##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the Transition period from to
 Commission file number 333-9371
 CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
  Delaware
    
    38-3304096(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)24 Frank Lloyd Wright Drive, Lobby L, 4th Floor, P.O.Box 544, Ann Arbor, Michigan
    
    48106-0544(Address of principal executive offices)
    
    (Zip Code)Issuers telephone number, including area code: (734) 994-5505Securities registered under Section 12(b) of the Exchange Act:
    
    NoneSecurities registered under Section 12(g) of the Exchange Act:
    
    None(Title of Class)
 Yes o No þ
 Yes o No þ
  Yes þ No o
 þ
  o Large Accelerated Filer o Accelerated Filer þ Non-accelerated Filer
 Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. Description of PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Limited Partnership Interests and Related Security Holder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Qualitative and Quantitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Securityholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesItem 15. Exhibits and Financial Statement SchedulesSIGNATURESExhibit IndexCertification Pursuant to Section 302Certification Pursuant to 18 U.S.C. Section 1350    Table of Contents  
 PART I
 
 Item 1. Business.




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Item 1A. Risk Factors.
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Description of Properties.
     OriginalAsset Cost
    
    
    Asset
    
    
    
    
    
    
    Date of
    
    
    Annual
    
    
    BuildingConcept
    
    
    Date of
    
    
    Date of
    
    
    Including
    
    
    State
    
    
    Monthly
    
    
    Next Rent
    
    
    Rate of
    
    
    SizeTenant/Lessee Name
    
    
    Name
    
    
    Commence
    
    
    Expiration
    
    
    Acquisiton Fees
    
    
    Location
    
    
    Rent
    
    
    Increase
    
    
    Increase
    
    
    (SQFT)PROPERTIESHollywood Entertainment Corp.
    
    
    Hollywood Video
    
    
    11/01/97
    
    
    
    07/01/12
    
    
    $
    1,455,300
    
    
    OH
    
    $
    13,972
    
    
    
    08/01/07
    
    
    
    (1
    )
    
    
    7,488Blockbuster Entertainment Corp.
    
    
    Blockbuster Video
    
    
    09/01/97
    
    
    
    08/01/07
    
    
    
    1,170,000
    
    
    GA
    
    
    11,012
    
    
    
    
    
    
    
    n/a
    
    
    
    6,500Hollywood Entertainment Corp.
    
    
    Hollywood Video
    
    
    10/01/98
    
    
    
    12/24/12
    
    
    
    1,454,880
    
    
    OH
    
    
    13,740
    
    
    
    
    
    
    
    n/a
    
    
    
    7,488Sterling Jewelers
    
    
    Jared Jewelers
    
    
    02/01/99
    
    
    
    02/01/19
    
    
    
    1,131,619
    
    
    TX
    
    
    12,833
    
    
    
    02/01/09
    
    
    
    1.92
    %
    
    
    5,227Sybra, Inc.
    
    
    Arby's
    
    
    09/01/98
    
    
    
    09/01/18
    
    
    
    840,000
    
    
    MI
    
    
    6,921
    
    
    
    09/01/07
    
    
    
    1.49
    %
    
    
    2,7786,051,800
    
    
    
    
    
    
    
    58,478
    
    
    
    
    
    
    
    
    
    
    
    29,481
 
 (1)
    
    Rent Increase equals the lesser of CPI or 10%. Leases
 Real Estate Leases:




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Equipment Leases:
 Summary of Investment Objectives and Policies
          
 Item 3. Legal Proceedings.




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Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5. Market for Registrants Limited Partnership Interests and Related Security Holder Matters
and Issuer Purchases of Equity Securities.
  
 Item 6. Selected Financial Data.
  Year Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Statements of Operations Data:Operating revenue:Rental income
    
    $
    533,418
    
    
    $
    533,418
    
    
    $
    533,418
    
    
    $
    516,063
    
    
    $
    510,727Finance income
    
    
    124,600
    
    
    
    135,318
    
    
    
    146,037
    
    
    
    156,755
    
    
    
    167,473Total operating revenue
    
    
    658,018
    
    
    
    668,736
    
    
    
    679,455
    
    
    
    672,818
    
    
    
    678,200Operating costs and expenses:Depreciation
    
    
    80,407
    
    
    
    80,407
    
    
    
    80,407
    
    
    
    80,407
    
    
    
    80,407General and administrative
    
    
    234,163
    
    
    
    232,420
    
    
    
    184,913
    
    
    
    166,788
    
    
    
    129,144Total operating costs and expenses
    
    
    314,570
    
    
    
    312,827
    
    
    
    265,320
    
    
    
    247,195
    
    
    
    209,551Income from continued operations before other income
    
    
    343,448
    
    
    
    355,909
    
    
    
    414,135
    
    
    
    425,623
    
    
    
    468,649Interest and other income
    
    
    128,754
    
    
    
    5,340
    
    
    
    4,857
    
    
    
    1,478
    
    
    
    14,608Income from continued operations
    
    
    472,202
    
    
    
    361,249
    
    
    
    418,992
    
    
    
    427,101
    
    
    
    483,257Discontinued operationsNet income from discontinued operations, net
    
    
    429,187
    
    
    
    375,827
    
    
    
    1,455,100
    
    
    
    1,129,894
    
    
    
    1,456,721Gain on sale of equipment
    
    
    1,997
    
    
    
    8,040
    
    
    
    45,741
    
    
    
    
    
    
    
    (258
    )Gain on sale of real estate
    
    
    4,754,452
    
    
    
    262,045
    
    
    
    
    
    
    
    
    
    
    
    Debt retirement costs
    
    
    (1,690,354
    )
    
    
    (209,010
    )
    
    
    
    
    
    
    
    
    
    
    Income from discontinued operations
    
    
    3,495,282
    
    
    
    436,902
    
    
    
    1,500,841
    
    
    
    1,129,894
    
    
    
    1,456,463Net income
    
    
    3,967,484
    
    
    
    798,151
    
    
    
    1,919,833
    
    
    
    1,556,995
    
    
    
    1,939,720Net income from allocable to general partners
    
    
    9,034
    
    
    
    7,982
    
    
    
    19,198
    
    
    
    15,570
    
    
    
    19,397Net income from allocable to limited partners
    
    $
    3,958,450
    
    
    $
    790,169
    
    
    $
    1,900,635
    
    
    $
    1,541,425
    
    
    $
    1,920,323Net income per limited partnership unit
    
    $
    136.62
    
    
    $
    27.23
    
    
    $
    65.00
    
    
    $
    52.49
    
    
    $
    65.10weighted average units outstanding
    
    
    28,975
    
    
    
    29,020
    
    
    
    29,239
    
    
    
    29,369
    
    
    
    29,496Other Data:Cash flows from operating activities
    
    $
    (560,434
    )
    
    $
    1,173,309
    
    
    $
    1,951,899
    
    
    $
    1,934,582
    
    
    $
    2,020,200Cash flows from investing activities
    
    
    27,936,743
    
    
    
    4,110,489
    
    
    
    (97,459
    )
    
    
    1,402,096
    
    
    
    1,253,154Cash flows from financing activities
    
    
    (26,623,608
    )
    
    
    (5,835,077
    )
    
    
    (2,292,589
    )
    
    
    (3,461,189
    )
    
    
    (2,094,788
    )Balance Sheet Data:Cash and cash equivalents
    
    $
    896,164
    
    
    $
    476,469
    
    
    $
    928,132
    
    
    $
    1,367,069
    
    
    $
    1,460,847Investment in property under leases
    
    
    5,513,042
    
    
    
    27,231,464
    
    
    
    31,262,517
    
    
    
    31,516,729
    
    
    
    33,604,343Total assets
    
    
    6,466,143
    
    
    
    29,220,279
    
    
    
    34,246,143
    
    
    
    34,612,180
    
    
    
    36,589,728Total liabilities
    
    
    84,672
    
    
    
    13,780,645
    
    
    
    15,120,012
    
    
    
    14,552,078
    
    
    
    14,928,823Total partners capital
    
    
    6,381,471
    
    
    
    15,439,634
    
    
    
    19,126,131
    
    
    
    20,060,102
    
    
    
    21,660,905
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Results of Operations  2005 to 2004




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Results of Operations  2004 to 2003




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Liquidity and Capital Resources




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Contractual Obligations
  Critical Accounting Policies




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Item 7A. Qualitative and Quantitative Disclosures About Market Risk
  
 Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.




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Item 9A. Controls and Procedures
   
 Item 9B. Other Information.
 None.
 
 PART III
 
 Item 10. Directors and Executive Officers of the Registrant.
     
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Securityholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions.




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Item 14. Principal Accountant Fees and Services.
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees




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Item 15. Exhibits and Financial Statement Schedules.
 (a)(1)
    
    Financial StatementsBalance Sheets
    
    F-3Statements of Operations
    
    F-4Statements of Changes in Partners Capital
    
    F-5Statements of Cash Flows
    
    F-6Notes to Financial Statements
    
    F-7(a)(2)
    
    Financial Statements SchedulesSchedule III  Properties and AccumulatedDepreciation as of December 31, 2005
    
    F-13(a)(3)
    
    The following exhibits are included herein or incorporated by reference:
 Number
    
    Exhibit2
    
    Plan of Liquidation and Dissolution (Incorporated by reference to the
Registrants Definitive Proxy Statement on Schedule 14A, filed on
September 21, 2004)4
    
    Amended Agreement of Limited Partnership of Registrant. (Incorporated
by reference to the Registrants Definitive Proxy Statement on
Schedule 14A, filed on September 21, 2004 and the corresponding
exhibit in the Registrants Form 10-K for the fiscal year ended
December 31, 1998)10.1
    
    Promissory Note dated December 17, 1998 between Registrant and
National Realty Funding L.C. (Incorporated by reference to the
corresponding exhibit in the Registrants Form 10-K for the fiscal
year ended December 31, 1998)10.2
    
    Promissory Note dated March 30, 1999 between Registrant and
National Realty Funding L.C. (Incorporated by reference to the
corresponding exhibit in the Registrants Form 10-Q for the quarter
ended March 31, 1999)31
    
    Certification Pursuant to section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002




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SIGNATURES
  CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IVBy:
    
    GP4 Asset Acquisition, LLCIts ManagerBy:
    
    /s/ Patrick L. BeachPatrick L. BeachPresidentDate:
    
    March 29, 2006
  By:
    
    /s/ Patrick L. BeachPatrick L. BeachPresidentDate:
    
    March 29, 2006




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Captec Franchise Capital Partners L.P. IV
 Contents
 Page(s)Report of Independent Registered Public Accounting Firm
    
    F-1Financial StatementsBalance Sheets
    
    F-3Statements of Operations
    
    F-4Statements of Changes in Partners Capital
    
    F-5Statements of Cash Flows
    
    F-6Notes to Financial Statements
    
    F-7Schedule III  Properties and Accumulated Depreciation asof December 31, 2005
    
    F-13
 F-1




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Report of Independent Registered Public Accounting Firm
      
 F-1




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Captec Franchise Capital Partners L.P. IV
Balance Sheets
 2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    896,164
    
    
    $
    143,463Restricted cash
    
    
    
    
    
    
    333,006Assets held for sale:Operating leases, net
    
    
    
    
    
    
    21,529,175Financing leases, net
    
    
    
    
    
    
    79,440Unbilled rent, net
    
    
    
    
    
    
    1,028,549Investment in leases:Operating leases, net
    
    
    4,295,457
    
    
    
    4,375,864Financing leases, net
    
    
    1,217,585
    
    
    
    1,246,985Unbilled rent, net
    
    
    53,437
    
    
    
    47,447Deferred financing costs, net
    
    
    
    
    
    
    258,339Accounts receivable
    
    
    3,500
    
    
    
    178,011Total assets
    
    $
    6,466,143
    
    
    $
    29,220,279Liabilities and Partners CapitalLiabilities:Notes payable
    
    $
    
    
    
    $
    13,597,961Accounts payable and accrued
expenses
    
    
    63,800
    
    
    
    171,715Due to related parties
    
    
    20,872
    
    
    
    10,969Total liabilities
    
    
    84,672
    
    
    
    13,780,645Partners capital:Limited partners capital accounts
    
    
    6,377,000
    
    
    
    15,444,197General partners capital account
    
    
    4,471
    
    
    
    (4,563
    )Total partners capital
    
    
    6,381,471
    
    
    
    15,439,634Total liabilities and
partners capital
    
    $
    6,466,143
    
    
    $
    29,220,279
  F-2




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Captec Franchise Capital Partners L.P. IV
Statements of Operations
 2005
    
    
    2004
    
    
    2003Operating revenue:Rental income
    
    $
    533,418
    
    
    $
    533,418
    
    
    $
    533,418Finance income
    
    
    124,600
    
    
    
    135,318
    
    
    
    146,037Total operating revenue
    
    
    658,018
    
    
    
    668,736
    
    
    
    679,455Operating costs and expenses:Depreciation
    
    
    80,407
    
    
    
    80,407
    
    
    
    80,407General and administrative
    
    
    234,163
    
    
    
    232,420
    
    
    
    184,913Total operating costs and expenses
    
    
    314,570
    
    
    
    312,827
    
    
    
    265,320Income from continued operations before other income
    
    
    343,448
    
    
    
    355,909
    
    
    
    414,135Other income :Interest and other income
    
    
    128,754
    
    
    
    5,340
    
    
    
    4,857Total other income
    
    
    128,754
    
    
    
    5,340
    
    
    
    4,857Income from continued operations
    
    
    472,202
    
    
    
    361,249
    
    
    
    418,992Discontinued operations:Income from discontinued operations, net, prior to debt retirement costs
    
    
    429,187
    
    
    
    375,827
    
    
    
    1,455,100Gain on sale of equipment
    
    
    1,997
    
    
    
    8,040
    
    
    
    45,741Gain on sale of real estate
    
    
    4,754,452
    
    
    
    262,045
    
    
    
    Debt retirement costs
    
    
    (1,690,354
    )
    
    
    (209,010
    )
    
    
    Income from discontinued operations
    
    
    3,495,282
    
    
    
    436,902
    
    
    
    1,500,841Net income
    
    $
    3,967,484
    
    
    $
    798,151
    
    
    $
    1,919,833Net income allocable to general partner
    
    $
    9,034
    
    
    $
    7,982
    
    
    $
    19,198Net income allocable to limited partners
    
    $
    3,958,450
    
    
    $
    790,169
    
    
    $
    1,900,635Net income from continued operations per limited partnership unit
    
    $
    16.14
    
    
    $
    12.32
    
    
    $
    14.18Net income from discontinued operations per limited
partnership unit
    
    $
    120.48
    
    
    $
    14.91
    
    
    $
    50.82Net income per limited partnership unit
    
    $
    136.62
    
    
    $
    27.23
    
    
    $
    65.00Weighted average number of limited partnership
units outstanding
    
    
    28,975
    
    
    
    29,020
    
    
    
    29,239
  F-3




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Captec Franchise Capital Partners L.P. IV
Statement of Changes in Partners Capital
 Limited
    
    
    Limited
    
    
    General
    
    
    TotalPartners
    
    
    Partners
    
    
    Partners
    
    
    PartnersUnits
    
    
    Accounts
    
    
    Account
    
    
    CapitalBalance, January 1, 2003
    
    
    29,341
    
    
    $
    20,091,845
    
    
    $
    (31,743
    )
    
    $
    20,060,102Distributions  ($93.03 per limited
partnership unit)
    
    
    
    
    
    
    (2,720,000
    )
    
    
    
    
    
    
    (2,720,000
    )Repurchase of limited partnership units
    
    
    (186
    )
    
    
    (133,804
    )
    
    
    
    
    
    $
    (133,804
    )Net income
    
    
    
    
    
    
    1,900,635
    
    
    
    19,198
    
    
    
    1,919,833Balance, December 31, 2003
    
    
    29,155
    
    
    
    19,138,676
    
    
    
    (12,545
    )
    
    
    19,126,131Distributions  ($150.24 per limited
partnership unit)
    
    
    
    
    
    
    (4,359,932
    )
    
    
    
    
    
    
    (4,359,932
    )Repurchase of limited partnership units
    
    
    (180
    )
    
    
    (124,716
    )
    
    
    
    
    
    $
    (124,716
    )Net income
    
    
    
    
    
    
    790,169
    
    
    
    7,982
    
    
    
    798,151Balance, December 31, 2004
    
    
    28,975
    
    
    
    15,444,197
    
    
    
    (4,563
    )
    
    
    15,439,634Distributions  ($449.55 per limited
partnership unit)
    
    
    
    
    
    
    (13,025,647
    )
    
    
    
    
    
    
    (13,025,647
    )Net income
    
    
    
    
    
    
    3,958,450
    
    
    
    9,034
    
    
    
    3,967,484Balance, December 31, 2005
    
    
    28,975
    
    
    $
    6,377,000
    
    
    $
    4,471
    
    
    $
    6,381,471
  F-4




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Captec Franchise Capital Partners L.P. IV
Statements of Cash Flows
 2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    3,967,484
    
    
    $
    798,151
    
    
    $
    1,919,833Adjustments to net income:Depreciation
    
    
    80,407
    
    
    
    473,108
    
    
    
    506,298Amortization of debt issuance costs
    
    
    25,749
    
    
    
    50,920
    
    
    
    78,728Gain on sale of equipment
    
    
    (1,997
    )
    
    
    (8,040
    )
    
    
    (45,741
    )Gain on sale of real estate
    
    
    (4,754,452
    )
    
    
    (262,045
    )
    
    
    Provision for losses
    
    
    9,961
    
    
    
    15,000
    
    
    
    (Increase) decrease in unbilled rent
    
    
    (66,804
    )
    
    
    72,591
    
    
    
    (293,045
    )(Increase) decrease in accounts
receivable
    
    
    (85,678
    )
    
    
    122,178
    
    
    
    (209,404
    )(Decrease) increase in accounts payable
and accrued expenses
    
    
    (78,013
    )
    
    
    11,202
    
    
    
    3,271Increase (decrease) in due to related parties
    
    
    9,903
    
    
    
    (140
    )
    
    
    (8,829
    )Decrease (increase) in restricted cash
    
    
    333,006
    
    
    
    (99,616
    )
    
    
    788Net cash (used in) provided by operating
activities
    
    
    (560,434
    )
    
    
    1,173,309
    
    
    
    1,951,899Cash flows from investing activities:Purchase of properties subject to
operating leases
    
    
    
    
    
    
    
    
    
    
    (1,155,000
    )Proceeds from sale of equipment
    
    
    15,000
    
    
    
    40,200
    
    
    
    345,309Proceeds from sale of real estate
    
    
    27,895,673
    
    
    
    3,849,338
    
    
    
    Payment of lease commissions
    
    
    (59,805
    )
    
    
    
    
    
    
    Principal collections on financing leases
    
    
    85,875
    
    
    
    220,951
    
    
    
    712,232Net cash provided by (used in) investing
activities
    
    
    27,936,743
    
    
    
    4,110,489
    
    
    
    (97,459
    )Cash flows from financing activities:Proceeds from issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    920,000Debt issuance costs
    
    
    
    
    
    
    
    
    
    
    (12,276
    )Repayments of notes payable
    
    
    (13,597,961
    )
    
    
    (1,350,429
    )
    
    
    (346,509
    )Repurchase of limited partnership units
    
    
    
    
    
    
    (124,716
    )
    
    
    (133,804
    )Distributions to limited partners
    
    
    (13,025,647
    )
    
    
    (4,359,932
    )
    
    
    (2,720,000
    )Net cash used in financing activities
    
    
    (26,623,608
    )
    
    
    (5,835,077
    )
    
    
    (2,292,589
    )Net increase (decrease) in cash and cash
equivalents
    
    
    752,701
    
    
    
    (551,279
    )
    
    
    (438,149
    )Cash and cash equivalents, beginning of
period
    
    
    143,463
    
    
    
    694,742
    
    
    
    1,132,891Cash and cash equivalents, end of period
    
    $
    896,164
    
    
    $
    143,463
    
    
    $
    694,742Cash paid for interest
    
    $
    597,661
    
    
    $
    1,129,074
    
    
    $
    1,216,350
  F-5




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##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Notes to Financial Statements
 1.
    
    The Partnership and Its Significant Accounting PrinciplesCaptec Franchise Capital Partners L.P. IV (the Partnership), a Delaware limited partnership,
was organized on July 23, 1996 for the purpose of acquiring income-producing commercial real
properties and equipment leased on a triple net or double net basis, primarily to operators
of national and regional chain franchised fast food and family style restaurants, as well as
other national and regional retail chains.The initial general partners of the Partnership were Captec Franchise Capital Corporation IV (the
Corporation), a wholly-owned subsidiary of Captec Financial Group, Inc. (Captec), an
affiliate, and Patrick L. Beach, the Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation and Captec. In August 1998, Captec Net Lease Realty, Inc.
(Captec Net Lease), an affiliate, acquired the General Partnership interest of the Partnership.
In December 2001, Captec Net Lease merged with and into Commercial Net Lease Realty, Inc.
(Commercial Net Lease). In connection with the merger, Commercial Net Lease agreed to sell and
assign its General Partnership interest in the Partnership to GP4 Asset Acquisition, LLC (GP4
Asset Acquisition), which is wholly-owned by Mr. Beach and is an affiliate of Captec. Effective
January 15, 2002, the limited partners consented to the transfer of the General Partnership
interest. On September 11, 2003, the Partnerships secured lender consented to the transfer of
the general partnership interest to GP4 Asset Acquisition. Upon receipt of the secured lenders
consent, the general partnership interest was immediately transferred to GP4 Asset Acquisition.
Therefore, as of September 11, 2003, GP4 Asset Acquisition became the general partner of the
Partnership.The Partnership commenced a public offering (the Offering) of up to 30,000 limited partnership
units (the Units), priced at $1,000 per Unit, registered under the Securities Act of 1933, as
amended, by means of a Registration Statement filed on Form S-11, which was declared effective by
the Securities and Exchange Commission on December 23, 1996. The Partnership accepted
subscriptions for the minimum number of Units on March 5, 1997 and immediately commenced
operations. The Offering was fully subscribed in December 1998. Since 1999, 1,025 Units have been
repurchased by the Partnership pursuant to the terms of the Repurchase Plan set forth in the
Partnerships December 23, 1996 prospectus with respect to the Offering. At December 31, 2005,
the Partnership had 28,975 Units issued and outstanding.The principal investment objectives of the Partnership are: (i) preservation and protection of
capital; (ii) distribution of cash flow generated by the Partnerships leases; (iii) capital
appreciation of Partnership properties; (iv) generation of increased income and protection
against inflation through escalation of base rents or participation in gross revenues of tenants
of Partnership properties; and (v) deferred taxation of cash distributions to the limited
partners.Allocation of profits, losses and cash distributions from operations and cash distributions from
sale or refinancing are made pursuant to the terms of the Partnership Agreement. Profits and
losses from operations are allocated among the limited partners based upon the number of Units
owned.Following is a summary of the Partnerships significant accounting policies:Basis of presentationIn November 2004, the limited partners approved a plan to liquidate the Partnership and dispose
of all the assets of the Partnership. With this approval, the Partnership commenced activities
to liquidate and dispose of the assets of the Partnership, which include entering into an
exclusive listing agreement with a third party, who oversees the marketing and offering for sale
of all the real estate assets and equipment leases and loans on behalf of the Partnership. In
accordance with Financial Accounting Standards No. 144 Accounting for the Impairment or Disposal
of Long Lived-Assets (FAS 144), as a result of the approval of the Plan of Liquidation and
Dissolution, as of December 31, 2004 all assets, excluding cash were previously classified as
Assets Held for Sale, and the results of the operations for these Assets Held for Sale were
previously classified as discontinued operations for all years presented, since the operations
are directly related to the assets held for sale. Depreciation of real estate assets ceased at
that time. The four real properties and one financing lease owned by the Partnership as of
December 31, 2005 which were not disposed of within one year from the initial held for sale
designation have been reclassified to investment in operating leases and financing leases, and
the respective results of operations have been presented within continuing operations for all
periods presented
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##### Table of Contents



in accordance with FAS 144. Also, in accordance with FAS 144, the partnership recognized $80,407 of
depreciation expense for these assets for the year ended December 31, 2005 in the fourth quarter
of 2005 to cumulatively catch-up depreciation since its cessation in December 2004 upon
reclassification of these assets. The remaining assets of the Partnership will be sold and the
cash will be used to distribute the net proceeds from such liquidation after the repayment of all
liabilities in accordance with the partnership agreement.
 Cash and cash equivalentsThe Partnership considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.Restricted cashThe Partnership was required to maintain a cash balance in an escrow account until specific
requirements were satisfied related to a note payable.Rental income from operating leasesThe Partnerships operating leases may have scheduled rent increases which occur at various dates
throughout the lease terms. Increases to rental income on leases that provide for rental
increases based on changes in the Consumer Price Index commence being recognized when the
increase is known. The Partnership recognizes the total rent, as stipulated by the lease
agreement, as income on a straight-line basis over the term of each lease for those leases with
fixed percentage increases subject to reasonably assured collectibility. To the extent rental
income on the straight-line basis exceeds rents billable per the lease agreement; an amount is
recorded as unbilled rent.As of December 31, 2005, operating leases to Hollywood Entertainment Corp. represented
47.4%, of the annualized rent from the total portfolio. Any performance failure under these
leases could materially adversely affect the Partnerships income and financial position.Land and buildings subject to operating leasesLand and buildings subject to operating leases are stated at cost less accumulated depreciation.
Buildings are depreciated on the straight-line method over their estimated useful lives (40
years). Depreciation ceases upon designation of depreciable property as held for sale. The
Partnership periodically reviews its real estate portfolio for impairment whenever events or
changes in circumstances indicate that the carrying amount of the property may not be
recoverable. If an impairment loss is indicated using undiscounted cash flows, the loss is
measured as the amount by which the carrying amount of the asset exceeds the estimated fair or
present value of the asset on a discounted cash flow basis.The cost of the properties acquired is allocated among land, buildings and equipment and
recognized intangibles based upon estimated far values in accordance with the provisions of SFAS
No 141, Business Combinations. Recognized intangibles include the value of acquired lease
contracts. In computing the value of acquired lease contracts, consideration is given to (a)
whether the lease is at market rates (b) origination fees typically incurred to negotiate a
contract and (c) recovery costs to replace the tenant.As of December 31, 2005, 100% of the properties owned or held as financing leases by the
Partnership are occupied and all are paying as agreed according to the terms of their leases.
All of the above properties are being marketed for sale. Based on current offers and sales
agreements for the properties, the General Partner does not have evidence at this time to believe
impairment exists on any of the properties.In the second quarter of 2005, the Partnership sold twelve properties for net cash, prior to
repayment of debt and related debt retirement costs, for approximately $20.8 million, resulting
in a gain of approximately $3.2 million. There were approximately $1.36 million of debt
retirement costs associated with the disposition of these properties.In the third quarter of 2005, the Partnership sold two properties for net cash, prior to
repayment of debt and related debt retirement costs, for approximately $7.1 million, resulting in
a gain of approximately $1.5 million. There were approximately $330,000 of debt retirement costs
associated with the disposition of one of these properties.
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##### Table of Contents



For year ended December 31, 2004, the Partnership sold three properties that were triggered by
the tenants exercise of purchase option clauses in the lease agreements. The properties were
sold for net cash proceeds of approximately $3.9 million, resulting in a gain of approximately
$262,000. There were approximately $209,000 of debt retirement costs associated with the
disposition of the Capital Food property.All of the properties are subject to triple net leases pursuant to which the tenant is
responsible for all expenses related to the cost of operating the properties, including real
estate taxes, insurance, maintenance and repair costs. As of December 31, 2005, original base
terms of the property leases ranged from 10 to 20 years, and the weighted average remaining base
term of the property lease portfolio was 8.1 years. Certain of the leases provide the tenant with
one or more options to renew the lease upon expiration of the base term at predetermined or
market rental rates. All but two of the leases provide for increases in the monthly rents during
the base term of the lease, with two of these determined based upon fixed, contractual rates of
increase.Net investment in financing leasesNet investment in financing leases represents one building used as a retail store that is subject
to a long-term ground lease and equipment used in restaurant operations which are leased on a
triple-net basis. Leases classified as financing leases are stated as the sum of the minimum
lease payments plus the unguaranteed residual value accruing to the benefit of the lessor, less
unearned income. Unearned income is amortized to income over the lease term so as to produce a
constant periodic rate of return on the net investment in the lease. Direct origination costs are
deferred and amortized over the life of the lease as an adjustment to yield. The Partnership
periodically reviews its financing lease portfolio for impairment whenever events or changes in
circumstances indicate that the carrying value of a lease may not be recoverable. If impairment
is indicated, a loss reserve is calculated based on the estimated amounts recoverable. At
December 31, 2004, the Partnership had provided an allowance of $275,542 for uncollectible
amounts associated with one of its financing leases. Amounts due under this lease and the
related reserve were written off in 2005.Net income per limited partnership interestNet income per limited partnership interest is calculated using the weighted average number of
limited partnership Units outstanding during the period and the limited partners allocable share
of the net income.Distributions per limited partnership UnitDistributions per limited partnership Unit is calculated using the actual distributions disbursed
during the period and the weighted average number of limited partnership Units outstanding during
the period. Actual individual limited partner distributions realized may vary from this
calculation as a result of a variety of factors including: (i) actual distributions are computed
based on quarterly operating results and outstanding limited partnership units, which are
disbursed in the subsequent quarter; (ii) certain limited partners have elected to receive
monthly distributions versus quarterly distributions which creates timing differences between
comparative calculations, (iii) the calculation ignores the timing of repurchases and (iv)
liquidating distributions are determined based on the tax account balances of the partners per
the Partnership agreement.Income taxesNo provision for income taxes is included in the accompanying financial statements, as the
Partnerships results of operations are passed through to the partners for inclusion in their
respective income tax returns. The principal reasons for the difference between net income passed
through the partners for federal income tax purposes and financial statement purposes are the
recognition of straight-line rent for reporting purposes, different useful lives and depreciation
methods for real property and the provision for losses for reporting purposes versus bad debt
expense for tax purposes.EstimatesThe preparation of financial statements in conformity with United States generally accepted
accounting requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
 F-8




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##### Table of Contents



ReclassificationsCertain prior period financial statement amounts have been reclassified to conform to the 2005
presentations.
 2.
    
    DistributionsCash flows of the Partnership are allocated 99% to the limited partners and 1% to the General
Partner, except that the General Partners share is subordinated to a 10% per annum cumulative,
non-compounded preferred return to the limited partners. Net sale or refinancing proceeds of the
Partnership are allocated 90% to the limited partners and 10% to the General Partner, except that
the General Partners share is subordinated to a 10.5% per annum cumulative, non-compounded
return on their adjusted investment plus return of the original contributions to the limited
partners.Distributions of cash flow from operations are paid quarterly in arrears.3.
    
    Related Party Transactions and AgreementsPursuant to the Partnership Agreement, the General Partner receives acquisition fees of 4%, plus
an additional .00624% for each 1% of indebtedness incurred in acquiring properties and equipment,
of the aggregate purchase prices of properties and equipment (not to exceed a total 5%
acquisition fee). The Partnership incurred $55,000 in acquisition fees during 2003 for the
purchase of a property. In 2005 and 2004, the Partnership incurred no acquisition fees. The
acquisition fees are capitalized as part of the Partnerships investment in land and buildings
subject to operating leases and net investment in financing leases.The Partnership has entered into an asset management agreement with the General Partner and its
affiliates, whereby the General Partner and the General Partners affiliates provide various
property and equipment management services for the Partnership. A subordinated asset management
fee is charged in an amount equal to 1% of the gross rental revenues derived from the properties
and equipment. Payment of the asset management fee is subordinated to receipt by the limited
partners of annual distributions equal to a cumulative, non-compounded return of 10% per annum on
their adjusted invested capital. Management fees of $17,822, $32,180 and $43,092 were expensed as
incurred during 2005, 2004 and 2003, respectively.The Partnership Agreement provides for the General Partner to receive real estate and equipment
liquidation fees limited to the lesser of 3% of the gross sales price or 50% of the customary
real estate commissions in the event of a real estate liquidation. This fee is payable only after
the limited partners have received distributions equal to a cumulative, non-compounded return of
10.5% per annum on their adjusted invested capital, plus distributions of sale or refinancing
proceeds equal to 100% of their original contributions. The Partnership did not pay any real
estate or equipment liquidation fees during 2005, 2004 or 2003 and does not anticipate the
payment of any fees under this provision.In April 2003, the Partnership acquired a property located in Harrison, Ohio subject to an
existing lease with a Taco Bell franchisee. The property was purchased from an affiliate for a
price of $1,155,000, which the Partnership funded with $230,000 of cash and $920,000 of proceeds
from two term notes issued in connection with the purchase. The lease is an absolute net lease
that expires in September 2019. This property was sold in June 2005 and the note was paid in
full with proceeds from the sale.4.
    
    Land and Building Subject to Operating LeasesThe net investment in operating leases as of December 31, 2005 and 2004, including those
classified as held for sale, is comprised of the following:
 2005
    
    
    2004Land
    
    $
    1,705,200
    
    
    $
    10,261,124Building and improvements
    
    
    3,214,980
    
    
    
    17,979,5644,920,180
    
    
    
    28,240,688Less accumulated depreciation
    
    
    (624,723
    )
    
    
    (2,335,649
    )$
    4,295,457
    
    
    $
    25,905,039
 F-9




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##### Table of Contents



2006
    
    $
    547,7402007
    
    
    493,5112008
    
    
    418,0882009
    
    
    418,9442010
    
    
    420,656Thereafter
    
    
    1,286,677Total
    
    $
    3,585,616
 5.
    
    Net Investment in Financing LeasesThe net investment in financing leases as of December 31, 2005 and 2004 is comprised of the
following:
 2005
    
    
    2004Minimum lease payments to be received
    
    $
    1,880,854
    
    
    $
    2,126,118Gross investment in financing leases
    
    
    1,880,854
    
    
    
    2,126,118Less unearned income
    
    
    (663,268
    )
    
    
    (799,693
    )Net investment in financing leases
    
    $
    1,217,585
    
    
    $
    1,326,425
  2006
    
    $
    154,0002007
    
    
    154,0002008
    
    
    154,0002009
    
    
    166,8332010
    
    
    169,400Thereafter
    
    
    1,082,621Total
    
    $
    1,880,854
 6.
    
    Notes PayableIn December 1998, the Partnership entered into a $6.4 million term note. The note had a 10-year
term, was collateralized by certain properties that had a carrying value of approximately $11.6
million subject to operating leases, and bore interest at a rate of 8.13% per annum. The
Partnership defeased all the remaining amounts payable under this note using the proceeds from
the sale of twelve properties in June 2005. The Partnership incurred approximately $841,000 of
yield maintenance costs and $46,000 of professional fees related to the defeasance.In March 1999, the Partnership entered into an additional $3.3 million term note. The note had a
10-year term, was collateralized by certain properties that had a carrying value of approximately
$3.4 million subject to operating leases, and bore interest at a rate of 8.5% per annum. In March
2004, the partnership defeased approximately $466,000 of this note payable with proceeds from the
sale of a property. The Partnership defeased all the remaining amounts payable under this note
using the proceeds from the sale of twelve properties in June 2005. The Partnership incurred
approximately $427,000 of yield maintenance costs and $46,000 of professional fees related to the
June 2005 defeasance.The Partnership purchased one net leased real estate property in October 2000 and assumed a $3.75
million term note in connection with the acquisition of a property. The note had a 10-year term
and was collateralized by a property that had a carrying value of approximately $4.6 million and
bore interest at the rate of 8.35% per annum. The Partnership prepaid all remaining amounts
payable under this note using the proceeds from the sale of the collateralized property in August
2005. The Partnership incurred approximately $295,000 of yield maintenance costs and $35,000 of
professional fees related to the prepayment.In November 2001, the Partnership entered into an additional $1.5 million term note. In June
2004, the Partnership sold a property subject to an operating lease that secured this note.
Using proceeds from the sale, the note was paid down to a balance of $874,000, and the maturity
date was extended to July 2006. The remaining note was secured by a certain property subject to
an operating lease that had a carrying value of $1.5 million, and bore interest at a rate of
prime plus 2% per annum. The Partnership prepaid all remaining amounts payable under this note
using the proceeds from the sale of the secured property in June 2005.
 F-10




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##### Table of Contents



In April 2003, the Partnership entered into an $862,500 term note. The note has a 5-year term,
was collateralized by a certain property subject to an operating lease that had a carrying value
of $1.1 million, and bore interest at a rate of 6.25%, per annum. The Partnership prepaid all
remaining amounts payable under this note using the proceeds from the sale of the collateralized
property in June 2005.In April 2003, the Partnership entered into a $57,500 unsecured revolving note. The note
initially had a 2-year term and bore interest at a variable rate equivalent to the Wall Street
Journal (WSJ) prime rate plus 1/2%. The interest rate was adjusted monthly for changes in the
WSJ prime rate. In April 2005, the maturity date on the note was extended to April 2006. The
Partnership prepaid the remaining amounts payable under this note using the proceeds from the
sale of the twelve properties in June 2005.Debt issuance costs of $646,349 were incurred in connection with the issuance of the notes, and
were being amortized over the life of the notes to interest expense using the straight-line
method, which is not materially different than the interest rate method. Upon the defeasance and
prepayment of the notes payable in June 2005, the remaining unamortized debt issuance costs
associated with the debt that was prepaid were expensed.
 7.
    
    Change in EstimateAs of December 31, 2004, the Partnership held two vacant properties. In June 2004, the leases on
these properties (for which rental payments were over eighteen months past due), along with the
rights to pursue remedies against the tenant and all Guarantors, were terminated as the
Partnership entered into a Settlement Agreement with the former tenants and Guarantors. Under
that Settlement Agreement, the Partnership received $100,000 as full and final payment from all
parties involved. The remaining receivable of $277,000 associated with these leases was written
off as bad debt expense in 2004 and is included in income from discontinued operations, net.8.
    
    Income from Discontinued Operations, netIncome from discontinued operations, net for the years ended December 31, 2005, 2004 and 2003
consists of the following:
 2005
    
    
    2004
    
    
    2003Revenues
    
    $
    1,111,350
    
    
    $
    2,351,658
    
    
    $
    3,186,240Interest expense
    
    
    555,865
    
    
    
    1,182,993
    
    
    
    1,271,165Depreciation
    
    
    
    
    
    
    392,701
    
    
    
    425,891General and administrative
    
    
    126,298
    
    
    
    400,137
    
    
    
    34,084Income from discontinued operations, net
    
    $
    429,187
    
    
    $
    375,827
    
    
    $
    1,455,100
  F-11




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##### Table of Contents



9. Quarterly Results of Operations (Unaudited)
  Year Ended December 31, 20051st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterTotal revenues from continued operations (1)
    
    
    165,510
    
    
    
    164,840
    
    
    
    164,170
    
    
    
    163,499Income from continued operations (1)
    
    
    129,199
    
    
    
    113,181
    
    
    
    89,801
    
    
    
    11,269Other income from continued operations (1)
    
    
    350
    
    
    
    15,324
    
    
    
    77,749
    
    
    
    35,331Income (loss) from discontinued operations (1)
    
    
    214,541
    
    
    
    2,055,732
    
    
    
    1,231,363
    
    
    
    (6,353
    )Net income
    
    
    344,089
    
    
    
    2,184,236
    
    
    
    1,398,912
    
    
    
    40,247Net income allocable to limited partner
    
    
    340,648
    
    
    
    2,162,236
    
    
    
    1,396,850
    
    
    
    58,716Net income per limited partnership unit
    
    
    11.76
    
    
    
    74.63
    
    
    
    48.21
    
    
    
    2.02
 
 (1)
    
    The amounts presented for the first three quarters of 2005 are not equal to the same amounts previously reported in the respective Form 10Qs filed
with the SEC for each period primarily as a result of changes in discontinued operations due to properties that were not disposed within one year of
the initial decision to sell the properties. All properties were considered discontinued operations through the first three quarters of 2005; as of
December 31, 2005, certain properties were reclassified to continued operations because they were not disposed within one year of the initial
decision to sell the properties. Below is a reconciliation to the amounts previously reported in the respective Form 10-Qs: Total revenues from discontinued operations previously reported in Form 10-Q
    
    
    736,405
    
    
    
    604,656
    
    
    
    264,808Total revenues not subsequently reclassified to continued operations
    
    
    (570,896
    )
    
    
    (439,817
    )
    
    
    (100,639
    )Total revenues subsequently reclassified to continued operations disclosed in Form 10-K
    
    
    165,510
    
    
    
    164,840
    
    
    
    164,170Operating income (loss) from discontinued operations previously reported in Form 10-Q
    
    
    341,742
    
    
    
    (1,063,024
    )
    
    
    (201,353
    )Operating (income) loss not subsequently reclassified to continued operations
    
    
    (212,544
    )
    
    
    1,176,205
    
    
    
    291,154Operating
income subsequently reclassified to continued operations disclosed in Form 10-K
    
    
    129,199
    
    
    
    113,181
    
    
    
    89,801Other income from discontinued operations previously reported in Form 10-Q
    
    
    2,347
    
    
    
    3,247,260
    
    
    
    1,600,265Other income not subsequently reclassified to continued operations
    
    
    (1,997
    )
    
    
    (3,231,936
    )
    
    
    (1,522,516
    )Other income subsequently reclassified to continued operations disclosed in Form 10-K
    
    
    350
    
    
    
    15,324
    
    
    
    77,749Net income from discontinued operations previously reported in Form 10-Q
    
    
    344,089
    
    
    
    2,184,236
    
    
    
    1,398,912Less operating income subsequently reclassified to continued operations
    
    
    (129,199
    )
    
    
    (113,181
    )
    
    
    (89,801
    )Less other income subsequently reclassified to continued operations
    
    
    (350
    )
    
    
    (15,324
    )
    
    
    (77,749
    )Income from discontinued operations disclosed in Form 10-K
    
    
    214,541
    
    
    
    2,055,732
    
    
    
    1,231,363
  Year Ended December 31, 20041st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterTotal revenues from continued operations (2)
    
    
    168,189
    
    
    
    167,519
    
    
    
    166,850
    
    
    
    166,180Income (loss) from continued operations (2)
    
    
    (66,581
    )
    
    
    52,333
    
    
    
    (22,494
    )
    
    
    (51
    )Other income from continued operations (2)
    
    
    168
    
    
    
    12,921
    
    
    
    29
    
    
    
    262Income from discontinued operations (2)
    
    
    370,493
    
    
    
    138,391
    
    
    
    243,444
    
    
    
    69,237Net income
    
    
    304,080
    
    
    
    203,644
    
    
    
    220,979
    
    
    
    69,448Net income allocable to limited partner
    
    
    301,039
    
    
    
    201,607
    
    
    
    218,769
    
    
    
    68,754Net income per limited partnership unit
    
    
    10.33
    
    
    
    6.96
    
    
    
    7.55
    
    
    
    2.39(2) The amounts presented for the first three quarters of 2004 are not equal to the same amounts previously reported in the respective Form 10Qs filed
with the SEC for each period primarily as a result of changes in discontinued operations due to properties that were not disposed within one year of
the initial decision to sell the properties. All properties were considered discontinued operations through the first three quarters of 2005; as of
December 31, 2005, certain properties were reclassified to continued operations because they were not disposed within one year of the initial
decision to sell the properties. Below is a reconciliation to the amounts previously reported in the respective Form 10-Qs:Total revenues from discontinued operations previously reported in Form 10-Q
    
    
    822,846
    
    
    
    771,896
    
    
    
    703,232
    
    
    
    722,420Total revenues not subsequently reclassified to continued operations
    
    
    (654,658
    )
    
    
    (604,378
    )
    
    
    (536,383
    )
    
    
    (556,241
    )Total revenues subsequently reclassified to continued operations disclosed in Form 10-K
    
    
    168,189
    
    
    
    167,519
    
    
    
    166,850
    
    
    
    166,180Operating income from discontinued operations previously reported in Form 10-Q
    
    
    51,601
    
    
    
    172,912
    
    
    
    220,450
    
    
    
    77,763Operating income not subsequently reclassified to continued operations
    
    
    (118,182
    )
    
    
    (120,580
    )
    
    
    (242,944
    )
    
    
    (77,814
    )Operating income (loss) subsequently reclassified to continued operations disclosed in
Form 10-K
    
    
    (66,581
    )
    
    
    52,333
    
    
    
    (22,494
    )
    
    
    (51
    )Other income (loss) from discontinued operations previously reported in Form 10-Q
    
    
    252,479
    
    
    
    30,732
    
    
    
    529
    
    
    
    (8,315
    )Other (income) loss not subsequently reclassified to continued operations
    
    
    (252,311
    )
    
    
    (17,811
    )
    
    
    (500
    )
    
    
    8,577Other income subsequently reclassified to continued operations disclosed in Form 10-K
    
    
    168
    
    
    
    12,921
    
    
    
    29
    
    
    
    262Net income from discontinued operations previously reported in Form10-Q
    
    
    304,080
    
    
    
    203,644
    
    
    
    220,979
    
    
    
    69,448Less operating (income) loss subsequently reclassified to continued operations
    
    
    66,581
    
    
    
    (52,333
    )
    
    
    22,494
    
    
    
    51Less other income subsequently reclassified to continued operations
    
    
    (168
    )
    
    
    (12,921
    )
    
    
    (29
    )
    
    
    (262
    )Income from discontinued operations disclosed in Form 10-K
    
    
    370,493
    
    
    
    138,391
    
    
    
    243,444
    
    
    
    69,237
 F-12




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##### Table of Contents



SCHEDULE III
 PROPERTIES AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2005
 Cost
    
    
    Gross AmountCapitalized
    
    
    At WhichSubsequent
    
    
    Carried At
    
    
    
    
    
    
    Date ofType of
    
    
    State
    
    
    
    
    
    
    Initial Cost
    
    
    To
    
    
    Close
    
    
    Accumulated
    
    
    Acquisition/
    
    
    Acquisition/Concept
    
    Property
    
    
    Location
    
    
    Encumbrances
    
    
    To Company
    
    
    Acquisition
    
    
    Of Period
    
    
    Depreciation
    
    
    Construction
    
    
    Construction
    
    
    DepreciationHollywood Video
    
    Retail
    
    OH
    
    
    
    
    
    
    1,455,300
    
    
    
    
    
    
    
    1,455,300
    
    
    
    173,858
    
    
    
    1997
    
    
    Acquisition
    
    40 YearsBlockbuster Video
    
    Retail
    
    GA
    
    
    
    
    
    
    1,170,000
    
    
    
    
    
    
    
    1,170,000
    
    
    
    162,813
    
    
    
    1997
    
    
    Acquisition
    
    40 YearsHollywood Video
    
    Retail
    
    OH
    
    
    
    
    
    
    1,454,880
    
    
    
    
    
    
    
    1,454,880
    
    
    
    191,802
    
    
    
    1998
    
    
    Acquisition
    
    40 YearsArbys
    
    Restaurant
    
    MI
    
    
    
    
    
    
    840,000
    
    
    
    
    
    
    
    840,000
    
    
    
    96,250
    
    
    
    1998
    
    
    Acquisition
    
    40 YearsTotal Properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,920,180
    
    
    $
    
    
    
    $
    4,920,180
    
    
    $
    624,723
   2005
    
    
    2004Balance, beginning of year
    
    $
    28,240,688
    
    
    $
    31,873,511Acquisitions
    
    
    
    
    
    
    Dispositions and other
    
    
    (23,320,508
    )
    
    
    (3,632,823
    )Costs capitalized
    
    
    
    
    
    
    Balance, end of year
    
    $
    4,920,180
    
    
    $
    28,240,688
  2005
    
    
    2004Balance, beginning of year
    
    $
    2,335,649
    
    
    $
    2,205,530Depreciation expense
    
    
    80,407
    
    
    
    473,108Dispositions and other
    
    
    (1,791,333
    )
    
    
    (342,989
    )Balance, end of year
    
    $
    624,723
    
    
    $
    2,335,649
 F-13




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description2
    
    Plan of Liquidation and Dissolution (Incorporated by reference to the
Registrants Definitive Proxy Statement on Schedule 14A, filed on
September 21, 2004)4
    
    Amended Agreement of Limited Partnership of Registrant. (Incorporated
by reference to the Registrants Definitive Proxy Statement on
Schedule 14A, filed on September 21, 2004 and the corresponding
exhibit in the Registrants Form 10-K for the fiscal year ended
December 31, 1998)10.1
    
    Promissory Note dated December 17, 1998 between Registrant and
National Realty Funding L.C. (Incorporated by reference to the
corresponding exhibit in the Registrants Form 10-K for the fiscal
year ended December 31, 1998)10.2
    
    Promissory Note dated March 30, 1999 between Registrant and
National Realty Funding L.C. (Incorporated by reference to the
corresponding exhibit in the Registrants Form 10-Q for the quarter
ended March 31, 1999)31
    
    Certification Pursuant to section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002