**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

*        (Mark      One)*

|  **Trustreet                Properties, Inc.**                                           |
|-----------------------------------------------------------------------------------------------|
| _____________________________________________________________________________________________ |
| (Exact                name of registrant as specified in its                charter)          |

|  **Maryland**                          |   |  **75-2687420**               |
|---------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction |   | (IRS                Employer       |
| of                incorporation)            |   | Identification                No.) |

|  **450                South Orange Avenue****Orlando,                Florida** |  **32801**                |
|-------------------------------------------------------------------------------------|--------------------------------|
| _________________________________________                                           | ______________________________ |
| (Address                of principal executive offices)                             | (Zip                Code)      |

**(407)      540-2000**

| _____________________________________________________________________________________________ |
|-----------------------------------------------------------------------------------------------|

| Large                accelerated filer x | Accelerated                filer  ̈ | Non-accelerated                Filer  ̈ |
|------------------------------------------|-----------------------------------------|---------------------------------------------|

----

| Part                I - Financial Information                                                          | Page   |
|--------------------------------------------------------------------------------------------------------|--------|
|                                                                                                   |   |
| Item                1. Financial                Statements:                                       |   |
|                                                                                                   |   |
| Condensed                Consolidated Balance Sheets                                                   | 3-4    |
|                                                                                                   |   |
| Condensed                Consolidated Statements of Income                                             | 5      |
|                                                                                                   |   |
| Condensed                Consolidated Statement of                                                     |   |
| Stockholders’                Equity and Comprehensive Income                                     | 6      |
|                                                                                                   |   |
| Condensed                Consolidated Statements of Cash Flows                                         | 7-8    |
|                                                                                                   |   |
| Notes                to Condensed Consolidated Financial                                               |   |
| Statements                                                                                             | 9-18   |
|                                                                                                   |   |
| Item                2. Management’s                Discussion and Analysis of Financial     | 19-36  |
| Condition                and Results of Operations                                                     |   |
|                                                                                                   |   |
| Item                3. Quantitative                and Qualitative Disclosures About              | 37     |
| Market                Risk                                                                             |   |
|                                                                                                   |   |
| Item                4. Controls                and Procedures                                     | 37     |
|                                                                                                   |   |
| Part                II - Other Information                                                             |   |
|                                                                                                   |   |
| Item                1. Legal                Proceedings                                           | 38     |
|                                                                                                   |   |
| Item                1A. Risk                Factors                                               | 38     |
|                                                                                                   |   |
| Item                2. Unregistered                Sales of Equity Securities and Use of Proceeds | 38     |
|                                                                                                   |   |
| Item                3. Defaults                Upon Senior Securities                             | 38     |
|                                                                                                   |   |
| Item                4. Submission                of Matters to a Vote of Security Holders         | 38     |
|                                                                                                   |   |
| Item                5. Other                Information                                           | 38     |
|                                                                                                   |   |
| Item                6. Exhibits                                                                   | 39-41  |
|                                                                                                   |   |

----

|                                                                                                                             |   | March                31, 2006 |      |  December                31, 2005 |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-----------|----------------------------------------|--------|
| ASSETS                                                                                                                           |   |                          |      |                              |   |
|                                                                                                                             |   |                          |      |                              |   |
| Real                estate investment properties                                                                                 |   | $                             | 1,738,317 |                                   | $      | 1,728,783 |   |
| Net                investment in capital leases                                                                                  |   |                          | 148,058   |                                   |   | 149,627 |   |
| Real                estate held for sale                                                                                         |   |                          | 247,739   |                                   |   | 238,686 |   |
| Mortgage,                equipment and other notes receivable, net of allowanceof                $3,423 and $5,706, respectively |   |                          | 84,748    |                                   |   | 88,239 |   |
| Cash                and cash equivalents                                                                                         |   |                          | 18,415    |                                   |   | 20,459 |   |
| Restricted                cash                                                                                                   |   |                          | 25,219    |                                   |   | 32,465 |   |
| Receivables,                less allowance for doubtful accountsof                $2,286 and $2,394, respectively                |   |                          | 9,555     |                                   |   | 7,665 |   |
| Accrued                rental income                                                                                             |   |                          | 39,011    |                                   |   | 35,122 |   |
| Intangible                lease costs, net of accumulated amortization of $12,442and                $9,628, respectively         |   |                          | 77,133    |                                   |   | 77,499 |   |
| Goodwill                                                                                                                         |   |                          | 235,895   |                                   |   | 235,895 |   |
| Other                assets                                                                                                      |   |                          | 70,862    |                                   |   | 69,456 |   |
|                                                                                                                             |   | $                             | 2,694,952 |                                   | $      | 2,683,896 |   |
|                                                                                                                             |   |                          |      |                                   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS’ EQUITY                                                                        |   |                          |      |                                   |   |   |   |
|                                                                                                                             |   |                          |      |                                   |   |   |   |
| Revolver                                                                                                                         |   | $                             | 78,000    |                                   | $      | 55,000 |   |
| Notes                payable                                                                                                     |   |                          | 576,934   |                                   |   | 579,002 |   |
| Mortgage                warehouse facilities                                                                                     |   |                          | 139,600   |                                   |   | 122,722 |   |
| Bonds                payable                                                                                                     |   |                          | 723,145   |                                   |   | 742,201 |   |
| Below                market lease liability, net of accumulated amortization of $4,996                and $3,772, respectively   |   |                          | 30,886    |                                   |   | 32,065 |   |
| Due                to related parties                                                                                            |   |                          | 798       |                                   |   | 232 |   |
| Other                payables                                                                                                    |   |                          | 57,377    |                                   |   | 56,097 |   |
| Total                liabilities                                                                                                 |   | $                             | 1,606,740 |                                   | $      | 1,587,319 |   |

----

|                                                                                                                                                                                                                                                                                                                                                 |   | March                31,2006 |      |  December                31,2005 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|---------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                 |   |                         |      |                             |   |
| Minority                interests                                                                                                                                                                                                                                                                                                                    |   | $                            | 3,769     |                                  | $      | 4,077 |   |
|                                                                                                                                                                                                                                                                                                                                                 |   |                         |      |                                  |   |   |   |
| Commitments                and contingencies (Note 11)                                                                                                                                                                                                                                                                                               |   |                         |      |                                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                 |   |                         |      |                                  |   |   |   |
| Stockholders’                equity:                                                                                                                                                                                                                                                                                                           |   |                         |      |                                  |   |   |   |
| Preferred                stock, $0.001 par value per share: 84,500 shares authorized and                unissued                                                                                                                                                                                                                                     |   |                         | —   |                                  |   | — |   |
| Preferred                stock, $0.001 par value per share: Series A Cumulative Convertible                Preferred Stock - 8,000 shares authorized, 7,834 shares issued and                outstanding (aggregate liquidation value of $195,855)                                                                                                   |   |                         | 8         |                                  |   | 8 |   |
| Preferred                stock, $0.001 par value per share: Series C Redeemable                Convertible Preferred Stock - 7,500 shares authorized, 7,244 shares                issued                and outstanding (aggregate liquidation value of $181,101)                                                                                    |   |                         | 7         |                                  |   | 7 |   |
| Excess                shares, $0.001 par value per share. 400,000 shares authorized and                unissued                                                                                                                                                                                                                                      |   |                         | —   |                                  |   | — |   |
| Common                stock, $0.001 par value per share; 300,000 shares authorized,                67,548 and 67,375 shares issued at March 31, 2006 and December 31,                2005,                respectively, and 67,527 and 67,357 shares outstanding at March                31,                2006 and December 31, 2005, respectively |   |                         | 67        |                                  |   | 67 |   |
| Capital                in excess of par value                                                                                                                                                                                                                                                                                                        |   |                         | 1,489,599 |                                  |   | 1,489,405 |   |
| Accumulated                other comprehensive income                                                                                                                                                                                                                                                                                                |   |                         | 6,762     |                                  |   | 3,547 |   |
| Accumulated                distributions in excess of net income                                                                                                                                                                                                                                                                                     |   |                         | (412,000  | )                                     |   | (400,534 | ) |
| Total                stockholders’ equity                                                                                                                                                                                                                                                                                                      |   |                         | 1,084,443 |                                  |   | 1,092,500 |   |
|                                                                                                                                                                                                                                                                                                                                                 |   |                         |      |                                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                 |   | $                            | 2,694,952 |                                  | $      | 2,683,896 |   |

----

|                                                                                                                                                                         |   | Quarter                ended March 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                                                                                                         |   | 2006                                   |   |  2005 |   |
|                                                                                                                                                                         |   |                                   |   |    |   |
| Revenues:                                                                                                                                                                    |   |                                   |   |    |   |
|                                                                                                                                                                         |   |                                   |   |    |   |
| Rental                income from operating leases                                                                                                                           |   | $                                      | 47,416 |   | $ | 22,748 |   |
| Earned                income from capital leases                                                                                                                             |   |                                   | 3,089  |   |   | 2,683 |   |
| Interest                income from mortgage, equipment andother                notes receivables                                                                            |   |                                   | 1,983  |   |   | 6,281 |   |
| Investment                and interest income                                                                                                                                |   |                                   | 271    |   |   | 546 |   |
| Other                income                                                                                                                                                  |   |                                   | 3,508  |   |   | 1,056 |   |
|                                                                                                                                                                         |   |                                   | 56,267 |   |   | 33,314 |   |
| Expenses:                                                                                                                                                                    |   |                                   |   |   |   |   |   |
| General                operating and administrative                                                                                                                          |   |                                   | 7,810  |   |   | 10,961 |   |
| Interest                expense                                                                                                                                              |   |                                   | 25,004 |   |   | 16,891 |   |
| Property                expenses, state and other taxes                                                                                                                      |   |                                   | 3,483  |   |   | 1,151 |   |
| Depreciation                and amortization                                                                                                                                 |   |                                   | 10,500 |   |   | 5,043 |   |
| Impairment                provisions on assets                                                                                                                               |   |                                   | 732    |   |   | — |   |
|                                                                                                                                                                         |   |                                   | 47,529 |   |   | 34,046 |   |
|  Income/(loss)                from continuing operations before minority interest and equity in                earnings                of unconsolidated joint ventures |   |                                   | 8,738  |   |   | (732 | ) |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Minority                interest                                                                                                                                             |   |                                   | (232   | ) |   | (815 | ) |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Equity                in earnings of unconsolidated joint ventures                                                                                                           |   |                                   | 36     |   |   | 30 |   |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Income/(loss)                from continuing operations                                                                                                                      |   |                                   | 8,542  |   |   | (1,517 | ) |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Income                from discontinued operations, after income taxes                                                                                                       |   |                                   | 8,755  |   |   | 4,966 |   |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Gain                on sale of assets                                                                                                                                        |   |                                   | 659    |   |   | — |   |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Net                income                                                                                                                                                    |   |                                   | 17,956 |   |   | 3,449 |   |
| Dividends                to preferred stockholders                                                                                                                           |   |                                   | (7,176 | ) |   | (2,923 | ) |
| Net                income allocable to common stockholders                                                                                                                   |   | $                                      | 10,780 |   | $ | 526 |   |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Basic                and diluted net income per share:                                                                                                                       |   |                                   |   |   |   |   |   |
| Income/(loss)                from continuing operations allocable to common                stockholders                                                                      |   | $                                      | 0.03   |   | $ | (0.10 | ) |
| Income                from discontinued operations                                                                                                                           |   |                                   | 0.13   |   |   | 0.11 |   |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Basic                and diluted net income per share                                                                                                                        |   | $                                      | 0.16   |   | $ | 0.01 |   |
|                                                                                                                                                                         |   |                                   |   |   |   |   |   |
| Weighted                average number of shares of common stockoutstanding                                                                                                  |   |                                   |   |   |   |   |   |
| Basic                                                                                                                                                                        |   |                                   | 67,243 |   |   | 43,858 |   |
| Diluted                                                                                                                                                                      |   |                                   | 67,343 |   |   | 43,858 |   |

----

|                                                                                                                                                             |   | Preferred                StockSeries                A |    | Preferred                StockSeries                C |   | Common                Stock    |   | Capital                in |    | Accumulated                distributionsin                excess |   | Accumulated                othercompre- |   |                                             |    | Compre-                     |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|---------|-------------------------------------------------------|--------|--------------------------------|--------|---------------------------|---------|------------------------------------------------------------------|--------|-----------------------------------------|--------|--------------------------------------------------|---------|-----------------------------|--------|
|                                                                                                                                                             |   | Number                ofshares                        |    | Parvalue                                              |   | Number                ofshares |   | Parvalue                  |    | Number                ofShares                                   |   | Parvalue                                |   | excess                ofpar                value |    | of                netincome |   | hensiveincome |   |  Total |   | hensiveincome |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |
| Balance                at December 31, 2005                                                                                                                      |   |                                                  | 7,834   |                                                  | $      | 8                              |   |                      | 7,244   |                                                             | $      | 7                                       |   |                                             | 67,357  |                        | $      | 67 |   | $ | 1,489,405 |   | $ | (400,534 | ) | $ | 3,547 |   | $ | 1,092,500 |   |   |   |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                        |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | — |   |   | 17,956 |   |   | — |   |   | 17,956 |   | $ | 17,956 |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification                of other than temporary loss on        statement                of                income |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | — |   |   | — |   |   | 347 |   |   | 347 |   |   | 347 |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                period adjustment to recognize change in fair value of cash flow                hedges                                                    |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | — |   |   | — |   |   | 2,868 |   |   | 2,868 |   |   | 2,868 |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                comprehensive income                                                                                                                        |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   | $ | 21,171 |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                declared on common stock                                                                                                                |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | — |   |   | (22,246 | ) |   | — |   |   | (22,246 | ) |   |   |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                declared on preferred stock                                                                                                             |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | — |   |   | (7,176 | ) |   | — |   |   | (7,176 | ) |   |   |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of restricted stock to directors andemployees,                net of forfeitures                                                         |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | 170     |                        |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   |   |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                                                                                                             |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | 176 |   |   | — |   |   | — |   |   | 176 |   |   |   |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                issuance cost adjustment                                                                                                                    |   |                                                  | — |                                                  |   | —                        |   |                      | — |                                                             |   | —                                 |   |                                             | — |                        |   | — |   |   | 18 |   |   | — |   |   | — |   |   | 18 |   |   |   |   |
|                                                                                                                                                             |   |                                                  |    |                                                  |   |                           |   |                      |    |                                                             |   |                                    |   |                                             |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at March 31, 2006                                                                                                                         |   |                                                  | 7,834   |                                                  | $      | 8                              |   |                      | 7,244   |                                                             | $      | 7                                       |   |                                             | 67,527  |                        | $      | 67 |   | $ | 1,489,599 |   | $ | (412,000 | ) | $ | 6,762 |   | $ | 1,084,443 |   |   |   |   |

----

|                                                                                                                                                                   |   | Quarter                ended March 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                                                                                   |   | 2006                                   |    |  2005 |   |
| Cash                flows from operating activities:                                                                                                                   |   |                                   |    |    |   |
|                                                                                                                                                                   |   |                                   |    |    |   |
| Net                income                                                                                                                                              |   | $                                      | 17,956  |   | $ | 3,449 |   |
| Adjustments                to reconcile net income to net cashprovided                by operating activities, net of effects of business                acquisitions: |   |                                   |    |   |   |   |   |
| Depreciation                and amortization on real estate assets                                                                                                     |   |                                   | 10,054  |   |   | 5,072 |   |
| Depreciation                and amortization on non-real estate assets                                                                                                 |   |                                   | 537     |   |   | 385 |   |
| Amortization                of above and below market leases                                                                                                           |   |                                   | 70      |   |   | 14 |   |
| Amortization                of deferred financing costs                                                                                                                |   |                                   | 2,371   |   |   | 1,968 |   |
| Impairments                and provisions on assets                                                                                                                    |   |                                   | 853     |   |   | 207 |   |
| Gain                on sales of assets                                                                                                                                 |   |                                   | (3,723  | ) |   | (180 | ) |
| Stock                based compensation                                                                                                                                |   |                                   | 176     |   |   | 2,053 |   |
| Increase                in accrued rental income                                                                                                                       |   |                                   | (3,265  | ) |   | (1,291 | ) |
| Amortization                of investment in capital leases                                                                                                            |   |                                   | 1,580   |   |   | 895 |   |
| Changes                in inventories of real estate held for sale                                                                                                     |   |                                   | (19,121 | ) |   | 34,185 |   |
| Changes                in other assets                                                                                                                                 |   |                                   | (2,309  | ) |   | 5,216 |   |
| Changes                in other payables and due to related parties                                                                                                    |   |                                   | 1,230   |   |   | 7,609 |   |
| Net                cash provided by operating activities                                                                                                               |   |                                   | 6,409   |   |   | 59,582 |   |
|                                                                                                                                                                   |   |                                   |    |   |   |   |   |
| Cash                flows from investing activities:                                                                                                                   |   |                                   |    |   |   |   |   |
| Additions                to real estate investment properties and intangibles                                                                                          |   |                                   | (20,612 | ) |   | (26,331 | ) |
| Proceeds                from sale of assets                                                                                                                            |   |                                   | 10,946  |   |   | — |   |
| Decrease                in restricted cash                                                                                                                             |   |                                   | 7,246   |   |   | 1,462 |   |
| Acquisition                of Income Funds                                                                                                                             |   |                                   | — |   |   | (449,997 | ) |
| Cash                acquired through merger                                                                                                                            |   |                                   | — |   |   | 43,473 |   |
| Payment                of merger costs for USRP reverse merger                                                                                                         |   |                                   | — |   |   | (11,927 | ) |
| Collection                on mortgage, equipment and other notes receivable                                                                                            |   |                                   | 5,635   |   |   | 2,887 |   |
| Other                                                                                                                                                                  |   |                                   | 34      |   |   | — |   |
| Net                cash provided by/(used in) investing activities                                                                                                     |   |                                   | 3,249   |   |   | (440,433 | ) |

----

|                                                                                                    |   | Quarter                ended March 31, |    |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                    |   | 2006                                   |    |  2005 |   |
| Cash                flows from financing activities:                                                    |   |                                   |    |    |   |
| Proceeds                from borrowings on revolver, term loan and note payable                         |   | $                                      | 59,521  |   | $ | 762,000 |   |
| Payment                on revolver and note payable                                                     |   |                                   | (38,553 | ) |   | (767,507 | ) |
| Proceeds                from borrowings on mortgage warehouse facilities                                |   |                                   | 44,758  |   |   | 7,892 |   |
| Payments                on mortgage warehouse facilities                                                |   |                                   | (27,880 | ) |   | (41,574 | ) |
| Proceeds                from issuance of senior notes                                                   |   |                                   | — |   |   | 250,000 |   |
| Proceeds                from issuance of bonds                                                          |   |                                   | — |   |   | 275,000 |   |
| Retirement                of bonds payable                                                              |   |                                   | (19,115 | ) |   | (20,381 | ) |
| Payment                of bond issuance and debt refinancing costs                                      |   |                                   | (405    | ) |   | (22,456 | ) |
| Proceeds                from termination of hedge                                                       |   |                                   | — |   |   | 1,685 |   |
| Proceeds                from exercised stock options                                                    |   |                                   | — |   |   | 273 |   |
| Retirement                of convertible preferred stock                                                |   |                                   | — |   |   | (32,500 | ) |
| Acquisition                of minority interest                                                         |   |                                   | — |   |   | (655 | ) |
| Distributions                to minority interest                                                       |   |                                   | (642    | ) |   | (755 | ) |
| Reimbursement/(payment)                of stock issuance costs                                          |   |                                   | 18      |   |   | (1,493 | ) |
| Distributions                to common stockholders                                                     |   |                                   | (22,228 | ) |   | (17,849 | ) |
| Distributions                to preferred stockholders                                                  |   |                                   | (7,176  | ) |   | (4,912 | ) |
| Net                cash provided by/(used in) financing activities                                      |   |                                   | (11,702 | ) |   | 386,768 |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Net                increase/(decrease) in cash and cash equivalents                                     |   |                                   | (2,044  | ) |   | 5,917 |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Cash                and cash equivalents at beginning of period                                         |   |                                   | 20,459  |   |   | 22,744 |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Cash                and cash equivalents at end of period                                               |   | $                                      | 18,415  |   | $ | 28,661 |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Supplemental                disclosures of cash flow information:                                       |   |                                   |    |   |   |   |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Interest                paid                                                                            |   | $                                      | 18,379  |   | $ | 14,183 |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Income                taxes paid                                                                        |   | $                                      | 2,876   |   | $ | — |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Supplemental                disclosures of non-cash investing and financing                activities:  |   |                                   |    |   |   |   |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Redemption                of minority interest in lieu of payment on accounts                receivable |   | $                                      | — |   | $ | 1,798 |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Note                receivable accepted in exchange for sale of property                                |   | $                                      | 1,483   |   | $ | — |   |
|                                                                                                    |   |                                   |    |   |   |   |   |
| Distributions                declared and unpaid at March 31                                            |   | $                                      | 7,428   |   | $ | 6,369 |   |

----

| 1. | Organization                and Nature of Business: |
|----|-----------------------------------------------------|

| 2. | Basis                of Presentation: |
|----|---------------------------------------|

----

| 2. | Basis                of Presentation - Continued: |
|----|---------------------------------------------------|

|                                                       |   | Quarter                Ended March 31, |   |
|------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                       |   | 2006                                   |   | 2005 |   |
|                                                       |   |                                   |   |   |   |
| Revenues                                                   |   | $                                      | 56,267 |   | $ | 53,857 |   |
|                                                       |   |                                   |   |   |   |   |   |
| Net                income/(loss)                           |   | $                                      | 17,956 |   | $ | (1,975 | ) |
| Dividends                to preferred stockholders         |   |                                   | (7,176 | ) |   | (7,157 | ) |
| Net                income allocable to common stockholders |   |                                   | 10,780 |   |   | (9,132 | ) |
|                                                       |   |                                   |   |   |   |   |   |
| Basic                and diluted earnings/(loss) per share |   | $                                      | 0.16   |   | $ | (0.16 | ) |
|                                                       |   |                                   |   |   |   |   |   |
| Basic                weighted average shares outstanding   |   |                                   | 67,243 |   |   | 57,668 |   |
|                                                       |   |                                   |   |   |   |   |   |
| Diluted                weighted average shares outstanding |   |                                   | 67,343 |   |   | 57,668 |   |

|   | During                the quarter ended March 31, 2005, the Company recorded non-recurring                charges of approximately $13.7 million. These one-time expenses consisted                of a non-cash tax charge of $5 million and $8.7 million of expenses                related to the Merger. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. | Adoption                of New Accounting Standards: |
|----|------------------------------------------------------|

| 4. | Real                Estate Held for Sale: |
|----|-------------------------------------------|

|                                                                 |   | (In                thousands)           |    |
|----------------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                                 |   | Quarters                ended March 31, |    |
|                                                                 |   | 2006                                    |    | 2005 |   |
|                                                                 |   |                                    |    |   |   |
| Rental                income                                         |   | $                                       | 3,921   |   | $ | 3,051 |   |
| Food,                beverage and retail revenues                    |   |                                    | — |   |   | 5,245 |   |
| Food,                beverage and retail expenses                    |   |                                    | — |   |   | (4,634 | ) |
| Other                property related income/(expenses)              |   |                                    | 8       |   |   | (860 | ) |
| Interest                expense                                      |   |                                    | (2,026  | ) |   | (827 | ) |
| Impairment                provisions                                 |   |                                    | (97     | ) |   | (192 | ) |
|                                                                 |   |                                    |    |   |   |   |   |
| Earnings                from discontinued operations                 |   |                                    | 1,806   |   |   | 1,783 |   |
|                                                                 |   |                                    |    |   |   |   |   |
| Sales                of real estate                                  |   |                                    | 54,794  |   |   | 56,954 |   |
| Cost                of real estate sold                              |   |                                    | (47,238 | ) |   | (47,177 | ) |
|                                                                 |   |                                    |    |   |   |   |   |
| Gain                on disposal of discontinued operations           |   |                                    | 7,556   |   |   | 9,777 |   |
|                                                                 |   |                                    |    |   |   |   |   |
| Income                tax provision                                  |   |                                    | (607    | ) |   | (6,594 | ) |
|                                                                 |   |                                    |    |   |   |   |   |
| Income                from discontinued operations, after income tax |   | $                                       | 8,755   |   | $ | 4,966 |   |

----

| 5. | Borrowings: |
|----|-------------|

| 6. | Income                Tax: |
|----|----------------------------|

| 7. | Related                Party Transactions: |
|----|--------------------------------------------|

----

| 8. | Flexible                Incentive Plan: |
|----|-----------------------------------------|

|                                                    |   |  Number                of shares(in                thousands) |   | Weighted                average fair value at grant date |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                    |   |                                                               |   |                                                     |   |
| Non-vested                shares at beginning of period |   |                                                               | 120    |                                                     | $      | 16.98 |   |
| Granted                                                 |   |                                                               | 172    |                                                     |   | 14.78 |   |
| Vested                                                  |   |                                                               | (41    | )                                                        |   | 16.56 |   |
| Forfeited                                               |   |                                                               | (2     | )                                                        |   | 17.20 |   |
|                                                    |   |                                                               |   |                                                     |   |   |   |
| Non-vested                shares at March 31, 2006      |   |                                                               | 249    |                                                     | $      | 15.53 |   |

----

| 9. | Earnings                Per Share: |
|----|------------------------------------|

|   | For                the quarters ended March 31, 2006 and 2005, basic and diluted earnings                per                common share for income (loss) from continuing operations available                to                common shareholders has been computed as                follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                               |   | Quarter                ended March 31, |    |      |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|-----------|--------|
|                                                                                                                                               |   | 2006                                   |    |      |   | 2005 |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |
| Numerator:                                                                                                                                         |   |                                   |    |      |   |   |   |   |   |
| Income/(loss)                from continuing operations                                                                                            |   | $                                      | 8,542   |      |   |   |   | $ | (1,517 | ) |   |   |   |
| Gain                on sale of assets                                                                                                              |   |                                   | 659     |      |   |   |   |   | — |   |   |   |   |
| Less:                Preferred stock dividends                                                                                                     |   |                                   | (7,176  | )         |   |   |   |   | (2,923 | ) |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
| Income/(loss)                from continuing operations available to common                stockholders                                            |   | $                                      | 2,025   |      |   |   |   | $ | (4,440 | ) |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                                                                       |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
| Basic                weighted average number of shares outstanding                                                                                 |   |                                   | 67,243  |      |   |   |   |   | 43,858 |   |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
| Effect                of dilutive securities:                                                                                                      |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
| Stock                option                                                                                                                        |   |                                   | 1       |      |   |   |   |   | — |  (2) |   |   |   |
| Restricted                stock                                                                                                                    |   |                                   | 99      |      |   |   |   |   | — |  (2) |   |   |   |
| Warrants                                                                                                                                           |   |                                   | — |  (1) |   |   |   |   | — |  (2) |   |   |   |
| Convertible                preferred stock                                                                                                         |   |                                   | — |  (1) |   |   |   |   | — |  (2) |   |   |   |
| Diluted                weighted average shares outstanding                                                                                         |   |                                   | 67,343  |      |   |   |   |   | 43,858 |   |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |   |   |   |   |
| Basic                and diluted income/(loss) from continuing operations allocable to                common                stockholders per share |   | $                                      | 0.03    |      |   |   |   | $ | (0.10 | ) |   |   |   |
|                                                                                                                                               |   |                                   |    |      |   |   |   |   |   |   |   |   |   |

|   | (1) | For                the quarter ended March 31, 2006, the Company excluded Series A and                Series                C Preferred Stock convertible into 16.6 million shares of common                stock and                approximately 0.1 million shares of restricted common stock and warrants                to purchase 0.4 million shares of common stock from the computation                of                diluted earnings per share as these common stock equivalents were                anti-dilutive. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | For                the quarter ended March 31, 2005, the Company excluded stock options                to                purchase approximately 0.012 million shares of common stock, warrants                to                purchase 0.4 million shares of common stock, approximately 0.12 million                shares of restricted common stock and Series A and Series C Preferred                Stock convertible into 16.6 million shares of common stock from the                computation of diluted earnings per share as these common stock                equivalents were anti-dilutive. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 9. | Earnings                Per Share - Continued: |
|----|------------------------------------------------|

|                                                                                                                                                       |   | (In                thousands)                          |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|---------|
|                                                                                                                                                       |   | Quarters                ended March                31, |    |
|                                                                                                                                                       |   | 2006                                                   |    | 2005 |   |
|                                                                                                                                                       |   |                                                   |    |   |   |
| Historical                income (loss) from continuing operations and gain on sale of assets                less                preferred stock dividends |   | $                                                      | 2,025   |   | $ | (4,440 | ) |
| Proforma                adjustment for Series C Preferred Stock dividends                                                                                  |   |                                                   | — |   |   | (2,264 | ) |
| Proforma                income (loss) from continuing operations allocable to common                stockholders                                           |   | $                                                      | 2,025   |   | $ | (6,704 | ) |
|                                                                                                                                                       |   |                                                   |    |   |   |   |   |
| Basic                and diluted proforma earnings (loss) per share:                                                                                       |   |                                                   |    |   |   |   |   |
|                                                                                                                                                       |   |                                                   |    |   |   |   |   |
| From                continuing operations                                                                                                                  |   | $                                                      | 0.03    |   | $ | (0.15 | ) |
| From                discontinued operations                                                                                                                |   |                                                   | 0.13    |   |   | 0.11 |   |
| Total                                                                                                                                                      |   | $                                                      | 0.16    |   | $ | (0.04 | ) |

| 10. | Segment                Information: |
|-----|-------------------------------------|

----

| 10. | Segment                Information - Continued: |
|-----|-------------------------------------------------|

|                                                                               |   | Quarter                ended March 31, 2006(In                thousands) |      |
|------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-----------|
|                                                                               |   | Real                estate segment                                       |      | Specialty                finance segment |   | Other |   | ConsolidatedTotals |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |
| Revenues                                                                           |   | $                                                                        | 54,186    |   | $ | 3,328 |   | $ | (1,247 | ) | $ | 56,267 |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                          |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| General                operating and administrative                                |   |                                                                     | 3,494     |   |   | 5,473 |   |   | (1,157 | ) |   | 7,810 |   |
| Interest                expense                                                    |   |                                                                     | 23,062    |   |   | 2,032 |   |   | (90 | ) |   | 25,004 |   |
| Property                expenses, state and other taxes                            |   |                                                                     | 3,495     |   |   | (12 | ) |   | — |   |   | 3,483 |   |
| Depreciation                and amortization                                       |   |                                                                     | 10,000    |   |   | 500 |   |   | — |   |   | 10,500 |   |
| Impairments                and provisions on assets                                |   |                                                                     | 732       |   |   | — |   |   | — |   |   | 732 |   |
| Minority                interest net of equity in earnings                         |   |                                                                     | 200       |   |   | (4 | ) |   | — |   |   | 196 |   |
|                                                                               |   |                                                                     | 40,983    |   |   | 7,989 |   |   | (1,247 | ) |   | 47,725 |   |
| Discontinued                operations:                                            |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operations, net of income tax              |   |                                                                     | 3,185     |   |   | 5,570 |   |   | — |   |   | 8,755 |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Gain                on sale of assets                                              |   |                                                                     | 659       |   |   | — |   |   | — |   |   | 659 |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                          |   | $                                                                        | 17,047    |   | $ | 909 |   | $ | — |   | $ | 17,956 |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Assets                at March 31, 2006                                            |   | $                                                                        | 2,303,764 |   | $ | 393,070 |   | $ | (1,882 | ) | $ | 2,694,952 |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Investments                accounted for under the equity method at March 31, 2006 |   | $                                                                        | 824       |   | $ | — |   | $ | — |   | $ | 824 |   |
|                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |

----

| 10. | Segment                Information - (Continued): |
|-----|---------------------------------------------------|

|                                                                                                    |   | Quarter                ended March 31, 2005(In                thousands) |      |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-----------|
|                                                                                                    |   | Real                estate segment                                       |      | Specialty                finance segment |   | Other |   | ConsolidatedTotals |   |
|                                                                                                    |   |                                                                     |      |   |   |   |   |   |   |
| Revenues                                                                                                |   | $                                                                        | 27,348    |   | $ | 6,586 |   | $ | (620 | ) | $ | 33,314 |   |
|                                                                                                    |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                               |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| General                operating and administrative                                                     |   |                                                                     | 3,283     |   |   | 8,221 |   |   | (543 | ) |   | 10,961 |   |
| Interest                expense                                                                         |   |                                                                     | 12,514    |   |   | 4,452 |   |   | (75 | ) |   | 16,891 |   |
| Property                expenses, state and other taxes                                                 |   |                                                                     | 1,109     |   |   | 136 |   |   | (94 | ) |   | 1,151 |   |
| Depreciation                and amortization                                                            |   |                                                                     | 4,770     |   |   | 273 |   |   | — |   |   | 5,043 |   |
| Minority                interest net of equity in earnings                                              |   |                                                                     | 36        |   |   | 749 |   |   | — |   |   | 785 |   |
|                                                                                                    |   |                                                                     | 21,712    |   |   | 13,831 |   |   | (712 | ) |   | 34,831 |   |
| Discontinued                operations:                                                                 |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operations, net of income tax                                   |   |                                                                     | 345       |   |   | 4,621 |   |   | — |   |   | 4,966 |   |
|                                                                                                    |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Net                income/(loss)                                                                        |   | $                                                                        | 5,981     |   | $ | (2,624 | ) | $ | 92 |   | $ | 3,449 |   |
|                                                                                                    |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Assets                at March 31, 2005                                                                 |   | $                                                                        | 2,289,860 |   | $ | 306,119 |   | $ | 4,540 |   | $ | 2,600,519 |   |
|                                                                                                    |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |
| Investments                accounted for under the  equity                method at March 31, 2005 |   | $                                                                        | 1,203     |   | $ | — |   | $ | — |   | $ | 1,203 |   |
|                                                                                                    |   |                                                                     |      |   |   |   |   |   |   |   |   |   |   |

----

| 11. | Commitments                and Contingencies: |
|-----|-----------------------------------------------|

----

**Item      2. Management’s Discussion and Analysis of Financial Condition and Results of      Operations**

|   | · | changes                in general economic conditions; |
|--------|--------|--------------------------------------------------------|

|   | · | general                risks affecting the real estate industry (including, without limitation,                the inability to enter into or renew leases on favorable terms, dependence                on tenants’ financial condition, and competition from other developers,                owners and operators of real                estate); |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | general                risks affecting the restaurant industry (including, without limitation,                any disruption in the supply or quality of ingredients, the availability                of labor, and the continued demand for restaurant                dining); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | financing                may not be available on favorable terms or at all, and our cash flow                from                operations and access to attractive capital may be insufficient to                fund                existing operations, or growth in new acquisitions and                developments; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in interest rates; |
|--------|--------|-------------------------------------------|

|   | · | our                ability to refinance existing financial obligations at favorable                terms; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | our                ability to locate suitable tenants for our properties; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | our                ability to resolve any tenant defaults that could lead to a decline                in                value in and as a result, subject us to impairment                charges; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                ability of tenants and borrowers to make payments under their agreements                with us; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | possible                adverse changes in tax and environmental laws, as well as the impact                of                newly adopted accounting principles on our accounting policies and                on                period-to-period comparisons of financial                results; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | risks                associated with our potential failure to qualify as a REIT under                the                Internal Revenue Code of 1986, as                amended; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                ability to re-lease or sell properties that are currently vacant                or that                may become vacant; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                ability to sell properties through our investment property sales                program                as a result of any possible elimination of capital gains taxes or                changes                in interest rates; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                ability to continue to make distributions at historical                rates; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | our                ability to manage our debt levels that could adversely affect our                cash                flow, limit our flexibility to raise additional capital and prevent                us                from making distributions on the outstanding shares of common stock;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                loss of certain members of our management team that could adversely                affect                our business. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

----

*Overview      of Management’s Discussion and Analysis*

|   | 1. | restaurant                operators of major national and regional                chains; |
|--------|----|-------------------------------------------------------------------------------------------|

|   | 2. | restaurant                property investors; and |
|--------|----|---------------------------------------------------|

|   | 3. | retail                real estate developers. |
|--------|----|-----------------------------------------------|

|   | 1. | financing                free-standing restaurant and retail real                estate; |
|--------|----|------------------------------------------------------------------------------------------|

|   | 2. | maximizing                the potential of our real estate                portfolio; |
|--------|----|--------------------------------------------------------------------------------------|

|   | 3. | sale                of real estate to investors; and |
|--------|----|------------------------------------------------------|

|   | 4. | real                estate development and                redevelopment. |
|--------|----|--------------------------------------------------------------------------|

*Strategy      1: Financing Free-standing Restaurant and Retail Real Estate*

|   | · | ability                to execute transactions in excess of $100 million as committed, including                properties with a single concept; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · |  review                and approval by our investment committee that includes senior executives,                including the CEO and CFO, separate from the marketing                team. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                have lost certain lease transactions to competitors offering mortgage                debt                financing. With continued historically low long-term interest rates,                large                national and regional banks have offered less expensive mortgage                financing                that many restaurant operators find more attractive than leases.                We do not                currently originate mortgage financing as a primary line of business.                Instead, we maintain a relationship with a large financial institution                to                provide mortgage financing to our clients. We are in the process                of                developing additional relationships with other major financial                institutions to do the same. Through this relationship, we provide                the net                lease financing and the financial institution provides the senior                debt on                those transactions requiring a combination of debt and net lease                in the                target capital structure. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Various                real estate brokerage firms compete against us and receive a brokerage                fee                upon the sale of the restaurant properties.  Generally the                brokers serve as an intermediary and do not have appropriate capital                to                ensure certainty of close for the restaurant operator. Broker competition                exists more in the market for smaller transaction sizes than our                typical prospects although new entrants (now commonly referred to                as “flip                shops”) continue to squeeze the margin between wholesale and retail cap                rates. Through our borrowing capacity, we are able to provide assurance                of                closing which to date has mitigated this competitive threat, particularly                on larger transactions.  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Strategy      2: Maximizing the Potential of our Real Estate Portfolio*

| **Concept**                                    |   | **Number                of Properties** |   | **Percentage                of Total Properties** |   | **Percentage                of Total Annualized Base Rent (*)** |   | **Average                Remaining Lease Term (Years)** |
|------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------------------|--------|-----------------------------------------------------------------|--------|---------------------------------------------------------|
|                                           |   |                                    |   |                                              |   |                                                            |   |                                                    |
| Wendy’s                (*)               |   | 189                                     |   | 9.4%                                              |   | 8.1%                                                            |   | 10.7                                                    |
| Burger                King                     |   | 169                                     |   | 8.4%                                              |   | 7.2%                                                            |   | 11.4                                                    |
| Golden                Corral                   |   | 83                                      |   | 4.1%                                              |   | 7.0%                                                            |   | 6.5                                                     |
| Jack                in the Box                 |   | 114                                     |   | 5.7%                                              |   | 6.7%                                                            |   | 8.5                                                     |
| Arby’s                                   |   | 150                                     |   | 7.5%                                              |   | 6.2%                                                            |   | 10.5                                                    |
| International                House of Pancakes |   | 63                                      |   | 3.1%                                              |   | 4.2%                                                            |   | 13.4                                                    |
| Captain                D’s               |   | 101                                     |   | 5.0%                                              |   | 3.9%                                                            |   | 17.0                                                    |
| Bennigan’s                               |   | 26                                      |   | 1.3%                                              |   | 3.0%                                                            |   | 11.0                                                    |
| Denny’s                                  |   | 47                                      |   | 2.3%                                              |   | 2.6%                                                            |   | 8.1                                                     |
| Pizza                Hut                       |   | 120                                     |   | 6.0%                                              |   | 2.5%                                                            |   | 7.3                                                     |

|   | (*) | Includes                contingent rent for units with leases where rent is based on actual                store                sales, generally, without a minimum                threshold. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Tenant**                                |   | **Number                of Properties** |   | **Percentage                of Total Properties** |   | **Percentage                of Total Annualized Base Rent (*)** |   | **Average                Remaining Lease Term (Years)** |
|-------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------------------|--------|-----------------------------------------------------------------|--------|---------------------------------------------------------|
|                                      |   |                                    |   |                                              |   |                                                            |   |                                                    |
| Jack                in the Box, Inc.      |   | 114                                     |   | 5.7%                                              |   | 6.7%                                                            |   | 8.5                                                     |
| Golden                Corral Corporation  |   | 71                                      |   | 3.5%                                              |   | 6.0%                                                            |   | 6.0                                                     |
| IHOP                Properties, Inc.      |   | 60                                      |   | 3.0%                                              |   | 4.0%                                                            |   | 13.7                                                    |
| Captain                D’s, LLC     |   | 92                                      |   | 4.6%                                              |   | 3.7%                                                            |   | 17.4                                                    |
| Sybra                Inc.                 |   | 84                                      |   | 4.2%                                              |   | 3.4%                                                            |   | 11.5                                                    |
| S&A                Properties Corp.   |   | 31                                      |   | 1.5%                                              |   | 3.1%                                                            |   | 12.3                                                    |
| Texas                Taco Cabana, LP      |   | 31                                      |   | 1.5%                                              |   | 2.1%                                                            |   | 11.2                                                    |
| Carrols                Corporation        |   | 42                                      |   | 2.1%                                              |   | 2.0%                                                            |   | 10.5                                                    |
| El                Chico Restaurants, Inc. |   | 23                                      |   | 1.1%                                              |   | 1.9%                                                            |   | 10.4                                                    |
| The                Restaurant Company     |   | 18                                      |   | 0.9%                                              |   | 1.8%                                                            |   | 19.4                                                    |

|   | (*) | Includes                contingent rent for units with leases where rent is based on actual                store                sales, generally, without a minimum                threshold. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **State**                     |   | **Number                of Properties** |   | **Percentage                of Total Properties** |   | **Percentage                of Total Annualized Base Rent (*)** |   | **Average                Remaining Lease Term (Years)** |
|-------------------------------|--------|-----------------------------------------|--------|---------------------------------------------------|--------|-----------------------------------------------------------------|--------|---------------------------------------------------------|
|                          |   |                                    |   |                                              |   |                                                            |   |                                                    |
| Texas                         |   | 409                                     |   | 20.4%                                             |   | 19.6%                                                           |   | 9.3                                                     |
| Florida                       |   | 193                                     |   | 9.6%                                              |   | 10.9%                                                           |   | 10.8                                                    |
| Georgia                       |   | 128                                     |   | 6.4%                                              |   | 5.9%                                                            |   | 11.8                                                    |
| Tennessee                     |   | 96                                      |   | 4.8%                                              |   | 3.8%                                                            |   | 10.5                                                    |
| Illinois                      |   | 63                                      |   | 3.1%                                              |   | 3.8%                                                            |   | 10.1                                                    |
| California                    |   | 55                                      |   | 2.7%                                              |   | 3.7%                                                            |   | 11.0                                                    |
| North                Carolina |   | 94                                      |   | 4.7%                                              |   | 3.7%                                                            |   | 9.7                                                     |
| Ohio                          |   | 92                                      |   | 4.6%                                              |   | 3.5%                                                            |   | 9.2                                                     |
| Missouri                      |   | 52                                      |   | 2.6%                                              |   | 2.8%                                                            |   | 11.2                                                    |
| South                Carolina |   | 56                                      |   | 2.8%                                              |   | 2.5%                                                            |   | 11.1                                                    |

|   | (*) | Includes                contingent rent for units with leases where rent is based on actual                store                sales, generally, without a minimum                threshold. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Strategy      3: Sale of Real Estate to Investors*

*Strategy      4: Real Estate Development and Redevelopment*

*Liquidity      and Capital Resources*

----

| **Debt**                                       | **Balance****(in                millions)** |   | **Approximate****Interest                Rates** |   | **Expected                Maturity Date** |   | **Type**         |   |
|------------------------------------------------|---------------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------------|--------|------------------|--------|
|                                           |                                        |   |                                             |   |                                      |   |             |   |
| Mortgage                Warehouse Facility (c) | $                54.8                       |   | LIBOR                + 1.25%                     |   | Mar-07                                    |   | Collateralized   |   |
| Mortgage                Warehouse Facility (c) | 84.8                                        |   | LIBOR                + .90%                      |   | May-06                                    |   | Collateralized   |   |
| Series                2001-A Bonds (a)         | 126.9                                       |   | LIBOR                + .98%                      |   | Aug-06                                    |   | Collateralized   |   |
| Series                2001 Bonds (a)           | 91.4                                        |   | LIBOR                + .94%                      |   | Oct-06                                    |   | Collateralized   |   |
| Notes                Payable                   | 0.8                                         |   | 7.16%                                            |   | 2006-2007                                 |   | Collateralized   |   |
| Revolver                                       | 78.0                                        |   | LIBOR                + 2.25%                     |   | April-08                                  |   | Uncollateralized | (d)    |
| Term                Loan (a)                   | 275.0                                       |   | LIBOR                + 2.00%                     |   | April-10                                  |   | Uncollateralized | (d)    |
| Series                2003 Bonds (a)           | 2.0                                         |   | LIBOR                + 5.00%                     |   | 2006-2007                                 |   | Collateralized   |   |
| Series                2001-4 Bonds             | 23.8                                        |   | 8.90%                                            |   | 2009-2013                                 |   | Collateralized   |   |
| Series                2005 Bonds               | 262.4                                       |   | 4.67%                                            |   | 2012                                      |   | Collateralized   |   |
| Senior                Unsecured Notes (b)      | 301.1                                       |   | 7.50%                                            |   | April-15                                  |   | Uncollateralized |   |
| Series                2000-A Bonds             | 216.7                                       |   | 7.97%                                            |   | 2009-2017                                 |   | Collateralized   |   |
|                                           |                                        |   |                                             |   |                                      |   |             |   |
| Total                Debt                      | $                1,517.7                    |   |                                             |   |                                      |   |             |   |

|   | (a) | We                have entered into hedging transactions to reduce our sensitivity                to                floating rate debt in the form of swaps and caps, as described further                under “Market Risk”. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Balance                includes a premium of $1.1 million at March 31,                2006. |
|--------|-----|---------------------------------------------------------------------------------------------|

|   | (c) | We                also pay exit fees to the lenders upon the sale of properties financed                by                the warehouse facilities which we record as interest expense. We                paid exit                fees of $0.2 million and $0.3 million during the quarters ended March                31,                2006 and 2005, respectively. Effective March 31, 2006, we eliminated                the                exit fee under the $160 million Mortgage Warehouse Facility as part                of                renewing it through March 2007. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | The                Revolver and Term Loan are subject to borrowing base asset                requirements. |
|--------|-----|------------------------------------------------------------------------------------------------------------|

*Bonds      Payable*

|                                         |   | (In                millions) |   |
|----------------------------------------------|--------|------------------------------|--------|
|                                         |   |                         |   |
| Mortgage                Warehouse Facilities |   | $                            | 120.4  |   |
| Revolver                                     |   |                         | 97.0   |   |
| Cash                and Cash Equivalents     |   |                         | 18.4   |   |
|                                         |   | $                            | 235.8  |   |

*Mortgage      Warehouse Facilities*

*Bonds      Payable. *

*Revolver.      *

*Notes      Payable. *

*Litigation*

|   | a. | On                January 18, 2005, Robert Lewis and Sutter Acquisition Fund, LLC,                two                limited partners in several of the Income Funds, filed a purported                class                action lawsuit on behalf of the limited partners against the general                partners of the Income Funds, CNLRP and USRP. The complaint alleges                that                the general partners breached their fiduciary duties in connection                with                the Mergers and that the parties to the Merger aided and abetted                in the                alleged breaches of fiduciary duties. The complaint further alleges                that                the general partners violated provisions of the Income Fund partnership                agreements and demands an accounting as to the affairs of the Income                Funds. The plaintiffs are seeking unspecified compensatory and exemplary                damages and equitable relief, which also included an injunction preventing                the defendants from proceeding with the Mergers, which was unsuccessful.                On April 26, 2005, a supplemental plea to jurisdiction hearing was                held.                On May 2, 2005, the plaintiffs amended their lawsuit to add allegations                that the general partners of the Income Funds, with CNLRP and USRP,                prepared and distributed a false and misleading final proxy statement                filing to the limited partners of the Income Funds and the stockholders                of                CNLRP and USRP. On May 26, 2005, the Court entered a Final Order                Dismissing Action for lack of subject matter jurisdiction. On June                22,                2005, the plaintiffs filed a Notice of Appeal of the Order of Dismissal.                On September 7, 2005, the plaintiffs filed an appellants’ brief. On                November 7, 2005, the Company and the other defendants filed an appellees’                brief. On December 12, 2005, the plaintiffs filed a brief in reply.                The                court has granted a request for postponement of oral argument on                the                appeal that was originally scheduled for May 3, 2006. The Court has                not                yet set a new date. We believe the lawsuit, including the request                for                certification, is without merit and intend to defend vigorously against                its claims. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | During                2004, Management Strategies, Inc. filed a lawsuit against USRP. The                complaint alleges that we owe approximately $3 million in sales and                fuel                tax liabilities to the State of Georgia. We believe the claims against                us                are without merit and intend to defend vigorously against such claims. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Contractual      Cash Obligations*

*Cash      Flows*

|                                                                 |   | Quarter                ended March 31, |   |
|----------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                 |   | (in                millions)           |   |
|                                                                 |   | 2006                                   |   | 2005 |   |
| Cash                flows provided by operating activities           |   | $                                      | 6.4    |   | $ | 59.5 |   |
| Cash                flows provided by/(used in) investing activities |   |                                   | 3.3    |   |   | (440.4 | ) |
| Cash                flows provided by/(used in) financing activities |   |                                   | (11.7  | ) |   | 386.8 |   |
|                                                                 |   |                                   |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents  |   |                                   | (2.0   | ) |   | 5.9 |   |
| Cash                and cash equivalents at beginning of year        |   |                                   | 20.4   |   |   | 22.8 |   |
|                                                                 |   |                                   |   |   |   |   |   |
| Cash                and cash equivalents at end of period            |   | $                                      | 18.4   |   | $ | 28.7 |   |

*Cash      Flows Provided by Operating Activities*

*Investing      Activities*

*Financing      Activities*

*Liquidity      Risks *

|                                                         |   |  Mortgage                loans |   | Bonds                outstanding |   |
|--------------------------------------------------------------|--------|-------------------------------------|--------|----------------------------------|--------|
|                                                         |   |  in                pool at par |   | at                face value     |   |
|                                                         |   |  (in                millions)  |   |
| Loans                and debt supporting 1998-1 Certificates |   | $                                   | 127.8  |                             | $      | 127.8 |   |
| Loans                and debt supporting 1999-1 Certificates |   |                                | 187.4  |                             |   | 187.4 |   |
|                                                         |   | $                                   | 315.2  |                             | $      | 315.2 |   |
|                                                         |   |                                |   |                             |   |   |   |

----

| Type                of Hedge      |   | NotionalAmount                atMarch                31, 2006(in                millions) |   | LIBOR                Cap Strike Price or Swap Rate |   | Trade                Date |   | Maturity                Date |     | Estimated                ValueatMarch                31, 2006(in                millions) |   |
|-----------------------------------|--------|-------------------------------------------------------------------------------------------|--------|----------------------------------------------------|--------|---------------------------|--------|------------------------------|----------|-------------------------------------------------------------------------------------------|--------|
|                              |   |                                                                                      |   |                                               |   |                      |   |                         |     |                                                                                      |   |
| Interest                Rate Cap  |   | $                                                                                         | 140.0  |                                               |   | 6.000                     | %      |                         | 08/13/01 |                                                                                      |   | 08/26/06 |   | $ | — |   |
| Interest                Rate Cap  |   | $                                                                                         | 104.6  |                                               |   | 4.500                     | %      |                         | 09/28/01 |                                                                                      |   | 10/25/06 |   | $ | 0.3 |   |
| Interest                Rate Swap |   | $                                                                                         | 175.0  |                                               |   | 4.202                     | %      |                         | 05/16/05 |                                                                                      |   | 04/01/10 |   | $ | 6.0 |   |
| Interest                Rate Cap  |   | $                                                                                         | 20.6   |                                               |   | 3.500                     | %      |                         | 12/17/03 |                                                                                      |   | 02/01/11 |   | $ | 0.8 |   |

*Inflation*

*New      Accounting Pronouncements*

*Results      of Operations*

*Real      estate segment*

*Specialty      finance segment*

----

|                                                                                                   |   | Quarter                ended March 31,(in                millions) |   |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|
|                                                                                                   |   | 2006                                                               |   | 2005 |   |
| Revenues:                                                                                              |   |                                                               |   |   |   |
| Real                estate                                                                             |   | $                                                                  | 54.2   |   | $ | 27.3 |   |
| Specialty                finance                                                                       |   |                                                               | 3.3    |   |   | 6.6 |   |
| Other*                                                                                                 |   |                                                               | (1.2   | ) |   | (0.6 | ) |
| Total                revenues                                                                          |   |                                                               | 56.3   |   |   | 33.3 |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Expenses:                                                                                              |   |                                                               |   |   |   |   |   |
| Operating                expenses excluding interest, depreciation, and                amortization:** |   |                                                               |   |   |   |   |   |
| Real                estate                                                                             |   |                                                               | 7.9    |   |   | 4.4 |   |
| Specialty                finance                                                                       |   |                                                               | 5.5    |   |   | 9.1 |   |
| Other*                                                                                                 |   |                                                               | (1.2   | ) |   | (0.6 | ) |
| Total                operating expenses excluding interest, depreciation, and amortization**           |   |                                                               | 12.2   |   |   | 12.9 |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Depreciation                and amortization expense:                                                  |   |                                                               |   |   |   |   |   |
| Real                estate                                                                             |   |                                                               | 10.0   |   |   | 4.8 |   |
| Specialty                finance                                                                       |   |                                                               | 0.5    |   |   | 0.3 |   |
| Total                depreciation and amortization expense                                             |   |                                                               | 10.5   |   |   | 5.1 |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Interest                expense:                                                                       |   |                                                               |   |   |   |   |   |
| Real                estate                                                                             |   |                                                               | 23.1   |   |   | 12.5 |   |
| Specialty                finance                                                                       |   |                                                               | 2.0    |   |   | 4.4 |   |
| Other*                                                                                                 |   |                                                               | (0.1   | ) |   | — |   |
| Total                interest expense                                                                  |   |                                                               | 25.0   |   |   | 16.9 |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Total                expenses                                                                          |   |                                                               | 47.7   |   |   | 34.9 |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Income/(loss)                from continuing operations                                                |   |                                                               | 8.6    |   |   | (1.6 | ) |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Income                from discontinued operations, after income taxes:                                |   |                                                               |   |   |   |   |   |
| Real                estate                                                                             |   |                                                               | 3.2    |   |   | 0.4 |   |
| Specialty                finance                                                                       |   |                                                               | 5.6    |   |   | 4.6 |   |
| Total                income from discontinued operations, after income taxes                           |   |                                                               | 8.8    |   |   | 5.0 |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Gain                on sale of assets - Real estate segment                                            |   |                                                               | 0.6    |   |   | — |   |
|                                                                                                   |   |                                                               |   |   |   |   |   |
| Net                income                                                                              |   | $                                                                  | 18.0   |   | $ | 3.4 |   |

| ** | also                includes the minority interest in earnings of consolidated joint                ventures                net of the equity in earnings of unconsolidated joint                ventures |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Revenues:*

|                           |   | Quarter                ended March 31,(in                millions) |   |
|--------------------------------|--------|--------------------------------------------------------------------|--------|
|                           |   | 2006                                                               |   | %                of Total |   | 2005 |   | %                of Total |   |
| Rental                income   |   | $                50.0                                              |   | 92% |   | $                25.4 |   | 93% |   |
| Interest                income |   | 1.3                                                                |   | 2% |   | 1.6 |   | 6% |   |
| Other                          |   | 2.9                                                                |   | 6% |   | 0.3 |   | 1% |   |
| Total                Revenues  |   | $                54.2                                              |   | 100% |   | $                27.3 |   | 100% |   |

|                           |   | Quarter                ended March 31,(in                millions) |   |
|--------------------------------|--------|--------------------------------------------------------------------|--------|
|                           |   | 2006                                                               |   | %                of Total |   | 2005 |   | %                of Total |   |
| Rental                income   |   | $                0.6                                               |   | 18% |   | $                — |   | 0% |   |
| Interest                income |   | 1.0                                                                |   | 30% |   | 5.3 |   | 80%   |   |
| Other                          |   | 1.7                                                                |   | 52% |   | 1.3 |   | 20%  |   |
| Total                Revenues  |   | $                3.3                                               |   | 100% |   | $                6.6 |   | 100% |   |

*Operating      expenses, excluding depreciation, amortization and interest:*

|                                                    |   | Quarter                ended March 31,(in                millions) |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------|--------|
|                                                    |   | 2006                                                               |   | %                of Total |   | 2005 |   | %                of Total |   |
| General                operating and administrative     |   | $                3.5                                               |   | 44% |   | $                3.3 |   | 75% |   |
| Property                expenses, state and other taxes |   | 3.5                                                                |   | 44% |   | 1.1 |   | 25% |   |
| Other                                                   |   | 0.9                                                                |   | 12% |   | — |   | — |   |
|                                                    |   | $                7.9                                               |   | 100% |   | $                4.4 |   | 100% |   |

----

|                                                    |   | Quarter                ended March 31,(in                millions) |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------|--------|
|                                                    |   | 2006                                                               |   | %                of Total |   | 2005 |   | %                of Total |   |
| General                operating and administrative     |   | $                5.5                                               |   | 100% |   | $                8.2 |   | 90% |   |
| Property                expenses, state and other taxes |   | —                                                            |   | — |   | 0.1 |   | 1% |   |
| Other                                                   |   | —                                                            |   | — |   | 0.8 |   | 9% |   |
|                                                    |   | $                5.5                                               |   | 100% |   | $                9.1 |   | 100% |   |

|   | · | During                2005, expenses in this segment includes a one time charge of $2 million                resulting from a grant of non-restricted stock and related cash                compensation to members of our Board of Directors and                employees. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During                2005, we incurred certain costs related to the upgrade of our property                management software to account for leasing transactions and to capture                other tenant and lease information. We also incurred certain costs                to                in-source the information technology, human resources and other functions                previously outsourced to related parties. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                2005 we incurred additional expenses with the integration of the                merged                portfolios. While our servicing fee income in this segment for the                management of the larger portfolio increased after the Merger, we                incurred                various one-time setup expenses during 2005 to add new properties                creating                an excess of new expenses over new revenues that have stabilized                in 2006.                The Income Fund portfolio had been previously serviced by the specialty                finance segment and did not create significant additional integration                costs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Interest      Expense*

|                             |   | Quarter                ended March 31,(in                millions) |   |
|----------------------------------|--------|--------------------------------------------------------------------|--------|
|                             |   | 2006                                                               |   | %                of Total |   | 2005 |   | %                of Total |   |
| Real                estate       |   | $                23.1                                              |   | 92% |   | $                12.5 |   | 74% |   |
| Specialty                finance |   | 2.0                                                                |   | 8% |   | 4.4 |   | 26% |   |
| Other                            |   | (0.1                                                               | )      | — |   | — |   | — |   |
|                             |   | $                25.0                                              |   | 100% |   | $                16.9 |   | 100% |   |

----

*Depreciation      and Amortization*

|                             |   | Quarter                ended March 31,(in                millions) |   |
|----------------------------------|--------|--------------------------------------------------------------------|--------|
|                             |   | 2006                                                               |   | %                of Total |   | 2005 |   | %                of Total |   |
| Real                estate       |   | $                10.0                                              |   | 95% |   | $                4.8 |   | 94% |   |
| Specialty                finance |   | 0.5                                                                |   | 5% |   | 0.3 |   | 6% |   |
|                             |   | $                10.5                                              |   | 100% |   | $                5.1 |   | 100% |   |

*Discontinued      Operations*

----

|                                                                                                     |   | Quarter                Ended March 31,(in                millions) |    |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                                                                     |   | 2006                                                               |    | 2005 |   |
|                                                                                                     |   | Real                EstateSegment                                  |    | Specialty                FinanceSegment |   | Real                EstateSegment |   | Specialty                FinanceSegment |   |
|                                                                                                     |   |                                                               |    |   |   |   |   |   |   |
| Sale                of real estate                                                                       |   | $                                                                  | 14.1    |   | $ | 40.7 |   | $ | — |   | $ | 57.0 |   |
| Cost                of real estate sold                                                                  |   |                                                               | 11.0    |   |   | 36.2 |   |   | — |   |   | 47.2 |   |
| Gain                on sale of real estate                                                               |   |                                                               | 3.1     |   |   | 4.5 |   |   | — |   |   | 9.8 |   |
| Net                other income                                                                          |   |                                                               | 0.1     |   |   | 1.7 |   |   | 0.4 |   |   | 0.8 |   |
| Earnings                from real estate discontinued                operationsbefore                tax |   |                                                               | 3.2     |   |   | 6.2 |   |   | 0.4 |   |   | 10.6 |   |
|                                                                                                     |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |
| Retail                operations revenue                                                                 |   |                                                               | — |   |   | — |   |   | — |   |   | 5.2 |   |
| Retail                cost of sales                                                                      |   |                                                               | — |   |   | — |   |   | — |   |   | 4.6 |   |
| Earnings                from retail discontinued                operationsbefore                tax      |   |                                                               | — |   |   | — |   |   | — |   |   | 0.6 |   |
|                                                                                                     |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |
| Income                tax provision                                                                      |   |                                                               | — |   |   | 0.6 |   |   | — |   |   | 6.6 |   |
|                                                                                                     |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |
| Income                from discontinuedoperations,                after income taxes                     |   | $                                                                  | 3.2     |   | $ | 5.6 |   | $ | 0.4 |   | $ | 4.6 |   |

*Overview      of Management’s Discussion and Analysis - Strategy 3: Sales of Real Estate to      Investors*

----

**Item      3.**
**Quantitative      and Qualitative Disclosures About Market Risk.**

**Item      4.**
**Controls      and Procedures.**

*Evaluation      of Disclosure Controls and Procedures. *

*Changes      in Internal Control over Financial Reporting*

----

|   |   | On                January 18, 2005, Robert Lewis and Sutter Acquisition Fund, LLC,                two                limited partners in several Income Funds, filed Plaintiffs’ Corrected                Original Petition for Class Action, Cause No. 05-00083-F, a purported                class action lawsuit on behalf of the limited partners of the Income                Funds                against the Company, USRP, the Income Funds and the general partners                (Mr.                Seneff, Mr. Bourne and CNL Realty Corporation) of the Income Funds,                and                subsidiaries of the Company in the District Court of Dallas County,                Texas                (the “Court”). The complaint alleged that the general partners of the                Income Funds breached their fiduciary duties in connection with the                proposed Mergers between the Income Funds and USRP and that the Company,                subsidiaries of the Company and USRP aided and abetted in the alleged                breaches of fiduciary duties. The complaint further alleged that                the                Income Fund general partners violated provisions of the Income Fund                partnership agreements and demanded an accounting as to the affairs                of the                Income Funds. On April 26, 2005, a supplemental plea to jurisdiction                was                held. On May 2, 2005, the plaintiffs filed their First Amended Petition                for Class Action. In the Amended Petition the plaintiffs did not                add any                parties or claims, but they did add allegations that the general                partners                of the Income Funds, with CNLRP and USRP, prepared and distributed                a false                and misleading final proxy statement filing to the limited partners                of the                Income Funds and the shareholders of CNLRP and USRP. The plaintiffs                are                seeking unspecified compensatory and exemplary damages and equitable                relief, which also included an injunction preventing the defendants                from                proceeding with the Mergers. On May 26, 2005, the Court entered a                Final                Order Dismissing Action for lack of subject matter jurisdiction.                On June                22, 2005, the plaintiffs filed a Notice of Appeal of the Order of                Dismissal. On September 7, 2005, the plaintiffs filed an appellants’                brief. On November 7, 2005, the Company and the other defendants                filed an                appellees’ brief. On December 12, 2005, the plaintiffs filed a brief in                reply. The Court has granted a request for postponement of oral argument                on the appeal that was originally scheduled for May 3, 2006. The                Court has                not yet set a new date. Management of the Company believes the claims                against the Company are without merit and intends to vigorously defend                against such claims. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | During                2004, Management Strategies, Inc. filed a lawsuit against USRP. The                complaint alleges that the Company owes approximately $3 million                in sales                and fuel tax liabilities to the State of Georgia. The management                of the                Company believes the claims against the Company are without merit                and                intends to defend vigorously against such claims. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item                1A. | Risk                Factors. There have been no material changes in the risk factors                previously disclosed in our Annual Report on Form                10-K. |
|-------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2.1 | Agreement                and Plan of Merger by and between the Registrant and CNL Restaurant                Properties, Inc., dated as of August 9, 2004 (previously filed as                Exhibit                2.1 to the Registrant’s current report on Form 8-K filed on August 10,                2004 and incorporated herein by                reference). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.2 | Agreements                and Plans of Merger by and among the Registrant, a separate, wholly-owned                subsidiary of the operating partnership of the Registrant and each                of the                18 CNL Income Funds (previously filed as Exhibits 2.2 - 2.19 to the                Registrant’s current report on Form 8-K filed on August 10, 2004 and                incorporated herein by reference). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.1 | Restated                Articles of Incorporation of the Registrant dated November 11, 1997,                as                amended by the Articles of Amendment to the Articles of Restatement                of the                Registrant dated February 24, 2005 and the Articles of Amendment                to the                Articles of Restatement of the Registrant dated February 24, 2005                (previously filed as Exhibit 3.1 to the Registrant’s quarterly report on                Form 10-Q for the fiscal quarter ended March 31, 2005 and incorporated                herein by reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Third                Amended and Restated Bylaws (previously filed as Exhibit 3.1 to the                Company’s current report on Form 8-K filed on August 15, 2005 and                incorporated herein by reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | Specimen                of Common Stock Certificate (previously filed as Exhibit 4.1 to the                Registrant’s Registration Statement on Form S-4 (File No. 333-21403) and                incorporated herein by reference). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | Articles                Supplementary Classifying and Designating a Series of Preferred Stock                as                Series A Cumulative Convertible Preferred Stock (previously filed                as                Exhibit 3.2 to the Registrant’s current report on Form 8-K filed on                November 14, 1997 and incorporated herein by                reference). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | Amendment                to Articles Supplementary Classifying and Designating a Series of                Preferred Stock as Series A Cumulative Convertible Preferred Stock                (previously filed as Exhibit 3.2 to the Registrant’s current report on                Form 8-K filed on February 25, 2005 and incorporated herein by                reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.4 | Articles                Supplementary Classifying and Designating a Series of Preferred Stock                as                8% Series B Convertible Preferred Stock (previously filed as Exhibit                4.01                to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003                and incorporated herein by                reference). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.5 | Articles                Supplementary Classifying and Designating a Series of Preferred Stock                as                8% Series B-1 Convertible Preferred Stock (previously filed as Exhibit                99.5 to the Registrant’s current report on Form 8-K filed on September 16,                2004 and incorporated herein by                reference). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.6 | Articles                Supplementary Establishing and Fixing The Rights and Preferences                of 7.5%                Series C Redeemable Convertible Preferred Stock (previously filed                as                Exhibit 4.1 to the Registrant’s registration statement on Form 8-A (File                No. 001-13089) and incorporated herein by                reference). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.7 | Specimen                of 7.5% Series C Redeemable Convertible Preferred Stock Certificate                (previously filed as Exhibit 4.2 to the Registrant’s registration                statement on Form 8-A (File No. 001-13089) and incorporated herein                by                reference). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.8 | Indenture                dated as of March 4, 2005, among Net Lease Funding 2005, LP, MBIA                Insurance Corporation and Wells Fargo Bank, N.A., as indenture trustee                relating to $275,000,000 Triple Net Lease Mortgage Notes, Series                2005                (previously filed as Exhibit 99.1 to the Registrant’s current report on                Form 8-K filed on March 10, 2005 and incorporated herein by                reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4.9 | Securities                Purchase Agreement relating to the Series B Preferred Stock (previously                filed as Exhibit 4.02 to the Registrant’s Form 10-Q for the fiscal quarter                ended June 30, 2003 and incorporated herein by                reference). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.10 | Registration                Rights Agreement relating to Series B Preferred Stock (previously                filed as                Exhibit 4.03 to the Registrant’s Form 10-Q for the fiscal quarter ended                June 30, 2003 and incorporated herein by                reference). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.11 | Stock                Purchase Warrant - Omnicron Master Trust (previously filed as Exhibit                4.04                to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003                and incorporated herein by                reference). |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.12 | Stock                Purchase Warrant - The Riverview Group, LLC (previously filed as                Exhibit                4.05 to the Registrant’s Form 10-Q for the fiscal quarter ended June 30,                2003 and incorporated herein by                reference). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.13 | Indenture,                dated as of March 23, 2005, between the Registrant and Wells Fargo                Bank,                National Association, as trustee, relating to the Registrant’s 7 1⁄2% Senior                Notes due 2015 (previously filed as Exhibit 4.1 to the Registrant’s                current report on Form 8-K filed on March 28, 2005 and incorporated                herein                by reference). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4* | Pursuant                to Regulation S-K Item 601(b)(4)(iii), the Registrant by this filing                agrees, upon request, to furnish to the Securities and Exchange Commission                a copy of instruments defining the rights of holders of long-term                debt of                the Registrant. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Registrant                Flexible Incentive Plan, as amended, (previously filed as Exhibit                10.1 to                the Registrant’s Current Report on Form 8-K filed on March 20, 2006 and                incorporated herein by reference). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | Credit                Agreement, dated as of April 8, 2005, by and among the Registrant,                as                borrower, certain subsidiaries of the Registrant, as guarantors,                Bank of                America, N.A., as Administrative Agent, L/C Issuer and Swing Line                Lender,                Bank of America Securities LLC, as Sole Lead Arranger and Sole Book                Manager, Key Bank, National Association, as Syndication Agent, Credit                Suisse First Boston, Societe Generale, and Wachovia Bank National                Association, as Co-Documentation Agents, and the lenders party thereto                (previously filed as Exhibit 10.1 to the Registrant’s current report on                Form 8-K filed on April 13, 2005 and incorporated herein by                reference). |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.8 | Pledge                Agreement, dated as of April 8, 2005, by substantially all of the                Borrower’s domestic subsidiaries, in favor of Bank of America, N.A., in                its capacity as Administrative Agent (previously filed as Exhibit                10.2 to                the Registrant’s current report on Form 8-K filed on April 13, 2005 and                incorporated herein by reference). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1 | Certification                of Chief Executive Officer pursuant to Rule 13a-14(a) as adopted                pursuant                to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification                of Chief Financial Officer pursuant to Rule 13a-14(a) as adopted                pursuant                to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 32.1 | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

| Date:                May 9, 2006 | TRUSTREET                PROPERTIES, INC. |
|----------------------------------|-------------------------------------------|
|                             |                                      |
|                             | By:                                       |   |
|                             |                                      |   |
|                             |                                      | /s/                CURTIS B. MCWILLIAMS |
|                             |                                      | Curtis                B. McWilliams |
|                             |                                      | Chief                Executive Officer |
|                             |                                      |   |
|                             |                                      |   |
|                             | By:                                       |   |
|                             |                                      |   |
|                             |                                      | /s/                STEVEN D. SHACKELFORD |
|                             |                                      | Steven                D. Shackelford |
|                             |                                      | Chief                Financial Officer |
|                             |                                      |   |

----

**EXHIBIT      INDEX**

|   | 2.1 | Agreement                and Plan of Merger by and between the Registrant and CNL Restaurant                Properties, Inc., dated as of August 9, 2004 (previously filed as                Exhibit                2.1 to the Registrant’s current report on Form 8-K filed on August 10,                2004 and incorporated herein by                reference). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.2 | Agreements                and Plans of Merger by and among the Registrant, a separate, wholly-owned                subsidiary of the operating partnership of the Registrant and each                of the                18 CNL Income Funds (previously filed as Exhibits 2.2 - 2.19 to the                Registrant’s current report on Form 8-K filed on August 10, 2004 and                incorporated herein by reference). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.1 | Restated                Articles of Incorporation of the Registrant dated November 11, 1997,                as                amended by the Articles of Amendment to the Articles of Restatement                of the                Registrant dated February 24, 2005 and the Articles of Amendment                to the                Articles of Restatement of the Registrant dated February 24, 2005                (previously filed as Exhibit 3.1 to the Registrant’s quarterly report on                Form 10-Q for the fiscal quarter ended March 31, 2005 and incorporated                herein by reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Third                Amended and Restated Bylaws (previously filed as Exhibit 3.1 to the                Company’s current report on Form 8-K filed on August 15, 2005 and                incorporated herein by reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | Specimen                of Common Stock Certificate (previously filed as Exhibit 4.1 to the                Registrant’s Registration Statement on Form S-4 (File No. 333-21403) and                incorporated herein by reference). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | Articles                Supplementary Classifying and Designating a Series of Preferred Stock                as                Series A Cumulative Convertible Preferred Stock (previously filed                as                Exhibit 3.2 to the Registrant’s current report on Form 8-K filed on                November 14, 1997 and incorporated herein by                reference). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | Amendment                to Articles Supplementary Classifying and Designating a Series of                Preferred Stock as Series A Cumulative Convertible Preferred Stock                (previously filed as Exhibit 3.2 to the Registrant’s current report on                Form 8-K filed on February 25, 2005 and incorporated herein by                reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.4 | Articles                Supplementary Classifying and Designating a Series of Preferred Stock                as                8% Series B Convertible Preferred Stock (previously filed as Exhibit                4.01                to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003                and incorporated herein by                reference). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.5 | Articles                Supplementary Classifying and Designating a Series of Preferred Stock                as                8% Series B-1 Convertible Preferred Stock (previously filed as Exhibit                99.5 to the Registrant’s current report on Form 8-K filed on September 16,                2004 and incorporated herein by                reference). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.6 | Articles                Supplementary Establishing and Fixing The Rights and Preferences                of 7.5%                Series C Redeemable Convertible Preferred Stock (previously filed                as                Exhibit 4.1 to the Registrant’s registration statement on Form 8-A (File                No. 001-13089) and incorporated herein by                reference). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.7 | Specimen                of 7.5% Series C Redeemable Convertible Preferred Stock Certificate                (previously filed as Exhibit 4.2 to the Registrant’s registration                statement on Form 8-A (File No. 001-13089) and incorporated herein                by                reference). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.8 | Indenture                dated as of March 4, 2005, among Net Lease Funding 2005, LP, MBIA                Insurance Corporation and Wells Fargo Bank, N.A., as indenture trustee                relating to $275,000,000 Triple Net Lease Mortgage Notes, Series                2005                (previously filed as Exhibit 99.1 to the Registrant’s current report on                Form 8-K filed on March 10, 2005 and incorporated herein by                reference). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4.9 | Securities                Purchase Agreement relating to the Series B Preferred Stock (previously                filed as Exhibit 4.02 to the Registrant’s Form 10-Q for the fiscal quarter                ended June 30, 2003 and incorporated herein by                reference). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.10 | Registration                Rights Agreement relating to Series B Preferred Stock (previously                filed as                Exhibit 4.03 to the Registrant’s Form 10-Q for the fiscal quarter ended                June 30, 2003 and incorporated herein by                reference). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.11 | Stock                Purchase Warrant - Omnicron Master Trust (previously filed as Exhibit                4.04                to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003                and incorporated herein by                reference). |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.12 | Stock                Purchase Warrant - The Riverview Group, LLC (previously filed as                Exhibit                4.05 to the Registrant’s Form 10-Q for the fiscal quarter ended June 30,                2003 and incorporated herein by                reference). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.13 | Indenture,                dated as of March 23, 2005, between the Registrant and Wells Fargo                Bank,                National Association, as trustee, relating to the Registrant’s 7 1⁄2% Senior                Notes due 2015 (previously filed as Exhibit 4.1 to the Registrant’s                current report on Form 8-K filed on March 28, 2005 and incorporated                herein                by reference). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4* | Pursuant                to Regulation S-K Item 601(b)(4)(iii), the Registrant by this filing                agrees, upon request, to furnish to the Securities and Exchange Commission                a copy of instruments defining the rights of holders of long-term                debt of                the Registrant. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Registrant                Flexible Incentive Plan, as amended, (previously filed as Exhibit                10.1 to                the Registrant’s Current Report on Form 8-K filed on March 20, 2006 and                incorporated herein by reference). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | Credit                Agreement, dated as of April 8, 2005, by and among the Registrant,                as                borrower, certain subsidiaries of the Registrant, as guarantors,                Bank of                America, N.A., as Administrative Agent, L/C Issuer and Swing Line                Lender,                Bank of America Securities LLC, as Sole Lead Arranger and Sole Book                Manager, Key Bank, National Association, as Syndication Agent, Credit                Suisse First Boston, Societe Generale, and Wachovia Bank National                Association, as Co-Documentation Agents, and the lenders party thereto                (previously filed as Exhibit 10.1 to the Registrant’s current report on                Form 8-K filed on April 13, 2005 and incorporated herein by                reference). |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.8 | Pledge                Agreement, dated as of April 8, 2005, by substantially all of the                Borrower’s domestic subsidiaries, in favor of Bank of America, N.A., in                its capacity as Administrative Agent (previously filed as Exhibit                10.2 to                the Registrant’s current report on Form 8-K filed on April 13, 2005 and                incorporated herein by reference). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1 | Certification                of Chief Executive Officer pursuant to Rule 13a-14(a) as adopted                pursuant                to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification                of Chief Financial Officer pursuant to Rule 13a-14(a) as adopted                pursuant                to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 32.1 | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed                herewith). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|