##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549









(Mark One)

| |  |                                                                               
| |  | ------------------------------------------------------------------------------
| |  | ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

OR

| |  |                                                                                   
| |  | ----------------------------------------------------------------------------------
| |  | 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



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 38-3304095                          
|(State or other jurisdiction
of incorporation or organization) |  | (I.R.S. Employer
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) 994-5505
|                                                              
|                                                              
|                                                              
|                                                              
|Securities registered under Section 12(b) of the Exchange Act: |  | None            
|                                                              
|                                                              
|                                                              
|                                                              
|Securities registered under Section 12(g) of the Exchange Act: |  | None            
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  | (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
       Yes     No

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

At December 31, 2000 subscriptions for 30,000 units of limited partnership
interest (the Units) had been accepted, representing an aggregate amount of
$30,000,000. The aggregate sales price does not reflect market value and it
reflects only the price at which the Units were offered to the public.
Currently, there is no market for the Units and no market is expected to
develop. At December 31, 2000 , 29,625 Units were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

A portion of the Prospectus of the Registrant dated December 23, 1996, as
supplemented and filed pursuant to Rule 424(b) under the Securities Act of
1933, as amended, S.E.C. File No. 333-9371, and is incorporated by reference in
Parts I and III of this Annual Report on Form 10-K.





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TABLE OF CONTENTS



|                                                                             |  |  |  |  |  |  |  | 
|---------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|FORM 10-K                                                                   
|PART I                                                                      
|PART II                                                                     
|PART III                                                                    
|SIGNATURES                                                                  
|Report of Independent Accountants                                           
|Report of Independent Accountants                                           
|SCHEDULE III PROPERTIES AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 2000



---






Item 1. Business

Captec Franchise Capital Partners L.P. IV (the Partnership) is a
Delaware limited partnership formed on July 23, 1996 for the purpose of
acquiring income-producing commercial real properties and equipment which are
leased primarily to operators of national chain and nationally franchised
fast-food, family style and dinner house restaurants as well as other
franchised or chain businesses pursuant to leases requiring the lessee to pay
all taxes, assessments, utilities, insurance, maintenance, and repair costs
associated with such properties or leases differing only in that the
Partnership is responsible for the maintenance of the exterior walls and roof
of the property. The Partnership also acquires properties that are leased to
prominent national and regional retail concerns. The general partners upon
formation of the Partnership were Captec Franchise Capital Corporation IV
(Captec) and Patrick L. Beach, an individual. In August, 1998, the general
partnership interest in the Partnership was acquired by Captec Net Lease
Realty, Inc. (Captec Net Lease), an affiliate of Captec, for $2,912,000.
Captec Net Lease, Captec, and Mr. Beach are collectively referred to as the
General Partners.

The Partnership commenced a public offering (the Offering) of up to
30,000 units of limited partnership interest (the Units) registered under the
Securities Act of 1933, as amended, by means of a Registration Statement on
Form S-11 which was declared effective by the Securities and Exchange
Commission on December 23, 1996. Capitalized terms not defined herein shall
have the meaning ascribed to them in the Partnerships Prospectus dated
December 23, 1996. Through December 31, 1998, the Partnership had accepted
subscriptions for the entire offering of 30,000 Units from 1,587 investors.
During 1999 the Partnership repurchased a total of 117 Units for $105,399, or
90% of the investors capital account. In April 2000 the Partnership
repurchased a total of 110 Units for $99,282, or 90% of the investors capital
account. An additional 148 Units were repurchased in October 2000 for
$131,080, or 89% of the investors capital account. The repurchase of the
Units was completed pursuant to the terms of the Repurchase Plan set forth in
the Partnerships Prospectus. At December 31, 2000, the Partnership had 29,625
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 lessees of Partnership properties; and (v) deferred taxation of
Partnership cash distributions for Limited Partners.

The Partnership expects to have not less than 75%, but not more than 90%
of total investments in properties and up to 25%, but not less than 10% in
equipment. The Partnership does not intend to have more than 25% of properties
to be leased to retail concerns. The properties generally will be leased on
terms which provide for a base minimum annual rent with fixed increases on
specific dates or indexation of rent to indices such as the Consumer Price
Index. The equipment will be leased only pursuant to leases under which the
present value of non-cancelable rental payments payable during the initial term
of the lease is at least sufficient to permit a lessor to recover the purchase
price of the equipment.

The Partnership has no employees. The General Partners and their
affiliates, however, are permitted to perform services for the Partnership.





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##### Table of Contents



Item 2. Description of Properties

As of December 31, 2000, the Partnership had a portfolio of 21 properties
located in 10 states, with a cost basis of $31.9 million and 23 equipment
leases with an original investment of $7.7 million. The properties are leased
to 10 operators of restaurant concepts and four retail operators.

As of December 31, 2000, leases to S&A Restaurants Corporation, Kona
Restaurant Group, Inc. and United Supermarkets, Inc. represented 19.0%, 17.3%
and 14.8% of the annualized rent from the properties, respectively. Equipment
leases to Champps Americana, Inc. represented 27.2% of the annualized rent from
the equipment. Any performance failure under these leases could materially
affect the Partnerships income and financial position.

All of the properties in the Partnership are performing at December 31,
2000. In October of 1998, Boston Chicken Inc. and the majority of its
subsidiaries filed for Chapter 11 bankruptcy protection. The Partnership has
one lease to a Boston Chicken franchisee who did file bankruptcy. This lease
was assumed under the bankruptcy court with slightly modified terms.
Annualized rent from this lease was $80,166 at December 31, 2000.

The following is a summary description of the property and equipment
leases as of December 31, 2000.





2



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##### Table of Contents



|                                |  |                    |  |           |  |            |  |                  |            | 
|------------------------------- |  | ------------------ |  | --------- |  | ---------- |  | ---------------- | ---------- | 
|                                |  |                    |  |           |  |            |  | Total Asset Cost |           
|                                |  | Concept            |  | Date of   |  | Date of    |  | Including        |           
|Lessee Name                     |  | Name               |  | Commence  |  | Expiration |  | Acquisition Fees |           
|                                |  |                    |  |           |  |            |  |                  |           
|PROPERTIES                     
|                               
|                               
|                               
|                               
|                               
|Finest Foodservice, LLC         |  | Boston Market      |  | 4/1/1997  |  | 4/1/2012   |  | $                | 1,012,200  | 
|Hollywood Entertainment Corp.   |  | Hollywood Video    |  | 11/1/1997 |  | 7/1/2012   |  |                  | 1,455,300  | 
|Blockbuster Entertainment Corp. |  | Blockbuster Video  |  | 9/1/1997  |  | 8/1/2007   |  |                  | 1,170,000  | 
|Kona Restaurant Group, Inc.     |  | Carinos           |  | 8/1/1997  |  | 8/1/2014   |  |                  | 1,680,000  | 
|Capital Foods, Inc.             |  | Arbys             |  | 12/1/1998 |  | 12/1/2018  |  |                  | 819,000    | 
|Taco Two of Bakersfield         |  | Del Taco           |  | 2/1/1999  |  | 2/1/2019   |  |                  | 1,239,000  | 
|Kona Restaurant Group, Inc.     |  | Kona Steakhouse    |  | 8/1/1999  |  | 8/1/2016   |  |                  | 1,801,622  | 
|Kona Restaurant Group, Inc.     |  | Johnny Carinos    |  | 8/1/1999  |  | 8/1/2016   |  |                  | 1,675,622  | 
|Hollywood Entertainment Corp.   |  | Hollywood Video    |  | 10/1/1998 |  | 11/1/2012  |  |                  | 1,454,880  | 
|S&A Restaurant Corporation      |  | Steak & Ale        |  | 7/1/1998  |  | 7/1/2018   |  |                  | 2,100,000  | 
|S&A Restaurant Corporation      |  | Steak & Ale        |  | 7/1/1998  |  | 7/1/2018   |  |                  | 2,441,250  | 
|S&A Restaurant Corporation      |  | Bennigans         |  | 7/1/1998  |  | 7/1/2018   |  |                  | 1,627,500  | 
|Slaymaker Group, Inc.           |  | Wingers            |  | 3/1/1999  |  | 3/1/2019   |  |                  | 941,850    | 
|Slaymaker Group, Inc.           |  | Wingers            |  | 2/1/1999  |  | 2/1/2019   |  |                  | 948,150    | 
|TEC Foods                       |  | Taco Bell          |  | 1/1/1999  |  | 1/1/2009   |  |                  | 766,500    | 
|TEC Foods                       |  | Taco Bell          |  | 1/1/1999  |  | 1/1/2019   |  |                  | 766,500    | 
|RTM, Inc.                       |  | Arbys             |  | 9/1/1998  |  | 9/1/2018   |  |                  | 840,000    | 
|Romacorp, Inc.                  |  | Tony Romas        |  | 1/1/1999  |  | 1/1/2014   |  |                  | 1,942,500  | 
|DRM, Inc.                       |  | Arbys             |  | 1/1/2000  |  | 1/1/2020   |  |                  | 987,000    | 
|United Supermarket, Inc.        |  | United Supermarket |  | 11/1/2000 |  | 6/1/2020   |  |                  | 5,063,907  | 
|Sterling Jewelers, Inc.         |  | Jared              |  | 2/1/1999  |  | 2/1/2019   |  |                  | 1,131,620  | 
|                                |  |                    |  |           |  |            |  |                  |            | 
|                                |  |                    |  |           |  |            |  |                  | 31,864,401 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                |  |          |  |  |      |       |  |          |  |             |  |         |         |  |           |           |         |  |  |  |        |  |       |  |  |  |       | 
|------------------------------- |  | -------- |  |  | ---- | ----- |  | -------- |  | ----------- |  | ------- | ------- |  | --------- | --------- | ------- |  |  |  | ------ |  | ----- |  |  |  | ----- | 
|                                |  |          |  |  |      | Asset |  |          |  |             |  |         |         |  |           | Date of   |         |  |  |  | Annual |  |      
|                                |  |          |  |  |      | State |  |          |  |             |  | Monthly |         |  | Next Rent |           | Rate of | 
|Lessee Name                     |  | Location |  |  | Rent |       |  | Increase |  | Increase(2) |  |         | Sq. Ft. | 
|                                |  |          |  |  |      |       |  |          |  |             |  |         |         | 
|PROPERTIES                     
|                               
|Finest Foodservice, LLC         |  |          |  |  |      | CO    |  |          |  |             |  | $       | 6,681   |  |           | 4/1/2002  |         |  |  |  |        |  | 1.93% |  |  |  | 3,035 | 
|Hollywood Entertainment Corp.   |  |          |  |  |      | OH    |  |          |  |             |  |         | 12,702  |  |           | 7/1/2003  |         |  |  |  | (1)    |  | 1.92% |  |  |  | 7,488 | 
|Blockbuster Entertainment Corp. |  |          |  |  |      | GA    |  |          |  |             |  |         | 9,831   |  |           | 8/1/2002  |         |  |  |  |        |  | 2.29% |  |  |  | 6,500 | 
|Kona Restaurant Group, Inc.     |  |          |  |  |      | TX    |  |          |  |             |  |         | 15,400  |  |           | 8/1/2003  |         |  |  |  |        |  | 1.64% |  |  |  | 6,257 | 
|Capital Foods, Inc.             |  |          |  |  |      | OH    |  |          |  |             |  |         | 7,495   |  |           | 12/1/2001 |         |  |  |  |        |  | 2.50% |  |  |  | 2,950 | 
|Taco Two of Bakersfield         |  |          |  |  |      | CA    |  |          |  |             |  |         | 10,571  |  |           | 2/1/2002  |         |  |  |  |        |  | 1.32% |  |  |  | 2,164 | 
|Kona Restaurant Group, Inc.     |  |          |  |  |      | TX    |  |          |  |             |  |         | 15,728  |  |           | 8/1/2002  |         |  |  |  |        |  | 1.63% |  |  |  | 6,335 | 
|Kona Restaurant Group, Inc.     |  |          |  |  |      | TX    |  |          |  |             |  |         | 14,628  |  |           | 8/1/2002  |         |  |  |  |        |  | 1.63% |  |  |  | 7,814 | 
|Hollywood Entertainment Corp.   |  |          |  |  |      | OH    |  |          |  |             |  |         | 12,268  |  |           | 10/1/2002 |         |  |  |  | (3)    |  | n/a   |  |  |  | 7,488 | 
|S&A Restaurant Corporation      |  |          |  |  |      | MI    |  |          |  |             |  |         | 17,084  |  |           | 7/1/2002  |         |  |  |  |        |  | 1.96% |  |  |  | 7,724 | 
|S&A Restaurant Corporation      |  |          |  |  |      | PA    |  |          |  |             |  |         | 19,860  |  |           | 7/1/2002  |         |  |  |  |        |  | 1.96% |  |  |  | 7,239 | 
|S&A Restaurant Corporation      |  |          |  |  |      | VA    |  |          |  |             |  |         | 13,240  |  |           | 7/1/2002  |         |  |  |  |        |  | 1.96% |  |  |  | 5,210 | 
|Slaymaker Group, Inc.           |  |          |  |  |      | AZ    |  |          |  |             |  |         | 8,036   |  |           | 3/1/2004  |         |  |  |  |        |  | 1.92% |  |  |  | 3,172 | 
|Slaymaker Group, Inc.           |  |          |  |  |      | AZ    |  |          |  |             |  |         | 8,089   |  |           | 2/1/2004  |         |  |  |  |        |  | 1.92% |  |  |  | 3,240 | 
|TEC Foods                       |  |          |  |  |      | MI    |  |          |  |             |  |         | 6,235   |  |           | 1/1/2002  |         |  |  |  |        |  | 0.66% |  |  |  | 2,252 | 
|TEC Foods                       |  |          |  |  |      | MI    |  |          |  |             |  |         | 6,235   |  |           | 1/1/2002  |         |  |  |  |        |  | 0.66% |  |  |  | 2,269 | 
|RTM, Inc.                       |  |          |  |  |      | MI    |  |          |  |             |  |         | 6,334   |  |           | 9/1/2001  |         |  |  |  |        |  | 0.99% |  |  |  | 5,909 | 
|Romacorp, Inc.                  |  |          |  |  |      | TX    |  |          |  |             |  |         | 15,417  |  |           | 1/1/2002 

[Additional columns below]

[Continued from above table, first column(s) repeated]



|                                 |  |                |  |            |  |            |  |                  |            | 
|-------------------------------- |  | -------------- |  | ---------- |  | ---------- |  | ---------------- | ---------- | 
|                                 |  |                |  |            |  |            |  | Total Asset Cost |           
|                                 |  | Concept        |  | Date of    |  | Date of    |  | Including        |           
|Lessee Name                      |  | Name           |  | Commence   |  | Expiration |  | Acquisition Fees |           
|                                 |  |                |  |            |  |            |  |                  |           
|EQUIPMENT                       
|                                
|J.M.C. Limited Partnership       |  | Applebees     |  | 3/1/1997   |  | 3/1/2004   |  |                  | 422,100    | 
|DenAmerica Corp.                 |  | Black Eye Pea  |  | 4/15/1997  |  | 4/15/2004  |  |                  | 367,500    | 
|Shells Seafood Restaurants, Inc. |  | Shells Seafood |  | 6/1/1997   |  | 6/1/2002   |  |                  | 124,591    | 
|Shells Seafood Restaurants, Inc. |  | Shells Seafood |  | 6/1/1997   |  | 6/1/2002   |  |                  | 98,133     | 
|Champps Americana, Inc.          |  | Champps        |  | 4/1/1998   |  | 4/1/2003   |  |                  | 896,229    | 
|Champps Americana, Inc.          |  | Champps        |  | 7/1/1998   |  | 7/1/2003   |  |                  | 1,089,914  | 
|Corral South Store #4, Inc.      |  | Golden Corral  |  | 6/15/1997  |  | 6/15/2002  |  |                  | 531,508    | 
|Girardi-Riva Enterprises, Inc.   |  | Arbys         |  | 2/1/1998   |  | 2/1/2005   |  |                  | 252,269    | 
|Girardi-Riva Enterprises, Inc.   |  | Arbys         |  | 7/1/1997   |  | 7/1/2004   |  |                  | 167,445    | 
|Morgans Restaurants of PA, Inc. |  | KFC            |  | 10/15/1997 |  | 10/15/2004 |  |                  | 242,571    | 
|Virginia QSC, LLC                |  | Burger King    |  | 11/1/1997  |  | 11/1/2004  |  |                  | 296,443    | 
|J-Four, Inc.                     |  | KFC            |  | 2/1/1998   |  | 2/1/2003   |  |                  | 292,691    | 
|GC of Charlottesville            |  | Golden Corral  |  | 5/1/1998   |  | 5/1/2005   |  |                  | 418,870    | 
|Taco Two of Bakersfield          |  | Del Taco       |  | 1/1/1999   |  | 1/1/2006   |  |                  | 319,528    | 
|Circle Rest. Co., Inc.           |  | Arbys         |  | 10/1/1998  |  | 10/1/2003  |  |                  | 98,425     | 
|RTM Georgia                      |  | TJ Cinnamons   |  | 4/1/1998   |  | 4/1/2003   |  |                  | 236,250    | 
|RTMSC, Inc.                      |  | TJ Cinnamons   |  | 4/1/1998   |  | 4/1/2003   |  |                  | 210,000    | 
|RTM, Inc.                        |  | Arbys         |  | 10/1/1998  |  | 10/1/2003  |  |                  | 73,446     | 
|RTM, Inc.                        |  | Arbys         |  | 10/1/1998  |  | 10/1/2003  |  |                  | 74,327     | 
|El Chico Restaurants, Inc.       |  | El Chico       |  | 9/1/1998   |  | 9/1/2003   |  |                  | 487,516    | 
|El Chico Restaurants, Inc.       |  | El Chico       |  | 9/1/1998   |  | 9/1/2003   |  |                  | 436,688    | 
|Cypress Rests. Inc.              |  | Dennys        |  | 9/1/1998   |  | 9/1/2005   |  |                  | 367,500    | 
|DJ Enterprises, Inc.             |  | Taco Bell      |  | 10/1/1998  |  | 7/1/2001   |  |                  | 180,600    | 
|                                 |  |                |  |            |  |            |  |                  |            | 
|                                 |  |                |  |            |  |            |  |                  | 7,684,544  | 
|                                 |  |                |  |            |  |            |  |                  |            | 
|                                 |  |                |  |            |  |            |  | $                | 39,548,945 | 
|                                 |  |                |  |            |  |            |  |                  |            | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                 |  |          |  |  |      |          |  |          |  |             |  |         |         |  |           |         |         |  |  |  |        |  |  |  |  |  |  | 
|-------------------------------- |  | -------- |  |  | ---- | -------- |  | -------- |  | ----------- |  | ------- | ------- |  | --------- | ------- | ------- |  |  |  | ------ |  |  |  |  |  |  | 
|                                 |  |          |  |  |      | Asset    |  |          |  |             |  |         |         |  |           | Date of |         |  |  |  | Annual |  | 
|                                 |  |          |  |  |      | State    |  |          |  |             |  | Monthly |         |  | Next Rent |         | Rate of | 
|Lessee Name                      |  | Location |  |  | Rent |          |  | Increase |  | Increase(2) |  |         | Sq. Ft. | 
|                                 |  |          |  |  |      |          |  |          |  |             |  |         |         | 
|EQUIPMENT                       
|                                
|J.M.C. Limited Partnership       |  |          |  |  |      | UT       |  |          |  |             |  |         | 6,838   | 
|                                
|                                
|                                
|                                
|DenAmerica Corp.                 |  |          |  |  |      | TX       |  |          |  |             |  |         | 5,866   | 
|                                
|                                
|                                
|                                
|Shells Seafood Restaurants, Inc. |  |          |  |  |      | FL       |  |          |  |             |  |         | 2,648   | 
|                                
|                                
|                                
|                                
|Shells Seafood Restaurants, Inc. |  |          |  |  |      | FL       |  |          |  |             |  |         | 2,086   | 
|                                
|                                
|                                
|                                
|Champps Americana, Inc.          |  |          |  |  |      | IL       |  |          |  |             |  |         | 17,651  | 
|                                
|                                
|                                
|                                
|Champps Americana, Inc.          |  |          |  |  |      | MI       |  |          |  |             |  |         | 21,466  | 
|                                
|                                
|                                
|                                
|Corral South Store #4, Inc.      |  |          |  |  |      | FL       |  |          |  |             |  |         | 10,934  | 
|                                
|                                
|                                
|                                
|Girardi-Riva Enterprises, Inc.   |  |          |  |  |      | WA       |  |          |  |             |  |         | 4,108   | 
|                                
|                                
|                                
|                                
|Girardi-Riva Enterprises, Inc.   |  |          |  |  |      | WA       |  |          |  |             |  |         | 2,727   | 
|                                
|                                
|                                
|                                
|Morgans Restaurants of PA, Inc. |  |          |  |  |      | PA       |  |          |  |             |  |         | 3,766   | 
|                                
|                                
|                                
|                                
|Virginia QSC, LLC                |  |          |  |  |      | VA       |  |          |  |             |  |         | 4,862   | 
|                                
|                                
|                                
|                                
|J-Four, Inc.                     |  |          |  |  |      | NY,NH,MA |  |          |  |             |  |         | 5,882   | 
|                                
|                                
|                                
|                                
|GC of Charlottesville            |  |          |  |  |      | VA       |  |          |  |             |  |         | 6,439   | 
|                                
|                                
|                                
|                                
|Taco Two of Bakersfield          |  |          |  |  |      | CA       |  |          |  |             |  |         | 5,087   | 
|                                
|                                
|                                
|                                
|Circle Rest. Co., Inc.           |  |          |  |  |      | CO       |  |          |  |             |  |         | 2,015   | 
|                                
|                                
|                                
|                                
|RTM Georgia                      |  |          |  |  |      | 9 sites  |  |          |  |             |  |         | 4,590   | 
|                                
|                                
|                                
|                                
|RTMSC, Inc.                      |  |          |  |  |      | 8 sites  |  |          |  |             |  |         | 4,080   | 
|                                
|                                
|                                
|                                
|RTM, Inc.                        |  |          |  |  |      | AL       |  |          |  |             |  |         | 1,427   | 
|                                
|                                
|                                
|                                
|RTM, Inc.                        |  |          |  |  |      | GA       |  |          |  |             |  |         | 1,444   | 
|                                
|                                
|                                
|                                
|El Chico Restaurants, Inc.       |  |          |  |  |      | TX       |  |          |  |             |  |         | 9,797   | 
|                                
|                                
|                                
|                                
|El Chico Restaurants, Inc.       |  |          |  |  |      | TX       |  |          |  |             |  |         | 8,775   | 
|                                
|                                
|                                
|                                
|Cypress Rests. Inc.              |  |          |  |  |      | TX       |  |          |  |             |  |         | 5,537   | 
|                                
|                                
|                                
|                                
|DJ Enterprises, Inc.             |  |          |  |  |      | FL       |  |          |  |             |  |         | 5,831   | 
|                                 |  |          |  |  |      |          |  |          |  |             |  |         |         | 
|                                 |  |          |  |  |      |          |  |          |  |             |  |         | 143,856 | 
|                                 |  |          |  |  |      |          |  |          |  |             |  |         |         | 
|                                 |  |          |  |  |      |          |  |          |  |             |  | $       | 408,480 | 
|                                 |  |          |  |  |      |          |  |          |  |             |  |         |         | 



---

|(1) |  | Rent Increase equals the lesser of CPI or 10%.           
|--- |  | ---------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Rate of increase calculated on a compounded annual basis.
|   
|   
|   
|   
|(3) |  | Rent Increase is based on CPI increase.                  

3



---



##### Table of Contents



Real Estate

General Real Estate Lease Provisions: All of the properties are subject to
leases which are triple net leases whereby the tenant is responsible for all
expenses related to the cost of operating the properties including real estate
taxes, insurance, maintenance and repair costs.

The General Partners or their affiliates analyzed demographic, geographic
and market diversification data for the areas in which each of the properties
are located and reviewed the appraisals of the properties and the analysis
regarding comparable properties contained therein. All of the purchase prices
were negotiated by General Partners or their affiliates, considering factors
such as the potential value of the site, the financial condition and business
and operating history of the tenants and demographic data for the areas in
which the properties are located.

The lessees generally pay all expenses incident to the closing of these
transactions including, the Partnerships attorneys fees, title insurance
premiums, recording fees and expenses and transfer.

Equipment

General Equipment Lease Provisions:All of the equipment leases are on the
Partnerships standard form of lease whereby the lessee is responsible for all
expenses related to the equipment including taxes, insurance, maintenance and
repair costs. Prior to entering into the leases, an affiliate of the General
Partner considered factors such as the financial condition and business and
operating history of the lessees and demographic data for the area in which the
equipment is located. All of the equipment was purchased with cash from
offering proceeds. The General Partner believes that the amount of insurance
carried by each lessee is adequate.

Summary of Investment Objectives and Policies

The Partnership acquires income-producing property and equipment which are
leased primarily to operators of nationally franchised fast-food, family style
and dinner house restaurants as well as other franchised service-type
businesses such as automotive and specialty retail franchises. Properties are
selected for acquisition based on an examination and evaluation by the General
Partners or an affiliate of the potential value of the site, the financial
condition and business history of the proposed lessee, the demographics of the
area in which the property is located, the proposed purchase price and lease
terms, geographic and market diversification, and potential operating results.
Similar analyses are utilized in selecting equipment. The Partnership
anticipates that only fee interests in real property will be acquired, although
other interests (including acquisitions of buildings, with the underlying land
being subject to a long-term ground lease) may be acquired if it is deemed to
be advantageous to the Partnership. At December 31, 2000 the Partnership has
one property subject to a ground lease.

In making investments, the General Partners consider relevant factors,
including the condition and proposed use of the property and/or equipment,
income-producing capacity, the financial condition of the lessee, and with
respect to properties, the prospects for long-term appreciation. In no event
will property or equipment be acquired unless a satisfactory lease commitment
has been obtained from a suitable lessee as further described below.

In selecting specific properties, the General Partners generally require
the following:

(i) Base annual rent will provide a specified minimum return on the
contract purchase price of the property; the majority of the leases will
provide for fixed increases on specific dates or indexation of rents to indices
such as the Consumer Price Index. Leases may also provide for percentage rents
calculated to provide rents equal to a percentage of the lessees gross sales
if greater than the base rent; and

4



---



##### Table of Contents



(ii)The initial lease will have a term of between ten and twenty years.

In selecting specific equipment, the General Partners typically require the following:

(i) Full Payout Leases providing for fixed rents structured to return 100%
of the cost of the equipment plus yield a return equivalent to market interest
rates over the lease term; and

(ii) The leases are expected to have terms of five to seven years with
residual values of equipment at the end of such terms expected to be minimal
(approximately 10% of original cost).

The determination of whether particular properties or equipment should be
sold or otherwise disposed of will be made after consideration of relevant
factors, including performance or projected performance of the property or
equipment and market conditions, with a view toward achieving the principal
investment objectives of the Partnership.

Item 3. Legal Proceedings

The Partnership is not a party to any material legal proceeding nor, to
the best of its knowledge, are any such proceedings either pending or
threatened.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during 2000.






Item 5. Market for Registrants Limited Partnership Interests and Related Security Holder Matters

The Units are not readily transferable. There is no public market for the
Units and it is not currently expected that any will develop. There are
restrictions upon the transferability of Units, including the requirement that
the General Partners consent to any transferee becoming a substituted Limited
Partner (which consent may be granted or withheld at the sole discretion of the
General Partners). In addition, restrictions on transfer may be imposed under
state securities laws.

The Revenue Act of 1987 contains provisions which may have an adverse
impact on investors in certain publicly traded partnerships. If the
Partnership were to be classified as a publicly traded partnership, income
attributable to the Units would be characterized as portfolio income and the
gross income attributable to Units acquired by tax-exempt entities would be
unrelated business income, with the result that the Units could be less
marketable. The General Partners will, if necessary, take appropriate steps to
ensure that the Partnership will not be deemed a publicly traded partnership.





5



---



##### Table of Contents



Item 6. Selected Financial Data

|                                                                 |                             |   |              |           |  |              |            |           |              |   |             |           | 
|---------------------------------------------------------------- | --------------------------- | - | ------------ | --------- |  | ------------ | ---------- | --------- | ------------ | - | ----------- | --------- | 
|                                                                 |                             |   | Year Ended   |           |  | Year Ended   |            |           | Year Ended   |  
|                                                                 |                             |   | December 31, |           |  | December 31, |            |           | December 31, |  
|                                                                 |                             |   | 2000         |           |  | 1999         |            |           | 1998         |  
|                                                                 |                             |   |              |           |  |              |            |           |              |  
|Statements of Operations Data:                                  
|                                                                
|                                                                
|                                                                
|                                                                
|Operating revenue:                                              
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Rental income               |   | $            | 3,002,022 |  |              | $          | 2,672,588 |              |   | $           | 1,243,403 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Finance income              |   |              | 588,435   |  |              |            | 805,410   |              |   |             | 548,342   | 
|                                                                 |                             |   |              |           |  |              |            |           |             
|Total operating revenue                                          |                             |   | 3,590,457    |           |  |              | 3,477,998  |           |              |   | 1,791,745   |          
|                                                                
|                                                                
|                                                                
|                                                                
|Operating costs and expenses:                                   
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest expense            |   |              | 923,965   |  |              |            | 788,199   |              |   |             | 23,603    | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Depreciation                |   |              | 394,312   |  |              |            | 327,803   |              |   |             | 131,565   | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | General and administrative  |   |              | 101,226   |  |              |            | 108,023   |              |   |             | 80,536    | 
|                                                                 |                             |   |              |           |  |              |            |           |             
|Total operating costs and expenses                               |                             |   | 1,419,503    |           |  |              | 1,224,025  |           |              |   | 235,704     |          
|                                                                 |                             |   |              |           |  |              |            |           |             
|                                                                
|                                                                
|                                                                
|                                                                
|Income from operations                                           |                             |   | 2,170,954    |           |  |              | 2,253,973  |           |              |   | 1,556,041   |          
|                                                                
|                                                                
|                                                                
|                                                                
|Other income (expense):                                         
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest income             |   |              | 488       |  |              |            | 29,143    |              |   |             | 254,673   | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Gain on sale of real estate |   |              |          |  |              |            | 5,858     |              |   |             |          | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Gain on sale of equipment   |   |              | 42,433    |  |              |            |          |              |   |             |          | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Other                       |   |              | 234       |  |              |            | 5,055     |              |   |             | 35        | 
|                                                                 |                             |   |              |           |  |              |            |           |             
|Total other income                                               |                             |   | 43,155       |           |  |              | 40,056     |           |              |   | 254,708     |          
|                                                                 |                             |   |              |           |  |              |            |           |             
|                                                                
|                                                                
|                                                                
|                                                                
|Net income                                                       |                             |   | 2,214,109    |           |  |              | 2,294,029  |           |              |   | 1,810,749   |          
|                                                                
|                                                                
|                                                                
|                                                                
|Net income allocable to general partner                          |                             |   | 22,141       |           |  |              | 22,940     |           |              |   | 18,107      |          
|                                                                 |                             |   |              |           |  |              |            |           |             
|Net income allocable to limited partners                         |                             | $ | 2,191,968    |           |  | $            | 2,271,089  |           |              | $ | 1,792,642   |          
|                                                                 |                             |   |              |           |  |              |            |           |             
|Net income per limited partnership unit                          |                             | $ | 73.65        |           |  | $            | 75.78      |           |              | $ | 72.37       |          
|                                                                
|                                                                
|                                                                
|                                                                
|Weighted average number of limited partnership
units outstanding |                             |   | 29,763       |           |  |              | 29,969     |           |              |   | 24,769      |          
|                                                                
|                                                                
|                                                                
|                                                                
|Other Data:                                                     
|                                                                
|                                                                
|                                                                
|                                                                
|Cash flow from operating activities                              |                             | $ | 2,626,092    |           |  | $            | 3,306,697  |           |              | $ | 715,635     |          
|                                                                
|                                                                
|                                                                
|                                                                
|Cash flow from investing activities                              |                             | $ | (3,138,164   | )         |  | $            | (4,000,047 | )         |              | $ | (20,428,353 | )        
|                                                                
|                                                                
|                                                                
|                                                                
|Cash flow from financing activities                              |                             | $ | (110,816     | )         |  | $            | (507,083   | )         |              | $ | 16,606,682  |          
|                                                                
|                                                                
|                                                                
|                                                                
|Balance Sheet Data:                                             
|                                                                
|                                                                
|                                                                
|                                                                
|Cash and cash equivalents                                        |                             | $ | 179,066      |           |  | $            | 915,760    |           |              | $ | 2,890,347   |          
|                                                                
|                                                                
|                                                                
|                                                                
|Investment in leases                                             |                             | $ | 35,405,709   |           |  | $            | 32,619,423 |           |              | $ | 28,941,321  |          
|                                                                
|                                                                
|                                                                
|                                                                
|Total assets                                                     |                             | $ | 36,819,022   |           |  | $            | 34,533,478 |           |              | $ | 32,659,591  |          
|                                                                
|                                                                
|                                                                
|                                                                
|Total liabilities                                                |                             | $ | 13,753,388   |           |  | $            | 9,832,387  |           |              | $ | 6,671,410   |          
|                                                                
|                                                                
|                                                                
|                                                                
|Total partners capital                                          |                             | $ | 23,065,634   |           |  | $            | 24,701,091 |           |              | $ | 25,988,181  |          



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

When used in this discussion, the words, intends, anticipates,
expects, and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those projected.
Such risks and uncertainties include the following: (i) a tenant may default in
making rent payments, (ii) a fire or other casualty may interrupt the cash flow
stream from a property, (iii) the properties may not be able to be leased at
the assumed rental rates, (iv) unexpected expenses may be incurred in the
ownership of the properties, and (v) properties may not be able to be sold at
the presently anticipated prices and times.

6



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##### Table of Contents



As a result of these and other factors, the Partnership may experience
material fluctuations in future operating results on a quarterly or annual
basis, which could materially and adversely affect its business, financial
condition and operating results. These forward-looking statements speak only
as of the date hereof. The Partnership undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

Results of Operations  2000 to 1999

For the year ended December 31, 2000, operating revenue increased 3% to
$3.6 million as compared to $3.5 million for the year ended December 31, 1999.
Rental income from operating leases for 2000 increased 12% to $3.0 million as
compared to $2.7 million for 1999 due to the acquisition of one real estate
property and the benefit of a full year of rental income from properties
acquired and leased in preceding periods. Earned income from financing leases
for 2000 decreased 27% to $588,000 as compared to $805,000 for 1999 due to the
sale of one equipment lease and the amortization of principal balances.

General and administrative expenses decreased 6% to $101,000 for 2000 as
compared to $108,000 for 1999. The decrease is primarily the result of a
decrease in professional fee expense. Depreciation expense increased 20% to
$394,000 for 2000 as compared to $328,000 for 1999 due to the acquisition of
one real estate property and the effect of a full period of depreciation of
properties acquired and leased in the preceding year.Interest expense
increased 17% to $924,000 during 2000 as compared to $788,000 for 1999. The
increase is due to a full year of interest expense for the $3.3 million term
note that the Partnership entered into in March 1999, as well as the additional
interest expense incurred for the $3.75 million term note that the Partnership
entered into in October 2000.

Interest and other income decreased to $722 for 2000 as compared to
$34,000 for 1999 primarily as a result of idle funds being invested in
properties and no longer earning interest.

During 2000, the Partnership recognized a gain of $42,000 on the sale of
equipment. Proceeds of approximately $611,000 were reinvested in a real estate
property. During 1999, the Partnership recognized a gain of $5,858 on the sale
of real estate. Proceeds of approximately $953,000 were reinvested in a real
estate property.

As a result of the foregoing, the Partnerships net income for 2000
decreased 3% to approximately $2.2 million as compared to $2.3 million in 1999.
The Partnership is not subject to income taxation as all of its income and
expenses flow through to the Partners. During the year ended December 31,
2000, the Partnership made distributions to limited partners totaling $3.6
million, as compared to $3.4 million for the preceeding year.

Results of Operations  1999 to 1998

For the year ended December 31, 1999, operating revenue increased 94% to
$3.5 million as compared to $1.8 million for the year ended December 31, 1998.
Rental income from operating leases for 1999 increased 115% to $2.7 million as
compared to $1.2 million for 1998 due to the acquisition or completed
construction funding of seven properties and the benefit of a full year of
rental income from properties acquired and leased in preceding periods. Earned
income from financing leases for 1999 increased 47% to $805,000 as compared to
$548,000 for 1998 as a result of the addition of one real estate property
treated as a direct finance lease and from the benefit of a full year of
finance income from leases originated in preceeding periods.

General and administrative expenses increased 34% to $108,000 for 1999 as
compared to $81,000 for 1998. The significant factor resulting in the increase
is due to management fees that are incurred and payable to the General Partner.
During 1999 the Partnership incurred $40,000 in management fees as compared to
$23,300 in 1998 due solely to the increased acquisition of net leased
properties during 1999. Depreciation expense increased 148% to $328,000 for
1999 as compared to $132,000 for 1998 due to the acquisition of net leased
properties and the effect of a full period of depreciation of properties
acquired and leased in the preceding year.Interest expense increased to
$788,000 during 1999 as compared to $24,000 for 1998. The increase is the
result of the $6.4 million term note that the Partnership entered into in
December 1998 and the $3.3 million term note that the Partnership entered into
in March 1999.

7



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##### Table of Contents



Interest and other income decreased 87% to $34,000 for 1999 as compared to
$255,000 for 1998 primarily as a result of idle funds being invested in
properties and no longer earning interest.

During 1999, the Partnership recognized a gain of $5,858 on the sale of
real estate. Proceeds of approximately $953,000 were reinvested in another
real estate property.

As a result of the foregoing, the Partnerships net income for 1999
increased 27% to approximately $2.3 million as compared to $1.8 million in
1998. The Partnership is not subject to income taxation as all of its income
and expenses flow through to the Partners. During the year ended December 31,
1999, the Partnership made distributions to limited partners totaling $3.4
million, as compared to $2.1 million for the preceeding year.



Liquidity and Capital Resources

The Partnership commenced the Offering of up to 30,000 Units 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 reached final
funding in December 1998 with subscriptions for the entire 30,000 Units. Net
proceeds after offering expenses were approximately $26.1 million.

In December, 1998, the Partnership entered into a $6.4 million term note.
The Partnership entered into an additional $3.3 million term note in March
1999. Proceeds from the notes were used to acquire additional properties. The
notes have a 10 year term, are collateralized by certain properties subject to
operating leases, and bear interest at rates ranging from 8.13 to 8.5% per
annum. Debt issuance costs of approximately $595,000 in aggregate incurred in
connection with the issuance of the notes are being amortized into interest
expense over the life of the notes using the straight-line method.

The Partnership purchased one net leased real estate property in October
2000. The Partnership assumed a $3.75 million term note in connection with the
acquisition. The note has a 10 year term and bears interest at the rate of
8.35% per annum. As of December 31, 2000, the Partnership had invested $31.9
million in 21 net leased real estate properties and $7.7 million in 23
equipment packages.

The Partnership expects that only limited amounts of liquid assets will be
required for existing properties since the form of lease which it uses for its
properties and equipment requires lessees to pay all taxes and assessments,
maintenance and repairs and insurance premiums, including casualty insurance.
The General Partners expect that the cash flow to be generated by the
Partnerships properties and equipment will provide adequate liquidity and
capital resources to pay operating expenses and provide distributions to
Limited Partners.

Item 7a. Qualitative and Quantitative Disclosures About Market Risk.None

Item 8. Financial Statements and Supplementary Data

See Index to Financial Statements on Page F-I of this Form 10-K for
Financial Statements and Financial Statement Schedules, where applicable.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.



8



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##### Table of Contents






Item 10. Directors and Executive Officers of the Registrant

The Partnership does not have directors or officers.

Item 11. Executive Compensation

The Partnership does not have directors or officers.

Item 12. Security Ownership of Certain Beneficial Owners and Management

To the best knowledge of the Partnership, as of December 31, 2000 no
person known by the Partnership, beneficially owned more than 5% of the
outstanding Units.

Item 13. Certain Relationships and Related Transactions

During 1999, the General Partners received acquisition fees from the
Partnership in an amount equal to $279,146 for services rendered in connection
with the selection, evaluation and acquisition of properties and equipment, as
provided in the Partnership Agreement. During 2000, no acquisition fee was
earned by the General Partners.

The General Partners believe that the Asset Management Agreement entered
into is on terms no less favorable to the Partnership than those customary for
similar services by independent firms in the relevant geographic area. The
Asset Management Agreement provides for termination by a majority vote of the
Limited Partners, without penalty, upon 60 days prior written notice. During
2000 and 1999 the Partnership incurred $45,556 and $39,507 respectively, of
management fees to the General Partner.

In connection with the Offering and throughout all stages of the
Partnerships operations, the General Partners and their affiliates will
receive compensation as described more fully in the Compensation Table on
pages 35 through 42 of the Partnerships Prospectus. All of the General
Partners fees with the exception of acquisition fees will be subordinated to
receipt by the Limited Partners of preferential distributions. Acquisition
fees will be payable whether or not funds are available for distribution to the
Limited Partners. The General Partners may, under certain circumstances,
benefit from the continued holding of Partnership properties and/or equipment,
while investors may be better served by a sale or other disposition of such
properties and/or equipment. Furthermore, the receipt of certain fees and
reimbursements is dependent upon the ability of the General Partners to timely
invest net offering proceeds. Therefore, the interest of the General Partners
in receiving such fees may conflict with the interest of the Limited Partners.
The General Partners and their affiliates believe that their actions and
decisions will be made in a manner consistent with their fiduciary duty to the
Partnership.

The agreements and arrangements, including those relating to compensation,
between the Partnership and the General Partners or any of their affiliates
have not and will not be the result of arms-length negotiations although the
General Partners believe that such agreements and arrangements will approximate
those which would be arrived at through arms-length negotiations. While the
Partnership will make no loans to the General Partners or their affiliates, the
Partnership may borrow money from the General Partners or their affiliates but
only on such terms as to interest rate, security, fees and other charges at
least as favorable to the Partnership as are charged by unaffiliated lending
institutions in the same locality on comparable loans for the same purpose.
The General Partners and their affiliates are not prohibited from providing
services to, and otherwise dealing or doing business with, persons (for
example, franchisees), who may deal with the Partnership. However, the
Partnership Agreement prohibits receipt of rebates or participation in any
reciprocal business arrangements which would have the effect of circumventing
any of the provisions of the Partnership Agreement.



9



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##### Table of Contents



Item 14. Exhibits and Reports on Form 8-K

(a) The following exhibits are included herein or incorporated by
reference:

|       |  |                                                                                                                                                                                                                                                                                                  |  |  |  | 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Number |  | Exhibit                                                                                                                                                                                                                                                                                         
|      
|      
|      
|      
|4      |  | Agreement of Limited Partnership of Registrant (Incorporated by
reference from Exhibit B of the final Prospectus dated December 23,
1996, as supplemented and filed with the Securities and Exchange
Commission, S.E.C. File No. 333-9371)                                                      
|      
|      
|      
|      
|4.1    |  | Amended Agreement of Limited Partnership of Registrant.
(Incorporated by reference to 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)                                                                            
|      
|      
|      
|      
|99.1   |  | Pages 35-42 of the final Prospectus dated December 23, 1997 as
supplemented. (Incorporated by reference from the final Prospectus
filed with the Securities and Exchange Commission pursuant to Rule
424(b) promulgated under the Securities Act of 1933, as amended. S.E.C.
File No. 333-9371.)

(b) Reports on Form 8-K:

There were no reports filed on Form 8-K for the fourth quarter ended December 31, 2000.





10



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##### Table of Contents






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

|                                          |  |                                                                 
|----------------------------------------- |  | ----------------------------------------------------------------
|CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
|                                         
|                                         
|                                         
|                                         
|By:                                       |  | Captec Net Lease Realty, Inc.,
Managing General Partner         
|                                         
|                                         
|                                         
|                                         
|By:                                       |  | /s/ W. Ross Martin                                              
|                                          |  |                                                                 
|                                          |  | W. Ross Martin
Executive Vice President,
Chief Financial Officer
|                                         
|                                         
|                                         
|                                         
|Date:                                     |  | March 30, 2001                                                  

In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|      |  |                                                                                                                            
|----- |  | ---------------------------------------------------------------------------------------------------------------------------
|By:   |  | /s/ Patrick L. Beach                                                                                                       
|      |  |                                                                                                                            
|      |  | Patrick L. Beach
Chairman of the Board of Directors,
President and Chief Executive Officer
of Captec Net Lease Realty, Inc.
|     
|     
|     
|     
|Date: |  | March 30, 2001                                                                                                             
|     
|     
|     
|     
|By:   |  | /s/ W. Ross Martin                                                                                                         
|      |  |                                                                                                                            
|      |  | W. Ross Martin
Executive Vice President,
Chief Financial Officer
of Captec Net Lease Realty, Inc.                          
|     
|     
|     
|     
|Date: |  | March 30, 2001                                                                                                             



11



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Captec Franchise Capital Partners, L.P. IV
Contents

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|                                                                               |          |  |  | 
|------------------------------------------------------------------------------ | -------- |  |  | 
|                                                                               | Page(s)  | 
|                                                                               |          |  | 
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Report of Independent Accountants                                              | F-1     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Financial Statements
Balance Sheets                                            | F-2     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Statements of Operations                                                       | F-3     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Statements of Changes in Partners Capital                                     | F-4     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Statements of Cash Flows                                                       | F-5     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Notes to Financial Statements                                                  | F-6-F-10
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Report of Independent Accountants                                              | F-11    
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Schedule III  Properties and Accumulated Depreciation as of
December 31, 2000 | F-12    





---



##### Table of Contents









To the Board of Directors of
Captec Net Lease Realty, Inc.
Managing General Partner of
Captec Franchise Capital Partners, L.P. IV

In our opinion, the accompanying balance sheets and the related statements of
operations, of partners capital and of cash flows present fairly, in all material
respects, the financial position of Captec Franchise Capital Partners L.P. IV
at December 31, 2000 and 1999, and the results of its operations and its cash
flows for the years ended December 31, 2000, 1999, and 1998, in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Companys management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.



PricewaterhouseCoopers LLP



Detroit, Michigan
March 9, 2001

F-1



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Balance Sheets
December 31, 2000 and 1999

---

|                                      |                       |                                         |            |            |            |   |            |            |            | 
|------------------------------------- | --------------------- | --------------------------------------- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                      |                       |                                         |            | 2000       |            |   | 1999       |           
|                                      |                       |                                         |            |            |            |  
|Assets                               
|                                     
|                                     
|                                     
|                                     
|Cash and cash equivalents             |                       | $                                       | 78,837     |            |            | $ | 701,725    |           
|                                     
|                                     
|                                     
|                                     
|Restricted cash                       |                       |                                         | 100,229    |            |            |   | 214,035    |           
|                                     
|                                     
|                                     
|                                     
|Investments in leases                
|                                      | Operating leases, net |                                         |            | 29,869,323 |            |   |            | 25,199,728 |           
|                                     
|                                     
|                                     
|                                     
|                                      | Financing leases, net |                                         |            | 5,536,386  |            |   |            | 7,419,695  |           
|                                     
|                                     
|                                     
|                                     
|Accounts receivable and prepaids      |                       |                                         | 26,751     |            |            |   | 32,647     |           
|                                     
|                                     
|                                     
|                                     
|Unbilled rent, net                    |                       |                                         | 730,375    |            |            |   | 389,496    |           
|                                     
|                                     
|                                     
|                                     
|Due from related parties              |                       |                                         | 966        |            |            |   | 40,477     |           
|                                     
|                                     
|                                     
|                                     
|Deferred financing costs, net         |                       |                                         | 476,155    |            |            |   | 535,675    |           
|                                      |                       |                                         |            |            |            |  
|                                      |                       | Total assets                            |            | $          | 36,819,022 |   |            | $          | 34,533,478 | 
|                                      |                       |                                         |            |            |            |  
|Liabilities and Partners Capital    
|                                     
|                                     
|                                     
|                                     
|Liabilities                          
|                                     
|                                     
|                                     
|                                     
|Notes payable                         |                       | $                                       | 13,389,750 |            |            | $ | 9,651,000  |           
|                                     
|                                     
|                                     
|                                     
|Accounts payable and accrued expenses |                       |                                         | 110,184    |            |            |   | 128,274    |           
|                                     
|                                     
|                                     
|                                     
|Due to related parties                |                       |                                         | 253,454    |            |            |   | 53,113     |           
|                                      |                       |                                         |            |            |            |  
|                                      |                       | Total liabilities                       |            |            | 13,753,388 |   |            |            | 9,832,387  | 
|                                     
|                                     
|                                     
|                                     
|Partners capital                    
|                                     
|                                     
|                                     
|                                     
|Limited partners capital accounts    |                       |                                         | 23,069,410 |            |            |   | 24,717,802 |           
|                                     
|                                     
|                                     
|                                     
|General partners capital accounts    |                       |                                         | (3,776     | )          |            |   | (16,711    | )         
|                                      |                       |                                         |            |            |            |  
|                                      |                       | Total partners capital                 |            |            | 23,065,634 |   |            |            | 24,701,091 | 
|                                      |                       |                                         |            |            |            |  
|                                      |                       | Total liabilities and partners capital |            | $          | 36,819,022 |   |            | $          | 34,533,478 | 
|                                      |                       |                                         |            |            |            |  

The accompanying notes are an integral part of the financial statements.

F-2



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Statements of Operations
For the Years Ended December 31, 2000, 1999 and 1998

---

|                                                                 |                             |                                    |           |           |           |   |           |           |           |      |           |           |           | 
|---------------------------------------------------------------- | --------------------------- | ---------------------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- | ---- | --------- | --------- | --------- | 
|                                                                 |                             |                                    |           | 2000      |           |   | 1999      |           |           | 1998 |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|Operating revenue                                               
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Rental income               |                                    | $         | 3,002,022 |           |   | $         | 2,672,588 |           |      | $         | 1,243,403 |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Finance income              |                                    |           | 588,435   |           |   |           | 805,410   |           |      |           | 548,342   |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                 |                             | Total operating revenue            |           |           | 3,590,457 |   |           |           | 3,477,998 |      |           |           | 1,791,745 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Operating costs and expenses                                    
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest expense            |                                    |           | 923,965   |           |   |           | 788,199   |           |      |           | 23,603    |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Depreciation                |                                    |           | 394,312   |           |   |           | 327,803   |           |      |           | 131,565   |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | General and administrative  |                                    |           | 101,226   |           |   |           | 108,023   |           |      |           | 80,536    |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                 |                             | Total operating costs and expenses |           |           | 1,419,503 |   |           |           | 1,224,025 |      |           |           | 235,704   | 
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                 |                             | Income from operations             |           |           | 2,170,954 |   |           |           | 2,253,973 |      |           |           | 1,556,041 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Other income                                                    
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest income             |                                    |           | 488       |           |   |           | 29,143    |           |      |           | 254,673   |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Gain on sale of real estate |                                    |           |          |           |   |           | 5,858     |           |      |           |          |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Gain on sale of equipment   |                                    |           | 42,433    |           |   |           |          |           |      |           |          |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Other                       |                                    |           | 234       |           |   |           | 5,055     |           |      |           | 35        |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                 |                             | Total other income                 |           |           | 43,155    |   |           |           | 40,056    |      |           |           | 254,708   | 
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|Net income                                                       |                             |                                    | 2,214,109 |           |           |   | 2,294,029 |           |           |      | 1,810,749 |          
|                                                                
|                                                                
|                                                                
|                                                                
|Net income allocable to general partner                          |                             |                                    | 22,141    |           |           |   | 22,940    |           |           |      | 18,107    |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Net income allocable to limited partners                         |                             | $                                  | 2,191,968 |           |           | $ | 2,271,089 |           |           | $    | 1,792,642 |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Net income per limited partnership unit                          |                             | $                                  | 73.65     |           |           | $ | 75.78     |           |           | $    | 72.37     |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Weighted average number of limited partnership
units outstanding |                             |                                    | 29,763    |           |           |   | 29,969    |           |           |      | 24,769    |          
|                                                                 |                             |                                    |           |           |           |   |           |           |          

The accompanying notes are an integral part of the financial statements.

F-3



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Statements of Changes in Partners Capital
For the Years Ended December 31, 2000, 1999 and 1998

---

|                                        |  |           |        |   |           |   |            |           |  |   |           |   |  |   |            |  
|--------------------------------------- |  | --------- | ------ | - | --------- | - | ---------- | --------- |  | - | --------- | - |  | - | ---------- | -
|                                        |  | Limited   |        |   | Limited   |   |            | General   |  |   | Total     |  
|                                        |  | Partners' |        |   | Partners' |   |            | Partners' |  |   | Partners' |  
|                                        |  | Units     |        |   | Accounts  |   |            | Accounts  |  |   | Capital   |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  
|                                       
|                                       
|                                       
|                                       
|Balance, January 1, 1998                |  |           | 15,392 |   |           | $ | 13,547,060 |           |  | $ | 5,460     |   |  | $ | 13,552,520 |  
|                                       
|                                       
|                                       
|                                       
|Issuance of limited partnership units   |  |           | 14,608 |   |           |   | 12,713,912 |           |  |   |          |   |  |   | 12,713,912 |  
|                                       
|                                       
|                                       
|                                       
|Distributions  ($69.63 per unit)       |  |           |       |   |           |   | (2,089,000 | )         |  |   |          |   |  |   | (2,089,000 | )
|                                       
|                                       
|                                       
|                                       
|Net income                              |  |           |       |   |           |   | 1,792,642  |           |  |   | 18,107    |   |  |   | 1,810,749  |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  
|                                       
|                                       
|                                       
|                                       
|Balance, December 31, 1998              |  |           | 30,000 |   |           |   | 25,964,614 |           |  |   | 23,567    |   |  |   | 25,988,181 |  
|                                       
|                                       
|                                       
|                                       
|Repurchase of limited partnership units |  |           | (117   | ) |           |   | (105,399   | )         |  |   |          |   |  |   | (105,399   | )
|                                       
|                                       
|                                       
|                                       
|Distributions  ($114.20 per unit)      |  |           |       |   |           |   | (3,412,501 | )         |  |   | (63,219   | ) |  |   | (3,475,720 | )
|                                       
|                                       
|                                       
|                                       
|Net income                              |  |           |       |   |           |   | 2,271,089  |           |  |   | 22,940    |   |  |   | 2,294,029  |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  
|                                       
|                                       
|                                       
|                                       
|Balance, December 31, 1999              |  |           | 29,883 |   |           |   | 24,717,803 |           |  |   | (16,712   | ) |  |   | 24,701,091 |  
|                                       
|                                       
|                                       
|                                       
|Repurchase of limited partnership units |  |           | (258   | ) |           |   | (230,363   | )         |  |   |          |   |  |   | (230,363   | )
|                                       
|                                       
|                                       
|                                       
|Distributions  ($121.86 per unit)      |  |           |       |   |           |   | (3,609,998 | )         |  |   | (9,205    | ) |  |   | (3,619,203 | )
|                                       
|                                       
|                                       
|                                       
|Net income                              |  |           |       |   |           |   | 2,191,968  |           |  |   | 22,141    |   |  |   | 2,214,109  |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  
|                                       
|                                       
|                                       
|                                       
|Balance, December 31, 2000              |  |           | 29,625 |   |           | $ | 23,069,410 |           |  | $ | (3,776    | ) |  | $ | 23,065,634 |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  

The accompanying notes are an integral part of the financial statements.

F-4



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Statements of Cash Flows
For the Years Ended December 31, 2000, 1999 and 1998

---

|                                                                         |                                                              |                                                     |            |          |            |   |            |          |            |      |             |          |             |  
|------------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------------------------- | ---------- | -------- | ---------- | - | ---------- | -------- | ---------- | ---- | ----------- | -------- | ----------- | -
|                                                                         |                                                              |                                                     |            | 2000     |            |   | 1999       |          |            | 1998 |            
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|Cash flows from operating activities                                    
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income                                                               |                                                              | $                                                   | 2,214,109  |          |            | $ | 2,294,029  |          |            | $    | 1,810,749   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Adjustments to net income
Depreciation                                   |                                                              |                                                     | 394,312    |          |            |   | 327,803    |          |            |      | 131,565     |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Amortization of debt issuance costs                          |                                                     |            | 59,519   |            |   |            | 59,519   |            |      |             |         |            
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Gain on sale of real estate                                  |                                                     |            |         |            |   |            | (5,858   | )          |      |             |         |            
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Gain on sale of equipment                                    |                                                     |            | (42,433  | )          |   |            |         |            |      |             |         |            
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Increase in unbilled rent                                    |                                                     |            | (340,879 | )          |   |            | (260,654 | )          |      |             | (102,859 | )          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Decrease (increase) in accounts receivable                   |                                                     |            | 5,896    |            |   |            | 97,587   |            |      |             | (126,747 | )          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Increase (decrease) in accounts payable and accrued expenses |                                                     |            | (18,090  | )          |   |            | 81,573   |            |      |             | (2,674   | )          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Decrease (increase) in due from related parties              |                                                     |            | 39,511   |            |   |            | 135,140  |            |      |             | (126,236 | )          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Increase (decrease) in due to related parties                |                                                     |            | 200,341  |            |   |            | (196,596 | )          |      |             | 120,026  |            
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Decrease (increase) in restricted cash                       |                                                     |            | 113,806  |            |   |            | 774,154  |            |      |             | (988,189 | )          
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|                                                                         |                                                              | Net cash provided by operating activities           |            |          | 2,626,092  |   |            |          | 3,306,697  |      |             |          | 715,635     |  
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|Cash flows from financing activities                                    
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Purchase and construction cost of properties
subject to operating leases |                                                              |                                                     | (5,063,907 | )        |            |   | (5,040,449 | )        |            |      | (15,759,559 | )       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Proceeds from disposition of properties subject to operating 
leases     |                                                              |                                                     |           |          |            |   | 952,639    |          |            |      |            |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Proceeds from sale of equipment                                          |                                                              |                                                     | 611,121    |          |            |   |           |          |            |      |            |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Purchase of equipment and real estate subject to financing
leases        |                                                              |                                                     |           |          |            |   | (1,131,619 | )        |            |      | (5,473,417  | )       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Principal collections on financing leases                                |                                                              |                                                     | 1,314,622  |          |            |   | 1,219,382  |          |            |      | 804,623     |         
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|                                                                         |                                                              | Net cash used in investing activities               |            |          | (3,138,164 | ) |            |          | (4,000,047 | )    |             |          | (20,428,353 | )
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|Cash flows from financing activities                                    
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Proceeds from issuance of note payable                                   |                                                              |                                                     | 3,746,276  |          |            |   | 3,276,000  |          |            |      | 6,375,000   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Debt issuance costs                                                      |                                                              |                                                     |           |          |            |   | (201,964   | )        |            |      | (393,230    | )       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Repayments of notes payable                                              |                                                              |                                                     | (7,526     | )        |            |   |           |          |            |      |            |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Issuance of limited partnership units                                    |                                                              |                                                     |           |          |            |   |           |          |            |      | 14,598,683  |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Offering costs                                                           |                                                              |                                                     |           |          |            |   |           |          |            |      | (1,884,771  | )       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Repurchase of limited partnership units                                  |                                                              |                                                     | (230,363   | )        |            |   | (105,399   | )        |            |      |            |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Distributions to limited partners                                        |                                                              |                                                     | (3,609,998 | )        |            |   | (3,412,501 | )        |            |      | (2,089,000  | )       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Distributions to general partner                                         |                                                              |                                                     | (9,205     | )        |            |   | (63,219    | )        |            |      |            |         
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|                                                                         |                                                              | Net cash (used in) provided by financing activities |            |          | (110,816   | ) |            |          | (507,083   | )    |             |          | 16,606,682  |  
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|                                                                         |                                                              | Net decrease in cash and cash equivalents           |            |          | (622,888   | ) |            |          | (1,200,433 | )    |             |          | (3,106,036  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Cash and cash equivalents, beginning of period                           |                                                              |                                                     | 701,725    |          |            |   | 1,902,158  |          |            |      | 5,008,194   |         
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|Cash and cash equivalents, end of period                                 |                                                              | $                                                   | 78,837     |          |            | $ | 701,725    |          |            | $    | 1,902,158   |         
|                                                                         |                                                              |                                                     |            |          |            |   |            |          |           
|Supplemental
disclosure of cash flow information:                       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Cash
paid for interest                                                   |                                                              | $                                                   | 838,430    |          |            | $ | 665,731    |          |            | $    | 20,156     

The accompanying notes are an integral part of the financial statements.

F-5



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Notes to Financial Statements

---



|1. |  | The Partnership and Its Significant Accounting Principles
|-- |  | ---------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Captec 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 general partners upon formation of the Partnership were Captec
Franchise Capital Corporation IV (the Corporation), a wholly owned
subsidiary of Captec Financial Group, Inc. (Captec), and Patrick L.
Beach, the Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation and Captec. In August, 1998, the
general partnership interest of the Partnership was acquired by Captec Net
Lease Realty, Inc., an affiliate of Captec.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Partnership commenced a public offering of 30,000 limited partnership
interests (Units), priced at $1,000 per unit, on December 31, 1996. The
Partnership commenced operations on March 5, 1997. At December 31, 1998,
the Partnership had accepted subscriptions for all 30,000 Units. During
1999 the Partnership repurchased a total of 117 Units for $105,339, or 90%
of the investors capital account. On April 3, 2000 the partnership
repurchased a total of 110 units for $99,282, or 90% of the investors
account. An additional 148 units were repurchased on October 2, 2000 for
$131,080 or 89% of the investors account. The repurchase of the Units was
completed pursuant to the terms of the Repurchase Plan set forth in the
Partnerships Prospectus. At December 31, 2000, the Partnership had 29,625
Units issued and outstanding.



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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:



| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | Cash and cash equivalents                                                                                                                  
|
| | The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.



| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Restricted cash                                                                                                                                                    
|
| | The Partnership is required to maintain a cash balance in an escrow account
until specific post closing requirements have been satisfied related
to a
note payable.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Rental income from operating leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | The Partnerships operating leases have scheduled rent increases which
occur at various dates throughout the lease terms. 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. To the extent rental
income on the straight-line basis exceeds rents billable per the lease
agreement, an amount is recorded as unbilled rent. In addition to
scheduled rent increases, certain of the Partnerships leases also have
percentage and overage rent clauses, which the Partnership recognizes after
the tenants reported sales have exceeded the applicable sales breakpoint.

F-6



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Notes to Financial Statements

---



|1. |  | The Partnership and Its Significant Accounting Principles (continued)
|-- |  | ---------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Land and building subject to operating leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Land 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). 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 were 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.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net investment in financing leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Net investment in financing leases primarily represents equipment used in
restaurant operations and are leased under 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. Financing
leases delinquent for 90 or more days are determined to be impaired, and
income accrual is suspended at that time. A loss reserve is calculated
based on the estimated amounts recoverable. At December 31, 2000 no
financing leases have been determined to be impaired and, thus, the
Partnership has not provided for an allowance for uncollectible amounts
associated with its financing leases.



| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Note payable                                                                                                                                                          
|
| | The fair value of fixed rate debt approximates the book value, and is
estimated based on current rates offered for notes payable of the
equivalent remaining maturity.



| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net income per limited partnership interest                                                                                                                                                                        
|
| | Net 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.



| |                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Income taxes                                                                                                                                                                                                           
|
| | No 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.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | The preparation of financial statements in conformity with generally
accepted accounting principles 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.



| |                                                                                                              
| | -------------------------------------------------------------------------------------------------------------
| | Reclassifications                                                                                            
|
| | Certain prior period financial statement amounts have been reclassified to
conform to the 2000 presentations.

F-7



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Notes to Financial Statements

---



|2. |  | Distributions
|-- |  | -------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cash 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 will be allocated 90% to the limited partners 10% to the
General Partner, except that the General Partners share will be
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 Agreements
|-- |  | -----------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Organization and offering expenses, excluding selling commissions, were
paid initially by the General Partners and/or their affiliates and
subsequently reimbursed by the Partnership in an amount equal to up to 3%
of the gross proceeds of the offering (less any amounts paid directly by
the Partnership). In addition, the General Partner and/or its affiliates
were paid a non-accountable expense allowance by the Partnership in an
amount equal to 2% of the gross proceeds of the offering. These costs were
treated as capital issuance costs and have been netted against the limited
partners capital accounts.



| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Partnership paid to Participating Dealers, including affiliates of the
general partners, selling commissions in an amount equal to 8% of the
purchase price of all Units placed by them directly. There were $0 and
$1,156,562 of selling commissions incurred during 2000 and 1999,
respectively. These costs were treated as capital issuance costs and have
been netted against the limited partners capital accounts.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the Partnership Agreement, 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) are incurred to
the General Partner. The Partnership incurred $240,772, $279,146 and
$1,088,073 in acquisition fees during 2000, 1999 and 1998, respectively.
The acquisition fees were 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 $45,556, $39,507
and $22,934 were incurred during 2000, 1999 and 1998, respectively.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Partnership Agreement provides for the General Partner to receive
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, cumulative non-compounded preferred return on their
adjusted invested capital plus distributions of sale or refinancing
proceeds equal to 100% of their original contributions. The Partnerships
Prospectus provides for the reinvestment of net sale proceeds during the
four year period beginning on the date the Partnership terminated the
offering, December 23, 1998. The Partnership did not pay any
liquidation fees during 2000 or 1999.



F-8



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Notes to Financial Statements

---



|4. |  | Land and Building Subject to Operating Leases
|-- |  | ---------------------------------------------



| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | The net investment in operating leases as of December 31, 2000 and 1999 is
comprised of the following:

|                          |                               |   |            |          |   |      |            |          |  
|------------------------- | ----------------------------- | - | ---------- | -------- | - | ---- | ---------- | -------- | -
|                          |                               |   | 2000       |          |   | 1999 |           
|                          |                               |   |            |          |   |      |           
|Land                      |                               | $ | 11,197,200 |          |   | $    | 10,635,450 |         
|                         
|                         
|                         
|                         
|Building and improvements |                               |   | 19,535,581 |          |   |      | 15,033,424 |         
|                          |                               |   |            |          |   |     
|                          |                               |   | 30,732,781 |          |   |      | 25,668,874 |         
|                         
|                         
|                         
|                         
|                          | Less accumulated depreciation |   |            | (863,458 | ) |      |            | (469,146 | )
|                          |                               |   |            |          |   |     
|                          |                               | $ | 29,869,323 |          |   | $    | 25,199,728 |         
|                          |                               |   |            |          |   |     



| |                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All construction draws are subject to the terms of a standard lease
agreement with the Partnership. Upon completion of construction and when
the tenant lease payments begin, the construction draws are then
capitalized as land and building. There were no outstanding construction
draws on properties as of December 31, 2000 and 1999.



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | The following is a schedule of future minimum lease payments to be received
on the operating leases as of December 31, 2000:

|           |       |   |            |            | 
|---------- | ----- | - | ---------- | ---------- | 
|2001       |       | $ | 3,057,094  |           
|          
|          
|          
|          
|2002       |       |   | 3,124,362  |           
|          
|          
|          
|          
|2003       |       |   | 3,157,794  |           
|          
|          
|          
|          
|2004       |       |   | 3,216,979  |           
|          
|          
|          
|          
|2005       |       |   | 3,274,194  |           
|          
|          
|          
|          
|Thereafter |       |   | 38,944,003 |           
|           |       |   |           
|           | Total |   | $          | 54,774,426 | 
|           |       |   |           



|5. |  | Net Investment in Financing Leases
|-- |  | ----------------------------------



| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | The net investment in financing leases as of December 31, 2000 and 1999 is
comprised of the following:

|                                      |                                 |                                      |           |            |           |   |            |            |            | 
|------------------------------------- | ------------------------------- | ------------------------------------ | --------- | ---------- | --------- | - | ---------- | ---------- | ---------- | 
|                                      |                                 |                                      |           | 2000       |           |   | 1999       |           
|                                      |                                 |                                      |           |            |           |   |            |           
|Minimum lease payments to be received |                                 | $                                    | 7,261,082 |            |           | $ | 10,230,685 |           
|                                     
|                                     
|                                     
|                                     
|Estimated residual value              |                                 |                                      | 232,697   |            |           |   | 232,697    |           
|                                      |                                 |                                      |           |            |           |  
|                                      |                                 | Gross investment in financing leases |           |            | 7,493,779 |   |            |            | 10,463,382 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Less - unearned income          |                                      |           | (1,521,638 | )         |   |            | (2,709,359 | )         
|                                     
|                                     
|                                     
|                                     
|                                      | Less - direct origination costs |                                      |           | (435,755   | )         |   |            | (334,328   | )         
|                                      |                                 |                                      |           |            |           |  
|                                      |                                 | Net investment in financing leases   |           | $          | 5,536,386 |   |            | $          | 7,419,695  | 
|                                      |                                 |                                      |           |            |           |  



F-9



---



##### Table of Contents



Captec Franchise Capital Partners, L.P. IV
Notes to Financial Statements

---



|5. |  | Net Investment in Financing Leases (continued)
|-- |  | ----------------------------------------------



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | The following is a schedule of future minimum lease payments to be received
on the financing leases as of December 31, 2000:

|           |       |   |           |           | 
|---------- | ----- | - | --------- | --------- | 
|2001       |       | $ | 1,823,681 |          
|          
|          
|          
|          
|2002       |       |   | 1,670,956 |          
|          
|          
|          
|          
|2003       |       |   | 1,066,386 |          
|          
|          
|          
|          
|2004       |       |   | 512,971   |          
|          
|          
|          
|          
|2005       |       |   | 301,178   |          
|          
|          
|          
|          
|Thereafter |       |   | 1,885,910 |          
|           |       |   |          
|           | Total |   | $         | 7,261,082 | 
|           |       |   |          



|6. |  | Notes Payable
|-- |  | -------------



| |                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December 1998, the Partnership entered into a $6.4 million term note,
the proceeds of which were used to acquire properties. The note has a
10-year term, is collateralized by certain properties subject to operating
leases, and bears an interest rate of 8.13% per annum.



| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In March 1999, the Partnership entered into an additional $3.3 million term
note. The note has a 10-year term, is collateralized by certain properties
subject to operating leases, and bears an interest rate of 8.5% per annum.



| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In October 2000, the Partnership assumed a $3.7 million term note in
connection with the acquisition of a United Supermarket property. The note
has a 10-year term, and bears an interest rate of 8.35% per annum.



| |                                                                                  
| | ---------------------------------------------------------------------------------
| | At December 31, 2000, annual maturities on the notes in aggregate are as
follows:

|           |       |   |            |            | 
|---------- | ----- | - | ---------- | ---------- | 
|2001       |       | $ | 211,460    |           
|          
|          
|          
|          
|2002       |       |   | 263,410    |           
|          
|          
|          
|          
|2003       |       |   | 286,039    |           
|          
|          
|          
|          
|2004       |       |   | 310,614    |           
|          
|          
|          
|          
|2005       |       |   | 337,300    |           
|          
|          
|          
|          
|Thereafter |       |   | 11,980,927 |           
|           |       |   |           
|           | Total |   | $          | 13,389,750 | 
|           |       |   |           



| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Debt issuance costs of $595,194 in aggregate were incurred in connection
with the issuance of the notes, and are being amortized to interest expense
using the straight-line method over the 10-year term.



|7. |  | Subsequent Event
|-- |  | ----------------



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Based upon the results of operations for the three month period ended
December 31, 2000, the Partnership declared distributions of $835,000 to
its limited partners on January 15, 2001.



F-10



---



##### Table of Contents








To the Board of Directors of
Captec Net Lease Realty, Inc.
Managing General Partner of
Captec Franchise Capital Partners L.P. IV

In connection with our audit of the financial statements of Captec Franchise
Capital Partners L.P. IV as of December 31, 2000, 1999 and 1998, which
financial statements are included in this Form 10-K, we have also audited the
financial statement schedule listed in the index to Financial Statements
contained in this Form 10-K.

In our opinion, this financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material aspects, the information required to be included therein.





PricewaterhouseCoopers LLP





Detroit, Michigan
March 9, 2001



F-11



---



##### Table of Contents









|                   |         |            |          |  |    |          |  |  |              |           |            |            |              |           |            |  |  |  |  |  | 
|------------------ | ------- | ---------- | -------- |  | -- | -------- |  |  | ------------ | --------- | ---------- | ---------- | ------------ | --------- | ---------- |  |  |  |  |  | 
|                   |         |            | Type of  |  |    | State    |  |  |              |           |            |            | Initial Cost |          
|                   | Concept |            | Property |  |    | Location |  |  | Encumbrances |           |            | To Company |             
|                   |         |            |          |  |    |          |  |  |              |           |            |            |             
|Boston Market      |         | Restaurant |          |  | MN |          |  |  |              |          |            |            |              | 1,012,200 |           
|                  
|                  
|                  
|                  
|Hollywood Video    |         | Retail     |          |  |    | OH       |  |  |              |           | 736,836    |            |              |           | 1,455,300  | 
|                  
|                  
|                  
|                  
|Blockbuster Video  |         | Retail     |          |  |    | GA       |  |  |              |           | 590,078    |            |              |           | 1,170,000  | 
|                  
|                  
|                  
|                  
|Italian Oven       |         | Restaurant |          |  | TX |          |  |  |              | 883,177   |            |            |              | 1,680,000 |           
|                  
|                  
|                  
|                  
|Arbys             |         | Restaurant |          |  | OH |          |  |  |              | 398,136   |            |            |              | 819,000   |           
|                  
|                  
|                  
|                  
|Hollywood Video    |         | Retail     |          |  |    | OH       |  |  |              |           | 762,912    |            |              |           | 1,454,880  | 
|                  
|                  
|                  
|                  
|Steak & Ale        |         | Restaurant |          |  | MI |          |  |  |              | 1,028,261 |            |            |              | 2,100,000 |           
|                  
|                  
|                  
|                  
|Steak & Ale        |         | Restaurant |          |  | PA |          |  |  |              | 1,196,139 |            |            |              | 2,441,250 |           
|                  
|                  
|                  
|                  
|Bennigans         |         | Restaurant |          |  | VA |          |  |  |              | 796,226   |            |            |              | 1,627,500 |           
|                  
|                  
|                  
|                  
|Taco Bell          |         | Restaurant |          |  | MI |          |  |  |              | 385,541   |            |            |              | 766,500   |           
|                  
|                  
|                  
|                  
|Taco Bell          |         | Restaurant |          |  | MI |          |  |  |              | 385,541   |            |            |              | 766,500   |           
|                  
|                  
|                  
|                  
|Arbys             |         | Restaurant |          |  | MI |          |  |  |              | 381,371   |            |            |              | 840,000   |           
|                  
|                  
|                  
|                  
|Tony Romas        |         | Restaurant |          |  | TX |          |  |  |              | 951,803   |            |            |              | 1,942,500 |           
|                  
|                  
|                  
|                  
|Del Taco           |         | Restaurant |          |  | CA |          |  |  |              | 654,981   |            |            |              | 1,239,000 |           
|                  
|                  
|                  
|                  
|Kona Steakhouse    |         | Restaurant |          |  | TX |          |  |  |              |          |            |            |              | 1,801,622 |           
|                  
|                  
|                  
|                  
|Carinos            |         | Restaurant |          |  | TX |          |  |  |              |          |            |            |              | 1,675,622 |           
|                  
|                  
|                  
|                  
|Wingers            |         | Restaurant |          |  | AZ |          |  |  |              |          |            |            |              | 941,850   |           
|                  
|                  
|                  
|                  
|Wingers            |         | Restaurant |          |  | AZ |          |  |  |              | 499,998   |            |            |              | 948,150   |           
|                  
|                  
|                  
|                  
|Arbys             |         | Restaurant |          |  | IA |          |  |  |              |           |            |            |              | 987,000   |           
|                  
|                  
|                  
|                  
|United Supermarket |         | Retail     |          |  | TX |          |  |  |              | 3,738,450 |            |            |              | 5,063,907 |           
|                   |         |            |          |  |    |          |  |  |              |           |            |            |              |          
|TOTAL PROPERTIES   |         |            |          |  |    |          |  |  |              |           | 13,389,450 |            |              |           | 30,732,781 | 
|                   |         |            |          |  |    |          |  |  |              |           |            |            |              |          

|                   |  |  |             |   |  |              |            |           |              |  |         |              |         |  |              |      |  |              |  |              |  |  |  |          | 
|------------------ |  |  | ----------- | - |  | ------------ | ---------- | --------- | ------------ |  | ------- | ------------ | ------- |  | ------------ | ---- |  | ------------ |  | ------------ |  |  |  | -------- | 
|                   |  |  | Cost        |   |  | Gross Amount |           
|                   |  |  | Capitalized |   |  | At Which     |           
|                   |  |  | Subsequent  |   |  | Carried At   |            |           |              |  |         |              | Date of | 
|                   |  |  | To          |   |  | Close        |            |           | Accumulated  |  |         | Acquisition/ |         |  | Acquisition/ |     
|Concept            |  |  | Acquisition |   |  | Of Period    |            |           | Depreciation |  |         | Construction |         |  | Construction |      |  | Depreciation | 
|                   |  |  |             |   |  |              |            |           |              |  |         |              |         |  |              |      |  |              | 
|Boston Market      |  |  |             |  |  |              |            | 1,012,200 |              |  |         | 60,441       |         |  |              | 1997 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Hollywood Video    |  |  |             |  |  |              |            | 1,455,300 |              |  |         | 67,414       |         |  |              | 1997 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Blockbuster Video  |  |  |             |  |  |              |            | 1,170,000 |              |  |         | 65,125       |         |  |              | 1997 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Italian Oven       |  |  |             |  |  |              |            | 1,680,000 |              |  |         | 44,844       |         |  |              | 1997 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Arbys             |  |  |             |  |  |              |            | 819,000   |              |  |         | 22,914       |         |  |              | 1998 |  |              |  | Construction |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Hollywood Video    |  |  |             |  |  |              |            | 1,454,880 |              |  |         | 59,525       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Steak & Ale        |  |  |             |  |  |              |            | 2,100,000 |              |  |         | 64,116       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Steak & Ale        |  |  |             |  |  |              |            | 2,441,250 |              |  |         | 58,964       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Bennigans         |  |  |             |  |  |              |            | 1,627,500 |              |  |         | 79,931       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Taco Bell          |  |  |             |  |  |              |            | 766,500   |              |  |         | 21,263       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Taco Bell          |  |  |             |  |  |              |            | 766,500   |              |  |         | 24,675       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Arbys             |  |  |             |  |  |              |            | 840,000   |              |  |         | 30,625       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Tony Romas        |  |  |             |  |  |              |            | 1,942,500 |              |  |         | 57,750       |         |  |              | 1998 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Del Taco           |  |  |             |  |  |              |            | 1,239,000 |              |  |         | 23,446       |         |  |              | 1998 |  |              |  | Construction |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Kona Steakhouse    |  |  |             |  |  |              |            | 1,801,622 |              |  |         | 51,854       |         |  |              | 1998 |  |              |  | Construction |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Carinos            |  |  |             |  |  |              |            | 1,675,622 |              |  |         | 37,878       |         |  |              | 1999 |  |              |  | Construction |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Wingers            |  |  |             |  |  |              |            | 941,850   |              |  |         | 27,383       |         |  |              | 1999 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Wingers            |  |  |             |  |  |              |            | 948,150   |              |  |         | 28,653       |         |  |              | 1999 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|Arbys             |  |  |             |   |  |              |            | 987,000   |              |  |         | 18,821       |         |  |              | 1999 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                  
|                  
|                  
|                  
|United Supermarket |  |  |             |  |  |              |            | 5,063,907 |              |  |         | 17,835       |         |  |              | 2000 |  |              |  | Acquisition  |  |  |  | 40 Years | 
|                   |  |  |             |   |  |              |            |           |             
|TOTAL PROPERTIES   |  |  |            |   |  |              | 30,732,781 |           |              |  | 863,458 |             
|                   |  |  |             |   |  |              |            |           |             

Notes:

The changes in total properties for the years ended December 31, 2000 and
1999 are as follows:

|                           |  |      |            |  |      |   |            |  
|-------------------------- |  | ---- | ---------- |  | ---- | - | ---------- | -
|                           |  | 2000 |            |  | 1999 |  
|                           |  |      |            |  |      |  
|Balance, beginning of year |  | $    | 25,668,874 |  |      | $ | 21,598,416 |  
|                          
|                          
|                          
|                          
|Acquisitions               |  |      | 5,063,907  |  |      |   | 5,040,449  |  
|                          
|                          
|                          
|                          
|Dispositions and other     |  |      |           |  |      |   | (969,991   | )
|                           |  |      |            |  |      |  
|Balance, end of year       |  | $    | 30,732,781 |  |      | $ | 25,668,874 |  
|                           |  |      |            |  |      |  

The changes in accumulated depreciation for the years ended December 31,
2000 and 1999 are as follows:

|                           |  |      |         |  |      |   |         |  
|-------------------------- |  | ---- | ------- |  | ---- | - | ------- | -
|                           |  | 2000 |         |  | 1999 |  
|                           |  |      |         |  |      |  
|Balance, beginning of year |  | $    | 469,146 |  |      | $ | 164,552 |  
|                          
|                          
|                          
|                          
|Depreciation expense       |  |      | 394,312 |  |      |   | 327,803 |  
|                          
|                          
|                          
|                          
|Dispositions and other     |  |      |        |  |      |   | (23,209 | )
|                           |  |      |         |  |      |  
|Balance, end of year       |  | $    | 863,458 |  |      | $ | 469,146 |  
|                           |  |      |         |  |      |  

F(a)-12