------------    ------------    ------------

              Net cash provided by operating activities                                  162,017         143,492         109,952
                                                                                    ------------    ------------    ------------
</TABLE>

                                                                     (Continued)

                 See notes to consolidated financial statements.


                                     F - 6
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                                 (In thousands)
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                          2001
                                                                            2003           2002        Predecessor
                                                                       --------------  --------------  -------------
                                                                       (Consolidated)  (Consolidated)   (Combined
                                                                                                       Consolidated)
<S>                                                                       <C>            <C>            <C>
CASH FLOWS FROM INVESTING ACTIVITIES:

Continuing Operations:
      Cash related to formation of partnership                            $     --       $ 10,776       $     --
      Land additions                                                        (2,268)        (2,904)        (2,842)
      Investment in contract rights                                             --             --           (284)
      Advances to related parties                                               --             --         (3,334)
      Cash related to previously unconsolidated limited partnerships           650             --         21,235
      Deposits on operating partnership units                                   --             --           (418)
      Investments in limited partnership interests                          (1,307)            --        (37,374)
                                                                          --------       --------       --------

              Net cash (used in) provided by continuing operations          (2,925)         7,872        (23,017)
                                                                          --------       --------       --------

Discontinued Operations:
      Net proceeds from disposal of real estate or other assets             61,491          3,208            844
      Proceeds from sales of contract rights                                    --             --            542
      Land additions                                                          (250)            --             --
                                                                          --------       --------       --------

              Net cash provided by discontinued operations                  61,241          3,208          1,386
                                                                          --------       --------       --------

              Net cash provided by (used in) investing activities           58,316         11,080        (21,631)
                                                                          --------       --------       --------
</TABLE>

                                                                     (Continued)

                 See notes to consolidated financial statements.


                                      F - 7
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                                 (In thousands)
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                          2001
                                                                        2003             2002         Predecessor
                                                                   --------------   --------------   -------------
                                                                   (Consolidated)   (Consolidated)    (Combined
                                                                                                     Consolidated)
<S>                                                                   <C>             <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:

Continuing Operations:
     Satisfaction of mortgage notes                                   $  (7,265)      $(115,537)      $      --
     Satisfaction of contract right mortgage notes and
       accrued interest                                                  (6,053)        (52,619)             --
     Satisfaction of note payable                                      (194,367)             --              --
     Principal payments of mortgage notes payable                      (119,541)       (104,640)        (93,454)
     Principal payments of note payable                                 (27,401)         (3,350)             --
     Principal payments of contract right mortgage notes                 (4,730)         (1,090)             --
     Mortgage prepayment penalties                                          (91)         (4,710)             --
     Proceeds from new debt                                             212,838         396,870          35,812
     Contributions from minority interests                                   --              --           1,191
     Contributions from members                                              --              --           5,329
     Distributions to partners/members                                  (34,731)       (196,880)         (7,384)
     Limited partner buyouts                                             (3,937)           (182)             --
     Distributions to minority interests                                 (6,166)         (1,693)         (2,432)
     Distributions from limited partnership interests                       492              --           1,848
     Deferred costs                                                      (8,015)        (10,365)         (4,456)
     Related party loans                                                     --              --           1,851
                                                                      ---------       ---------       ---------

                Net cash used in continuing operations                 (198,967)        (94,196)        (61,695)
                                                                      ---------       ---------       ---------

Discontinued Operations:
     Satisfaction of notes payable                                      (58,914)        (24,153)             --
     Principal payments of notes payable                                 (6,709)        (16,773)        (13,559)
     Proceeds from new debt                                              49,500          14,533              --
     Mortgage prepayment penalties                                         (309)             --              --
     Deferred costs                                                        (535)           (531)             --
                                                                      ---------       ---------       ---------

         Cash used in discontinued operations                           (16,967)        (26,924)        (13,559)
                                                                      ---------       ---------       ---------

                Net cash used in financing activities                  (215,934)       (121,120)        (75,254)
                                                                      ---------       ---------       ---------

Net increase in cash and cash equivalents                                 4,399          33,452          13,067

Cash and Cash Equivalents at Beginning of Year                           33,452              --           8,205
                                                                      ---------       ---------       ---------

Cash and Cash Equivalents at End of Year                              $  37,851       $  33,452       $  21,272
                                                                      =========       =========       =========

Supplemental Disclosure of Cash Flow Information:
     Cash paid for state income taxes                                 $   1,072       $     542       $     520
                                                                      =========       =========       =========
     Cash paid for interest                                           $ 124,342       $ 174,488       $ 126,472
                                                                      =========       =========       =========
</TABLE>

                 See notes to consolidated financial statements.


                                      F - 8
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                                   (Continued)

Supplemental Information

In January 2003, balances related to the issuance of 317,813 Units in the
Partnership for the various assets contributed to the Partnership were as
follows:

                                                                    2003
                                                               --------------
                                                               (In thousands)

      Real estate investments, net                               $ 36,836
      Cash and cash equivalents                                       382
      Receivables                                                   3,557
      Deferred costs, net                                           1,512
      Equity investments in limited partnerships                    6,335
      Mortgage notes payable                                      (61,057)
      Accrued interest payable                                     (1,134)
      Accounts payable and accrued expenses                           (68)
      Minority interests                                           24,687
                                                                 --------

      Partners' equity                                           $ 11,050
                                                                 ========

In connection with the disposal of real estate, the purchaser of a property
assumed $94,918,000 of the Partnership's debt.

                 See notes to consolidated financial statements.


                                     F - 9
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                                   (Continued)

Supplemental Information (Continued)

The combined financial statements of Newkirk RE Holdings, LLC and Newkirk NL
Holdings, LLC are considered the acquirer and predecessor of the business
transferred to the Partnership in connection with the transaction because the
members of the combined entity acquired majority control of the businesses
transferred to the Partnership.

As of January 1, 2002, balances related to the exchange of Units in the
Partnership for the various assets of the combined entity and other contributing
unit holders were as follows:

                                                                  2002
                                                             --------------
                                                             (In thousands)

      Real estate, net                                        $ 1,233,756
      Real estate held for sale                                   113,982
      Cash and cash equivalents                                    10,776
      Receivables                                                  78,376
      Deferred costs, net                                          19,957
      Other assets                                                 34,377
      Other assets of discontinued operations                         880
      Mortgage notes payable                                     (776,633)
      Contract right mortgage notes payable                      (325,264)
      Accrued interest                                           (188,567)
      Accounts payable and accrued expenses                       (15,189)
      Liabilities of discontinued operations                     (123,078)
      Minority interest                                            35,520
      Investment in limited partnerships                               --
                                                              -----------
      Partners' equity                                        $    98,893
                                                              ===========

                 See notes to consolidated financial statements.


                                     F - 10
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -    ORGANIZATION AND BUSINESS

            The Newkirk Master Limited Partnership (the "Partnership") was
            organized in October 2001 as a limited partnership under the
            Delaware Revised Uniform Limited Partnership Act. The Partnership's
            term is perpetual unless it is otherwise dissolved in accordance
            with the terms of the Partnership's partnership agreement. The
            Partnership commenced operations on January 1, 2002 following the
            completion of a transaction (the "Exchange") involving the merger
            into wholly-owned subsidiaries of the Partnership of 90 limited
            partnerships, each of which owned commercial properties (the
            "Newkirk Partnerships"), and the acquisition by the Partnership of
            various assets, including those related to the management or capital
            structure of the Newkirk Partnerships. The Partnership was formed to
            facilitate and consummate the Exchange and for the purpose of
            directly or indirectly (whether through a subsidiary or otherwise),
            investing in, acquiring, owning, holding, managing, operating,
            selling, exchanging and otherwise disposing of interests in real
            estate and assets related to real estate and to engage in activities
            and transactions as the general partner deems necessary or advisable
            to promote the business of the Partnership.

            As part of the Exchange, each Newkirk Partnership was merged with
            and into a separate newly-formed limited partnership that is
            wholly-owned by the Partnership; the Newkirk Partnerships ceased to
            exist following completion of the merger. Each Newkirk Partnership
            owned one or more commercial properties that are generally net
            leased to a single tenant. As a result of the Exchange, the
            Partnership owns the properties and other assets formerly owned by
            the Newkirk Partnerships, subject to the liabilities of such
            partnerships. In addition, as part of the Exchange, the "Newkirk
            Group" contributed certain assets to the Partnership. The Newkirk
            Group, which managed the Newkirk Partnerships, is comprised of
            certain affiliates of Apollo Real Estate Fund III, L.P., ("Apollo"),
            Vornado Realty Trust and senior executives of Winthrop Financial
            Associates, A Limited Partnership ("WFA"). At December 31, 2003, the
            Newkirk Group owned approximately 80% of the Partnership.

            The limited partners of the Partnership consist of former limited
            partners of the Newkirk Partnerships, former limited partners that
            elected to participate in the Exchange of an additional limited
            partnership that was affiliated with the Newkirk Partnerships and
            affiliates of the Newkirk Group. The general partner of the
            Partnership is MLP GP LLC, a Delaware limited liability company
            owned by affiliates of the Newkirk Group. MLP GP LLC does not
            receive any compensation for managing the Partnership. MLP GP LLC
            has no assets, liabilities or equity and has no economic interest in
            the Partnership. WFA, which performed asset


                                     F - 11
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -    ORGANIZATION AND BUSINESS (Continued)

            management services for the Newkirk Partnerships, performs asset
            management services for the Partnership.

            At December 31, 2003, the Partnership owned the following:

            (i) Net-Leased Properties:

            Ownership of 268 commercial properties located throughout the United
            States of America, each of which is generally net-leased to a single
            tenant.

            (ii) Other Assets:

                  (a)   General partnership interests in (i) seven consolidated
                        partnerships, (ii) eight unconsolidated partnerships and
                        (iii) six other partnerships that own commercial net
                        leased properties.

                  (b)   Limited partnership interests in (i) seven consolidated
                        partnerships which represent between 32.1% and 60.5% and
                        (ii) eight unconsolidated partnerships which represent
                        between .5% and 36.88%.

                  (c)   A 50.01% interest in Newkirk Capital LLC whose
                        wholly-owned subsidiary, Newkirk Asset Management LLC,
                        provides asset management and other services to the
                        Partnership and the Other Partnerships. Prior to the
                        Exchange, Newkirk Asset Management LLC provided these
                        services to the Newkirk Partnerships and the Other
                        Partnerships. Newkirk Capital LLC and Newkirk Asset
                        Management LLC have retained WFA to perform certain of
                        the services provided to the Partnership and the Other
                        Partnerships. The fees payable to Newkirk Asset
                        Management LLC and Newkirk Capital LLC are retained by
                        the Partnership.

                  (d)   Newkirk Finco LLC, which holds a note receivable from
                        Administrator LLC, a 49.99% owner of Newkirk Capital
                        LLC, valued at $13.2 million at December 31, 2003.


                                     F - 12
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -    ORGANIZATION AND BUSINESS (Continued)

                  (e)   The right to acquire T-Two Partners, L.P., ("T-Two
                        Partners") from its current owners, affiliates of the
                        Newkirk Group.

                  (f)   Land interests comprised of ground leases, remainder
                        interests or the right to acquire remainder interests in
                        the land underlying certain properties owned by the
                        Partnership and other real estate limited partnerships.

                  (g)   An interest in NK Leasehold II LLC, which has a
                        leasehold and second mortgage interest in a property
                        owned by the Partnership.

                  (h)   An interest in NK-Leyden Loan, L.P. and NK-Dautec Loan,
                        L.P., each of which hold an unsecured note of the
                        Partnership.

                  (i)   Interests in entities which hold a securitized pool of
                        31 first mortgage loans encumbering 67 Partnership
                        properties and 1 property owned by another limited
                        partnership.

            In February 2003, the Partnership acquired from its limited partners
            115,000 of its units of limited partnership interest at a purchase
            price of $35 per unit.


                                     F - 13
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Basis of Presentation

            The accompanying consolidated financial statements present the
            consolidated financial position, results of operations and cash
            flows of the Partnership and its majority-owned subsidiaries. All
            significant intercompany transactions, receivables and payables have
            been eliminated in consolidation. Minority interests relate to the
            interest in certain partnerships not owned by the Partnership. The
            Partnership accounts for its investments in partnerships and joint
            ventures, in which it does not have a controlling interest, using
            the equity method of accounting. Equity investments are recorded
            initially at cost and subsequently adjusted for the Partnership's
            share of the net income or loss and cash contributions to and
            distributions from these partnerships and joint ventures.

            The Partnership has accounted for the Exchange as an exchange of
            equity interests between entities under common control and initially
            recognized the assets and liabilities contributed at the carrying
            amounts of the contributing entities.

            The combined financial statements of Newkirk RE Holdings, LLC and
            Newkirk NL Holdings, LLC are considered the Predecessor Entity (the
            "Predecessor Entity"). These entities are under the control of
            Apollo, which controlled the General Partnership interests in the
            Newkirk Partnerships and held more than a 50% voting ownership
            interest before and after the Exchange. As a result, the Predecessor
            Entity is considered the accounting acquirer and, accordingly, the
            combined consolidated operating results for the year ended December
            31, 2001 reflect the historical results of operations of the
            Predecessor Entity. The combined consolidated operating results for
            the year ended December 31, 2001 is not comparable to the
            consolidated operating results for the years ended December 31, 2003
            and 2002. The Predecessor Entity amounts include assets that were
            not transferred to the Partnership, and the Partnership's amounts
            included assets that were contributed to the Partnership by partners
            other than the Predecessor Entity.

            Use of Estimates

            The preparation of consolidated financial statements in conformity
            with accounting principles generally accepted in the United States
            of America requires management to make estimates and assumptions
            that affect the amounts reported in the consolidated financial
            statements and accompanying notes. Actual results could differ from
            those estimates.


                                     F - 14
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Real Estate

            Investments in real estate are stated at historical cost basis less
            accumulated depreciation and amortization. Depreciation of buildings
            and improvements is computed on a straight-line basis over their
            estimated useful lives, which range from fourteen to forty years.
            Amortization of the land estates is computed on a straight-line
            basis over their estimated useful lives, which range from twenty-two
            to thirty years.

            During 2003, the Partnership made a change to its accounting
            estimates with respect to the depreciable lives of its real estate
            assets. The change in accounting estimates resulted in a decrease in
            net income of approximately $6.8 million and a decrease in net
            income of approximately $1.08 per limited partnership unit for the
            year ended December 31, 2003.

            The Predecessor Entity recorded its acquisition of the Newkirk
            Partnerships interests as purchase transactions in accordance with
            Accounting Principles Board Opinion No. 16, "Business Combinations"
            ("APB No. 16") as all such acquisitions were completed prior to July
            1, 2001. The purchase price for such acquisitions was principally
            allocated to the real estate and debt acquired as of the date of
            each of the transactions. Statement of Financial Accounting
            Standards No. 141 "Business Combinations" ("SFAS No. 141") applied
            for the last six months of the year ended December 31, 2001. No
            acquisitions occurred in that period.

            The Partnership's real estate investments are reviewed for
            impairment if events or changes in circumstances indicate that the
            carrying amount of the real estate may not be recoverable. In such
            an event, a comparison is made of the current and projected
            operating cash flows of such real estate on an undiscounted basis to
            the carrying amount of such real estate. Such carrying amount would
            be adjusted, if necessary, to estimated fair value to reflect
            impairment in the value of the real estate. Real estate assets for
            which the Partnership has committed to a plan to dispose of the
            assets, whether by sale or abandonment, are reported at the lower of
            carrying amount or fair value less cost to sell. Preparation of
            projected cash flows is inherently subjective and is based on the
            Partnership's best estimate of assumptions concerning expected
            future conditions.


                                     F - 15
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Real Estate (continued)

            Upon acquisitions of real estate, the Partnership assesses the fair
            value of acquired assets (including land, buildings, tenant
            improvements, and identified intangibles such as above and below
            market leases and acquired in-place leases) and acquired
            liabilities, and allocates purchase price based on these
            assessments.

            The Partnership accounts for properties as held for sale under the
            provisions of SFAS No. 144, "Accounting for the Impairment or
            Disposal of Long-Lived Assets" ("SFAS No. 144"), when all criteria
            of SFAS No. 144 have been met.

            Cash and Cash Equivalents

            The Partnership considers all highly liquid investments with
            original purchase maturity dates of three months or less to be cash
            equivalents.

            Restricted Cash

            Restricted cash includes reserves for tenant improvements, leasing
            commissions and related costs established pursuant to the
            Partnership's note payable agreement.

            Concentration of Credit Risk

            Substantially all of the Partnership's cash and cash equivalents
            consist of money market mutual funds which invest in U.S. Treasury
            Bills and repurchase agreements with original maturity dates of
            three months or less.

            The Partnership maintains cash with one banking institution, which
            amounts at times exceed federally insured limits.

            Interest Rate Protection Agreements

            SFAS No. 133, "Accounting for Derivative Instruments and Hedging
            Activities," requires the recording of all derivative instruments as
            either assets or liabilities depending on the rights and obligations
            under the contracts. In addition, all derivative instruments shall
            be measured at fair value, with the resulting gain or loss being
            recognized either in earnings or equity in the period of change,
            depending on whether the contract is designated as a hedge or not.
            The Partnership invests in interest rate caps in order to cap the
            maximum interest rate payable on its variable rate debt. The
            interest rate caps are not designated as hedging instruments, and
            are measured at fair value, with the resulting gain or loss being
            recognized in interest expense in the period of change.


                                     F - 16
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Receivables

            Receivables consist of rent from tenants and other receivables which
            are deemed collectable by the Partnership. No provision for doubtful
            accounts was considered necessary based upon the Partnership's
            evaluation of the collectability of these amounts.

            Loans Receivable

            The Partnership evaluates the collectability of both interest and
            principal of each of its loans, if circumstances warrant, to
            determine whether it is impaired. A loan is considered to be
            impaired, when based on current information and events, it is
            probable that the Partnership will be unable to collect all amounts
            due according to the existing contractual terms. When a loan is
            considered to be impaired, the amount of the loss accrual is
            calculated by comparing the recorded investment to the value
            determined by discounting the expected future cash flows at the
            loan's effective interest rate. Interest on impaired loans is
            recognized on a cash basis. Loans receivable are included with
            "other assets" in the accompanying consolidated balance sheets.

            Investments in Debt Securities and Mortgage Loans

            Investments in debt securities are classified as held-to-maturity
            and reported at amortized cost. Investment in mortgage loans is
            included with "other assets" in the accompanying consolidated
            balance sheets.

            Deferred Costs

            Fees paid in connection with the financing of the Partnership's and
            Predecessor Entity's properties are deferred and amortized over the
            terms of the related agreements as a component of interest expense.


                                     F - 17
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Investments in Limited Partnerships

            The Predecessor Entity accounted for its investments in limited
            partnerships under the equity method when significant influence, but
            not control was exercised over the limited partnership. Where
            control was exercised, the limited partnerships were consolidated
            for financial statement purposes. The investments were recorded by
            the Predecessor Entity using the fair-value principles of APB No.
            16, as all such acquisitions were completed prior to the effective
            date of SFAS No. 141 of July 1, 2001, whereby the Predecessor
            Entity's share of the assets acquired and liabilities assumed was
            adjusted to fair value. During 2001, a significant number of
            additional limited partnerships came under the control of the
            Predecessor Entity resulting in a change from the equity method to
            consolidation.

            Revenue Recognition

            The Partnership's lease agreements are operating leases and
            generally provide for varying rents over the lease terms. The
            Partnership records rental income for the full term of each lease on
            a straight-line basis. Accordingly, deferred rental income is
            recorded from tenants for the amount that is expected to be
            collected over the remaining lease term rather than currently. When
            a property is acquired, the term of existing leases is considered to
            commence as of the acquisition date for purposes of this
            calculation. Deferred rental income recorded amounted to $31.6
            million and $27.1 million for the Partnership at December 31, 2003
            and 2002, respectively.


                                     F - 18
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Income Taxes

            Taxable income or loss of the Partnership is reported in the income
            tax returns of its partners. Accordingly, no provision for income
            taxes is made in the consolidated financial statements of the
            Partnership. However, the Partnership is required to pay certain
            state and local entity level taxes which are expensed as incurred.

            The Predecessor Entity provided for income taxes with respect to the
            portion of the net income attributable to its taxable corporate
            subsidiaries. Income tax expense for 2001 represented current income
            taxes payable; no deferred income tax expense was recorded. The
            corporate subsidiaries were not contributed to the Partnership.

            Net Income per Unit

            Net income per Unit is computed by dividing net income by the
            6,329,204 and 6,119,942 weighted average Units outstanding during
            the years ended December 31, 2003 and 2002, respectively.

            The Predecessor Entity has only two members and does not have any
            limited partnership units outstanding.

            Distributions; Allocations of Income and Loss

            As provided in the partnership agreement, distributions are
            allocated to the limited partners based on their ownership of Units.
            No distributions, or net income or loss allocation, are made to the
            general partner. Income and loss for financial reporting purposes is
            allocated to limited partners based on their ownership of Units.
            Special allocation rules affect the allocation of taxable income and
            loss. The Partnership paid distributions of $34,731,000 ($5.52 per
            Unit) and $196,880,000 ($32.16 per Unit) to its limited partners
            during the years ended December 31, 2003 and 2002, respectively.

            The members of the Predecessor Entity are Apollo Real Estate
            Investment Fund III L.P. holding 98.57% and WEM Brynmar Associates
            LLC holding 1.43%.

            Segment Reporting

            The Partnership has one reportable segment, net-leased commercial
            real estate. The Partnership evaluates performance based on net
            operating income, which is income before depreciation, amortization,
            interest and non-operating items.


                                     F - 19
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Fair Value of Financial Instruments

            Financial instruments held by the Partnership include cash and cash
            equivalents, receivables, accounts payable and long-term debt. The
            fair value of cash and cash equivalents, receivables and accounts
            payable approximates their current carrying amounts due to their
            short-term nature. The fair value of long-term debt, which has fixed
            interest rates, was determined based upon current market conditions
            and interest rates. The fair value of the mortgage notes payable
            approximates fair value for debt with similar terms and conditions
            due to yield maintenance requirements and prepayment penalties. The
            fair value of the Partnership's contract right mortgage notes
            payable is approximately $393.0 million, which is $13.7 million less
            than the aggregate carrying amount at December 31, 2003. The fair
            value of the Partnership's interest rate cap is approximately $2.6
            million at December 31, 2003. Such fair value estimates are not
            necessarily indicative of the amounts that would be realized upon
            disposition of the Partnerships' financial instruments.

            Reclassifications

            Certain prior year amounts have been reclassified to conform to the
            2003 presentation, including the reporting of discontinued
            operations for those assets that have been disposed of or classified
            as held for sale in accordance with SFAS No. 144.

            Recently Issued Accounting Standards

            In January 2003, the Financial Accounting Standards Board ("FASB")
            issued Interpretation No. 46, "Consolidation of Variable Interest
            Entities." This interpretation clarifies the application of existing
            accounting pronouncements to certain entities in which equity
            investors do not have the characteristics of a controlling financial
            interest or do not have sufficient equity at risk for the entity to
            finance its activities without additional subordinated financial
            support from other parties. In December 2003, the FASB issued a
            revision to Interpretation No. 46 ("46R") to clarify some of the
            provisions of Interpretation No. 46, and to exempt certain entities
            from its requirements. The provisions of the interpretation need to
            be applied in the first fiscal period beginning after March 15,
            2004, except for entities that are considered to be special-purpose
            entities which need to be applied as of December 31, 2003. This
            interpretation had no effect on the Partnership's consolidated
            financial statements.


                                     F - 20
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            Recently Issued Accounting Standards (Continued)

            In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
            Financial Instruments with Characteristics of both Liabilities and
            Equity." The statement improves the accounting for certain financial
            instruments that under previous guidance, issuers could account for
            as equity. The new statement requires that those instruments be
            classified as liabilities in statements of financial position. SFAS
            No. 150 affects the issuer's accounting for three types of
            freestanding financial instruments. One type is mandatorily
            redeemable shares, which the issuing company is obligated to buy
            back in exchange for cash or other assets. A second type, which
            includes put options and forward purchase contracts, involves
            instruments that do or may require the issuer to buy back some of
            its shares in exchange for cash or other assets. The third type of
            instruments that are liabilities under this statement is obligations
            that can be settled with shares, the monetary value of which is
            fixed, tied solely or predominantly to a variable such as a market
            index, or varies inversely with the value of the issuers' shares.
            SFAS No. 150 does not apply to features embedded in a financial
            instrument that is not a derivative in its entirety. In addition to
            its requirements for the classification and measurement of financial
            instruments in its scope, SFAS No. 150 also requires disclosures
            about alternative ways of settling the instruments and the capital
            structure of entities, all of whose shares are mandatorily
            redeemable. Most of the guidance in SFAS No. 150 is effective for
            all financial instruments entered into or modified after May 31,
            2003, and otherwise is effective at the beginning of the first
            interim period beginning after June 15, 2003. In October 2003, the
            FASB deferred, indefinitely, the application of paragraphs 9 and 10
            of SFAS No. 150 as it relates to recording mandatorily redeemable
            non-controlling interests in consolidated subsidiaries at fair
            value. The remainder of this statement had no effect on the
            Partnership's consolidated financial statements.


                                     F - 21
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 -    REAL ESTATE INVESTMENTS

            Most of the Partnership's properties are each net-leased to a single
            commercial tenant. The properties are located throughout the United
            States. The lease terms vary, but most leases have a primary term of
            25 years followed by multiple 5-year optional renewal terms. The
            leases are similar in many respects and generally provide for fixed
            rent payments and obligate the tenant to pay all capital and
            operating expenses for a property; obligate the tenant to perform
            all responsibilities (other than the payment of debt service)
            relating to the property; require the tenant to maintain insurance
            against casualty and liability losses; permit the tenant to sublet
            the property; and afford the tenant in many instances the right to
            terminate the lease at certain points during the primary term if it
            determines that its continued use and occupancy of the property
            would be uneconomic or unsuitable.

            The Partnership's ability to maintain and operate its properties and
            satisfy its contractual obligations is dependent upon the
            performance by the tenants of their obligations under their lease
            agreements with the Partnership. Under certain conditions (including
            the destruction of the property), many of the tenants have an option
            to purchase the property upon the expiration of the primary term of
            the lease and at the end of one or more renewal terms for a price
            stated in the lease agreement.

            The Partnership's properties are encumbered by mortgage notes
            payable and subordinated contract rights payable.

            The future minimum lease payments that are scheduled to be received
            under non-cancellable operating leases are as follows (in
            thousands):

                               2004                 $  265,547
                               2005                    258,032
                               2006                    243,429
                               2007                    209,384
                               2008                    153,892
                               Thereafter               95,828
                                                    ----------
                                                    $1,226,112
                                                    ==========

            Two tenants accounted for approximately 24% and 25% of the aggregate
            rental revenues of the Partnership in 2003 and 2002, respectively.


                                     F - 22
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 -    REAL ESTATE INVESTMENTS (Continued)

            The Partnership owns the fee interest in the land on which certain
            of its properties are located, leases the land pursuant to ground
            leases or holds an estate for years with an option to lease the land
            upon expiration of the estate for years. Certain land interests held
            by the Newkirk Group comprised of ground leases, remainder interests
            or the right to acquire remainder interests in the land underlying
            certain properties were contributed to the Partnership in connection
            with the Exchange.

            The rent payable under the ground leases is as follows (in
            thousands):

                               2004                  $ 3,191
                               2005                    3,143
                               2006                    2,413
                               2007                    1,769
                               2008                    1,184
                               Thereafter                830
                                                     -------
                                                     $12,530
                                                     =======

Note 4 - NOTES AND CONTRACT RIGHTS PAYABLE

            The Partnership, excluding discontinued operations, had outstanding
            mortgage notes payable and contract right mortgage notes payable of
            $895.9 million and $1.0 billion at December 31, 2003 and 2002,
            respectively. The mortgage notes are at fixed interest rates with
            payments of principal and interest generally due either monthly,
            quarterly or semi-annually. All the mortgage notes are
            collateralized by the Partnership's real estate; some of the
            mortgage notes are cross-collateralized.

            An aggregate of $602.9 million in indebtedness under the mortgage
            notes mature at various dates from 2004 to 2024. Prepayment of most
            of the mortgage notes is permitted only with a yield maintenance
            payment or prepayment penalty as defined in the mortgage note
            agreements. Interest rates on the mortgages ranged from 4.2% to
            11.3%, with a weighted average interest rate of 8.0% at December 31,
            2003. Interest rates on the fixed rate mortgages ranged from 4.2% to
            11.3% with a weighted average interest rate of 8.9% at December 31,
            2002.


                                     F - 23
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 -    NOTES AND CONTRACT RIGHTS PAYABLE (Continued)

            The contract right mortgage notes aggregating $293.0 million mature
            at various dates from 2008 to 2024. The Partnership has the option
            to prepay some of these mortgage notes at a discount. All of the
            contract right mortgages are prepayable at any time without premium
            or penalty subject to the prior or simultaneous satisfaction of the
            underlying first mortgage loans. Interest rates ranged from 8.11% to
            16.25%, with a weighted average interest rate of 10.3% at December
            31, 2003. Interest rates ranged from 8.13% to 16.25%, with a
            weighted average interest rate of 10.99% at December 31, 2002.

            Mortgage notes payable and contract right mortgage notes payable
            aggregating approximately $1.1 billion and accrued interest thereon
            were assumed as part of the Exchange. The Predecessor Entity
            recorded these notes at their fair value as of the various dates of
            acquisition. This accounting method resulted in recorded interest
            expense that was $3.8 million, $4.0 million and ($1.7) million
            greater (or less) than the contractual interest expense for the
            years ended December 31, 2003, 2002 and 2001, respectively. The
            effect of utilizing this accounting method was to increase the
            principal balance of mortgage and contract rights notes payable and
            reduce interest accrued on these obligations. The cumulative
            reduction in liabilities related to utilizing this accounting method
            was $56.1 million and $50.5 million at December 31, 2003 and 2002,
            respectively.

            During January 2003, the Partnership acquired a second mortgage loan
            that encumbered the Partnership's property in Morris Township, New
            Jersey. The outstanding mortgage principal and accrued interest was
            $28.1 million at December 31, 2002. It was acquired for $22.1
            million, $9.3 million of which was paid in January 2003 and $12.8
            million of which was to be payable on or before September 30, 2003.
            The deferred portion of the purchase price bore interest at a rate
            of 6.0% per annum. The Partnership acquired this mortgage in
            connection with an extension of the lease on the property and
            obtained new first mortgage financing in June 2003 to satisfy the
            balance of the purchase price. The new first mortgage that was
            obtained in June 2003, had a principal balance of $21.0 million and
            bore interest at LIBOR plus 2.875% per annum. After payment of
            closing costs, $6.7 million of the proceeds were used to satisfy the
            existing first mortgage and the balance of the net proceeds was used
            to satisfy the deferred portion of the second mortgage purchase
            price. This loan was refinanced in October 2003.


                                     F - 24
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 -    NOTES AND CONTRACT RIGHTS PAYABLE (Continued)

            During October 2003, the Partnership refinanced its first mortgage
            loan on its property in Morris Township, New Jersey. The new first
            mortgage loan has a principal balance of $28.5 million, bears
            interest at 5.55%, and has a term of ten years. After payment of
            closing costs, $21.1 million of proceeds were used to satisfy the
            existing first mortgage and accrued interest.

            During August 2003, the Partnership obtained a first mortgage loan
            encumbering the Partnership's property in Beaumont, Texas in the
            amount of $3.4 million. The new loan bears interest at 6.2% per
            annum and matures on November 30, 2007, at which time it is
            scheduled to be fully amortized.

            During November 2003, the Partnership obtained a $208.5 million
            loan, which had an outstanding balance of $208.4 million at December
            31, 2003. The note payable bears interest at a rate elected by the
            Partnership equal to either (1) LIBOR plus 450 basis points or (2)
            the prime rate charged by the bank plus 250 basis points. The note
            payable was obtained to replace the Partnership's existing note
            payable and effectively reduced the interest rate on such borrowing
            from a minimum of 8.5% to a floating rate which was 5.71% (LIBOR
            plus 450 basis points) at December 31, 2003 and that will in no
            event exceed 9.5%, after giving effect to the three-year interest
            rate protection agreement entered into by the Partnership. The note
            payable is scheduled to mature on November 24, 2006, subject to two
            one-year extensions. The note payable requires monthly payments of
            interest only. In addition, mandatory prepayments of principal are
            required from the proceeds of property sales and refinancings and
            other asset sales, as well as up to approximately $1.3 million per
            quarter to the extent that T-Two Partners does not make the required
            principal payments on the T-Two Loan that is described below. The
            Partnership can prepay the note payable in whole or in part at any
            time together with a premium of 1% if such prepayment occurs on or
            before November 24, 2004, 1/2% if such prepayment occurs between
            November 25, 2004 and November 24, 2005 and thereafter with no
            premium. In addition, the Partnership and T-Two Partners may prepay
            up to $50.0 million annually of this Loan and the T-Two Loan without
            a premium. The note payable is secured by substantially all of the
            assets of the Partnership, and contains customary financial and
            other covenants.


                                     F - 25
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 -    NOTES AND CONTRACT RIGHTS PAYABLE (Continued)

            At the same time as the Partnership obtained the loan, T-Two
            Partners obtained a $316.5 million loan. This loan is referred to as
            the T-Two Loan. The interest rate, maturity date and principal terms
            of the T-Two Loan are the same as the Partnership's note payable.
            T-Two Partners used part of the proceeds of the T-Two Loan to
            purchase the senior beneficial interests in the contract rights
            encumbering the Partnership's and certain other partnership's
            properties so that T-Two Partners is now the 100% beneficial owner
            of the contract rights. These senior beneficial interests in the
            contract rights are referred to as the T-1 Certificate. The T-Two
            Loan is secured by all the assets of T-Two Partners, including the
            contract rights receivable from the Partnership. The Partnership
            guaranteed repayment of the T-Two Loan. In consideration for the
            Partnership's guarantee, the owners of T-Two Partners agreed to the
            elimination of their put option, which could require the Partnership
            to purchase T-Two Partners in December 2007, provided a credit line
            to the Partnership bearing interest at LIBOR plus 450 basis points
            and modified the Partnership's option to acquire T-Two Partners in
            January 2008. The credit line is in an amount sufficient to satisfy
            any shortfall between amounts T-2 Partners collects from the
            Partnership and pays to the lender. The option can now be exercised
            anytime between November 24, 2006 and November 24, 2009 and the
            purchase price is payable in cash rather than Units. Any amounts
            advanced to the Partnership under the credit line would have to be
            repaid in full before the Partnership could purchase the interests
            in T-Two Partners if the Partnership exercises its purchase option
            for T-Two Partners.

            T-Two Partners will reimburse the Partnership for approximately $7.3
            million of closing costs incurred in connection with the note
            payable and the T-Two Loan, together with interest thereon at a rate
            equal to LIBOR plus 450 basis points.

            In connection with the Partnership's refinancings, real estate sales
            and repayments of mortgage debt during 2003, the Partnership has
            recognized a net gain from early extinguishment of debt of $8.7
            million, which is included in discontinued operations. The net gain
            from early extinguishment of debt consisted of gains from debt
            extinguishment of $9.1 million, net of mortgage prepayment penalties
            of $0.4 million. During 2002, the Partnership recognized a net gain
            from early extinguishment of debt of $6.3 million, $5.8 million of
            which is included in interest expense and $0.5 million of which is
            included in discontinued operations. The net gain from early
            extinguishment of debt consisted of gains from debt extinguishment
            of $11.0 million, net of mortgage prepayment penalties of $4.7
            million.


                                     F - 26
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 -    NOTES AND CONTRACT RIGHTS PAYABLE (Continued)

            Scheduled payments of principal at December 31, 2003, for the next
            five years and thereafter through maturity, are as follows (in
            thousands):

<TABLE>
<CAPTION>
                                                                  Contract Right
                                     Mortgage          Note          Mortgage
                 Year              Notes Payable      Payable      Notes Payable       Total
            --------------         -------------      -------      -------------       -----
<S>                                 <C>             <C>             <C>             <C>
            2004                    $  116,964      $       --      $    4,314      $  121,278
            2005                       103,848              --           9,781         113,629
            2006                       134,805         208,356          11,454         354,615
            2007                        94,653              --          19,351         114,004
            2008                        70,390              --          21,956          92,346
            Thereafter                  82,259              --         226,100         308,359
                                    ----------      ----------      ----------      ----------
                                       602,919         208,356         292,956       1,104,231

             Plus: Accrued
              interest payable          13,074              --         108,176         121,250
                                    ----------      ----------      ----------      ----------

                                    $  615,993      $  208,356      $  401,132      $1,225,481
                                    ==========      ==========      ==========      ==========
</TABLE>

Note 5 -    MINORITY INTERESTS

            Minority interests consist of external ownership interests in
            limited partnerships consolidated by the Partnership. Certain
            limited partnerships have negative partnership capital balances, as
            liabilities exceed assets, principally depreciated real estate. The
            limited partnerships have profitable operations and due to their
            nature, triple net-leased properties with declining debt service
            obligations are expected to maintain profitable operations and
            eliminate any negative capital balance.

Note 6 -    RELATED PARTY TRANSACTIONS

            WFA, an affiliate of the Newkirk Group, performs asset management
            services for the Partnership and received a fee of $1.8 million for
            the years ended December 31, 2003 and 2002. WFA performed asset
            management services for the Predecessor Entity and received a fee of
            $3.0 million for the year ended December 31, 2001.

            The Partnership provides certain asset management, investor and
            administrative services to the Other Partnerships that were
            controlled by the Newkirk Group and were not merged into the
            Partnership. Control of the general partners of these partnerships
            was acquired by the Partnership. The Partnership earned $0.4 million
            and $0.8 million of management fees for these services for the years
            ended


                                     F - 27
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 -    RELATED PARTY TRANSACTIONS (Continued)

            December 31, 2003 and 2002, respectively. The Partnership had
            receivables for management fees of $1.1 million and $1.0 million due
            from these partnerships at December 31, 2003 and 2002, respectively.
            In addition, the Partnership had a receivable of $0.6 million at
            December 31, 2002 for a non-interest bearing advance made to one of
            these partnerships. This receivable was collected during 2003.

            The Partnership had a loan receivable and accrued interest of $0.2
            million at December 31, 2002 and earned interest income of $0.2
            million for the year ended December 31, 2002 from Cenland Associates
            Limited Partnership, one of the Other Partnerships. In February
            2003, the Partnership received the remaining amount due on this
            loan.

            The Partnership has an ownership interest in the three most junior
            tranches of a securitized pool of first mortgages with respect to 31
            first mortgage loans encumbering 67 Partnership properties and 1
            other property controlled by affiliates of the general partner. The
            Partnership had a loan receivable, net of discount, of $9.8 million
            and $9.5 million at December 31, 2003 and 2002, respectively, and
            earned interest income of $1.2 million for the years ended December
            31, 2003 and 2002, related to this ownership interest.

            Affiliates and executives of the Newkirk Group owned $17.3 million
            of a $145.2 million Real Estate Mortgage Investment Conduit
            ("REMIC") which was secured by the contract rights payable. The
            affiliates and executives of the Newkirk Group earned $2.2 million,
            $2.5 million and $2.5 million of interest income during 2003, 2002
            and 2001. The affiliates and executives were repaid when T-Two
            Partners purchased the T-1 Certificate as discussed in the following
            paragraph.

            T-Two Partners, an affiliate of the Newkirk Group, is the 100%
            beneficial owner of the contract rights. T-Two Partners owned the
            portion of the contract rights referred to as the T-2 Certificate
            and during 2003, purchased the portion of the contract rights
            referred to as the T-1 Certificate. The Partnership incurred $14.3
            million, $12.5 million and $6.3 million of interest expense on these
            contract rights during 2003, 2002 and 2001, respectively. The
            Partnership had the right to acquire T-Two Partners' interest in the
            contract rights in January 2008 by acquiring T-Two Partners in
            exchange for Units. The Newkirk Group had the right to require the
            Partnership to purchase this interest in December 2007 in exchange
            for Units. During 2003, the Partnership and the owners of T-Two
            Partners modified these rights. The Partnership can now exercise
            their option anytime between November 24, 2006 and November 24,
            2009.


                                     F - 28
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 -    RELATED PARTY TRANSACTIONS (Continued)

            In addition, the purchase price is payable in cash rather than
            Units. The owners of T-Two Partners agreed to eliminate their put
            option which could require the Partnership to purchase T-Two
            Partners in December 2007 and the Partnership agreed to guarantee
            repayment of the T-Two Loan. T-Two Partners also agreed to provide a
            credit line to the Partnership bearing interest at LIBOR plus 450
            basis points. If the Partnership exercises the option, the purchase
            price is to be calculated as follows: the sum of $316.5 million plus
            T-Two Partners' costs of obtaining the T-Two Loan (approximately
            $7.3 million) and administering the trust that holds the contract
            rights, together with interest on the foregoing sum at the effective
            rate of interest paid by T-Two Partners on the T-Two Loan, less all
            payments made from and after November 24, 2003 on the contract
            rights.

            T-Two Partners will reimburse the Partnership for approximately $7.3
            million of closing costs incurred in connection with the note
            payable and the T-Two Loan, together with interest thereon at a rate
            equal to LIBOR plus 450 basis points. The Partnership earned
            interest income of $37,000 during 2003.

            Also see Note 8 for related party acquisitions.

Note 7 -    CONTINGENCIES

            Legal

            In July 2002, an action was commenced in the Connecticut Superior
            Court against, among others, the Partnership's general partner and
            various affiliates of the Partnership's general partner. Plaintiffs
            are four limited partners of three of the Newkirk Partnerships. The
            action alleges, among other things, that the price paid to
            non-accredited investors in connection with the Exchange was unfair
            and did not fairly compensate them for the value of their
            partnership interests. The complaint also alleges that the exchange
            values assigned in the Exchange to certain assets contributed by
            affiliates of the Partnership's general partner were too high in
            comparison to the exchange values assigned to the Newkirk
            Partnerships, that the option arrangement relating to the
            Partnership's potential acquisition in the future of the T-2
            Certificate, which represents an interest in a grantor trust, the
            mortgage assets of which consist of contract rights secured by the
            Partnership's real properties as well as other properties owned by
            other partnerships that are controlled by affiliates of the
            Partnership's general partner, was unfair to limited partners and
            that the disclosure document used in connection with the Exchange
            contained various misrepresentations and/or omissions of material
            facts. The complaint seeks to have


                                     F - 29
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 -    CONTINGENCIES (Continued)

            Legal (Continued)

            the action classified as a class action as well as compensatory and
            punitive damages in an unspecified amount. The defendants have
            denied and continue to deny the allegations of the complaint. In
            order to avoid the expenses, distraction, and uncertainties of
            litigation, the defendants entered into a settlement agreement dated
            December 31, 2003 to settle the litigation, which settlement
            agreement is subject to court approval. A court hearing on whether
            to approve the settlement is currently scheduled to take place on
            April 12, 2004. The settlement provides for the following material
            terms: (i) the Newkirk Group will convey to unitholders of the
            Newkirk Partnerships who are unaffiliated with the general partner
            and who received limited partnership units in the Exchange, units in
            the Partnership equal to 1% of the outstanding units; (ii) the
            Partnership will pay $1.5 million to an escrow agent for the benefit
            of unaffiliated unitholders; and (iii) the Partnership will pay $2.0
            million to an escrow agent for the benefit of unitholders of the
            Newkirk Partnerships who were entitled to receive cash in the
            Exchange. In addition, the Partnership, in order to facilitate the
            settlement, entered into an agreement with T-Two Partners and its
            equityholders pursuant to which the Partnership has the right to
            acquire substantially all of the assets of T-Two Partners or a 100%
            ownership interest in T-Two Partners at any time between November
            24, 2006 and November 24, 2009. As part of the agreement, defendants
            have also agreed not to object to the payment of reasonable
            attorneys fees, expenses, and incentive awards to be paid from the
            consideration payable under the settlement agreement. The
            Partnership accrued $3.5 million with respect to this matter, which
            is included in general and administrative expense in the
            consolidated statement of operations for the year ended December 31,
            2003.

            On December 31, 2002, a derivative action was commenced in the
            Dallas County Texas District Court by a limited partner of Eastgar
            Associates, L.P. ("Eastgar") against, among others, the general
            partners of Eastgar and affiliates of the Newkirk Partnerships. The
            Partnership owns a 60.5% limited partnership interest in Eastgar and
            also controls the general partner of that partnership. The complaint
            alleges that the defendants have charged Eastgar excessive
            management fees and have unfairly prevented Eastgar from prepaying
            and refinancing its mortgage indebtedness. The complaint seeks
            compensatory and punitive damages in an unspecified amount,
            attorneys' fees and expenses, an accounting, and a declaration of
            the parties' future rights and obligations regarding management fees
            and the refinancing of mortgage indebtedness. The defendants have
            denied and continue to deny the allegations of the complaint. In
            order to avoid the expenses, distraction and uncertainties of
            litigation, the defendants entered into an agreement to settle the
            litigation for a


                                     F - 30
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 -    CONTINGENCIES (Continued)

            Legal (Continued)

            $137,500 payment by the defendants other than Eastgar and to charge
            an asset management fee of $35,000 per year, adjusted for changes in
            the Consumer Price Index and as may be adjusted for extraordinary
            circumstances by Eastgar's general partner. After payment of
            court-approved attorneys' fees and expenses, the remaining balance
            would be distributed to Eastgar's limited partners other than the
            Partnership or its affiliates. The settlement also sets the
            management fees to be charged to Eastgar, subject to any changes
            that Eastgar may approve in the future consistent with its fiduciary
            duty. The settlement has been, as required, approved by the trial
            court after notice to the limited partners of Eastgar, and remains
            subject only to a potential appeal of court approval prior to the
            close of the appeals period. The Partnership accrued $137,500 with
            respect to this matter, which is included in general and
            administrative expense in the consolidated statement of operations
            for the year ended December 31, 2003.

            Property Matters

            In January 2002, Kmart Corporation ("Kmart"), a tenant at twelve of
            the Partnership's properties, filed for protection under Chapter 11
            of the United States Bankruptcy Code. Kmart had the right to either
            accept or reject the leases. Kmart elected to reject the leases,
            which caused an immediate termination of such leases. The
            Partnership re-leased nine of the properties to Furr's Restaurant
            Group ("Furr's") for 10-year lease terms, one of the properties to
            Lithia Motors for a 10-year lease term and another property for use
            as a Chinese food restaurant for a five-year lease term. The
            remaining property was vacant. The Partnership is pursuing a claim
            against Kmart in Bankruptcy Court. In January 2003, Furr's filed for
            protection under Chapter 11 of the Bankruptcy Code and subsequently
            rejected the lease on three sites. The remaining sites continue to
            be leased to Furr's through 2012 and the Partnership is pursuing a
            claim against Furr's in Bankruptcy Court for the three rejected
            sites. Furr's also has the right to reject the lease that now covers
            the remaining sites. In addition, the Chinese food restaurant
            defaulted on its lease and that property has been vacated. The
            aggregate rent for the seven sites that are presently leased is
            approximately $0.6 million less than the amount that was scheduled
            to be received from Kmart on the twelve properties during its
            renewal term which would have begun in February 2003. The
            Partnership is responsible for the payment of insurance, real estate
            taxes and mortgage debt on the vacant properties. The Partnership
            has purchased the land underlying all twelve properties for $0.25
            million. In September 2003, two of the vacant properties were sold.
            The


                                     F - 31
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 -    CONTINGENCIES (Continued)

            Property Matters (Continued)

            Partnership is attempting to sell the three remaining vacant
            properties. The Partnership has classified the vacant properties as
            part of real estate held for sale in the accompanying consolidated
            balance sheet at December 31, 2003 and has classified the operations
            of the properties as part of discontinued operations in the
            accompanying consolidated statement of operations for the years
            ended December 31, 2003 and 2002.

Note 8 -    ACQUISITIONS

            On January 1, 2003, the Partnership acquired from an affiliate of
            the general partner, limited partnership interests in nine limited
            partnerships that own net-leased commercial properties. The limited
            partnership interests acquired by the Partnership ranged between
            4.9% and 57.75% of each partnership and were acquired in exchange
            for 317,813 limited partnership units of the Partnership valued at
            $22.7 million. In August 2003, the Partnership acquired
            approximately an additional 9.9% interest in one of these limited
            partnerships for a cash purchase price of $525,000, increasing the
            partnership interest to 23.4% from 13.5%. These interests were
            aquired from unaffiliated limited partners. In January 2004, the
            Partnership sent notice of its intent to exercise an option to
            purchase additional limited partnership interests in two of the
            partnerships. It is anticipated that these additional limited
            partnership interests will be acquired on April 1, 2004. The values
            of the net-leased real estate partnerships and the Partnership units
            were determined without arms-length negotiations. Independent
            appraisals were obtained on the value of the properties owned by the
            limited partnerships. The Partnership has accounted for the
            acquisition on a historical cost basis. Four of the limited
            partnerships have been consolidated into the Partnership's financial
            statements and five of the limited partnerships are being accounted
            for under the equity method of accounting.

            In January 2003, the Partnership acquired the land underlying the
            property owned by one of the net-leased partnerships referred to
            immediately above. The land was acquired from a company affiliated
            with the general partner for $1.0 million, $50,000 of which was paid
            in cash and the balance in the form of a $950,000 note due September
            8, 2008. The note bore interest at the rate of 6.0% per annum,
            compounded annually, and was payable interest-only until maturity,
            at which time the full balance of the note was to be due. In October
            2003, the note was satisfied by the Partnership from cash reserves.
            The purchase price for the land sale was


                                     F - 32
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 -    ACQUISITIONS (Continued)

            determined without arms-length negotiations. An independent
            appraisal was obtained on the value of the land that was acquired.

            In April and June 2003, the Partnership acquired 30.6% and 46.1%,
            respectively, of the outstanding limited partnership interests in
            two Other Partnerships. The partnership interests were acquired for
            an aggregate cash purchase price of $711,250. The Partnership
            previously owned 1.5% and 3.8%, respectively, of the outstanding
            limited partnership interests in these two partnerships. The
            Partnership controls the general partners of each of these
            partnerships. The Partnership has consolidated these partnerships in
            accordance with the guidance provided by Statement of Position 78-9
            "Accounting for Investments in Real Estate Ventures."

            In May and June 2003, the Partnership purchased the remainder
            interest in the land underlying 25 properties for an aggregate
            purchase price of $1.2 million and, as a result, now owns a fee
            interest in the underlying land. The improvements on 23 of the
            properties are owned by the Partnership and the improvements on the
            two other properties are owned by one of the Other Partnerships in
            which the Partnership owns limited partnership interests and
            controls the general partner.

Note 9 -    DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

            During the year ended December 31, 2003, the Partnership sold
            fourteen properties for a combined net sales price of $156.4
            million. The Partnership recognized a net gain on sale of these
            properties of $29.5 million. During the year ended December 31,
            2002, the Partnership sold two properties for a combined net sales
            price of $3.2 million. The Partnership recognized a net loss on sale
            of these properties of $1.0 million. During the year ended December
            31, 2001, the Predecessor Entity sold 3 properties for a combined
            net sales price of $.8 million. The Predecessor Entity recognized a
            net loss on sale of these properties of $2.9 million. The sale and
            operations of these properties for all periods presented have been
            recorded as discontinued operations in accordance with the
            provisions of SFAS No. 144. In addition, the Partnership has
            classified various properties which have met all of the criteria of
            SFAS No. 144 as real estate held for sale in the accompanying
            consolidated balance sheets and has classified the operations of the
            properties and the sold properties as discontinued operations in the
            accompanying consolidated statements of operations.

            Discontinued operations for the years ended December 31, 2003, 2002
            and 2001 are summarized as follows (in thousands):


                                     F - 33
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 -    DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE (Continued)

<TABLE>
<CAPTION>
                                                              2003           2002           2001
                                                            --------       --------       --------
<S>                                                         <C>            <C>            <C>
            Revenue                                         $ 23,149       $ 43,588       $ 36,010

            Expenses                                          (9,988)       (25,693)       (29,850)
            Impairment loss on real estate                    (1,560)            --             --
            Net gain from early extinguishment of debt         8,733            553             --
            Gain (loss) from disposal of real estate          29,514           (983)        (2,936)
                                                            --------       --------       --------

            Income from discontinued operations             $ 49,848       $ 17,465       $  3,224
                                                            ========       ========       ========
</TABLE>

            Expenses include interest expense to related parties of $459,000,
            $623,000 and $767,000 for the years ended December 31, 2003, 2002
            and 2001, respectively.

            Other assets of discontinued operations at December 31, 2003 and
            2002 are summarized as follows (in thousands):

                                               2003            2002
                                              ------          ------

            Receivables                       $  734          $2,164
            Other assets                         221             126
                                              ------          ------

                                              $  955          $2,290
                                              ======          ======

            Liabilities of discontinued operations at December 31, 2003 and 2002
            are summarized as follows:

                                                             2003         2002
                                                           --------     --------

            Mortgage notes and accrued interest payable    $ 30,371     $ 44,999

            Contract right mortgage notes and accrued
              interest payable (including $5,626 and
              $2,371 to related parties)                      5,626       59,707

            Accounts payable and accrued expenses                --          794
                                                           --------     --------

                                                           $ 35,997     $105,500
                                                           ========     ========


                                     F - 34
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 -   INCOME TAXES

            The Partnership's taxable income for 2003 and 2002 differs from net
            income for financial reporting purposes as follows (in thousands,
            except per unit data):

<TABLE>
<CAPTION>
                                                                        2003            2002
                                                                     ---------       ---------
<S>                                                                  <C>             <C>
            Net income for financial reporting purposes              $ 149,936       $ 122,862
                     Depreciation and amortization                      37,364          23,425
                     Interest expense                                   10,219           4,081
                     Gain on sale of real estate                        80,517           4,118
                     Costs capitalized for tax purposes                     --           3,211
                     Other                                              (3,127)          3,391
                     Net gain from early extinguishment of debt         (4,266)        (10,992)
                     Straight-line rent adjustment                      (3,248)         (2,293)
                                                                     ---------       ---------

            Taxable income                                           $ 267,395       $ 147,803
                                                                     =========       =========
</TABLE>

            The net basis of the Partnership's assets and liabilities for tax
            reporting purposes is approximately $896.0 million and $1.0 billion
            lower than the amount reported for financial statement purposes at
            December 31, 2003 and 2002, respectively.

Note 11 -   SUBSEQUENT EVENTS

            During January 2004, the Partnership sold two properties to
            unaffiliated third parties for a combined net sales price of $48.4
            million. For financial reporting purposes, the Partnership expects
            to recognize a net gain on sale of these properties of approximately
            $7.1 million during 2004.


                                     F - 35
<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 -   SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

            The following summary represents the results of operations for each
            quarter in 2003 and 2002:

            (In thousands, except units amounts)

<TABLE>
<CAPTION>
                                                                   Quarters Ended
                                             -----------------------------------------------------------
                                               March 31        June 30      September 30     December 31
                                               --------        -------      ------------     -----------
<S>                                          <C>             <C>            <C>             <C>
            2003 (Restated)

            Revenues                         $    70,266     $   70,282     $    69,234     $     68,590
                                             ===========     ==========     ===========     ============
            Net income                       $    65,330(1)  $   34,097(2)  $    26,180(3)  $     24,329(4)
                                             ===========     ==========     ===========     ============
            Net income per
              limited partnership unit       $    10.27      $     5.40     $     4.14      $       3.85
                                             ===========     ==========     ===========     ============

            2002

            Revenues                         $    67,826     $   67,062     $    67,201      $    68,777
                                             ===========     ==========     ===========     ============
            Net income                       $    28,814     $   28,898     $    32,605      $    32,545 (5)
                                             ===========     ==========     ===========     ============
            Net income per
              limited partnership unit       $      4.71     $     4.72     $      5.33      $      5.32
                                             ===========     ==========     ===========     ============
</TABLE>

(1)   Includes gain from disposal of real estate of $26.1 million.
(2)   Includes gain from disposal of real estate of $6.2 million.
(3)   Includes loss from disposal of real estate of $2.0 million.
(4)   Includes loss from disposal of real estate of $0.8 million.
(5)   Includes loss from disposal of real estate of $1.0 million.


                                     F - 36
<PAGE>

                          Independent Auditor's Report

To the Partners of
The Newkirk Master Limited Partnership

Under date of January 30, 2004, we reported on the consolidated balance sheets
of The Newkirk Master Limited Partnership as of December 31, 2003 and 2002, and
the related consolidated statements of operations, partners' equity, and cash
flows for the years then ended, which is included in the Annual Report on Form
10-K. In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedule listed
under Item 15(d)(3) on page 60. This financial statement schedule is the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, represents
fairly, in all material respects, the information set forth therein.


                                                   /s/ Imowitz Koenig & Co., LLP

New York, New York
January 30, 2004

<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                              At December 31, 2003

<TABLE>
<CAPTION>
                                                                                                                 Cost capitalized
                                                                                                                  subsequent to
                                                                                Initial Cost to Registrant          acquistion
                                                                          -------------------------------------------------------
                                                     Encumbrances                        Land       Building and   Building and
Description    Location                         Mortgage  Contract Right       Land     Estates     Improvements   Improvements
-----------------------------------------     --------------------------  -------------------------------------------------------
<S>          <C>                             <C>           <C>             <C>         <C>          <C>             <C>
Continuing Operations:

Office       Little Rock            AR       $    644,790  $   413,779     $  244,068  $        0   $  2,596,681    $      0
Office       Pine Bluff             AR            562,233      335,730         37,723           0      2,997,699           0
Office       El Segundo             CA         31,131,185            0        550,419           0     38,871,092           0
Office       Long Beach             CA         46,076,477    5,968,731              0  13,955,889     65,745,241           0
Office       Walnut Creek           CA          3,736,407    2,871,512              0   1,339,403     12,740,691           0
Office       Colorado Spring        CO          5,044,323            0        384,876           0     13,260,300           0
Office       Clinton                CT          1,497,063            0              0           0      2,267,879           0
Office       Orlando                FL         11,184,695    8,888,896      2,015,271           0     54,845,812           0
Office       Columbus               IN          3,594,294   11,959,804              0           0     53,535,792           0
Office       Owensboro              KY         16,526,815            0              0           0     25,036,228           0
Office       New Orleans            LA         16,404,535            0              0           0     26,187,779           0
Office       NewOrleans             LA         13,191,580            0              0           0     21,058,702           0
Office       Baltimore              MD         16,400,000   53,729,899              0           0    138,489,552           0
Office       Bridgeton              MO            916,628      457,360              0     420,249      3,177,573           0
Office       Carteret               NJ          5,882,554    1,630,703        482,890           0     10,450,068           0
Office       Elizabeth              NJ            265,633      188,021        245,140           0        866,678           0
Office       MorrisTownship         NJ         23,360,735   15,102,542              0           0     65,421,691           0
Office       Morristown             NJ         17,045,710   12,408,267              0           0     61,910,388           0
Office       Plainsboro             NJ          1,459,404    1,032,998         46,867           0      4,761,579           0
Office       Las Vegas              NV         19,323,384   10,818,191      1,121,178           0     43,198,548           0
Office       Miamisburg             OH                  0    2,612,156              0     702,011      7,922,845           0
Office       Miamisburg             OH                  0    1,404,933              0     251,821      6,454,696           0
Office       Toledo                 OH         53,377,945    7,185,840              0           0     95,878,252           0
Office       Allentown              PA          1,358,875            0         29,773           0      4,816,913           0
Office       Johnson City           TN                  0    1,593,970        550,046           0      4,543,653           0
Office       Kingport               TN            891,496      754,594         89,846           0      3,146,885           0
Office       Memphis                TN         36,868,966   10,993,926        356,650           0     63,296,739           0
Office       Memphis                TN          5,598,090    2,263,903              0           0     19,233,942           0
Office       Beaumont               TX         33,768,608   11,025,715        370,578           0     58,891,296           0
Office       Bedford                TX          1,584,651    4,758,098              0           0     22,033,586           0
Office       Dallas                 TX          5,190,218    5,184,845        631,561           0     20,059,117           0
Office       Garland                TX                  0    2,620,413        203,162   1,676,696     11,347,001           0

                                             -------------------------    --------------------------------------------------
                                              372,887,294  176,204,826      7,360,048  18,346,069    965,044,898           0
                                             -------------------------    --------------------------------------------------

Retail       Dothan                 AL            210,254      251,268              0           0      1,618,558           0
Retail       Florence               AL          1,094,647      715,818              0     343,661      3,187,224           0
Retail       Huntsville             AL            664,769    1,133,195              0           0      5,005,608           0
Retail       Montgomery             AL            780,934      660,231        269,635           0      2,826,176           0
Retail       Montgomery             AL            321,145      230,200              0           0      1,452,940           0
Retail       Tuscaloosa             AL            323,689      243,455              0           0      1,234,233           0
Retail       Bisbee                 AZ            846,606      331,563              0     333,266      2,127,157           0
Retail       Tucson                 AZ            966,582      378,550         42,620     380,494      2,428,605           0
Retail       Anaheim                CA                  0      686,098        233,033           0      1,186,391           0
Retail       Barstow                CA                  0      379,912        196,719           0        951,285           0
Retail       Beaumont               CA                  0      600,417        203,932           0      1,038,233           0
Retail       Calimesa               CA                  0      760,143        258,182           0      1,314,429           0
Retail       Colton, Rancho         CA                  0    1,199,087        407,834           0      2,073,445           0
Retail       Colton, Valley         CA                  0      572,009        194,553           0        989,111           0
Retail       Corona                 CA            446,535      221,895              0     121,144      1,008,072           0
Retail       Corona                 CA                  0      366,836              0     641,229      1,761,811           0
Retail       Costa Mesa, 19th       CA                  0      690,065        234,330           0      1,193,251           0
Retail       Costa Mesa, Newport    CA                  0      739,034        251,013           0      1,277,927           0
Retail       Desert Hot Springs     CA                  0      603,614        205,302           0      1,043,762           0
Retail       Downey                 CA            416,952      709,968        327,365           0      2,501,610           0
Retail       El Toro                CA             39,112      292,212        141,727     319,982        879,559           0
Retail       Fontana                CA                  0      610,853        207,476           0      1,056,279           0
Retail       Garden Grove           CA                  0      646,588        219,614           0      1,118,071           0
Retail       Glen Avon              CA                  0      938,314        318,698           0      1,622,520           0
Retail       Huntington Beach       CA            717,908    1,089,632        421,465           0      2,853,660           0
Retail       Indio                  CA            391,738      194,665              0     106,278        884,366           0
Retail       Lancaster              CA            694,575    1,054,218        407,766           0      2,760,915           0
Retail       Livermore              CA            481,073      531,598        180,441           0      2,903,113           0
Retail       Lomita                 CA            736,108      645,808              0     408,435      2,878,868           0
Retail       Mammoth Lake           CA          1,313,615    1,199,048              0     561,578      4,857,298           0
Retail       Mojave                 CA                  0      323,164              0     564,891      1,552,069           0

<CAPTION>


                                  As of December 31, 2003
             ---------------------------------------------------------------------
                           Land       Building and                    Accumulated           Date
Description     Land      Estates     Improvements         Total     Depreciation         Acquired      Life
----------------------------------------------------------------------------------      -----------------------
<S>          <C>         <C>           <C>             <C>            <C>                  <C>        <C>
Continuing Operations:

Office       $  244,068  $        0    $  2,596,681    $  2,840,749   $    748,075         1/1/2002      40 yrs
Office           37,723           0       2,997,699       3,035,422      1,180,533         1/1/2002      40 yrs
Office          550,419           0      38,871,092      39,421,511     13,071,022         1/1/2002   38-40 yrs
Office                0  13,955,889      65,745,241      79,701,130     29,003,290         1/1/2002   22-40 yrs
Office                0   1,339,403      12,740,691      14,080,094      5,022,588         1/1/2002   22-40 yrs
Office          384,876           0      13,260,300      13,645,176      4,139,323         1/1/2002   38-40 yrs
Office                0           0       2,267,879       2,267,879      1,092,533         1/1/2003   20-40 yrs
Office        2,015,271           0      54,845,812      56,861,083     19,174,680         1/1/2002   38-40 yrs
Office                0           0      53,535,792      53,535,792     10,640,323         1/1/2002   38-40 yrs
Office                0           0      25,036,228      25,036,228     12,061,001         1/1/2003   20-40 yrs
Office                0           0      26,187,779      26,187,779     16,423,364         1/1/2003   20-40 yrs
Office                0           0      21,058,702      21,058,702     13,206,722         1/1/2003   20-40 yrs
Office                0           0     138,489,552     138,489,552     55,561,487         1/1/2002   14-38 yrs
Office                0     420,249       3,177,573       3,597,822      1,439,872         1/1/2002   22-40 yrs
Office          482,890           0      10,450,068      10,932,958      3,397,993         1/1/2002   38-40 yrs
Office          245,140           0         866,678       1,111,818        283,199         1/1/2002   38-40 yrs
Office                0           0      65,421,691      65,421,691     19,815,196         1/1/2002   20-40 yrs
Office                0           0      61,910,388      61,910,388     25,658,368         1/1/2002   20-40 yrs
Office           46,867           0       4,761,579       4,808,446      1,555,913         1/1/2002   38-40 yrs
Office        1,121,178           0      43,198,548      44,319,726      7,205,410         1/1/2002   38-40 yrs
Office                0     702,011       7,922,845       8,624,856      4,115,867         1/1/2002   20-40 yrs
Office                0     251,821       6,454,696       6,706,517      2,737,926         1/1/2002   22-40 yrs
Office                0           0      95,878,252      95,878,252     33,525,494         1/1/2002   38-40 yrs
Office           29,773           0       4,816,913       4,846,686      2,202,519         1/1/2002      40 yrs
Office          550,046           0       4,543,653       5,093,699        791,167         1/1/2002   38-40 yrs
Office           89,846           0       3,146,885       3,236,731        876,784         1/1/2002   38-40 yrs
Office          356,650           0      63,296,739      63,653,389     14,325,498         1/1/2002   38-40 yrs
Office                0           0      19,233,942      19,233,942      8,412,254         1/1/2002   30-40 yrs
Office          370,578           0      58,891,296      59,261,874      9,958,339         1/1/2002   38-40 yrs
Office                0           0      22,033,586      22,033,586      4,629,296         1/1/2002   38-40 yrs
Office          631,561           0      20,059,117      20,690,678      9,364,903         1/1/2002   38-40 yrs
Office          203,162   1,676,696      11,347,001      13,226,859      3,649,921         1/1/2002   22-40 yrs

             ---------------------------------------------------------------------
              7,360,048  18,346,069     965,044,898     990,751,015    335,270,861
             ---------------------------------------------------------------------

Retail                0           0       1,618,558       1,618,558        700,553         1/1/2002      40 yrs
Retail                0     343,661       3,187,224       3,530,885      1,266,780         1/1/2002   22-40 yrs
Retail                0           0       5,005,608       5,005,608      1,620,402         1/1/2002   38-40 yrs
Retail          269,635           0       2,826,176       3,095,811        564,647         1/1/2002   38-40 yrs
Retail                0           0       1,452,940       1,452,940        673,125         1/1/2002      40 yrs
Retail                0           0       1,234,233       1,234,233        434,134         1/1/2002      40 yrs
Retail                0     333,266       2,127,157       2,460,422        984,318         1/1/2002   22-40 yrs
Retail           42,620     380,494       2,428,605       2,851,719      1,123,809         1/1/2002   22-40 yrs
Retail          233,033           0       1,186,391       1,419,424        421,689         1/1/2002   20-40 yrs
Retail          196,719           0         951,285       1,148,004        132,411         1/1/2002   38-40 yrs
Retail          203,932           0       1,038,233       1,242,164        369,028         1/1/2002   20-40 yrs
Retail          258,182           0       1,314,429       1,572,611        467,199         1/1/2002   20-40 yrs
Retail          407,834           0       2,073,445       2,481,279        736,983         1/1/2002   20-40 yrs
Retail          194,553           0         989,111       1,183,664        351,568         1/1/2002   20-40 yrs
Retail                0     121,144       1,008,072       1,129,216        248,351         1/1/2002   22-40 yrs
Retail                0     641,229       1,761,811       2,403,040      2,295,256         1/1/2002   22-39 yrs
Retail          234,330           0       1,193,251       1,427,580        424,128         1/1/2002   20-40 yrs
Retail          251,013           0       1,277,927       1,528,940        454,225         1/1/2002   20-40 yrs
Retail          205,302           0       1,043,762       1,249,064        370,993         1/1/2002   20-40 yrs
Retail          327,365           0       2,501,610       2,828,975        776,008         1/1/2002   38-40 yrs
Retail          141,727     319,982         879,559       1,341,269        629,756         4/1/2003   22-40 yrs
Retail          207,476           0       1,056,279       1,263,755        375,442         1/1/2002   20-40 yrs
Retail          219,614           0       1,118,071       1,337,685        397,406         1/1/2002   20-40 yrs
Retail          318,698           0       1,622,520       1,941,218        576,706         1/1/2002   20-40 yrs
Retail          421,465           0       2,853,660       3,275,125        545,568         1/1/2002   38-40 yrs
Retail                0     106,278         884,366         990,644        217,875         1/1/2002   22-40 yrs
Retail          407,766           0       2,760,915       3,168,681        527,837         1/1/2002   38-40 yrs
Retail          180,441           0       2,903,113       3,083,554      1,057,211         1/1/2002   38-40 yrs
Retail                0     408,435       2,878,868       3,287,303      1,078,063         1/1/2002   22-40 yrs
Retail                0     561,578       4,857,298       5,418,876      2,175,871         1/1/2002   22-40 yrs
Retail                0     564,891       1,552,069       2,116,960      2,022,007         1/1/2002   22-39 yrs
</TABLE>

<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                              At December 31, 2003

<TABLE>
<CAPTION>
                                                                                                                 Cost capitalized
                                                                                                                  subsequent to
                                                                                Initial Cost to Registrant          acquistion
                                                                          -------------------------------------------------------
                                                     Encumbrances                        Land       Building and   Building and
Description    Location                         Mortgage  Contract Right       Land     Estates     Improvements   Improvements
-----------------------------------------     --------------------------  -------------------------------------------------------
<S>          <C>                                <C>          <C>              <C>         <C>         <C>                  <C>
Retail       Morgan Hill              CA           23,001      171,849         83,350     188,181        517,267           0
Retail       Ontario                  CA                0      689,088        234,049           0      1,191,561           0
Retail       Orange                   CA                0      958,476        325,546           0      1,657,384           0
Retail       Pinole                   CA        1,790,595      419,110              0     190,365      3,930,655           0
Retail       Pleasanton               CA        6,512,907    1,073,479        480,348           0     13,118,825           0
Retail       Rancho Cucamonga         CA                0      654,833        222,415           0      1,132,329           0
Retail       Redlands                 CA           20,115      150,284         72,890     164,566        452,354           0
Retail       Rialto                   CA                0      625,256        212,368           0      1,081,185           0
Retail       Rubidoux                 CA                0      711,677        241,721           0      1,230,623           0
Retail       San Bernadino            CA                0    1,069,159        363,140           0      1,848,776           0
Retail       San Bernadino            CA                0      532,662        275,811           0      1,333,767           0
Retail       San Diego                CA                0    3,524,962              0           0     15,656,895           0
Retail       Santa Ana                CA                0      705,564        239,645           0      1,220,051           0
Retail       Santa Monica             CA        4,624,419      901,322        445,955           0      7,050,333           0
Retail       Santa Rosa               CA          226,960      210,017         69,074           0        925,951           0
Retail       Simi Valley              CA          755,024      527,348         15,883           0      2,778,433           0
Retail       Sunnymead                CA                0      377,461        195,449           0        945,148           0
Retail       Tustin                   CA                0            0        285,000           0      2,556,557           0
Retail       Union City               CA           25,679      191,856         93,053     210,089        577,486           0
Retail       Ventura                  CA        3,608,474    1,584,653              0           0      6,870,815           0
Retail       Westminster              CA                0      863,040        293,131           0      1,492,357           0
Retail       Yorba Linda              CA           26,730      199,707         96,861     218,686        601,118           0
Retail       Yucaipa                  CA                0      479,874        162,990           0        829,793           0
Retail       Aurora                   CO          962,269    1,049,838         17,701     320,113      4,448,324           0
Retail       Aurora                   CO          680,095      545,977        487,823           0      3,063,975           0
Retail       Littleton                CO        1,165,532    1,197,317        587,401           0      4,325,125           0
Retail       Bradenton                FL        1,146,973      973,826        272,587           0      4,088,639           0
Retail       Cape Coral               FL          818,260      493,487        175,559           0      2,132,215           0
Retail       Casselberry              FL          677,399    1,153,446        411,929           0      4,064,226           0
Retail       Gainsville               FL          924,992      557,856        198,458           0      2,410,337           0
Retail       Largo                    FL          531,570      399,807        278,585           0      2,026,886           0
Retail       Largo, 66th              FL          712,481      429,692        152,864           0      1,856,576           0
Retail       Largo, Keene             FL        1,091,184      658,085        245,374           0      2,843,395           0
Retail       Orlando                  FL                0      541,732         14,545           0      2,465,817           0
Retail       Pinellas Park            FL          890,937      754,092        288,344           0      3,142,532           0
Retail       Port Richey              FL          458,094      219,162              0           0      1,564,547           0
Retail       Tallahassee              FL          372,436      272,807              0           0      1,722,653           0
Retail       Venice                   FL          518,320      572,757        141,040           0      3,127,889           0
Retail       Atlanta (Dunwoody)       GA                0      247,263              0     120,697        813,389           0
Retail       Atlanta (Exec Park)      GA                0      313,470              0     153,014      1,031,179           0
Retail       Atlanta (Ponce de Leon)  GA                0      219,714              0     107,249        722,764           0
Retail       Cumming                  GA                0      555,007              0     270,916      1,825,733           0
Retail       Duluth                   GA                0      373,052              0     182,098      1,227,177           0
Retail       Forest Park (Clayton)    GA                0      558,281              0     272,514      1,836,502           0
Retail       Jonesboro                GA                0      216,067              0     105,469        710,765           0
Retail       Stone Mountain           GA                0      266,013              0     129,849        875,068           0
Retail       Boise                    ID        1,464,400    1,160,829        310,501           0      5,283,297           0
Retail       Freeport                 IL          692,561      417,678        148,591           0      1,804,668           0
Retail       Rock Falls               IL          730,507      440,564        156,731           0      1,903,549           0
Retail       Carmel                   IN                0      511,317         52,033           0      2,358,284           0
Retail       Lawrence                 IN                0      622,854         53,887           0      2,872,714           0
Retail       Louisville               KY          988,191      695,491              0     460,927      4,118,624           0
Retail       Baton Rouge              LA          850,854      719,344        232,849           0      3,079,214           0
Retail       Minden                   LA          799,798      416,566        342,304      76,762      1,674,347           0
Retail       Billings                 MT          758,754      692,579              0     324,372      2,805,610           0
Retail       Bozeman                  MT          117,403      140,305              0           0        903,783           0
Retail       Charlotte                NC                0      184,541         36,078           0        894,095           0
Retail       Concord                  NC                0      365,022         56,439           0      1,768,523           0
Retail       Jacksonville             NC                0      164,726         64,422           0        726,048           0
Retail       Jefferson                NC                0      143,562              0           0        632,763           0
Retail       Lexinton                 NC                0      272,829        106,705           0      1,202,518           0
Other        Mint Hill                NC                0      198,662         37,671           0        962,513           0
Retail       Thomasville              NC                0      208,722         38,805           0      1,011,250           0
Retail       Omaha                    NE        1,752,461    2,489,632      1,048,748           0      9,936,061           0
Retail       Garwood                  NJ        1,258,093      709,571        607,569           0      3,786,935           0
Retail       Albuquerque              NM        1,011,185      526,665        292,081      97,050      2,116,876           0
Retail       LasCruces                NM          690,486      586,250        171,196           0      2,461,388           0
Retail       Las Vegas                NV        1,502,964    1,099,099         18,299           0      5,566,404           0

<CAPTION>


                                  As of December 31, 2003
             ---------------------------------------------------------------------
                           Land       Building and                    Accumulated           Date
Description     Land      Estates     Improvements         Total     Depreciation         Acquired      Life
----------------------------------------------------------------------------------      -----------------------

<S>           <C>           <C>          <C>             <C>             <C>               <C>        <C>
Retail           83,350     188,181         517,267         788,797        370,358         4/1/2003   22-40 yrs
Retail          234,049           0       1,191,561       1,425,611        423,527         1/1/2002   20-40 yrs
Retail          325,546           0       1,657,384       1,982,930        589,098         1/1/2002   20-40 yrs
Retail                0     190,365       3,930,655       4,121,020      1,707,280         1/1/2002   22-40 yrs
Retail          480,348           0      13,118,825      13,599,173      5,481,940         1/1/2002      40 yrs
Retail          222,415           0       1,132,329       1,354,743        402,474         1/1/2002   20-40 yrs
Retail           72,890     164,566         452,354         689,810        323,881         4/1/2003   22-40 yrs
Retail          212,368           0       1,081,185       1,293,553        384,295         1/1/2002   20-40 yrs
Retail          241,721           0       1,230,623       1,472,344        437,411         1/1/2002   20-40 yrs
Retail          363,140           0       1,848,776       2,211,916        657,127         1/1/2002   20-40 yrs
Retail          275,811           0       1,333,767       1,609,578        185,649         1/1/2002   38-40 yrs
Retail                0           0      15,656,895      15,656,895      6,657,226         1/1/2002   38-40 yrs
Retail          239,645           0       1,220,051       1,459,697        433,653         1/1/2002   20-40 yrs
Retail          445,955           0       7,050,333       7,496,288      2,414,024         1/1/2002   38-40 yrs
Retail           69,074           0         925,951         995,026        149,326         1/1/2002   38-40 yrs
Retail           15,883           0       2,778,433       2,794,317        922,633         1/1/2002   38-40 yrs
Retail          195,449           0         945,148       1,140,597        131,556         1/1/2002   38-40 yrs
Retail          285,000           0       2,556,557       2,841,557      2,063,970         1/1/2002   38-40 yrs
Retail           93,053     210,089         577,486         880,628        413,475         4/1/2003   22-40 yrs
Retail                0           0       6,870,815       6,870,815      2,754,406         1/1/2002   20-40 yrs
Retail          293,131           0       1,492,357       1,785,488        530,441         1/1/2002   20-40 yrs
Retail           96,861     218,686         601,118         916,665        430,395         4/1/2003   22-40 yrs
Retail          162,990           0         829,793         992,782        294,940         1/1/2002   20-40 yrs
Retail           17,701     320,113       4,448,324       4,786,138      1,620,738         1/1/2002   22-40 yrs
Retail          487,823           0       3,063,975       3,551,798      1,078,778         1/1/2002      40 yrs
Retail          587,401           0       4,325,125       4,912,526      1,026,632         1/1/2002   38-40 yrs
Retail          272,587           0       4,088,639       4,361,226      1,255,020         1/1/2002   38-40 yrs
Retail          175,559           0       2,132,215       2,307,774        761,449         1/1/2002   38-40 yrs
Retail          411,929           0       4,064,226       4,476,154      1,260,736         1/1/2002   38-40 yrs
Retail          198,458           0       2,410,337       2,608,794        860,771         1/1/2002   38-40 yrs
Retail          278,585           0       2,026,886       2,305,471        712,944         1/1/2002      40 yrs
Retail          152,864           0       1,856,576       2,009,440        663,014         1/1/2002   38-40 yrs
Retail          245,374           0       2,843,395       3,088,769      1,015,424         1/1/2002   38-40 yrs
Retail           14,545           0       2,465,817       2,480,363      1,080,997         1/1/2002   38-40 yrs
Retail          288,344           0       3,142,532       3,430,876        681,882         1/1/2002   38-40 yrs
Retail                0           0       1,564,547       1,564,547        465,463         1/1/2002   38-40 yrs
Retail                0           0       1,722,653       1,722,653        705,376         1/1/2002      40 yrs
Retail          141,040           0       3,127,889       3,268,929      1,139,066         1/1/2002   38-40 yrs
Retail                0     120,697         813,389         934,086        339,086         1/1/2002   22-35 yrs
Retail                0     153,014       1,031,179       1,184,193        429,879         1/1/2002   22-35 yrs
Retail                0     107,249         722,764         830,013        301,306         1/1/2002   22-35 yrs
Retail                0     270,916       1,825,733       2,096,648        761,113         1/1/2002   22-35 yrs
Retail                0     182,098       1,227,177       1,409,275        511,586         1/1/2002   22-35 yrs
Retail                0     272,514       1,836,502       2,109,016        765,602         1/1/2002   22-35 yrs
Retail                0     105,469         710,765         816,233        296,304         1/1/2002   22-35 yrs
Retail                0     129,849         875,068       1,004,918        364,799         1/1/2002   22-35 yrs
Retail          310,501           0       5,283,297       5,593,798      1,672,364         1/1/2002   38-40 yrs
Retail          148,591           0       1,804,668       1,953,259        644,477         1/1/2002   38-40 yrs
Retail          156,731           0       1,903,549       2,060,280        679,789         1/1/2002   38-40 yrs
Retail           52,033           0       2,358,284       2,410,317        991,676         1/1/2002   20-40 yrs
Retail           53,887           0       2,872,714       2,926,600      1,207,997         1/1/2002   20-40 yrs
Retail                0     460,927       4,118,624       4,579,551      1,767,301         1/1/2002   22-40 yrs
Retail          232,849           0       3,079,214       3,312,063        615,202         1/1/2002   38-40 yrs
Retail          342,304      76,762       1,674,347       2,093,412        153,321         1/1/2002   22-40 yrs
Retail                0     324,372       2,805,610       3,129,982      1,256,798         1/1/2002   22-40 yrs
Retail                0           0         903,783         903,783        391,181         1/1/2002      40 yrs
Retail           36,078           0         894,095         930,173        213,631         1/1/2002   38-40 yrs
Retail           56,439           0       1,768,523       1,824,962        422,563         1/1/2002   38-40 yrs
Retail           64,422           0         726,048         790,470        157,916         1/1/2002   38-40 yrs
Retail                0           0         632,763         632,763        137,627         1/1/2002   38-40 yrs
Retail          106,705           0       1,202,518       1,309,224        261,549         1/1/2002   38-40 yrs
Other            37,671           0         962,513       1,000,184        229,979         1/1/2002   38-40 yrs
Retail           38,805           0       1,011,250       1,050,056        241,624         1/1/2002   38-40 yrs
Retail        1,048,748           0       9,936,061      10,984,809      3,148,404         1/1/2002   38-40 yrs
Retail          607,569           0       3,786,935       4,394,504        942,117         1/1/2002   38-40 yrs
Retail          292,081      97,050       2,116,876       2,506,006        193,844         1/1/2002   22-40 yrs
Retail          171,196           0       2,461,388       2,632,584        755,530         1/1/2002   38-40 yrs
Retail           18,299           0       5,566,404       5,584,703      1,420,620         1/1/2002   38-40 yrs
</TABLE>

<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                              At December 31, 2003

<TABLE>
<CAPTION>
                                                                                                                 Cost capitalized
                                                                                                                  subsequent to
                                                                                Initial Cost to Registrant          acquistion
                                                                          -------------------------------------------------------
                                                     Encumbrances                        Land       Building and   Building and
Description    Location                         Mortgage  Contract Right       Land     Estates     Improvements   Improvements
-----------------------------------------     --------------------------  -------------------------------------------------------
<S>          <C>                               <C>          <C>            <C>         <C>           <C>                   <C>
Retail       Las Vegas                NV          314,028      275,462        313,727           0      1,733,910           0
Retail       Reno                     NV          534,748      357,176              0           0      1,760,213           0
Retail       Portchester              NY        1,807,756    1,509,555              0           0      7,308,836           0
Retail       Cincinatti               OH          474,705      334,099              0     221,419      1,978,498           0
Retail       Columbus                 OH        1,015,634      714,805              0     473,727      4,233,003           0
Retail       Franklin                 OH                0      359,545         37,140           0      1,658,285           0
Retail       Lawton                   OK          898,546      351,904              0     353,712      2,257,659           0
Retail       Beaverton                OR          709,372    1,076,676        416,452           0      2,819,730           0
Retail       Grants Pass              OR          812,949      318,381              0     320,017      2,042,592           0
Retail       Portland                 OR                0      568,230        555,800           0      2,586,429           0
Retail       Salem                    OR          525,841      798,116        308,707           0      2,090,202           0
Retail       Doylestown               PA          463,451      250,926        130,522           0      1,091,131           0
Retail       Lansdale                 PA          365,448      197,864        102,922           0        861,971           0
Retail       Lima                     PA          397,750      215,353        112,019           0        938,162           0
Retail       Philadelphia             PA        1,136,891      769,776        628,239           0      3,780,770           0
Retail       Philadelphia, 52nd       PA          437,555      236,904        123,229           0      1,032,048           0
Retail       Philadelphia, Broad      PA          464,880      251,699        130,925           0      1,096,500           0
Retail       Philadelphia, Bustle     PA          345,565      187,099         97,322           0        815,075           0
Retail       Philadelphia, Cottman    PA          492,236      266,510        138,629           0      1,161,022           0
Retail       Philadelphia, Frankford  PA          382,834      207,277        108,178           0        902,981           0
Retail       Philadelphia, Lehigh     PA          348,041      188,439         98,020           0        820,915           0
Retail       Philadelphia, N 5th      PA          104,400       56,525         29,402           0        246,244           0
Retail       Philadelphia, N Broad    PA          325,683      176,334         91,723           0        768,178           0
Retail       Richboro                 PA          320,706      173,639         90,321           0        756,440           0
Retail       Wayne                    PA          469,852      254,391        131,965           0      1,108,227           0
Retail       Moncks Corner            SC                0      121,779              0           0        536,751           0
Retail       Chattanooga              TN        1,175,836      768,909              0     369,150      3,423,616           0
Retail       Paris                    TN          778,169      508,865              0     244,304      2,265,752           0
Retail       Carrolton                TX          446,535      391,758              0     247,763      1,746,370           0
Retail       Dallas                   TX          706,145      496,986              0     329,371      2,943,101           0
Retail       El Paso                  TX                0            0         91,580           0      1,256,859           0
Retail       Fort Worth               TX          998,543      911,455              0     426,883      3,692,269           0
Retail       Garland                  TX        1,359,763      708,218              0     130,505      2,846,611           0
Retail       Granbury                 TX          886,054      461,492              0      85,040      1,854,919           0
Retail       Grand Prairie            TX        1,174,434      459,952         15,130     462,315      2,950,848           0
Retail       Greenville               TX                0      328,597              0           0        675,961           0
Retail       Hillsboro                TX          748,525      389,861              0      71,841      1,567,009           0
Retail       Houston                  TX          970,878      683,306              0     452,852      4,046,470           0
Retail       Lubbock                  TX          325,094      238,129              0           0      1,503,678           0
Retail       Midland                  TX          819,207    1,243,383        480,935           0      3,256,323           0
Retail       Rockdale                 TX          174,736      117,727        134,651           0      1,049,237           0
Retail       Taylor                   TX          239,298      166,345        181,808           0      1,266,242           0
Retail       Texarkana                TX          418,991      387,713        110,394           0      1,709,398           0
Retail       Woodville                TX          167,653      112,955        129,192           0      1,006,703           0
Retail       Bountiful                UT          474,372      450,633              0           0      3,363,558           0
Retail       Sandy                    UT          200,592      344,240              0           0      1,578,176           0
Retail       Staunton                 VA                0      326,413        127,681           0      1,438,699           0
Retail       Bothell                  WA          249,454      178,811              0           0      1,128,590           0
Retail       Edmonds                  WA          281,099      205,904              0           0      1,300,189           0
Retail       Everett                  WA          947,536      804,496        228,290           0      3,377,702           0
Retail       Federal Way              WA          720,661      481,353        210,776           0      2,372,180           0
Retail       Graham                   WA        1,110,818      435,038              0     437,273      2,791,008           0
Retail       Kent                     WA          707,666    1,074,088        415,452           0      2,812,952           0
Retail       Milton                   WA        1,253,738      491,011              0     493,533      3,150,106           0
Retail       Port Orchard             WA          189,930      136,144              0           0        859,289           0
Retail       Redmond                  WA        1,246,121      488,028              0     490,535      3,130,967           0
Retail       Spokane                  WA          956,907      374,761              0     376,686      2,404,297           0
Retail       Spokane                  WA          560,997      402,129        355,128           0      2,538,088           0
Retail       Woodinville              WA          172,914      296,741              0           0      1,360,417           0
Retail       Cheyenne                 WY          239,948      222,035         71,549           0        978,937           0
Retail       Evanston                 WY           39,874      415,417         91,876           0      1,224,363           0
Retail       Evanston - Cons          WY           77,633      808,857        196,869           0      2,383,800           0

                                              ------------------------    --------------------------------------------------
                                               85,597,340   87,486,902     22,664,054  13,360,799    362,421,839           0
                                              ------------------------    --------------------------------------------------

Other        Jonesboro                AR                0            0         16,220           0              0           0
Other        Little Rock              AR                0            0         17,317           0              0           0
Other        Pine Bluff               AR                0            0         18,332           0              0           0

<CAPTION>


                                  As of December 31, 2003
             ---------------------------------------------------------------------
                           Land       Building and                    Accumulated           Date
Description     Land      Estates     Improvements         Total     Depreciation         Acquired      Life
----------------------------------------------------------------------------------      -----------------------

<S>           <C>        <C>            <C>             <C>             <C>                <C>        <C>
Retail          313,727           0       1,733,910       2,047,637        611,083         1/1/2002      40 yrs
Retail                0           0       1,760,213       1,760,213        455,752         1/1/2002   38-40 yrs
Retail                0           0       7,308,836       7,308,836      2,505,408         1/1/2002   38-40 yrs
Retail                0     221,419       1,978,498       2,199,918        848,974         1/1/2002   22-40 yrs
Retail                0     473,727       4,233,003       4,706,731      1,816,382         1/1/2002   22-40 yrs
Retail           37,140           0       1,658,285       1,695,425        697,321         1/1/2002   38-40 yrs
Retail                0     353,712       2,257,659       2,611,371      1,044,706         1/1/2002   22-40 yrs
Retail          416,452           0       2,819,730       3,236,182        539,081         1/1/2002   38-40 yrs
Retail                0     320,017       2,042,592       2,362,609        945,186         1/1/2002   22-40 yrs
Retail          555,800           0       2,586,429       3,142,229      1,133,873         1/1/2002   38-40 yrs
Retail          308,707           0       2,090,202       2,398,909        399,609         1/1/2002   38-40 yrs
Retail          130,522           0       1,091,131       1,221,653        255,060         1/1/2002   20-40 yrs
Retail          102,922           0         861,971         964,893        201,123         1/1/2002   20-40 yrs
Retail          112,019           0         938,162       1,050,181        218,901         1/1/2002   20-40 yrs
Retail          628,239           0       3,780,770       4,409,009      1,011,556         1/1/2002      40 yrs
Retail          123,229           0       1,032,048       1,155,277        240,807         1/1/2002   20-40 yrs
Retail          130,925           0       1,096,500       1,227,425        255,846         1/1/2002   20-40 yrs
Retail           97,322           0         815,075         912,397        190,181         1/1/2002   20-40 yrs
Retail          138,629           0       1,161,022       1,299,651        270,901         1/1/2002   20-40 yrs
Retail          108,178           0         902,981       1,011,158        210,692         1/1/2002   20-40 yrs
Retail           98,020           0         820,915         918,935        191,544         1/1/2002   20-40 yrs
Retail           29,402           0         246,244         275,646         57,456         1/1/2002   20-40 yrs
Retail           91,723           0         768,178         859,901        179,239         1/1/2002   20-40 yrs
Retail           90,321           0         756,440         846,760        176,500         1/1/2002   20-40 yrs
Retail          131,965           0       1,108,227       1,240,192        258,582         1/1/2002   20-40 yrs
Retail                0           0         536,751         536,751        116,744         1/1/2002   38-40 yrs
Retail                0     369,150       3,423,616       3,792,766      1,360,735         1/1/2002   22-40 yrs
Retail                0     244,304       2,265,752       2,510,056        900,536         1/1/2002   22-40 yrs
Retail                0     247,763       1,746,370       1,994,133        653,971         1/1/2002   22-40 yrs
Retail                0     329,371       2,943,101       3,272,472      1,262,885         1/1/2002   22-40 yrs
Retail           91,580           0       1,256,859       1,348,439        281,991         1/1/2002   38-40 yrs
Retail                0     426,883       3,692,269       4,119,153      1,653,986         1/1/2002   22-40 yrs
Retail                0     130,505       2,846,611       2,977,116        260,667         1/1/2002   22-40 yrs
Retail                0      85,040       1,854,919       1,939,960        169,857         1/1/2002   22-40 yrs
Retail           15,130     462,315       2,950,848       3,428,293      1,365,472         1/1/2002   22-40 yrs
Retail                0           0         675,961         675,961        289,013         1/1/2002      40 yrs
Retail                0      71,841       1,567,009       1,638,850        143,492         1/1/2002   22-40 yrs
Retail                0     452,852       4,046,470       4,499,322      1,736,340         1/1/2002   22-40 yrs
Retail                0           0       1,503,678       1,503,678        615,712         1/1/2002      40 yrs
Retail          480,935           0       3,256,323       3,737,258        622,550         1/1/2002   38-40 yrs
Retail          134,651           0       1,049,237       1,183,888        310,950         1/1/2002      40 yrs
Retail          181,808           0       1,266,242       1,448,050        596,681         1/1/2002   38-40 yrs
Retail          110,394           0       1,709,398       1,819,793        275,671         1/1/2002   38-40 yrs
Retail          129,192           0       1,006,703       1,135,895        298,345         1/1/2002      40 yrs
Retail                0           0       3,363,558       3,363,558      1,507,638         1/1/2002      40 yrs
Retail                0           0       1,578,176       1,578,176        357,478         1/1/2002   38-40 yrs
Retail          127,681           0       1,438,699       1,566,380        312,918         1/1/2002   38-40 yrs
Retail                0           0       1,128,590       1,128,590        522,858         1/1/2002      40 yrs
Retail                0           0       1,300,189       1,300,189        532,389         1/1/2002      40 yrs
Retail          228,290           0       3,377,702       3,605,992      1,036,796         1/1/2002   38-40 yrs
Retail          210,776           0       2,372,180       2,582,956        614,201         1/1/2002   38-40 yrs
Retail                0     437,273       2,791,008       3,228,281      1,291,508         1/1/2002   22-40 yrs
Retail          415,452           0       2,812,952       3,228,404        537,786         1/1/2002   38-40 yrs
Retail                0     493,533       3,150,106       3,643,639      1,457,676         1/1/2002   22-40 yrs
Retail                0           0         859,289         859,289        398,095         1/1/2002      40 yrs
Retail                0     490,535       3,130,967       3,621,502      1,448,820         1/1/2002   22-40 yrs
Retail                0     376,686       2,404,297       2,780,983      1,112,561         1/1/2002   22-40 yrs
Retail          355,128           0       2,538,088       2,893,216      1,175,857         1/1/2002      40 yrs
Retail                0           0       1,360,417       1,360,417        308,153         1/1/2002   38-40 yrs
Retail           71,549           0         978,937       1,050,486        157,871         1/1/2002   38-40 yrs
Retail           91,876           0       1,224,363       1,316,239        400,965         1/1/2002   20-40 yrs
Retail          196,869           0       2,383,800       2,580,669        780,667         1/1/2002   20-40 yrs

             ---------------------------------------------------------------------
             22,664,054  13,360,799     362,421,839     398,446,693    129,367,512
             ---------------------------------------------------------------------

Other            16,220           0               0          16,220              0         1/1/2002
Other            17,317           0               0          17,317              0         1/1/2002
Other            18,332           0               0          18,332              0         1/1/2002
</TABLE>

<PAGE>

                     THE NEWKIRK MASTER LIMITED PARTNERSHIP
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                              At December 31, 2003

<TABLE>
<CAPTION>
                                                                                                                 Cost capitalized
                                                                                                                  subsequent to
                                                                                Initial Cost to Registrant          acquistion
                                                                          -------------------------------------------------------
                                                     Encumbrances                        Land       Building and   Building and
Description    Location                         Mortgage  Contract Right       Land     Estates     Improvements   Improvements
-----------------------------------------     --------------------------  -------------------------------------------------------
<S>                                          <C>          <C>             <C>         <C>         <C>               <C>
Other        Mesa                   AZ                  0            0         40,335           0              0           0
Other        Phoenix                AZ                  0            0         42,191           0              0           0
Other        Sun City               AZ                  0            0         74,577           0      1,691,595           0
Other        Colton                 CA                  0    7,378,431      1,974,116           0     20,756,195           0
Other        El Segundo             CA         80,826,072            0      1,429,055           0    100,921,238           0
Other        Irvine                 CA                  0            0      1,000,000           0              0           0
Other        Long Beach             CA         25,030,735    3,242,473              0   7,581,442     35,715,658           0
Other        Loveland               CA                  0            0         17,020           0              0           0
Other        Palo Alto              CA         11,536,762    3,348,434              0           0     26,836,477           0
Other        Pasadena               CA                  0            0         17,203           0              0           0
Other        Rialto                 CA                  0            0         13,850           0              0           0
Other        San Dimas              CA                  0            0         14,831           0              0           0
Other        Yucca Valley           CA                  0            0         15,995           0              0           0
Other        Colorado Springs       CO                  0            0         18,447           0              0           0
Other        Ft Collins             CO                  0            0         83,278           0      1,961,118           0
Other        Pueblo                 CO                  0            0         14,714           0              0           0
Other        Homestead              FL                  0            0         18,028           0              0           0
Other        Orlando                FL          1,469,540    1,529,385              0           0      9,128,285           0
Other        North Berwick          ME          8,736,131    3,092,041        274,873   5,267,663     22,304,939           0
Other        Arnold                 MO                  0            0         48,406           0              0           0
Other        Independence           MO                  0            0         14,688           0              0           0
Other        St Louis               MO                  0            0         16,871           0              0           0
Other        Mint Hill              NC                  0            0          2,234           0              0           0
Other        Carlsbad               NM                  0            0         70,342           0      1,554,861           0
Other        Saugerties             NY            199,796            0         32,120           0      2,100,435           0
Other        Ponca City             OK                  0            0         41,745           0              0           0
Other        Stillwater             OK                  0            0         14,384           0              0           0
Other        New Kingston           PA          6,589,639    4,111,654              0           0     17,964,482           0
Other        N Myrtle Beach         SC                  0      324,016              0           0      1,569,849           0
Other        Franklin               TN          3,441,231            0              0           0      8,805,302           0
Other        Memphis                TN          2,062,672    1,348,834              0     647,569      6,005,767           0
Other        Amarillo               TX                  0            0         14,474           0              0           0
Other        Austin                 TX                  0            0         41,473           0              0           0
Other        Baytown                TX                  0            0         16,385           0              0           0
Other        Bear Creek             TX                  0            0         16,857           0              0           0
Other        Corpus Christi         TX                  0            0         81,669           0      1,910,679           0
Other        Greenville             TX                  0            0          1,790           0              0           0
Other        Lewisville             TX          2,919,337    1,850,276      1,952,216           0     15,502,972           0
Other        McAllen                TX                  0            0         56,850           0      1,131,104           0
Other        Round Rock             TX                  0            0         14,806           0              0           0
Other        Victoria               TX                  0            0         80,816           0      1,883,744           0
Other        Herndon                VA                  0            0         16,746           0              0           0
Other        Puyallup               WA                  0            0         14,268           0              0           0
Other        Windsor                WI          1,622,994    3,038,259              0           0     13,988,024           0
                                              ------------------------    --------------------------------------------------
                                              144,434,909   29,263,803      7,649,521  13,496,675    291,732,727           0
                                             -------------------------    --------------------------------------------------

Total from Continuing Operations             $602,919,543 $292,955,531    $37,673,623 $45,203,543 $1,619,199,464    $      0
                                             =========================    ==================================================

<CAPTION>


                                                       As of December 31, 2003
                                  ---------------------------------------------------------------------
                                                Land       Building and                    Accumulated           Date
Description                          Land      Estates     Improvements         Total     Depreciation         Acquired      Life
-------------                     ---------------------------------------------------------------------      -----------------------
<S>                              <C>         <C>          <C>             <C>              <C>                  <C>        <C>
Other                                 40,335           0               0          40,335              0         1/1/2002
Other                                 42,191           0               0          42,191              0         1/1/2002
Other                                 74,577           0       1,691,595       1,766,172        379,529         1/1/2002   38-40 yrs
Other                              1,974,116           0      20,756,195      22,730,311     10,225,004         1/1/2002   20-40 yrs
Other                              1,429,055           0     100,921,238     102,350,293     33,936,368         1/1/2002   38-40 yrs
Other                              1,000,000           0               0       1,000,000              0         1/1/2003
Other                                      0   7,581,442      35,715,658      43,297,100     15,755,841         1/1/2002   22-40 yrs
Other                                 17,020           0               0          17,020              0         1/1/2002
Other                                      0           0      26,836,477      26,836,477      8,997,492         1/1/2002      40 yrs
Other                                 17,203           0               0          17,203              0         1/1/2002
Other                                 13,850           0               0          13,850              0         1/1/2002
Other                                 14,831           0               0          14,831              0         1/1/2002
Other                                 15,995           0               0          15,995              0         1/1/2002
Other                                 18,447           0               0          18,448              0         1/1/2002
Other                                 83,278           0       1,961,118       2,044,397        440,000         1/1/2002   38-40 yrs
Other                                 14,714           0               0          14,714              0         1/1/2002
Other                                 18,028           0               0          18,028              0         1/1/2002
Other                                      0           0       9,128,285       9,128,285      3,635,995         1/1/2002   38-40 yrs
Other                                274,873   5,267,663      22,304,939      27,847,475     12,775,291         1/1/2002   22-40 yrs
Other                                 48,406           0               0          48,406              0       12/14/2003
Other                                 14,688           0               0          14,688              0         1/1/2002
Other                                 16,871           0               0          16,871              0         1/1/2002
Other                                  2,234           0               0           2,234              0         1/1/2002
Other                                 70,342           0       1,554,861       1,625,203        348,851         1/1/2002   38-40 yrs
Other                                 32,120           0       2,100,435       2,132,555      1,449,981         1/1/2003   38-40 yrs
Other                                 41,745           0               0          41,745              0         1/1/2002
Other                                 14,384           0               0          14,384              0         1/1/2002
Other                                      0           0      17,964,482      17,964,482      2,555,306         1/1/2002   38-40 yrs
Other                                      0           0       1,569,849       1,569,849        375,093         1/1/2002   38-40 yrs
Other                                      0           0       8,805,302       8,805,302      2,686,713         1/1/2002   38-40 yrs
Other                                      0     647,569       6,005,767       6,653,337      2,387,026         1/1/2002   22-40 yrs
Other                                 14,474           0               0          14,474              0         1/1/2002
Other                                 41,473           0               0          41,473              0         1/1/2002
Other                                 16,385           0               0          16,385              0         1/1/2002
Other                                 16,857           0               0          16,857              0         1/1/2002
Other                                 81,669           0       1,910,679       1,992,349        428,683         1/1/2002   38-40 yrs
Other                                  1,790           0               0           1,790              0         1/1/2002
Other                              1,952,216           0      15,502,972      17,455,188      6,025,697         1/1/2002   38-40 yrs
Other                                 56,850           0       1,131,104       1,187,954        253,776         1/1/2002   38-40 yrs
Other                                 14,806           0               0          14,806              0         1/1/2002
Other                                 80,816           0       1,883,744       1,964,560        422,640         1/1/2002   38-40 yrs
Other                                 16,746           0               0          16,746              0         1/1/2002
Other                                 14,268           0               0          14,268              0         1/1/2002
Other                                      0           0      13,988,024      13,988,024      5,122,297         1/1/2002   38-40 yrs
                                 ----------------------------------------------------------------------
                                   7,649,521  13,496,675     291,732,727     312,878,922    108,201,582
                                 ----------------------------------------------------------------------

Total from Continuing Operations $37,673,623 $45,203,543  $1,619,199,464  $1,702,076,629   $572,839,955
                                 ======================================================================
</TABLE>

* The above table:

      A)    excludes properties classified as discountinued operations
      B)    includes land only parcels owned by the partnership

The aggregate cost for Federal income tax purposes was approximately $1.5
billion

<PAGE>

                       NEWKIRK MASTER LIMITED PARTNERSHIP

                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             (amounts in thousands)

The following is a reconciliation of real estate assets and accumulated
depreciation:

<TABLE>
<CAPTION>
                                                                    Year ended     Year ended
                                                                   December 31,   December 31,
                                                                       2003           2002
                                                                   ------------   ------------
<S>                                                                 <C>            <C>
Real Estate
              Balance at beginning of year                          $1,716,568     $       --
              Assets contributed in the exchange                                    1,890,357
              Additions during the year:
                          Land & land estates                            5,611          2,904
                          Buildings & improvements                      91,724             --
                                                                    ----------     ----------
                                                                     1,813,903      1,893,261

              Less:  Reclassification to discontinued operations       111,826        176,693

                                                                    ----------     ----------
              Balance at end of year                                $1,702,077     $1,716,568
                                                                    ==========     ==========

Accumulated Depreciation
              Balance at beginning of year                          $  512,678     $       --
              Accumulated depreciation contributed in
                          the exchange                                      --        542,619
              Additions charged to depreciation and
                          amortization expense                          42,983         37,172
              Additions for properties acquired                         51,474             --
                                                                    ----------     ----------
                                                                       607,135        579,791

              Less: Reclassification to discontinued operations         34,295         67,113
                                                                    ----------     ----------
              Balance at end of year                                $  572,840     $  512,678
                                                                    ==========     ==========
</TABLE>