##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K




ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934


|                                            |  |                                
|------------------------------------------- |  | -------------------------------
|                                           
|                                           
|                                           
|                                           
|For the Fiscal Year ended December 31, 2000 |  | Commission file number
	1045281

CAPTEC NET LEASE REALTY, INC.

(Exact name of registrant as specified in its
charter)


|                                                                                        |  |                                               
|--------------------------------------------------------------------------------------- |  | ----------------------------------------------
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Delaware(State or other jurisdiction of
	incorporation or organization)                 |  | 38-3368333(I.R.S. Employer Identification No.)
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|24 Frank Lloyd Wright Drive
	Ann Arbor, Michigan(Address of Principal Executive Office) |  | 48106(Zip Code)                               

(734) 994-5505

(Registrants telephone number, including
area code)


Securities registered pursuant to Section 12(b) of the Act:

|                                       |  |                     |                               | 
|-------------------------------------- |  | ------------------- | ----------------------------- | 
|                                       |  | Name of Exchange   
|Title of Class                         |  | on Which Registered
|Common Stock, par value $.01 per share |  |                     | NASDAQ National Market System | 

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

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.

State the aggregate market value
of the voting stock held by nonaffiliates of the registrant:

$93,956,291 based on the average bid price of the



The number of shares of Common
Stock, par value $.01 per share, outstanding as of
March 1, 2001:  9,508,108



---






---

TABLE OF CONTENTS



|                                                           |  |  |  |  |  |  |  | 
|---------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                    
|PART II                                                   
|PART III                                                  
|PART IV                                                   
|FORWARD-LOOKING STATEMENTS                                
|SIGNATURES                                                
|INDEX TO FINANCIAL STATEMENTS                             
|REPORT OF INDEPENDENT ACCOUNTANTS                         
|CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES            
|CONSOLIDATED BALANCE SHEETS                               
|CONSOLIDATED STATEMENTS OF OPERATIONS                     
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
|CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                
|REPORT OF INDEPENDENT ACCOUNTANTS                         



---








PART I


Item 1.  Business

Background.Captec Net Lease Realty, Inc., which
operates as a real estate investment trust (REIT),
acquires, develops and owns high-quality freestanding properties
leased principally on a long-term triple-net basis to national
and regional chain and franchised restaurants and national
retailers. Triple-net leases generally impose on the lessee
responsibility for all operating costs and expenses of the
property, including the costs of repairs, maintenance, real
property taxes, assessments, utilities and insurance. The
Companys leases typically provide for minimum rent plus
specified fixed periodic rent increases. Other revenues are
derived primarily from interest income on loans to affiliates
and fee income earned from affiliated ventures.

Properties.As of December 31, 2000, the
Company had a portfolio of 138 properties located in 27
states, with a cost basis of $210 million. The properties
are leased to 52 operators of 35 distinct national and
regional restaurant concepts and 11 operators of
14 national and regional retail concepts. The restaurant
and retail markets represented approximately 76% and 24%,
respectively, of the annualized total revenue from the
properties as of December 31, 2000.

As of December 31, 2000, leases to a single lessee, S&A
Properties, Inc., the franchisor of the Bennigans and
Steak and Ale concepts, represented 12.8% of annualized total
revenue, and the next highest single lessee represents 4.2% of
annualized total revenue. Any default under these leases or a
material adverse change in the popularity of Bennigans or
Steak and Ale restaurants could have a material adverse effect
on the financial condition of the Company.

In addition to these properties, as of December 31, 2000
the Company had entered into tentative agreements to acquire 38
properties for an aggregate cost of $50.6 million. The
Company generally acquires properties from operators or
developers in locations which have exhibited growth in retail
sales and population. Upon acquiring a property, the Company
normally enters into a long-term triple-net lease typically for
a 15- to 20-year term, plus one or more five-year renewal
options, with the lessee which will operate the property. Under
the terms of a typical triple-net lease, the lessee is
responsible for all operating costs and expenses of the
property, including costs of repairs, maintenance, real property
taxes, assessments, utilities and insurance. The leases
generally provide for minimum rent plus specified fixed periodic
rent increases. The Company believes that the structure of its
leases provides steady, periodically escalating long-term cash
flow while reducing operating expenses and capital costs, and
that its underwriting standards reduce the risk of lessee
default or non-renewal.

The Advisor.The Company has retained Captec Net
Lease Realty Advisors, Inc. (Captec Advisors), an
affiliate, which, together with Captec Financial Group, Inc.,
(Captec Financial) an affiliate (Captec Advisors and
Captec Financial are collectively referred to herein as the
Advisor), manages the operations of the Company and
provides it with investment and financial advisory services
pertaining primarily to the acquisition, development and leasing
of properties and administrative support. Captec Financial is a
specialty commercial finance company, which, together with its
affiliates, provide a diverse line of financing products to the
franchise and chain restaurant, and retail petroleum and
convenience store markets, including equipment leases, mortgage
and acquisition loans, construction and development financing
and private equity financing. Since 1981, Captec Financial and
its affiliates have developed substantial expertise in all
aspects of the franchise, chain restaurant and specialty retail
finance business, including property acquisition, loan and lease
origination, underwriting and monitoring of business concepts,
obligor credit and real estate quality, portfolio management,
accounting and other administrative functions.

Subject to the direction of the Board of Directors, the
Advisors responsibilities include:



| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | selecting restaurant and specialty retail properties for
	acquisition, formulating, evaluating the terms of each proposed
	acquisition, and arranging for the acquisition of properties by
	the Company;
|
| |  | identifying potential leases for restaurant properties and
	formulating, evaluating and negotiating the terms of the leases;                                                                            
|
| |  | negotiating the terms of any borrowings;                                                                                                                                                                

1



---



##### Table of Contents





| |   |                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | performing credit analyses of prospective lessees;                                                                                                            
|
| |  | conducting legal and business due diligence and overseeing the
	preparation of all legal documentation for the development and
	leasing of all properties; and
|
| |  | identifying properties for sale consistent with the
	Companys investment objectives and prevailing economic
	conditions.                                     

The Advisor also provides all necessary and customary billing
and administrative functions with respect to the leases; takes
all actions necessary to cause the Company to comply with all
applicable laws and regulations; prepares reports to
stockholders and materials for stockholders meetings; prepares
and delivers to the Company periodic financial statements;
promptly notifies the Company upon the occurrence of certain
events including defaults under the leases; and performs such
other administrative and managerial functions as may be
requested by the Company.

Captec Advisors renders advisory, management and other services
to the Company pursuant to an advisory agreement, as amended.
Under the terms of the advisory agreement, the Company pays to
Captec Advisors a management fee of the lesser of (i) 0.6%
of the aggregate capitalized cost (excluding accumulated
depreciation) of all assets in the Companys portfolio, or
(ii) 5.0% of the Companys revenues. The Company also
pays Captec Advisors an incentive fee equal to 15.0% of the
amount by which any increase in annual Funds From Operations
(FFO) per share exceeds a 7.0% annual increase in
FFO per share multiplied by the weighted average number of
shares of common stock outstanding. The Company also reimburses
Captec Advisors in an amount equal to all costs incurred in the
acquisition of properties pursuant to an acquisition fee which,
together with the incentive fee cannot exceed 3.0% of the
acquisition cost of properties identified by Captec Advisors and
acquired during the term of the advisory agreement. The advisory
agreement has been amended to reduce the management fee to
Captec Advisors by the amount of acquisition fees and advisory
fees paid directly to Captec Advisors as a result of
acquisitions made by Family Realty, Inc., Family Realty II,
Inc. or by Captec Franchise Capital Partners L.P. III and
Captec Franchise Capital Partners LP. IV, both of which the
Company is the general partner. The advisory agreement expires
on December 31, 2001, subject to successive, automatic
one-year renewals unless terminated by either party at the
conclusion of the then-applicable term, upon 90 days prior
written notice.

Investment in
Affiliates

Investments in Partnerships.In August 1998 the
Company purchased from affiliates 100% of the general
partnership interests in Captec Franchise Capital Partners
L.P. III, and Captec Franchise Capital Partners
L.P. IV (together the Partnerships), which are
engaged in substantially the same business as the Company.
Pursuant to the terms outlined in the amended and restated
agreement of limited partnership of each Partnership, the
Company receives an acquisition fee equal to 5.0% of the
aggregate purchase price of properties and an asset management
fee equal to 1.0% of gross rental revenues from the
Partnerships properties and equipment. In connection with
the amendment of the advisory agreement, the limited partnership
agreements for the Partnerships were amended retroactive to
January 1, 1998. The effect of the amended agreements is to
provide an acquisition fee of 2.0% of the aggregate purchase
price of properties to the Company from the Partnerships and an
acquisition fee of 3.0% of the aggregate purchase price of
properties to Captec Advisors from the Partnerships, for which
the Company receives an equal reduction in management fee
expense to Captec Advisors. Cash flows of the Partnerships are
allocated 99.0% to the limited partners and 1.0% to the Company
as the general partner. Net sale or refinancing proceeds of each
of the Partnerships are allocated 90.0% to the limited partners
and 10.0% to the Company as the general partner. The Company
will receive liquidation fees limited to the lesser of 3.0% of
the gross sales price or 50.0% of the customary real estate
commissions in the event of a real estate liquidation by either
Partnership. The cash flow, liquidation fees, and net sale
proceeds to the Company are subordinated to a 10.5% and 11.0%
preferred return for Captec Franchise Capital Partners
L.P. IV and Captec Franchise Capital Partners
L.P. III, respectively, plus return of the original capital
contributions to the limited partners.

Investments in Family Realty.Family Realty, Inc.
(Family Realty) was formed in 1998 to invest in
net-leased entertainment-based and retail properties, which are
comprised principally of state of the art

2



---



##### Table of Contents





Investment in Joint Venture.During the twelve months
ended December 31, 1999, the Company, through a
wholly-owned subsidiary, formed a joint venture, FC
Venture I, LLC, with an affiliate of Fidelity Management
Trust Company, one of the largest investment managers in the
United States, on behalf of its institutional clients. The joint
venture was formed to develop and acquire net-leased restaurant
and retail properties similar to those which the Company
develops and acquires. At December 31, 2000 the affiliate
of Fidelity and the Company have provided $24.4 million and
$7.1 million, respectively, of equity capital for the joint
venture. The Company is the joint ventures administrative
agent authorized to act on behalf of the joint venture. As
properties are acquired, the Company receives management fees
and participates in any distributions from the joint venture as
provided in the operating agreement. The Company will utilize
any proceeds from the joint venture as working capital,
including for the acquisition of properties for its portfolio.
The affiliate of Fidelity has been granted an option to convert
either 25.0% or 75.0% of its joint venture interest into the
Companys common stock during the period March 31,
2001 through March 31, 2003. Under the 75.0% option the
affiliate of Fidelity is entitled to convert 75.0% of the value
of its membership interests into the Companys common stock
at the factor equal to 90.0% of the greater of $18.00 per
share or the market price of the Companys common stock on
the date notice of conversion is given. Under the 25.0% option,
the affiliate of Fidelity is entitled to convert 25.0% of the
value of its membership interest into the Companys common
stock at the greater of the market price of the Companys
common stock on March 31, 1999, which was $13.00 per
share, or the date notice of conversion is given.

Operations

Acquisitions from Operators.The Company purchases
properties from, and enters into leases with, creditworthy
multi-unit operators of national and regional chain and
franchised restaurants and national and regional specialty
retailers. Lessees that are deemed creditworthy are those
lessees that are most capable of meeting the obligations of a
lease over the term of the lease as a result of a comprehensive
credit review process which includes an evaluation of corporate
financial statements and federal income tax returns, unit level
operating data and projections and demographic and site
information. The Company targets only lessees which it believes
have the competitive position and financial strength to meet
lease obligations. By acting in tandem with Captec Financial as
a value-added provider of capital to restaurant operators, the
Company seeks to purchase properties at below retail
market value and thus realizes above market returns.

Acquisitions from Developers.The Company has developed
alliances with select retail developers to acquire properties in
the retail industry. By developing these alliances, the Company
establishes mutually beneficial, rather than competitive,
relationships with developers, which is intended to increase the
Companys supply of retail acquisition opportunities and
provide the Company with below market purchase prices and above
market lease yields.

3



---



##### Table of Contents



Underwriting Restaurant Chains and Retailers.The Company
leases its properties to franchisees and operators of select
major national and regional restaurants and retailers because
the Company believes these widely recognized and centrally
supported chains possess significant advantages over their
independent competitors. These competitive advantages, which
include the use of nationally recognized trademarks and logos
and substantial management, training, advertising, market and
product support from franchisors and national or regional chain
management, strengthen the business and financial position of
the Companys lessees.

A concept is a proprietary theme under which a retailer or
franchise conducts business, such as Blockbuster Video or Taco
Bell. The Company employs thorough underwriting procedures to
select the franchise and chain business concepts towards which
it directs its acquisition activities. This analysis includes:



| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a review of publicly available information concerning
	franchisors or chain operators;                                                            
|
| |  | credit analysis of the franchisors or operators
	financial statements;                                                                          
|
| |  | assessment of business strategies, operating history and key
	personnel;                                                                          
|
| |  | operational and financial evaluation of unit level performance;                                                                                   
|
| |  | comparison of franchise fee and expense structure to industry
	averages;                                                                          
|
| |  | analysis of concept penetration and trade name recognition;                                                                                       
|
| |  | assessment of non-quantitative factors contributing to concept
	success; and                                                                      
|
| |  | for franchisors, surveys of representative franchisees to
	develop data on average sales, profitability and satisfaction
	with franchisor support.

The Companys concept underwriting procedures also result
in the establishment of credit standards for concept lessees.
Once selected, the Company conducts ongoing review of the
performance of the business concept through monitoring of
financial information and news releases. Each business concept
is formally reevaluated annually.

Underwriting Lessee Credit.The lessees are predominantly
experienced, multi-unit operators of fast-food, family-style and
casual dining restaurants and national retailers. The Company
subjects each proposed lessee to a thorough underwriting process
to identify the most creditworthy lessees and minimize the
Companys risk from defaults and business failures. Lessees
that are deemed creditworthy are those lessees that are most
capable of meeting the obligations of their lease(s) over the
term. The Company targets only lessees with the competitive
position and financial strength to meet lease obligations. The
Companys lessees, as franchisees or operators of major
national and regional franchised and chain outlets, also undergo
rigorous scrutiny and training by national and regional
franchisor and chain management and often must make substantial
capital investments prior to conducting business. This provides
additional assurance as to the creditworthiness of the lessees
and further reduces the Companys risk.

Underwriting Site Selection.Prior to acquiring a
property, the Company conducts a site review. The Company
typically undertakes a long-term viability and market value
analysis, including an inspection of the property and
surrounding area by an acquisition specialist, and assessment of
market area demographics, consumer demand, traffic patterns,
surrounding land use, accessibility, visibility, competition and
parking. The Company also (i) obtains an independent
appraisal of the property; (ii) evaluates both the current
and potential alternative use of the property; and
(iii) obtains an independent environmental site assessment
or environmental liability insurance.

In addition, many of the chain operators and franchisors have
sophisticated full-time staffs engaged in site selection,
evaluation and pre-approval of all new sites. The operators of
national and regional franchised and chain restaurants that
become the Companys lessees generally are required to
submit their proposed locations to a rigorous site evaluation
and approval process by franchisors or national chain
management, which generally includes assessments of many of the
factors considered by the Company in performing its analysis.
These studies often are made available to, and utilized by, the
Company in analyzing a potential acquisition.

4



---



##### Table of Contents





Maintenance of Relationships with Restaurant Chains,
Retailers and Lessees.Once a business concept has been
approved, the Company seeks to develop a strong ongoing working
relationship with national or regional senior chain or retailer
management. The Company believes that such relationships
facilitate the identification, negotiation and consummation of
transactions, are beneficial in resolving disputes or problems
which arise during the terms of leases and are an excellent
referral source of additional financing opportunities.

Active Management of Lessee Credit.In addition to
monitoring lease compliance, the Company regularly reviews the
financial condition of its lessees and business, economic and
market trends in order to identify and anticipate problems with
lessee performance which could adversely affect the
lessees ability to meet lease obligations. If potential
problems are identified, the Company seeks early intervention
with its lessees and, when appropriate, chain or retailer
national management to address and avoid such problems.

All of the Companys operations are conducted in the United
States. The Companys operations historically have not been
seasonal.

Competition.The restaurant and retail finance
industry is intensely competitive and fragmented. The Company
believes that competition for the acquisition of restaurant
properties is fragmented among large public corporations,
private companies and individuals. The Company competes with
other restaurant and retail finance companies, some of which are
REITs, commercial banks, other financial institutions and
certain franchisors that offer financing services directly to
their franchisees. Based upon the knowledge of this industry and
assessment of other REITs, the Company considers Franchise
Finance Corporation of America, Realty Income Corporation and
Commercial Net Lease Realty, Inc. to be its primary competitors
among REITs.

The Company believes that it has several key competitive
advantages that enable it to compete favorably for property
acquisitions, including the Companys ability to
bank the chain restaurant industry in tandem with
Captec Financial. The Company and its affiliates meet most of
the chain restaurant operators financing needs on a
one-stop shopping basis. To execute this strategy,
the Company and Captec Financial have strategically developed
diversified financing products and a relationship-based
marketing strategy founded upon the value of building long-term
relationships with customers. The Company and Captec Financial
offer to customers net lease financing, mortgage and acquisition
loans, construction loans, equipment leases and loans and
private equity financing, with all net lease acquisition
opportunities directed to the Company or its affiliates. In
addition, the Company has established alliances with select
retail developers which allows the Company to compete favorably
for development contracts directly with certain retailers,
providing retailers with the combination of a nationwide network
of select developers and a complete financing commitment.

Environmental Matters.Typically, independent
environmental consultants conduct or update environmental site
assessments and other environmental investigations as
appropriate or the Company obtains environmental liability
insurance at the properties. Where possible, the Company enters
into indemnification agreements with lessees and/or prior owners
at certain of the properties where potential environmental
issues have been raised, but have been remediated or otherwise
resolved. As part of its underwriting procedures, the Company
obtains environmental site assessments or environmental
liability insurance for all future properties, including the
properties subject to acquisition by the Company. The Company
believes that the extent and geographic diversity of its
portfolio minimizes the likelihood of the Company being exposed
to a material environmental liability.

REIT Modernization Act. In January 2001, the
REIT Modernization Act (RMA) was signed into
law. The RMA contains several provisions that will allow
REITs to create a taxable REIT subsidiary
(TRS) that can provide services to lessees and
others without disqualifying the rents that a REIT receives from
its lessees. Furthermore, RMA changes the minimum distribution
requirement from 95.0% to 90.0% of

5



---



##### Table of Contents





Employees.Reference is made to Item 10.,
Directors and Executive Officers of the Registrant
for a listing of the Companys Executive Officers, who are
the Companys only employees.

Financial Information.See the Companys
financial statements included in this Form 10-K for
information on the Companys revenues, profits and total
assets. All of the Companys revenues from external
customers for the fiscal year ended December 31, 2000 may
be attributed to, and all of its long-term assets are located
in, the United States.

Item 2.  Properties

Existing Properties.As of December 31, 2000,
the Companys portfolio consisted of 138 properties located
in 27 states, which were leased to 63 operators of
35 distinct restaurant concepts and 14 retail
concepts. The properties ranged from one year to 80 years
of age and averaged 6.3 years of age and were subject to
leases with remaining terms, excluding renewals, ranging from
3.6 to 20.8 years and averaging approximately
13.4 years. Investments in individual properties ranged
from $552,000 to $7.1 million and the total investment in
the properties, excluding accumulated depreciation, was
$210 million. The size of facilities located on the
properties ranged from 2,000 to 78,400 square feet and
the properties aggregated approximately 938,000 square feet. The
properties include two properties which presently are under
construction, for which the Company had invested
$1.7 million and had remaining commitments totaling
$0.2 million. Most of the

6



---



##### Table of Contents





|                                        |                                |          |                   |            |  |            |     |     |  |  |    |    | 
|--------------------------------------- | ------------------------------ | -------- | ----------------- | ---------- |  | ---------- | --- | --- |  |  | -- | -- | 
|                                        |                                | Facility |                   | No. of     |  | No. of    
|Concept                                 |                                | Type     |                   | Properties |  | Lessees(1)
|                                        |                                |          |                   |            |  |           
|Properties subject to operating leases: |                                |          |                   |            |  |            |     |     |  |  |    |   
|                                       
|                                       
|                                       
|                                       
|Bennigans                              |                                |          | Restaurant        |            |  |            | 10  |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Steak & Ale                             |                                |          | Restaurant        |            |  |            | 8   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |                                |          | Restaurant        |            |  |            | 10  |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Red Robin                               |                                |          | Restaurant        |            |  |            | 3   |     |  |  | 3  |   
|                                       
|                                       
|                                       
|                                       
|Applebees                              |                                |          | Restaurant        |            |  |            | 5   |     |  |  | 3  |   
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |                                |          | Restaurant        |            |  |            | 4   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Claim Jumper                            |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Golden Corral                           |                                |          | Restaurant        |            |  |            | 4   |     |  |  | 4  |   
|                                       
|                                       
|                                       
|                                       
|Arbys                                  |                                |          | Restaurant        |            |  |            | 8   |     |  |  | 6  |   
|                                       
|                                       
|                                       
|                                       
|Blockbuster Video                       |                                |          | Retail            |            |  |            | 7   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|BMW                                     |                                |          | Auto Dealer       |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Champps                                 |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |                                |          | Restaurant        |            |  |            | 6   |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Sportmart                               |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Keg Steakhouse                          |                                |          | Restaurant        |            |  |            | 4   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Taco Bell                               |                                |          | Restaurant        |            |  |            | 5   |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Kona Steakhouse                         |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Carinos                                |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Video Update                            |                                |          | Retail            |            |  |            | 3   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Texas Roadhouse                         |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Rite Aid                                |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Babies R Us                             |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Mountain Jacks                         |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Nissan                                  |                                |          | Auto Dealer       |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Stanfords                              |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Burger King                             |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Jared Jewelers                          |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Schlotzskis Deli                       |                                |          | Restaurant        |            |  |            | 3   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Stop & Go                               |                                |          | Retail            |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|TGI Fridays                            |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Tony Romas                             |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Athletes Foot                          |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|KFC                                     |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Hollywood Video                         |                                |          | Retail            |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Circle K                                |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Carrows                                 |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Damons                                 |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Blockbuster Music                       |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Skippers Fish & Chips                  |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Roadhouse Grill                         |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Del Taco                                |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Pizza Hut                               |                                |          | Restaurant        |            |  |            | 2   |     |  |  | 2  |   
|                                       
|                                       
|                                       
|                                       
|Perkins                                 |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Popeyes                                |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|United Trust Bank                       |                                |          | Retail            |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Whataburger                             |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Hooters                                 |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Fazolis Restaurant                     |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Wendys                                 |                                |          | Restaurant        |            |  |            | 1   |     |  |  | 1  |   
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |                                |          | Restaurant/Retail |            |  |            | 7   |     |  |  | 0  |   
|                                        |                                |          |                   |            |  |            |     |     |  |  |    |   
|                                        |                                |          |                   |            |  |            | 134 |     |  |  | 68 |   
|                                        |                                |          |                   |            |  |            |     |     |  |  |    |   
|Properties subject to financing leases: |                                |          |                   |            |  |            |     |     |  |  |    |   
|                                       
|                                       
|                                       
|                                       
|Jared Jewelers                          |                                |          | Retail            |            |  |            | 4   |     |  |  | 1  |   
|                                        |                                |          |                   |            |  |            |     |     |  |  |    |   
|                                        | Total Revenue from
	Properties |          |                   |            |  |            |     | 138 |  |  |    | 69 | 
|                                        |                                |          |                   |            |  |            |     |     |  |  |    |   
|                                        | Annualized Total
	Revenue      |          |                   |            |  |            |     |     |  |  |    |    | 

[Additional columns below]

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

|                                        |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |       |  
|--------------------------------------- | ------------------------------ | -------- | ----------------------- | ----------- |  | ----------------- | ----------- | ----------- |  | - | ---------- | ---------- |  |  | ---- | ----- | -
|                                        |                                |          |                         |             |  | Annualized        |             | % of Total 
|                                        |                                | Location |                         | Acquisition |  | Revenue at        |             | Annual     
|Concept                                 |                                | (State)  |                         | Cost        |  | December 31, 2000 |             | Revenue    
|                                        |                                |          |                         |             |  |                   |             |            
|Properties subject to operating leases: |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      
|                                       
|                                       
|                                       
|                                       
|Bennigans                              |                                |          | CO,CT,FL,IL,MI,NC,OK,TX |             |  | $                 | 18,022,089  |             |  | $ | 2,126,152  |            |  |  | 8.5  | %    
|                                       
|                                       
|                                       
|                                       
|Steak & Ale                             |                                |          | FL,IN,OK,TX,VA          |             |  |                   | 11,593,288  |             |  |   | 1,367,722  |            |  |  | 5.4  |      
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |                                |          | IL,MI,NC,OH,PA          |             |  |                   | 11,760,135  |             |  |   | 1,274,219  |            |  |  | 5.1  |      
|                                       
|                                       
|                                       
|                                       
|Red Robin                               |                                |          | CO,OH,WA                |             |  |                   | 8,522,648   |             |  |   | 1,268,740  |            |  |  | 5.0  |      
|                                       
|                                       
|                                       
|                                       
|Applebees                              |                                |          | KY,MO,OH,WA             |             |  |                   | 8,801,628   |             |  |   | 1,128,576  |            |  |  | 4.5  |      
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |                                |          | MN                      |             |  |                   | 9,689,373   |             |  |   | 1,005,108  |            |  |  | 4.0  |      
|                                       
|                                       
|                                       
|                                       
|Claim Jumper                            |                                |          | AZ,CA                   |             |  |                   | 7,262,222   |             |  |   | 838,426    |            |  |  | 3.3  |      
|                                       
|                                       
|                                       
|                                       
|Golden Corral                           |                                |          | FL,NE,TX                |             |  |                   | 7,442,156   |             |  |   | 836,347    |            |  |  | 3.3  |      
|                                       
|                                       
|                                       
|                                       
|Arbys                                  |                                |          | CO,GA,MI,NM,OH,PA       |             |  |                   | 6,310,007   |             |  |   | 756,693    |            |  |  | 3.0  |      
|                                       
|                                       
|                                       
|                                       
|Blockbuster Video                       |                                |          | AL,GA,KY,SC,TX          |             |  |                   | 6,800,509   |             |  |   | 738,070    |            |  |  | 2.9  |      
|                                       
|                                       
|                                       
|                                       
|BMW                                     |                                |          | GA                      |             |  |                   | 7,115,013   |             |  |   | 709,200    |            |  |  | 2.8  |      
|                                       
|                                       
|                                       
|                                       
|Champps                                 |                                |          | GA                      |             |  |                   | 6,971,040   |             |  |   | 701,405    |            |  |  | 2.8  |      
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |                                |          | AZ,LA,TX                |             |  |                   | 5,955,284   |             |  |   | 677,940    |            |  |  | 2.7  |      
|                                       
|                                       
|                                       
|                                       
|Sportmart                               |                                |          | IL                      |             |  |                   | 6,102,797   |             |  |   | 654,450    |            |  |  | 2.6  |      
|                                       
|                                       
|                                       
|                                       
|Keg Steakhouse                          |                                |          | OR,WA                   |             |  |                   | 4,793,421   |             |  |   | 581,673    |            |  |  | 2.3  |      
|                                       
|                                       
|                                       
|                                       
|Taco Bell                               |                                |          | MN,FL                   |             |  |                   | 4,685,993   |             |  |   | 530,111    |            |  |  | 2.1  |      
|                                       
|                                       
|                                       
|                                       
|Kona Steakhouse                         |                                |          | TX                      |             |  |                   | 3,932,821   |             |  |   | 473,269    |            |  |  | 1.9  |      
|                                       
|                                       
|                                       
|                                       
|Carinos                                |                                |          | TX                      |             |  |                   | 3,987,862   |             |  |   | 450,588    |            |  |  | 1.8  |      
|                                       
|                                       
|                                       
|                                       
|Video Update                            |                                |          | AZ,MN,NM                |             |  |                   | 3,582,712   |             |  |   | 442,657    |            |  |  | 1.8  |      
|                                       
|                                       
|                                       
|                                       
|Texas Roadhouse                         |                                |          | CO                      |             |  |                   | 3,030,989   |             |  |   | 376,008    |            |  |  | 1.5  |      
|                                       
|                                       
|                                       
|                                       
|Rite Aid                                |                                |          | AL                      |             |  |                   | 3,320,830   |             |  |   | 348,847    |            |  |  | 1.4  |      
|                                       
|                                       
|                                       
|                                       
|Babies R Us                             |                                |          | MO                      |             |  |                   | 3,157,534   |             |  |   | 335,347    |            |  |  | 1.3  |      
|                                       
|                                       
|                                       
|                                       
|Mountain Jacks                         |                                |          | MI,OH                   |             |  |                   | 2,781,005   |             |  |   | 326,371    |            |  |  | 1.3  |      
|                                       
|                                       
|                                       
|                                       
|Nissan                                  |                                |          | GA                      |             |  |                   | 3,250,023   |             |  |   | 323,952    |            |  |  | 1.3  |      
|                                       
|                                       
|                                       
|                                       
|Stanfords                              |                                |          | CO                      |             |  |                   | 2,427,861   |             |  |   | 316,995    |            |  |  | 1.3  |      
|                                       
|                                       
|                                       
|                                       
|Burger King                             |                                |          | VA,WV                   |             |  |                   | 2,095,925   |             |  |   | 262,700    |            |  |  | 1.0  |      
|                                       
|                                       
|                                       
|                                       
|Jared Jewelers                          |                                |          | VA                      |             |  |                   | 2,023,360   |             |  |   | 261,516    |            |  |  | 1.0  |      
|                                       
|                                       
|                                       
|                                       
|Schlotzskis Deli                       |                                |          | AZ                      |             |  |                   | 2,645,054   |             |  |   | 258,968    |            |  |  | 1.0  |      
|                                       
|                                       
|                                       
|                                       
|Stop & Go                               |                                |          | TX                      |             |  |                   | 1,997,612   |             |  |   | 237,950    |            |  |  | 0.9  |      
|                                       
|                                       
|                                       
|                                       
|TGI Fridays                            |                                |          | TX                      |             |  |                   | 2,174,845   |             |  |   | 227,694    |            |  |  | 0.9  |      
|                                       
|                                       
|                                       
|                                       
|Tony Romas                             |                                |          | FL                      |             |  |                   | 1,915,800   |             |  |   | 209,700    |            |  |  | 0.8  |      
|                                       
|                                       
|                                       
|                                       
|Athletes Foot                          |                                |          | GA                      |             |  |                   | 1,691,520   |             |  |   | 196,588    |            |  |  | 0.8  |      
|                                       
|                                       
|                                       
|                                       
|KFC                                     |                                |          | PA,WA                   |             |  |                   | 2,149,820   |             |  |   | 187,410    |            |  |  | 0.7  |      
|                                       
|                                       
|                                       
|                                       
|Hollywood Video                         |                                |          | GA,OH                   |             |  |                   | 1,736,382   |             |  |   | 179,272    |            |  |  | 0.7  |      
|                                       
|                                       
|                                       
|                                       
|Circle K                                |                                |          | CA                      |             |  |                   | 1,419,166   |             |  |   | 168,977    |            |  |  | 0.7  |      
|                                       
|                                       
|                                       
|                                       
|Carrows                                 |                                |          | CA                      |             |  |                   | 1,324,288   |             |  |   | 164,704    |            |  |  | 0.7  |      
|                                       
|                                       
|                                       
|                                       
|Damons                                 |                                |          | AZ                      |             |  |                   | 1,429,445   |             |  |   | 161,483    |            |  |  | 0.6  |      
|                                       
|                                       
|                                       
|                                       
|Blockbuster Music                       |                                |          | AL                      |             |  |                   | 1,526,653   |             |  |   | 155,402    |            |  |  | 0.6  |      
|                                       
|                                       
|                                       
|                                       
|Skippers Fish & Chips                  |                                |          | OR,WA                   |             |  |                   | 2,235,385   |             |  |   | 155,056    |            |  |  | 0.6  |      
|                                       
|                                       
|                                       
|                                       
|Roadhouse Grill                         |                                |          | NY                      |             |  |                   | 1,048,395   |             |  |   | 149,970    |            |  |  | 0.6  |      
|                                       
|                                       
|                                       
|                                       
|Del Taco                                |                                |          | AZ                      |             |  |                   | 1,003,288   |             |  |   | 115,378    |            |  |  | 0.5  |      
|                                       
|                                       
|                                       
|                                       
|Pizza Hut                               |                                |          | AL,CT                   |             |  |                   | 1,105,944   |             |  |   | 111,758    |            |  |  | 0.4  |      
|                                       
|                                       
|                                       
|                                       
|Perkins                                 |                                |          | FL                      |             |  |                   | 1,016,704   |             |  |   | 110,999    |            |  |  | 0.4  |      
|                                       
|                                       
|                                       
|                                       
|Popeyes                                |                                |          | GA                      |             |  |                   | 877,941     |             |  |   | 101,538    |            |  |  | 0.4  |      
|                                       
|                                       
|                                       
|                                       
|United Trust Bank                       |                                |          | IL                      |             |  |                   | 1,293,062   |             |  |   | 81,800     |            |  |  | 0.3  |      
|                                       
|                                       
|                                       
|                                       
|Whataburger                             |                                |          | NM                      |             |  |                   | 948,068     |             |  |   | 71,262     |            |  |  | 0.3  |      
|                                       
|                                       
|                                       
|                                       
|Hooters                                 |                                |          | FL                      |             |  |                   | 1,048,870   |             |  |   | 71,050     |            |  |  | 0.3  |      
|                                       
|                                       
|                                       
|                                       
|Fazolis Restaurant                     |                                |          | MI                      |             |  |                   | 1,164,036   |             |  |   | 70,000     |            |  |  | 0.3  |      
|                                       
|                                       
|                                       
|                                       
|Wendys                                 |                                |          | PA                      |             |  |                   | 736,942     |             |  |   | 55,567     |            |  |  | 0.2  |      
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |                                |          | GA,IL,MO,NC, IN, PA     |             |  |                   | 7,417,957   |             |  |   |           |            |  |  | 0.0  |      
|                                        |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      
|                                        |                                |          |                         |             |  |                   | 205,325,701 |             |  |   | 22,355,607 |            |  |  | 89.0 | %    
|                                        |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      
|Properties subject to financing leases: |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      
|                                       
|                                       
|                                       
|                                       
|Jared Jewelers                          |                                |          | AZ,FL,TX                |             |  |                   | 4,317,451   |             |  |   | 547,437    |            |  |  | 2.2  | %    
|                                        |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      
|                                        | Total Revenue from
	Properties |          |                         |             |  |                   | $           | 209,643,152 |  |   | $          | 22,903,044 |  |  |      | 91.1  | %
|                                        |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      
|                                        | Annualized Total
	Revenue      |          |                         |             |  |                   |             |             |  |   | $          | 25,130,938 |  |  |      | 100.0 | %
|                                        |                                |          |                         |             |  |                   |             |             |  |   |            |            |  |  |      |      

|           |       |          |    |            |  |            |     |             |  |             |    |                    |  |  |      |       |   |   |             |             |  |   |            |            | 
|---------- | ----- | -------- | -- | ---------- |  | ---------- | --- | ----------- |  | ----------- | -- | ------------------ |  |  | ---- | ----- | - | - | ----------- | ----------- |  | - | ---------- | ---------- | 
|           |       |          |    |            |  |            |     | % of Total  |  |             |    | Annualized Revenue
|           |       | No. of   |    | No. of     |  | No. of     |     | Acquisition |  | Acquisition |    | From Properties at
|Segment    |       | Concepts |    | Properties |  | Lessees(1) |     | Cost        |  | Cost        |    | December 31, 2000 
|           |       |          |    |            |  |            |     |             |  |             |    |                   
|Restaurant |       |          | 35 |            |  |            | 109 |             |  |             | 52 |                    |  |  | 75.8 | %     |   | $ | 158,892,491 |             |  | $ | 17,521,579 |           
|          
|          
|          
|          
|Retail     |       |          | 14 |            |  |            | 29  |             |  |             | 11 |                    |  |  | 24.2 |       |   |   | 50,665,108  |             |  |   | 5,381,466  |           
|           |       |          |    |            |  |            |     |             |  |             |    |                    |  |  |      |       |   |   |             |             |  |   |            |           
|           | Total |          |    | 49         |  |            |     | 138         |  |             |    | 63                 |  |  |      | 100.0 | % |   | $           | 209,557,599 |  |   | $          | 22,903,044 | 
|           |       |          |    |            |  |            |     |             |  |             |    |                    |  |  |      |       |   |   |             |             |  |   |            |           

[Additional columns below]

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

|           |       |                 |      |       |  
|---------- | ----- | --------------- | ---- | ----- | -
|           |       | % of Annualized
|           |       | Revenue        
|Segment    |       | From Properties
|           |       |                
|Restaurant |       |                 | 76.5 | %    
|          
|          
|          
|          
|Retail     |       |                 | 23.5 |      
|           |       |                 |      |      
|           | Total |                 |      | 100.0 | %
|           |       |                 |      |      




|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Certain Lessees lease properties under more than one concept,
	and therefore the number of Lessees totaled by concept exceeds
	the number of actual Lessees (63).

7



---



##### Table of Contents



Description of Properties.The properties
typically are freestanding, surrounded by paved parking areas,
and are convertible to various uses with certain modifications.
Lot sizes generally range from 20,000 to 80,000 square
feet for restaurant properties and up to 150,000 square
feet for retail properties, depending upon building size and
local demographics. Properties purchased by the Company are in
locations zoned for commercial use which have been reviewed for
traffic patterns and volume. Land costs vary but generally range
from $130,000 to $3.0 million, depending upon various
factors including the size of the parcel, competition for sites
and local commercial real property values generally.

The style and appearance of the buildings typically are dictated
by the franchisors and chain owners of the businesses which are
operated from the properties. The buildings generally are
rectangular and constructed from various combinations of stucco,
steel, wood, brick and tile and typically range from
2,000 to 11,000 square feet for restaurant properties
and up to 40,000 square feet for retail properties.
Building and site preparation costs, which generally range from
$300,000 to $4.0 million for each property, vary
depending upon the size of the building and the site and area in
which the property is located. Generally, the properties
acquired by the Company are improved with buildings although in
some instances the Company may acquire only land, even if
improved, or only improvements. The Company believes the size of
its typical retail property is especially well-suited to meet
changes occurring in the retail industry. In order to meet
changing consumer preferences, and as a result of the relatively
high cost of mall space, the Company believes that retailers
increasingly prefer smaller, freestanding facilities which are
more accessible and facilitate the customized presentation of
the retail concept. The Company believes that it will benefit
from these trends because its properties meet these retailer
preferences.

Description of the Leases.The Company typically
acquires only properties which are subject to long-term,
typically 15-20 years with one or more five-year renewal
options, triple-net leases with creditworthy multi-unit
franchisees and operators of national and regional restaurants
and national retailers.

During the term of a lease, the lessee pays the Company rent on
a monthly basis. Leases generally provide for automatic, fixed
increases in the rent at predetermined intervals during the
lease term. As of December 31, 2000, the net weighted
average capitalization rate, which is annual minimum rent
divided by the total property investment, including acquisition
cost, for the properties was 10.11% and the weighted average
annualized rate of automatic fixed increases in the minimum
annual rent was 2.08%. In accordance with generally accepted
accounting principles (GAAP), the Company recognizes
the total rental, as stipulated by the lease, including
automatic fixed increases, as income on a straight-line basis
over the term of the lease. As of December 31, 2000, the
net weighted average straight-line capitalization rate, which is
annual straight-line rental revenue divided by the total
property investment, including capitalized acquisition cost, was
11.33% for the properties. Under the terms of the leases, the
lessees are typically responsible for all operating costs and
expenses of repairs, maintenance, real property taxes,
assessments, utilities and insurance. In limited circumstances,
the Companys retail leases are on a double-net
basis pursuant to which the Company, rather than the lessee, is
responsible for maintenance of the exterior walls and/or roof of
the property. Therefore, the Company generally is not required
to make significant capital expenditures with respect to its
portfolio. The Company had no capital expenditures for the years
ended December 31, 2000, 1999 and 1998.

8



---



##### Table of Contents



The following table sets forth as of December 31, 2000,
scheduled lease expirations for the properties. Only 14.0% of
the Companys leases are scheduled to expire during the
next 10 years (assuming no renewals).

|                    |  |           |     |            |  |               |            |  |  |  |        | 
|------------------- |  | --------- | --- | ---------- |  | ------------- | ---------- |  |  |  | ------ | 
|                    |  | Number of |     |            |  | Percentage   
|Year of             |  | Leases    |     | Annualized |  | of Annualized
|Expiration(1)       |  | Expiring  |     | Revenue    |  | Revenue      
|                    |  |           |     |            |  |              
|2004                |  |           | 1   |            |  | $             | 654,450    |  |  |  | 2.9%   | 
|                   
|                   
|                   
|                   
|2005                |  |           | 1   |            |  |               | 84,439     |  |  |  | 0.4%   | 
|                   
|                   
|                   
|                   
|2006                |  |           | 2   |            |  |               | 245,534    |  |  |  | 1.1%   | 
|                   
|                   
|                   
|                   
|2007                |  |           | 7   |            |  |               | 705,812    |  |  |  | 3.1%   | 
|                   
|                   
|                   
|                   
|2009                |  |           | 7   |            |  |               | 843,924    |  |  |  | 3.7%   | 
|                   
|                   
|                   
|                   
|2010 and thereafter |  |           | 113 |            |  |               | 20,173,613 |  |  |  | 88.8%  | 
|                    |  |           |     |            |  |               |            |  |  |  |        | 
|TOTAL               |  |           | 131 |            |  | $             | 22,707,772 |  |  |  | 100.0% | 
|                    |  |           |     |            |  |               |            |  |  |  |        | 




|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(1) | Assumed no early termination due to exercise of purchase
	options, defaults or otherwise.

Occupancy and Lease Performance.As of
December 31, 2000, 131 of the 138 properties were subject
to leases that were performing. The 7 vacant properties,
comprised of 2 properties formerly leased to Boston Chicken,
Inc. and its franchisees and five other properties, represent
3.5% of the total investment in the properties. The Company is
actively remarketing vacant properties. The Company 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, such as may be the case
with vacant properties. In 1999, the Company reserved for an
impairment loss of approximately $497,000 for a vacant property
held for sale. Management believes that estimated future cash
flows, undiscounted and without interest charges, from the other
vacant properties will be in excess of the carrying amount of
these properties.

Property and Lease Concentrations.The properties
are leased to operators of 49 distinct restaurant and retail
concepts or brands. As of December 31, 2000, leases to the
franchisor of Bennigans restaurants represent 7.8% of
annualized total revenue from the properties, and the next
highest concept concentration was 5.0%.

The properties are leased to 63 different lessees. As of
December 31, 2000, leases to S&A Properties, Inc.,
which operates Bennigans and Steak & Ale
restaurants and is also the franchisor of these concepts,
represent 12.8% of annualized total revenue from the properties,
and the next highest single lessee represents 4.2% of annualized
total revenue from the properties. No single property
contributed more than 3.0% of annualized total revenue from the
properties. As of December 31, 2000, of the properties, 109
are restaurant properties leased to 52 different lessees
representing 76% of the Companys investment in properties
and 29 are retail properties leased to 11 different lessees
representing 24% of the Companys investment in properties.

The Company invests in restaurant and retail properties
throughout the United States. The properties generally are well
diversified geographically across 27 states with a maximum
geographic concentration in Texas equal to 11.5% of
the annualized total revenue. No other geographic concentrations
exceed 10.0%.

Item 3.  Legal Proceedings

On December 6, 2000, the Court of Chancery of the State of
Delaware (the Court of Chancery) dismissed as moot
Steiner v. Beach, et al., C.A. 18005NC (Delaware Chancery
Court) and Bailey v. Beach, et al., C.A. 18006NC (Delaware
Chancery Court), two lawsuits filed in the Court of Chancery
against the Company and its directors. Both cases were dismissed
without prejudice to any position, claim or defense any party
may assert with respect to an application by the plaintiff in
either case for counsel fees and expenses. An application for
counsel fees and expenses was filed on January 12, 2001 by
parties in both cases, as of March 27, 2001, there has been
no ruling on this application.

The Company is not presently involved in any material legal
proceedings, nor, to its knowledge, are any material claims
threatened against the Company or its properties other than
claims arising in the ordinary course of business.

9



---



##### Table of Contents



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

There were no matters submitted to a vote of stockholders during
the fourth quarter of the fiscal year ended December 31,
2000.




PART II

Item 5.  Market for Registrants Common Shares
and Related Shareholder Matters

The Companys Common Stock is listed for quotation on the
Nasdaq National Market System under the symbol CRRR.
The following table sets forth the high and low sales prices per
share as quoted on the Nasdaq National Market System and
dividends declared by the Company related to the following
quarters of the fiscal years indicated:

|               |  |              |        |           |  |          |        |  |  |   |      | 
|-------------- |  | ------------ | ------ | --------- |  | -------- | ------ |  |  | - | ---- | 
|               |  |              |        |          
|               |  | Sales Prices |        |          
|               |  |              |        | Dividends
|Fiscal 2000    |  | High         |        | Low       |  | Declared
|               |  |              |        |           |  |         
|Fourth Quarter |  | $            | 11.813 |           |  | $        | 10.563 |  |  | $ | .38  | 
|              
|              
|              
|              
|Third Quarter  |  |              | 11.500 |           |  |          | 10.125 |  |  |   | .38  | 
|              
|              
|              
|              
|Second Quarter |  |              | 11.063 |           |  |          | 8.375  |  |  |   | .38  | 
|              
|              
|              
|              
|First Quarter  |  |              | 8.938  |           |  |          | 7.375  |  |  |   | .38  | 
|               |  |              |        |           |  |          |        |  |  |   |      | 
|               |  |              |        |           |  |          |        |  |  | $ | 1.52 | 
|               |  |              |        |           |  |          |        |  |  |   |      | 

|               |  |   |        |  |  |   |        |  |  |   |      | 
|-------------- |  | - | ------ |  |  | - | ------ |  |  | - | ---- | 
|Fiscal 1999    |  |   |        |  |  |  
|               |  |   |        |  |  |  
|Fourth Quarter |  | $ | 11.00  |  |  | $ | 6.25   |  |  | $ | .38  | 
|              
|              
|              
|              
|Third Quarter  |  |   | 13.563 |  |  |   | 10.063 |  |  |   | .38  | 
|              
|              
|              
|              
|Second Quarter |  |   | 13.813 |  |  |   | 11.875 |  |  |   | .38  | 
|              
|              
|              
|              
|First Quarter  |  |   | 13.500 |  |  |   | 12.250 |  |  |   | .38  | 
|               |  |   |        |  |  |   |        |  |  |   |      | 
|               |  |   |        |  |  |   |        |  |  | $ | 1.52 | 
|               |  |   |        |  |  |   |        |  |  |   |      | 

As of March 12, 2001 there were 77 record holders of the
Common Stock.

On January 18, 2001, the Company paid a dividend of $0.38
per share to stockholders of record on January 11, 2001.
While the Company intends to continue paying dividends, dividend
payment determinations, subject to the Companys
obligations in order to maintain its status as a REIT, will be
made by the Companys Board of Directors based on an
analysis of the Companys earnings, the competitive climate
in which the Company operates and other relevant considerations.

10



---



##### Table of Contents



Item 6. Selected Financial Data

The following tables set forth selected historical operating and
financial data for the Company as of December 31, 2000,
1999, 1998, 1997 and 1996 and for each of the years then ended
and as derived from the consolidated financial statements of the
Company.

The following selected financial data should be read in
conjunction with Managements Discussion and Analysis
of Financial Condition and Results of Operations and the
Financial Statements and notes thereto included elsewhere in
this Form 10-K.

|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |         |  
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------- | --------- | ------------ | - | ------------ | --------- | ------- | - | - | --------- | ------- | -
|                                                                                                                     |                                      | Year Ended                            |           | Year Ended   |   | Year Ended  
|                                                                                                                     |                                      | December 31,                          |           | December 31, |   | December 31,
|                                                                                                                     |                                      | 2000                                  |           | 1999         |   | 1998        
|                                                                                                                     |                                      |                                       |           |              |   |             
|                                                                                                                     |                                      |                                      
|                                                                                                                     |                                      | (in thousands, except per share data)
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Statement of Operations Data:                                                                                        |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Revenue:                                                                                                             |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Rental income                        |                                       | $         | 23,911       |   |              | $         | 24,559  |   |   | $         | 22,451  |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Interest and other income            |                                       |           | 4,079        |   |              |           | 4,428   |   |   |           | 3,235   |  
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Total revenue                                                                                                        |                                      |                                       | 27,990    |              |   |              | 28,987    |         |   |   | 25,686    |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Expenses:                                                                                                            |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Interest                             |                                       |           | 9,865        |   |              |           | 9,272   |   |   |           | 6,800   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | General and administrative           |                                       |           | 1,474        |   |              |           | 1,567   |   |   |           | 1,616   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Provision for unbilled rent          |                                       |           |             |   |              |           |        |   |   |           | 865     |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Depreciation and amortization        |                                       |           | 3,441        |   |              |           | 3,485   |   |   |           | 3,069   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Non-recurring merger costs           |                                       |           | 2,442        |   |              |           |        |   |   |           |        |  
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Total expenses                                                                                                       |                                      |                                       | 17,222    |              |   |              | 14,324    |         |   |   | 12,350    |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Income before equity in joint venture, gain (loss) on sale
	of properties, other non-recurring and accounting change |                                      |                                       | 10,768    |              |   |              | 14,663    |         |   |   | 13,336    |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Equity income of joint venture                                                                                       |                                      |                                       | 561       |              |   |              | 257       |         |   |   |          |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Gain (loss) on sale of properties                                                                                    |                                      |                                       | 2,508     |              |   |              | (850      | )       |   |   | (1,838    | )      
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Other non-recurring                                                                                                  |                                      |                                       | 706       |              |   |              |          |         |   |   |          |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Income before income tax                                                                                             |                                      |                                       | 14,544    |              |   |              | 14,070    |         |   |   | 11,498    |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Provision for income tax                                                                                             |                                      |                                       |          |              |   |              |          |         |   |   |          |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Net income before accounting change                                                                                  |                                      |                                       | 14,544    |              |   |              | 14,070    |         |   |   | 11,498    |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Cumulative effect of accounting change                                                                               |                                      |                                       |          |              |   |              | (337      | )       |   |   |          |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Redeemable Preferred Stock dividend requirements                                                                     |                                      |                                       |          |              |   |              |          |         |   |   |          |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Income/(loss) attributable to Common Stock                                                                           |                                      | $                                     | 14,544    |              |   | $            | 13,733    |         |   | $ | 11,498    |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Income/(loss) per share of Common Stock, basic and diluted                                                           |                                      | $                                     | 1.53      |              |   | $            | 1.44      |         |   | $ | 1.21      |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Cash dividends per share of Common Stock                                                                             |                                      | $                                     | 1.52      |              |   | $            | 1.51      |         |   | $ | 1.13      |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Weighted Average number of shares of Common Stock outstanding,
	basic and diluted                                    |                                      |                                       | 9,508,108 |              |   |              | 9,508,108 |         |   |   | 9,508,108 |        
|                                                                                                                     |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|Other Data:                                                                                                          |                                      |                                       |           |              |   |              |           |         |   |   |           |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Cash flows from operating activities |                                       | $         | 11,165       |   |              | $         | 16,688  |   |   | $         | 14,885  |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Cash flows from investing activities |                                       | $         | 21,472       |   |              | $         | (8,672  | ) |   | $         | (70,980 | )
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Cash flows from financing activities |                                       | $         | (33,008      | ) |              | $         | (11,468 | ) |   | $         | 57,055  |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Total properties (at end of period)  |                                       |           | 138          |   |              |           | 162     |   |   |           | 163     |  

[Additional columns below]

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

|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------- | --------- | ------------- | - | ------------ | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                                     |                                      | Three Months                          |           | Nine Months   |   |             
|                                                                                                                     |                                      | Ended                                 |           | Ended         |   | Year Ended  
|                                                                                                                     |                                      | December 31,                          |           | September 30, |   | December 31,
|                                                                                                                     |                                      | 1997                                  |           | 1997          |   | 1996        
|                                                                                                                     |                                      |                                       |           |               |   |             
|                                                                                                                     |                                      |                                       |           |               |   |             
|                                                                                                                     |                                      |                                       |           | Predecessor   |   | Predecessor 
|                                                                                                                     |                                      |                                      
|                                                                                                                     |                                      | (in thousands, except per share data)
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Statement of Operations Data:                                                                                        |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Revenue:                                                                                                             |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Rental income                        |                                       | $         | 3,591         |   |              | $       | 7,974   |   |   | $       | 4,907   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Interest and other income            |                                       |           | 468           |   |              |         | 1,363   |   |   |         | 2,011   |  
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Total revenue                                                                                                        |                                      |                                       | 4,059     |               |   |              | 9,337   |         |   |   | 6,918   |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Expenses:                                                                                                            |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Interest                             |                                       |           | 1,476         |   |              |         | 4,419   |   |   |         | 1,977   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | General and administrative           |                                       |           | 262           |   |              |         | 1,812   |   |   |         | 1,218   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Provision for unbilled rent          |                                       |           |               |   |              |         |         |   |   |         |         |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Depreciation and amortization        |                                       |           | 530           |   |              |         | 1,076   |   |   |         | 649     |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Non-recurring merger costs           |                                       |           |              |   |              |         |        |   |   |         |        |  
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Total expenses                                                                                                       |                                      |                                       | 2,268     |               |   |              | 7,307   |         |   |   | 3,844   |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Income before equity in joint venture, gain (loss) on sale
	of properties, other non-recurring and accounting change |                                      |                                       | 1,791     |               |   |              | 2,030   |         |   |   | 3,074   |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Equity income of joint venture                                                                                       |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Gain (loss) on sale of properties                                                                                    |                                      |                                       | 207       |               |   |              | (59     | )       |   |   |        |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Other non-recurring                                                                                                  |                                      |                                       |          |               |   |              |        |         |   |   |        |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Income before income tax                                                                                             |                                      |                                       | 1,998     |               |   |              | 1,971   |         |   |   | 3,074   |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Provision for income tax                                                                                             |                                      |                                       |          |               |   |              | 167     |         |   |   | 95      |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Net income before accounting change                                                                                  |                                      |                                       | 1,998     |               |   |              | 1,804   |         |   |   | 2,979   |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Cumulative effect of accounting change                                                                               |                                      |                                       |          |               |   |              |        |         |   |   |        |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|Redeemable Preferred Stock dividend requirements                                                                     |                                      |                                       | 1,012     |               |   |              | 5,625   |         |   |   | 7,496   |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Income/(loss) attributable to Common Stock                                                                           |                                      | $                                     | 986       |               |   | $            | (3,821  | )       |   | $ | (4,517  | )      
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Income/(loss) per share of Common Stock, basic and diluted                                                           |                                      | $                                     | 0.20      |               |   | $            | (3.90   | )       |   | $ | (4.61   | )      
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Cash dividends per share of Common Stock                                                                             |                                      | $                                     | 0.195     |               |   |              |        |         |   |   |        |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Weighted Average number of shares of Common Stock outstanding,
	basic and diluted                                    |                                      |                                       | 4,966,139 |               |   |              | 980,330 |         |   |   | 980,330 |        
|                                                                                                                     |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|Other Data:                                                                                                          |                                      |                                       |           |               |   |              |         |         |   |   |         |        
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Cash flows from operating activities |                                       | $         | 2,148         |   |              | $       | 2,777   |   |   | $       | 3,994   |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Cash flows from investing activities |                                       | $         | (44,353       | ) |              | $       | (33,789 | ) |   | $       | (53,274 | )
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Cash flows from financing activities |                                       | $         | 44,980        |   |              | $       | 27,903  |   |   | $       | 51,173  |  
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Total properties (at end of period)  |                                       |           | 112           |   |              |         | 83      |   |   |         | 63      |  

11



---



##### Table of Contents



|                    |                                   |                |   |         |  |      |   |         |  |      |   |         |  |  |   |         |  |  |   |        | 
|------------------- | --------------------------------- | -------------- | - | ------- |  | ---- | - | ------- |  | ---- | - | ------- |  |  | - | ------- |  |  | - | ------ | 
|                    |                                   |               
|                    |                                   | December 31,  
|                    |                                   |               
|                    |                                   | 2000           |   | 1999    |  | 1998 |   | 1997    |  | 1996
|                    |                                   |                |   |         |  |      |   |         |  |     
|                    |                                   |               
|                    |                                   | (in thousands)
|                   
|                   
|                   
|                   
|Balance Sheet Data: |                                   |                |   |         |  |      |   |         |  |      |   |         |  |  |   |         |  |  |   |       
|                   
|                   
|                   
|                   
|                    | Cash and cash equivalents         |                | $ | 665     |  |      | $ | 1,306   |  |      | $ | 4,489   |  |  | $ | 3,528   |  |  | $ | 3,862  | 
|                   
|                   
|                   
|                   
|                    | Properties subject to leases, net |                |   | 200,378 |  |      |   | 222,023 |  |      |   | 224,478 |  |  |   | 152,766 |  |  |   | 71,137 | 
|                   
|                   
|                   
|                   
|                    | Total investments                 |                |   | 223,509 |  |      |   | 244,951 |  |      |   | 238,195 |  |  |   | 166,953 |  |  |   | 85,735 | 
|                   
|                   
|                   
|                   
|                    | Total assets                      |                |   | 234,571 |  |      |   | 255,522 |  |      |   | 252,010 |  |  |   | 181,702 |  |  |   | 98,614 | 
|                   
|                   
|                   
|                   
|                    | Notes payable                     |                |   | 98,366  |  |      |   | 116,922 |  |      |   | 113,985 |  |  |   | 42,746  |  |  |   | 48,160 | 
|                   
|                   
|                   
|                   
|                    | Total liabilities                 |                |   | 99,544  |  |      |   | 120,586 |  |      |   | 116,403 |  |  |   | 46,896  |  |  |   | 49,214 | 
|                   
|                   
|                   
|                   
|                    | Redeemable Preferred Stock        |                |   |        |  |      |   |        |  |      |   |        |  |  |   |        |  |  |   | 49,399 | 
|                   
|                   
|                   
|                   
|                    | Total stockholders equity        |                |   | 135,027 |  |      |   | 134,936 |  |      |   | 135,607 |  |  |   | 134,806 |  |  |   | 1      | 

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

Overview

The following discussion and analysis should be read in
conjunction with Selected Financial Data and the
historical financial statements of the Company and notes thereto
appearing elsewhere in this Form 10-K.

The Company, which has operated as a REIT since
November 1997, acquires, develops and owns freestanding
properties which are leased on a long-term triple-net basis to
operators of national and regional chain restaurants and
national retailers. Triple-net leases generally impose on the
lessee responsibility for all operating costs and expense of the
property, including the costs of repairs, maintenance, real
property taxes, assessments, utilities and insurance. The
Companys leases typically provide for minimum rent plus
specified fixed periodic rent increases. Other revenues are
derived primarily from fee income earned from the affiliated
ventures and interest income on loans to affiliates.

The Company recognizes rental revenue on a straight-line basis
over the term of each lease. Substantially all of the leases are
treated as operating leases for purposes of GAAP and the related
properties are recorded at cost less accumulated depreciation.
All costs associated with the acquisition and development of a
property, including fees paid to Captec Advisors, have been
capitalized at the time of acquisition. Buildings acquired or
developed are amortized on a straight-line basis over forty
years. The substantial change in revenue and expense from year
to year is the result primarily of the acquisition and
development of properties and the commencement of leases during
the year of acquisition and the recognition of a full
years operation in the year subsequent to acquisition.

As of December 31, 2000, the Company owned 138 properties,
located in 27 states, with 131 properties subject to long-term
net leases with 63 different lessees. The lessees predominantly
are franchisees or operators of national restaurant and retail
concepts including Bennigans, Applebees,
Dennys, Blockbuster Video, and Jared Jewelers.

Results of Operations

2000 to 1999. Total revenue decreased 3.4% to
$28.0 million for the year ended December 31, 2000 as
compared to $29.0 million for the year ended
December 31, 1999. Rental revenue from operating leases
decreased 2.6% to $23.9 million for 2000 as compared to
$24.6 million for 1999. The decrease is primarily due to
the sale of thirty properties during 2000, slightly offset by a
full period of rental revenue from properties acquired and
leased in preceding periods. Earned income from financing leases
decreased 5.5% to approximately $614,000 in 2000 as compared to
approximately $650,000 for 1999. The decrease is the result of
principal collections on financing leases. Interest income on
loans to affiliates remained unchanged at $1.3 million for
2000 as compared to 1999. Other income decreased 12.2% to
$2.2 million for 2000 as compared to $2.5 million for
1999. The decrease is the result of the affiliated ventures
approaching completion of the acquisition phase, resulting in
reduced one-time acquisition fees.

12



---



##### Table of Contents



Total expenses increased 20.2% to $17.2 million for the
year ended December 31, 2000 as compared to
$14.3 million for the year ended December 31, 2000.
Interest expense increased 6.4% to $9.8 million in 2000 as
compared to $9.3 million for 1999. The increase was
principally due to an increase in the LIBOR interest rate and an
increase of $378,000 in deferred amortization costs. General and
administrative expenses, including management fees to
affiliates, decreased 5.9% to $1.5 million in 2000 as
compared to $1.6 million for 1999. The decrease is due to a
$200,000 decrease resulting from expense allocations related to
Family Realty II, Inc., slightly offset by an increase in
salaries of $85,000. Depreciation and amortization decreased
1.3% to $3.4 million for 2000 as compared to
$3.5 million for 1999. The decrease is due to the reduction
of the Companys property portfolio. At December 31,
2000 the Company had net investment in properties subject to
operating leases of $196 million as compared to
$218 million at December 31, 1999, a decrease of 10%.
Non-recurring merger costs increased 100% to $2.4 million
in 2000. On December 20, 1999 the Company executed an
Omnibus Agreement and Plan of Merger by and among the Company,
Captec Acquisition, Inc., a wholly-owned subsidiary of the
Company, Captec Financial Group, Inc. and Captec Advisors. The
merger agreement provided for the merger of Captec Acquisition
with and into Financial Group and of Captec Advisors with and
into the Company. On May 1, 2000 the merger agreement was
terminated by the mutual agreement of the parties thereto. In
September 2000 the Company announced that the Board of
Directors would pursue a sale of the Company. As a result of
these activities the Company incurred $2.4 million in
non-recurring costs.

During 1999 the Company invested approximately $7.1 million
in a 22.6% membership interest in FC Venture I, LLC, a
joint venture. The Company recorded approximately $561,000 as
its portion of FC Ventures equity earnings in 2000 as
compared to $257,000 in 1999 representing an increase of 84%.
The increase is primarily due to the increased investment in
properties, at December 31, 2000 FC Venture had
invested $50.0 million in properties as compared to
$33.5 million at December 31, 1999.

During 2000 the Company sold thirty properties collecting
proceeds of $37.0 million and reflecting a net gain on sale
totaling $2.5 million.

Other non-recurring items for the year ended December 31,
2000 of approximately $706,000 represents the reversal of a
previously provided allowance for an estimated income tax
obligation which is no longer required due to the completion of
an Internal Revenue Service audit that resulted in no additional
tax payment.

In April 1998, the Accounting Standards Executive Committee
issued Statement of Position 98-5, Reporting on the
Costs of Start-Up Activities. This statement requires
start-up activities and organization costs to be expensed as
incurred. In accordance with the provisions of the statement,
the Company recorded a $336,875 non-cash charge for the balance
of unamortized organization costs in the first quarter of 1999.

As result of the foregoing, the Companys net income after
accounting change increased 5.9% to $14.5 million for 2000
as compared to $13.7 million for 1999.

1999 to 1998.Total revenue increased 12.9% to
$29.0 million for the year ended December 31, 1999 as
compared to $25.7 million for the year ended
December 31, 1998. Rental revenue from operating leases
increased 9.4% to $24.6 million for 1999 as compared to
$22.5 million for 1998. The increase is primarily from the
benefit of a full period of rental revenue from properties
acquired and leased in preceding periods, offset by the
elimination of rental revenues of approximately
$1.1 million, related to vacant properties, principally
from properties formerly leased to Boston Chicken and its
affiliates. Earned income from financing leases increased to
approximately $650,000 in 1999 as compared to approximately
$48,000 for 1998 as a result of the addition of four financing
leases during the year ended December 31, 1999. Interest
income on loans to affiliates decreased 28.8% to
$1.3 million for 1999 as compared to $1.8 million for
1998 as a result of $9.1 million of principal payments
received. Other income increased 79.0% to $2.5 million for
1999 as compared to $1.4 million for 1998 primarily due to
fees earned for the acquisition, development and management of
properties on behalf of its affiliated ventures.

Total expenses increased 16.0% to $14.3 million for the
year ended December 31, 1999 as compared to
$12.4 million for the year ended December 31, 1998.
Interest expense increased 36.4% to $9.3 million in 1999

13



---



##### Table of Contents





During 1999, the Company invested approximately
$7.1 million in a 22.6% membership interest in
FC Venture I, LLC, a joint venture, and recorded
approximately $257,000 as its portion of FC Ventures
equity earnings for the year ended December 31, 1999.

During 1999, the Company sold twelve properties for
$17.6 million and reserved approximately $497,000 for a
loss expected on the disposition of one vacant property. As a
result of these transactions, the Company collected total
proceeds of $17.6 million and reflected a net loss on sale
of properties totaling approximately $850,000.

In April 1998, the Accounting Standards Executive Committee
issued Statement of Position 98-5, Reporting on the
Costs of Start-Up Activities. This statement requires
start-up activities and organization costs to be expensed as
incurred. In accordance with the provisions of the statement,
the Company recorded a $336,875 non-cash charge for the balance
of unamortized organization costs in the first quarter of 1999.

As result of the foregoing, the Companys net income after
accounting change increased 19.4% to $13.7 million for 1999
as compared to $11.5 million for 1998.

Liquidity and Capital Resources

The Companys principal use of funds is for property
development and acquisition, payment of interest on its
outstanding indebtedness and payment of operating expenses and
dividends. Historically, interest expense, operating expenses
and dividends have been paid out of cash flows from operations.
Property acquisitions typically have been funded out of proceeds
from equity offerings and borrowings. The Company expects to
meet its liquidity requirements, which are principally property
development and acquisition and scheduled debt maturities,
through a variety of future sources of capital, including
long-term collateralized and uncollateralized indebtedness,
off-balance sheet financing through the formation of
joint ventures, and the issuance of additional equity or debt
securities.

The Companys leases generally provide for specified
periodic rent increases. In addition, most of the Companys
leases require the lessee to pay all operating costs and
expenses including repairs, maintenance, real property taxes,
assessments, utilities and insurance, thereby substantially
reducing the Companys exposure to increases in costs and
operating expenses. Based upon these factors, the Company does
not anticipate significant capital demands related to the
management of its properties.

At December 31, 2000, the Company had cash and cash
equivalents of $665,408. For the year ended December 31,
2000, the Company generated cash from operations of
$11.7 million (including non-recurring items and excluding
gains or losses from the sale of properties) as compared to
$16.7 million in 1999. Cash generated from operations
provides funds for dividends. Any excess cash from operations
may also be used for investment in properties. For the year
ended December 31, 2000, the Company generated
$21.5 million from investing activities as compared to
utilizing $8.6 million in 1999. The Company used
$33.6 million in financing activities during the year ended
December 31, 2000 as compared to $11.5 million in 1999.

At December 31, 2000, the Companys debt-to-total
assets was 41.9% as compared to 45.8% at December 31, 1999.

14



---



##### Table of Contents



Joint Venture.At December 31, 2000 the
Company had contributed $7.1 million in equity capital and
FC Venture has invested $51.0 million in properties
subject to leases. During 2000, the Company received $836,000 in
cash distributions from FC Venture.

Credit Facility.In February 1998, the
Company entered into a $175.0 million syndicated credit
facility with First Union National Bank, as agent, to provide
funds for the acquisition and development of properties and
working capital. Outstanding debt under the facility is
collateralized by the properties. At December 31, 2000, the
Company had $96.4 million of aggregate outstanding
borrowings under the credit facility.

Advances under the credit facility are subject to certain
borrowing base restrictions that are dependent on a cash basis
lease revenue. The credit facility contains covenants which,
among other restrictions, require the Company to maintain a
minimum net worth of $125.0 million, a maximum leverage
ratio of 60.0%, an interest coverage ratio greater than 2.25:1
and a fixed charge coverage ratio greater than 1.75:1. As of
December 31, 2000 the Company is in compliance with all
debt covenants.

Due to the filing by Boston Chicken, Inc. for
Chapter 11 bankruptcy protection in October 1998, the
Company was in technical violation of a financial covenant and
was precluded from additional borrowings under the credit
facility. At that time the Company was in negotiation with the
credit facility lender regarding an amendment to prevent the
violation of this covenant in the event that Boston Chicken
chose to file for bankruptcy protection. The credit facility
lender agreed to forbear from taking any action against the
Company pursuant to the credit facility. On December 1,
1998 the credit facility was amended as follows: the facility
borrowing capacity was reduced from $175.0 million to
$125.0 million, the maximum leverage ratio was increased
from 50.0% to 60.0%, and annual interest rate spread over LIBOR
was increased from a range of 1.25% to 1.50% to a range of 1.25%
to 1.75%.

In connection with the credit facility the Company incurred
issuance cost of $1.7 million and is also required to pay a
commitment fee ranging from 0.125% to 0.20% per annum on the
unused amount of the commitment. Commitment fees and closing
expenses paid in conjunction with the credit facility have been
capitalized in other assets and are being amortized under the
effective interest method and classified as additional interest
expense over the term of the credit facility.

The credit facility expired in February 2001. In
February 2001 the Company amended and extended the maturity
of the credit facility. The effect of the amendment is to extend
the maturity to August 31, 2001. The amendment also
increased interest rate spread over LIBOR to a range of 2.25% to
2.50% dependent upon the ratio of debt to asset value, and a
reduction in the facility borrowing capacity to
$105 million. The Company also has an option to extend the
maturity of the credit facility an additional three months. The
extension of the credit facility has been designed to be
short-term in nature to enable the company to continue to
operate with a flexible capital structure, while the board of
directors pursues a possible sale of the Company. Upon
expiration of the credit facility, the Company has the ability
to readily refinance its indebtedness under the credit facility
through a new facility or loan with an institutional lender
and/or through the issuance of debt securities. The terms of the
Companys obligations with respect to an indebtedness
incurred in refinancing the credit facility will be based on
market conditions applicable to such form of indebtedness at the
time, which may cause the terms of any such indebtedness to vary
materially from the terms of the credit facility.

During 2000, the Company entered into three promissory notes for
an aggregate amount of $1,945,000 with a lending institution.
The notes are collateralized by certain properties in the
Companys property portfolio. The notes have terms ranging
from 15 years to 20 years and bear interest at 9.0%
per annum. As of December 31, 2000, the outstanding balance
of the promissory notes is $1,924,477.

Property Acquisitions, Sales and Commitments.During the year ended December 31, 2000, the
Company developed and acquired properties for an aggregate
acquisition cost of approximately $16.0 million. The gross
weighted average capitalization rate (annual rental divided by
the property purchase price) on aggregate 2000 property
acquisitions was 10.00% on a cash basis (using annual minimum
rents) and 10.94% on a straight-line basis (using estimated
annual revenue under GAAP). The net weighted average
capitalization rate (annual rental divided by the total property
investment, including capitalized acquisition costs) on
aggregate 2000 property acquisitions was 9.67% on a cash basis
and 10.59% on a straight-line basis.

15



---



##### Table of Contents



As of December 31, 2000, the Company had entered into
tentative agreements to acquire or develop 38 properties
totaling approximately $50.6 million. The tentative
agreements are subject to various conditions to closing which
are described in the contracts or letters of intent relating to
these properties. In addition, in the ordinary course of
business the Company is in negotiations regarding the proposed
acquisition of other properties and related co-development
opportunities. The Company may enter into tentative agreements
to acquire some of these prospective properties in the future.
The Company expects to finance any acquisitions through a
variety of sources of capital, including borrowings under the
credit facility, property sales, other long-term collateralized
and uncollateralized indebtedness, off-balance sheet
financing through the formation of joint ventures and the
issuance of additional equity or debt securities.

The Company periodically sells properties as a means of
generating capital to meet its current commitments of future
acquisitions and developments. The Company strategically
explores the marketability of certain properties in its
portfolio that would contribute to greater diversification
levels in tenants, geography, property type and property size
thereby increasing the strength of its current portfolio. At
December 31, 2000, the Company has explored the
marketability of 13 properties representing a carrying value of
$19.7 million.

Property acquisition and development commitments are expected to
generate the primary demand for additional capital in the future.

Dividends.During 2000, the Company paid dividends
of $14.5 million. In January 2001, the Company
declared a fourth quarter dividend on its Common Stock in the
amount of $0.38 per share or $3,613,081. The dividend was
payable to shareholders of record on January 11, 2001 and
was paid on January 18, 2001. The Company expects to pay
future dividends from cash available for distribution. The
Company believes that cash from operations will be sufficient to
allow the Company to make distributions necessary to enable the
Company to continue to qualify as a REIT to the extent such
requirements remain applicable.

Inflation

The Companys leases contain provisions which mitigate the
adverse impact of inflation. The leases generally provide for
specified periodic rent increases including fixed increase
amounts and, in limited circumstances, indexation to CPI and/or
percentage rent. In addition, most of the leases require the
lessee to pay all operating costs and expenses including
repairs, maintenance, real property taxes, assessments,
utilities and insurance, thereby substantially reducing the
Companys exposure to increases in costs and operating
expenses resulting from inflation.

The Companys credit facility bears interest at a variable
rate which will be influenced by changes in short-term interest
rates and will be sensitive to inflation. The Company uses
derivative financial instruments in the normal course of
business to manage its exposure to fluctuations in interest
rates.

Recently Issued Accounting Standards

In June 1998 the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards No. 133 (SFAS 133),
Accounting for Derivative Instruments and Hedging
Activities. In June 2000, the FASB issued SFAS
No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, which amends
SFAS No. 133. The statement requires that all derivative
instruments be recorded at fair value on the balance sheet with
changes in fair value recorded each period in current earnings
or other comprehensive income, depending on whether a derivative
is designated as part of a hedge transaction and, if so, the
type of hedge transaction.

Pursuant to the provisions of the statement, all hedging
designations and the methodology for determining hedge
effectiveness must be documented at the inception of the hedge,
and upon the initial adoption of the standard, hedging
relationships must be designated anew. The documentation must
also indicate the risk management intent for entering into the
hedging arrangement. The Company adopted this accounting
standard on January 1, 2001, as required. The cumulative
effect of this accounting change as of January 1, 2001
resulted in the Company recording an asset of $206,399 and an
offset to comprehensive income for the same amount. The Company
currently has two derivative instruments that have been
identified to be

16



---



##### Table of Contents





In December 1999, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 101
(SAB 101), Revenue Recognition in
Financial Statements. SAB 101 was adopted in the
fourth quarter 2000. The Company examined its revenue
recognition practices in light of interpretive guidance and
determined SAB 101 did not have an effect on the earnings
and financial position of the Company.

Item 7a.  Quantitative and Qualitative Disclosure
About Market Risk.

Market risk represents a risk of loss arising from adverse
changes in market prices and interest rates. The Companys
market risk arises from interest rate risk inherent in its
financial instruments. The Company is not subject to foreign
currency exchange rate risk or commodity price risk.

The Company monitors and manages interest rate exposure as an
integral part of its overall risk management program, which
recognizes the unpredictability of financial markets and seeks
to reduce the potentially adverse effect on its results. At
December 31, 2000, prior to the effects of derivative
instruments, approximately 98.0% of the Companys debt
bears interest at variable rates of LIBOR rate plus 1.25% to
1.75%.

The following table presents certain information on the
Companys assets and liabilities which are sensitive to
interest rate changes at December 31, 2000:

|            |                                                |              |   |             |           |       |   |             |   |  |   |            |           | 
|----------- | ---------------------------------------------- | ------------ | - | ----------- | --------- | ----- | - | ----------- | - |  | - | ---------- | --------- | 
|            |                                                |             
|            |                                                | Maturity    
|            |                                                |             
|            |                                                | 0 to 3       |   | 1 to 5      |           |      
|            |                                                | Months       |   | Years       |           | Total
|            |                                                |              |   |             |           |      
|Assets:     |                                                |              |   |             |           |       |   |             |   |  |   |           
|           
|           
|           
|           
|            | Cash and cash equivalents                      |              | $ | 665,408     |           |       | $ |            |   |  | $ | 665,408    |          
|           
|           
|           
|           
|            | Properties subject to operating leases, net(1) |              |   | 1,698,032   |           |       |   |            |   |  |   | 1,698,032  |          
|            |                                                |              |   |             |           |       |   |             |   |  |   |           
|            |                                                | Total assets |   | $           | 2,363,440 |       |   | $           |  |  |   | $          | 2,363,440 | 
|            |                                                |              |   |             |           |       |   |             |   |  |   |           
|Liabilities |                                                |              |   |             |           |       |   |             |   |  |   |           
|           
|           
|           
|           
|            | Notes payable                                  |              | $ | 96,441,438  |           |       | $ |            |   |  | $ | 96,441,438 |          
|            |                                                |              |   |             |           |       |   |             |   |  |   |           
|            | Reprice difference                             |              | $ | (94,077,998 | )         |       | $ |            |   |  |   |            |          
|           
|           
|           
|           
|            | Cumulative gap                                 |              | $ | (94,077,998 | )         |       | $ | (94,077,998 | ) |  |   |            |          




|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(1) | Represents leases for properties that are under construction and
	sensitive to interest rate fluctuations.

A 1.0% increase in the variable interest rate for the year ended
December 31, 2000 would have resulted in additional
interest expense of approximately $647,000.

The Company uses derivative financial instruments in the normal
course of business to manage its exposure to fluctuations in
interest rates. Those instruments involve, to varying degrees,
market risk, as the instruments are subject to rate and price
fluctuations, and elements of credit risk in the event the
counterparty defaults. The Company does not enter into
derivative transactions for trading purposes. At
December 31, 2000, the Company had an interest rate swap
contract outstanding with a total notional amount of
$50 million, and an interest rate cap contract outstanding
with a total notional amount of $31.5 million. The notional
amounts serve solely as a basis for the calculation of payments
to be exchanged and are not a measure of the exposure of the
Company through the use of derivatives. Under the interest rate
swap contract, the Company agrees to pay a fixed rate of 5.8%
and the counterparty agrees to make payments based on 3-month
LIBOR. Under the interest rate cap agreement, the counterparty
agrees to make payments to the Company if LIBOR exceeds 6.5%
through July 1, 1999 or 7.5% thereafter. The interest rate
swap contract terminates July 2001 and the interest rate cap
contract terminates January 2001. In January 2001, the Company
entered into an interest rate cap agreement for a notional
amount of $25 million. The interest rate cap agreement
requires the counterparty to make payments to the Company if the
LIBOR rate exceeds 7.50%. The interest rate cap agreement
terminates July 2001.

17



---



##### Table of Contents



Item 8.  Consolidated Financial Statements and
Supplementary Data

The consolidated Financial Statements and supplementary data are
attached to this Form 10-K. Reference is made to the Index
to the Financial Statements on page F-1.



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

Not applicable.






PART III


Item 10.  Directors and Executive Officers of the
Registrant

The following individuals were the Companys executive
officers at the date of this report:

|                 |  |     |    |          |  |                                                                 |  |  |      | 
|---------------- |  | --- | -- | -------- |  | --------------------------------------------------------------- |  |  | ---- | 
|                 |  |     |    |          |  | Year of                                                        
|Name             |  | Age |    | Position |  | Election                                                       
|                 |  |     |    |          |  |                                                                
|Patrick L. Beach |  |     | 44 |          |  | President and Chief Executive Officer                           |  |  | 1997 | 
|                
|                
|                
|                
|W. Ross Martin   |  |     | 40 |          |  | Executive Vice President, Chief Financial Officer and Treasurer |  |  | 1997 | 
|                
|                
|                
|                
|H. Reid Sherard  |  |     | 53 |          |  | Senior Vice President  Sales and Marketing                     |  |  | 1998 | 
|                
|                
|                
|                
|Ronald Max       |  |     | 43 |          |  | Vice President and Chief Investment Officer                     |  |  | 1997 | 

The following individuals were the Companys directors at
the date of this report:

|                    |  |     |    |                      |  |                                                                            |  |            |      |  |  |  |      | 
|------------------- |  | --- | -- | -------------------- |  | -------------------------------------------------------------------------- |  | ---------- | ---- |  |  |  | ---- | 
|                    |  |     |    |                      |  | Director                                                                   |  | Expiration
|Name                |  | Age |    | Principal Occupation |  | Since                                                                      |  | of Term   
|                    |  |     |    |                      |  |                                                                            |  |           
|Patrick L. Beach    |  |     | 44 |                      |  | Chairman of the Board of Directors, President and Chief
	Executive Officer |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|W. Ross Martin      |  |     | 40 |                      |  | Executive Vice President, Chief Financial Officer and Treasurer            |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|H. Reid Sherard     |  |     | 53 |                      |  | Senior Vice President  Sales and Marketing                                |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|Richard J. Peters   |  |     | 53 |                      |  | President, Penske Corporation                                              |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|Creed L. Ford, III  |  |     | 48 |                      |  | Chief Executive Officer, Fired Up, Inc                                     |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|William H. Krul, II |  |     | 51 |                      |  | Chief Executive Officer, Miller-Valentine Construction, Inc.               |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|Lee C. Howley       |  |     | 53 |                      |  | President, Howley & Company                                                |  |            | 1997 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|Albert T. Adams     |  |     | 50 |                      |  | Partner, Baker & Hostetler LLP                                             |  |            | 1998 |  |  |  | 2001 | 
|                   
|                   
|                   
|                   
|William J. Chadwick |  |     | 52 |                      |  | Managing Director, Chadwick, Saylor & Co., Inc.                            |  |            | 1998 |  |  |  | 2001 | 

The following is a summary of the business experience during the
past five years of each executive officer and director:

Patrick L. Beach and W. Ross Martin are, and for more than five
years have been, the Chairman, President and Chief Executive
Officer, and Executive Vice President, Chief Financial Officer
and Treasurer, respectively of the Company and its predecessor.

Reid Sherard has served as Senior Vice President 
Sales and Marketing of the Company since May 1998. Since
August 1994 Mr. Sherard also has served as Senior Vice
President  Sales and Marketing of Captec Financial.

Ronald Max has served as Vice President and Chief Investment
Officer of the Company since November 1997. From September
1995 through November 1997, Mr. Max served as Regional
Vice President of Captec Financial.

18



---



##### Table of Contents



Richard J. Peters has been the President of Penske Corporation,
a transportation services holding company, since
January 2000 and the President of R.J. Peters and
Company, LLC, a private investment company since
July 1997. During 1999, Mr. Peters served as President
and Chief Executive Officer of Illitch Ventures, Inc., an
entertainment service holding company, Mr. Peters served as
the Chief Executive Officer, President and Director of Penske
Motor Sports, Inc., a promoter and marketer of professional
motorsports, from January 1995 to July 1997.
Mr. Peters is also a director of Penske Corporation and
United Auto Group.

Creed L. Ford, III has served as Chief Executive Officer of
Fired Up, Inc. Group, a restaurant franchisee, since 1997. Prior
to 1997 Mr. Ford served in numerous capacities with Brinker
International, a multi-concept casual dining company, most
recently as Chief Operating Officer and a Director.

William H. Krul is, and for more than five years has been, the
President and Chief Executive Officer of Miller-Valentine
Construction, Inc., a commercial real estate construction and
development company.

Lee C. Howley is, and for more than five years has been, the
President of Howley & Company, a real estate brokerage
and development company. Mr. Howley is a director of Boykin
Lodging Company, LESCO, Inc. and Lorain National Bank.

Albert T. Adams is, and for more than five years has been, a
Partner of Baker & Hostetler LLP. Mr. Adams is a
director of American Industrial Property REIT, Associated
Estates Realty Corporation, Boykin Lodging Company, Developers
Diversified Realty Corporation and Dairy Mart Convenience
Stores, Inc.

William J. Chadwick is, and for more than five years has been, a
Managing Director of Chadwick, Saylor & Co., Inc., a real
estate bank.

Item 11.  Executive Compensation

The following information is provided for each of the
Companys executive officers.

|                            |  |        |      |                     |  |        |         |              |  |              |        |         |  |              |        |  |  |  |   |  |  |  |         |  |  |  |   | 
|--------------------------- |  | ------ | ---- | ------------------- |  | ------ | ------- | ------------ |  | ------------ | ------ | ------- |  | ------------ | ------ |  |  |  | - |  |  |  | ------- |  |  |  | - | 
|                            |  |        |      |                     |  |        |         |              |  |             
|                            |  |        |      |                     |  |        |         |              |  | Long-Term   
|                            |  |        |      |                     |  |        |         |              |  | Compensation
|                            |  |        |      |                     |  |        |         |              |  |             
|                            |  |        |      |                     |  |       
|                            |  |        |      | Annual Compensation |  | Awards
|                            |  |        |      |                     |  |       
|                            |  |        |      |                     |  | Other  |         | Restricted   |  |              |        | All    
|                            |  |        |      |                     |  | Annual |         | Stock        |  | Stock        |        | Other  
|Name and                    |  | Fiscal |      | Salary              |  | Bonus  |         | Compensation |  | Award(s)     |        | Options |  | Compensation
|Principal Position          |  | Year   |      | ($)                 |  | ($)    |         | ($)(1)       |  | ($)          |        | (#)(2)  |  | ($)         
|                            |  |        |      |                     |  |        |         |              |  |              |        |         |  |             
|Patrick L. Beach            |  |        | 2000 |                     |  | $      | 225,000 |              |  | $            | 90,000 |         |  |              |        |  |  |  |   |  |  |  |         |  |  |  |   | 
|Chairman, President         |  |        | 1999 |                     |  | $      | 175,000 |              |  | $            | 43,750 |         |  |              |        |  |  |  |   |  |  |  | 60,000  |  |  |  |   | 
|and Chief Executive Officer |  |        | 1998 |                     |  | $      | 150,000 |              |  | $            | 60,000 |         |  |              |        |  |  |  |   |  |  |  |         |  |  |  |   | 
|                           
|                           
|                           
|                           
|                           
|W. Ross Martin              |  |        | 2000 |                     |  | $      | 160,000 |              |  | $            | 60,000 |         |  |              |        |  |  |  |   |  |  |  |         |  |  |  |   | 
|Executive Vice President    |  |        | 1999 |                     |  | $      | 125,000 |              |  | $            | 31,250 |         |  |              |        |  |  |  |   |  |  |  | 30,000  |  |  |  |   | 
|and Chief Financial Officer |  |        | 1998 |                     |  | $      | 100,000 |              |  | $            | 40,000 |         |  |              |        |  |  |  |   |  |  |  |         |  |  |  |   | 
|                           
|                           
|                           
|                           
|                           
|H. Reid Sherard(3)          |  |        | 2000 |                     |  | $      |        |              |  |              |       |         |  |              |       |  |  |  |  |  |  |  |         |  |  |  |  | 
|Senior Vice President       |  |        | 1999 |                     |  | $      |        |              |  |              |       |         |  |              |       |  |  |  |  |  |  |  | 15,000  |  |  |  |  | 
|Sales and Marketing         |  |        | 1998 |                     |  |        |         |              |  |              |        |         |  |              |        |  |  |  |   |  |  |  | 100,000 |  |  |  |   | 
|                           
|                           
|                           
|                           
|                           
|Ronald Max                  |  |        | 2000 |                     |  | $      | 125,000 |              |  | $            | 25,000 |         |  |              |        |  |  |  |   |  |  |  |         |  |  |  |   | 
|Vice President and Chief    |  |        | 1999 |                     |  | $      | 125,000 |              |  | $            | 22,000 |         |  | $            | 14,166 |  |  |  |   |  |  |  | 15,000  |  |  |  |   | 
|Investment Officer          |  |        | 1998 |                     |  | $      | 100,000 |              |  |              |       |         |  | $            | 28,973 |  |  |  |  |  |  |  |         |  |  |  |   | 



---

|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Total perquisites and other personal benefits for each of the
	executive officers do not exceed the threshold amounts specified
	in the regulations promulgated by the United States Securities
	and Exchange Commission.
|   
|(2) | Granted pursuant to the Companys Long-Term Incentive Plan.                                                                                                                                                              
|   
|(3) | Amounts relating to 1998 paid to Mr. Sherard reflect
	compensation paid by the Company from May 8, 1998 (the date
	upon which Mr.  Sherard was employed by the Company)
	through December  31, 1998.                     

19



---



##### Table of Contents



Messrs. Beach and Martin each entered into employment
agreements with the Company on October 15, 1997. Each
agreement provides for an initial three-year term that is
automatically extended for an additional year at the end of each
year of the agreement, subject to the right of either party to
terminate the agreement at the end of the then applicable term
by giving written notice of termination on or before
November 30 of any year. Each agreement provides for the
annual base salary, stock options, and bonus described under
Compensation Committee Report, and medical and
dental benefits, vacation and sick leave, life insurance and
certain additional compensation. Mr. Sherard and
Mr. Max do not have employment agreements.

Director Compensation

Each independent director is compensated at the rate of $16,000
per year. Each director also receives $1,000 for attendance at
each meeting of the Board of Directors and of any committee or
$250 for participation in any meeting by telephone. Upon
completion of the Companys initial public offering in
November 1997, Messrs. Peters, Ford, Krul and Howley
each received a 10-year option for 5,000 shares of common stock,
exercisable at $18.00 per share. Options to purchase 2,500
shares of common stock vested in November 1998 and the
remainder vested in November 1999. Upon election to the
Board of Directors, Messrs. Adams and Chadwick each
received a 10-year option for 5,000 shares of the common stock,
exercisable at $18.00 per share. Options to purchase 2,500
shares of common stock vested in October 1999 and the
remainder vested in October 2000. On January 14, 1999, the
Company granted ten-year options to purchase 5,000 shares of the
Companys common stock at $12.97 to each of Mr. Adams,
Mr. Chadwick, Mr. Ford, Mr. Howley, Mr. Krul
and Mr. Peters. Options to purchase 2,500 shares of common
stock vested on January 14 and the remainder vested on
January 14, 2001.

Directors who are not employees of the Company are eligible to
participate in the Companys Directors Deferred
Compensation Plan. The deferred plan, which is administered by
officers appointed by the Board of Directors who are not
eligible to participate in it, allows directors to defer receipt
of the fees payable to them by the Company for their services as
directors. The value of the amounts credited to a director in
the deferred plan increases or decreases based on the market
value of the common stock.

Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values

|                 |  |              |   |          |  |                 |   |                   |  |  |                |  |  |  |   | 
|---------------- |  | ------------ | - | -------- |  | --------------- | - | ----------------- |  |  | -------------- |  |  |  | - | 
|                 |  |              |   |          |  | Number of       |   | Value of         
|                 |  |              |   |          |  | Unexercised     |   | Unexercised      
|                 |  |              |   |          |  | Options at      |   | In-the-Money     
|                 |  |              |   |          |  | Fiscal Year-End |   | Options at Fiscal
|                 |  | Shares       |   | Value    |  | (#)             |   | Year-End ($)     
|                 |  | Acquired on  |   | Realized |  | Exercisable/    |   | Exercisable/     
|Name             |  | Exercise (#) |   | ($)      |  | Unexercisable   |   | Unexercisable    
|                 |  |              |   |          |  |                 |   |                  
|Patrick L. Beach |  |              |  |          |  |                 |  |                   |  |  | 420,000/40,000 |  |  |  |  | 
|                
|                
|                
|                
|W. Ross Martin   |  |              |  |          |  |                 |  |                   |  |  | 210,000/20,000 |  |  |  |  | 
|                
|                
|                
|                
|H. Reid Sherard  |  |              |  |          |  |                 |  |                   |  |  | 105,000/10,000 |  |  |  |  | 
|                
|                
|                
|                
|Ronald Max       |  |              |  |          |  |                 |  |                   |  |  | 55,000/10,000  |  |  |  |  | 

Compensation Committee Interlocks and Insider
Participation

During 2000 the Compensation Committee has consisted of
Messrs. Howley, Krul and Chadwick. The Compensation
Committee determines compensation for senior management, advises
the Board of Directors on the adoption and administration of
employee benefit and compensation plans and administers the
Long-Term Incentive Plan. None of Messrs. Howley, Krul and
Chadwick have been an officer or employee of the Company or have
any financial relationship with the Company other than disclosed
herein.

Compensation Committee Report

Introduction.The Compensation Committee is responsible
for determining the compensation to be paid to the
Companys executive officers. The Committee also is
responsible for making major policy decisions with respect to
health care and other benefit plans and administers the
Long-Term Incentive Plan.

20



---



##### Table of Contents



The Compensation Committee seeks to (i) provide competitive
compensation that enables the Company to attract and retain
qualified executives and align their compensation with the
Companys overall business strategies, and
(ii) provide each executive officer with substantial
incentive to work for the success of the Company through stock
options which provide for participation in the Companys
growth and success. To achieve this goal, the Compensation
Committee determines executive compensation with a focus on
compensating executive officers based on their responsibilities
and the Companys performance. The primary components of
the Companys executive compensation program are
(i) base salaries and certain other annual compensation,
(ii) bonuses, and (iii) common stock options.

Base Salaries and Other Annual Compensation.The base
salaries and certain other compensation for the Companys
executive officers in 2000 were determined based upon the
experience of the executives in the industry, together with
comparisons of compensation paid by companies of similar size in
the real estate investment trust industry. This compensation was
determined after consulting with the Companys financial
advisors.

Messrs. Beach and Martin each have executed
October 15, 1997 employment agreements pursuant to which
they receive base salaries of $225,000 and $160,000,
respectively, health and life insurance and certain other
benefits. The employment agreements also entitle
Messrs. Beach and Martin to options to purchase 400,000
shares and 200,000 shares of the common stock, respectively, for
a period of 10 years at a purchase price of $18.00 per
share pursuant to the Long-Term Incentive Plan. The Compensation
Committee believes that these annual compensation packages are
commensurate with the experience and responsibility of
Messrs. Beach and Martin. Mr. Maxs base salary
for the fiscal year ended December 31, 2000 was $125,000.

Bonuses.The employment agreements each entitle
Mr. Beach and Mr. Martin to an annual bonus on a
sliding scale of 10.0% to 100.0% of annual base salary
contingent, and based upon the percentage increase of FFO per
share in any calendar year from the prior calendar year. Bonuses
relating to 2000 were earned by Messrs. Beach and Martin in
the amounts of $90,000 and $60,000, respectively.

Stock Options.All of the Companys executive
officers are eligible to receive options to purchase shares of
common stock under the Long-Term Incentive Plan. The Company
believes that stock options provide valuable motivation and
long-term incentive to management. Stock option grants reinforce
long-term goals by providing the proper nexus between the
interests of management and the interests of the Companys
stockholders. Pursuant to their employment agreements,
Messrs. Beach and Martin have been granted options under
the Long-Term Incentive Plan to purchase 400,000 and 200,000
shares of common stock, respectively, at $18.00 per share.
Mr. Max has been granted a 10-year option to purchase
50,000 shares of Common Stock at $18.00 per share. Options to
purchase the 400,000, 200,000, and 50,000 shares of common stock
by Messrs. Beach, Martin and Max, respectively, have
vested. The number of options granted initially to
Messrs. Beach, Martin and Max was determined through
consultation with the managing underwriters of the
Companys initial public offering and based on the expected
contribution of each of them to the Company. Mr. Sherard
has been granted a 10-year option to purchase 100,000 shares of
common stock at $18.00 per share. Options to purchase 66,667
shares of common stock by Mr. Sherard have vested and the
remaining options granted to Mr. Sherard vest and become
exercisable on May 8, 2001. On January 14, 1999, the
Company granted ten-year options to purchase the Companys
common stock at $12.97 per share as
follows: Mr. Beach  60,000 shares;
Mr. Martin  30,000 shares;
Mr. Sherard  15,000 shares;
Mr. Max  15,000 shares. These options vest
ratably on January 14 of each 2000, 2001 and 2002.



| |                    
| | -------------------
| | William J. Chadwick
| | Lee C. Howley      
| | William H. Krul, II

21



---



##### Table of Contents



Performance Graph

Set forth below is a line graph comparing the cumulative total
return of a hypothetical investment in the common stock of the
Company with the cumulative total return of a hypothetical
investment in each of the National Association of Real Estate
Investment Trusts (NAREIT) Equity Index and the
S&P 500 Index based on the respective market prices of
each such investment from October 31, 1997 through
December 31, 2000, assuming in each case an initial
investment of $100 on October 31, 1997, and reinvestment of
dividends.



|              |  |          |        |          |  |         |        |         |  |         |        |          |  |  |        |  |  |  |        |  |  |  |        | 
|------------- |  | -------- | ------ | -------- |  | ------- | ------ | ------- |  | ------- | ------ | -------- |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|              |  | 10/31/97 |        | 12/31/97 |  | 3/31/98 |        | 6/30/98 |  | 9/30/98 |        | 12/31/98
|              |  |          |        |          |  |         |        |         |  |         |        |         
|CRRR          |  |          | 100.00 |          |  |         | 95.49  |         |  |         | 96.21  |          |  |  | 87.64  |  |  |  | 93.07  |  |  |  | 76.53  | 
|S&P 500       |  |          | 100.00 |          |  |         | 106.43 |         |  |         | 121.27 |          |  |  | 125.28 |  |  |  | 112.82 |  |  |  | 136.84 | 
|NAREIT Equity |  |          | 100.00 |          |  |         | 104.57 |         |  |         | 104.09 |          |  |  | 99.31  |  |  |  | 88.86  |  |  |  | 86.27  | 

[Additional columns below]

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

|              |  |         |        |         |  |         |        |          |  |         |        |         |  |         |        |          |  |  |        |  |  |  |        |  |  |  |        |  |  |  |        | 
|------------- |  | ------- | ------ | ------- |  | ------- | ------ | -------- |  | ------- | ------ | ------- |  | ------- | ------ | -------- |  |  | ------ |  |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|              |  | 3/31/99 |        | 6/30/99 |  | 9/30/99 |        | 12/31/99 |  | 3/31/00 |        | 6/30/00 |  | 9/30/00 |        | 12/31/00
|              |  |         |        |         |  |         |        |          |  |         |        |         |  |         |        |         
|CRRR          |  |         | 79.03  |         |  |         | 84.91  |          |  |         | 64.84  |         |  |         | 50.14  |          |  |  | 58.43  |  |  |  | 80.58  |  |  |  | 86.21  |  |  |  | 87.72  | 
|S&P 500       |  |         | 143.65 |         |  |         | 153.78 |          |  |         | 144.17 |         |  |         | 165.62 |          |  |  | 169.42 |  |  |  | 164.92 |  |  |  | 163.32 |  |  |  | 150.54 | 
|NAREIT Equity |  |         | 82.11  |         |  |         | 90.39  |          |  |         | 83.12  |         |  |         | 82.29  |          |  |  | 84.26  |  |  |  | 93.13  |  |  |  | 100.25 |  |  |  | 103.98 | 

22



---



##### Table of Contents



Item 12.  Security Ownership of Certain Beneficial
Owners and Management

The following table sets forth certain information regarding the
beneficial ownership of the common stock as of March 1,
2001, by: (a) the Companys directors; (b) each
other person who is known by the Company to own beneficially
more than 5.0% of the outstanding shares of the common stock;
(c) each of the Companys executive officers; and
(d) the Companys executive officers and directors as
a group. Unless otherwise stated, the following beneficial
owners have sole voting power and sole investment power of all
shares of common stock set forth opposite their names.

|                                           |  |                     |           |          |  |  |       | 
|------------------------------------------ |  | ------------------- | --------- | -------- |  |  | ----- | 
|                                           |  |                    
|                                           |  | March 1, 2001      
|                                           |  |                    
|                                           |  | Shares Beneficially |           | Percent 
|Beneficial Owner                           |  | Owned(1)            |           | of Class
|                                           |  |                     |           |         
|Patrick L. Beach(2)                        |  |                     | 1,025,789 |          |  |  | 9.7%  | 
|                                          
|                                          
|                                          
|                                          
|W. Ross Martin(3)                          |  |                     | 461,962   |          |  |  | 4.6%  | 
|                                          
|                                          
|                                          
|                                          
|H. Reid Sherard(4)                         |  |                     | 109,972   |          |  |  | 1.1%  | 
|                                          
|                                          
|                                          
|                                          
|Ronald Max(5)                              |  |                     | 60,001    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|Richard J. Peters(6)                       |  |                     | 16,300    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|Creed L. Ford, III(6)                      |  |                     | 11,000    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|William H. Krul, II(6)                     |  |                     | 11,000    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|Lee C. Howley(6)                           |  |                     | 23,000    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|Albert T. Adams(6)                         |  |                     | 12,500    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|William J. Chadwick(6)                     |  |                     | 47,500    |          |  |  | *     | 
|                                          
|                                          
|                                          
|                                          
|The Public Institution For Social Security |  |                     | 527,778   |          |  |  | 5.5%  | 
|                                          
|                                          
|                                          
|                                          
|Boston Partners Asset Management L.P.(7)   |  |                     | 480,000   |          |  |  | 5.0%  | 
|                                          
|                                          
|                                          
|                                          
|Salomon Smith Barney Holdings, Inc.(8)     |  |                     | 983,850   |          |  |  | 10.4% | 
|                                          
|                                          
|                                          
|                                          
|Marsh & McLennan Companies, Inc.(9)        |  |                     | 496,374   |          |  |  | 5.2%  | 
|                                          
|                                          
|                                          
|                                          
|All officers and directors as a group      |  |                     | 1,779,024 |          |  |  | 18.7% | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Less than 1.0%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(1) | Excludes shares of the common stock subject to options not
	exercisable within 60 days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(2) | Includes options exercisable within 60 days to purchase
	440,000 shares of the common stock and 99,273 shares of the
	common stock owned by Family Realty. Mr. Beach owns all of
	the voting stock and an economic interest of one-half of one
	percent (0.5%) in Family Realty and disclaims beneficial
	ownership of those shares. Excludes 14,700 shares of the common
	stock owned by George Beach, Mr.  Beachs father.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | Includes options exercisable within 60 days to purchase
	220,001 shares of the common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) | Includes options exercisable within 60 days to purchase
	76,666 shares of the common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(5) | Includes options exercisable within 60 days to purchase
	60,001 shares of the common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(6) | Includes options exercisable within 60 days to purchase
	10,000 shares of the common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(7) | According to a Schedule 13G, dated February 9, 1998,
	filed with the SEC by Boston Partners Asset Management, L.P.
	(BPAM), BPAM, an investment advisory firm,
	beneficially owns 480,000 shares of the common stock. BPAM
	disclosed in its Schedule 13G that (a) it has shared
	dispositive and voting power for all 480,000 shares of the
	common stock with Boston Partners, Inc., the sole general
	partner of BPAM and Desmond John Heathwood, the principal
	stockholder of Boston Partners; and (b) each of BPAM,
	Boston Partners and Mr. Heathwood may be deemed to own
	beneficially all 480,000 shares of the common stock. BPAM also
	disclosed in its Schedule 13G that it holds all 480,000
	shares of the common stock under management for its clients,
	none of whom owns more than 5.0% of the common stock according
	to the Schedule 13G.
|   
|(8) | According to a Schedule 13G/ A dated May 10, 1999,
	filed with the SEC by Salomon Smith Barney Holdings, Inc., a
	holding company (SSB Holdings), its wholly-owned
	subsidiaries Salomon Brothers Holding Company, Inc.
	(SBHC) and SSBC Fund Management, Inc., formerly
	Mutual Management Corp. (SSBC), Salomon Brothers
	Asset Management, Inc., a wholly-owned subsidiary of SBHC                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

23



---



##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | (SBAM), and Citigroup Inc., the sole stockholder of
	SSB Holdings (Citigroup), and a Schedule 13G/A
	dated September 9, 1999, filed with the SEC by Citigroup,
	these reporting companies in the aggregate beneficially own
	shares of the common stock as follows: (a) SSB
	Holdings  983,850 shares, shared voting and
	dispositive power  983,850 shares; (b) 
	SBHC  503,850 shares, shared voting and dispositive
	power  503,850 shares; (c) SSBC 
	480,000 shares, shared voting and dispositive power 
	480,000 shares; (d) SBAM  480,000 shares, shared
	voting and dispositive power  480,000 shares;
	(e) Citigroup  300,650 shares, shared voting and
	dispositive power  300,650 shares.                                                                                         
|   
|(9) | According to a Schedule 13G/A dated February 4, 1999,
	filed with the SEC by Marsh & McLennan Companies, Inc.
	a holding company, its wholly-owned subsidiary Putnam
	Investments, Inc. (PII) and PIIs wholly-owned
	subsidiaries The Putnam Advisory Company, Inc.
	(PACI) and Putnam Investment Management, Inc.
	(PIMI) and the Putnam Capital Appreciation Fund
	(PCAF) in the aggregate beneficially own shares of
	the common stock as follows: (a) PII  496,374
	shares, shared voting power  10,674 shares, shared
	dispositive power  496,374 shares);
	(b) PIMI  485,700 shares, shared dispositive
	power  485,700 shares; (c) PAC 10,674 shares,
	shared voting and dispositive power  10,674 shares;
	and (d) PCAF  485,700 shares, shared dispositive
	power  485,700 shares.

Item 13.  Certain Relationships and Related
Transactions

Patrick L. Beach, W. Ross Martin, and H. Reid Sherard are the
Chief Executive Officer, President and Chairman, the Senior Vice
President and Chief Financial Officer, and the Senior Vice
President  Sales and Marketing, respectively, of
Captec Financial. Messrs. Beach and Martin also serve as
the Chief Executive Officer, President and Chairman and the
Executive Vice President and Chief Financial Officer,
respectively, of Captec Advisors. Messrs. Beach, Martin and
Sherard are each stockholders of Captec Advisors. Together with
Captec Financial, Captec Advisors provides the Company with
certain investment and financial advisory services pertaining
primarily to the acquisition, development and leasing of
properties pursuant to an August 29, 1997 advisory
agreement, as amended. Pursuant to the advisory agreement, the
Company pays to Captec Advisors a management fee in an amount
equal to the lesser of (i) 0.6% per annum of the aggregate
capitalized cost (excluding accumulated depreciation) of all
assets in the Companys portfolio, or (ii) 5.0% of the
Companys revenues. Under the advisory agreement, the
Company may pay Captec Advisors an incentive fee, which will
equal 15.0% of the amount by which any increase in annual Funds
From Operations (FFO) per share exceeds a 7.0%
annual increase in FFO per share multiplied by the weighted
average number of shares of common stock outstanding. The
Company is also subject to cost reimbursements to Captec
Advisors in an amount equal to all costs incurred in the
acquisition of properties. The sum of the incentive fee and the
cost reimbursement (the acquisition fee) will not
exceed 3.0% of the acquisition cost of properties identified by
the Advisor and acquired during the term of the advisory
agreement. The advisory agreement has been amended three times.
The effect of the amendments was to reduce the management fee to
Captec Advisors by the amount of acquisition fees paid directly
to Captec Advisors as a result of acquisitions made by Family
Realty, Family Realty II, or the Partnerships, which the
Company is the general partner. During 2000, the aggregate
management fee of $1,444,000 was paid in its entirety by CNLR
Development, Inc., a majority-owned subsidiary of the Company.
During 1999, the aggregate management fee paid by the Company
and CNLR Development was $1,196,000, which was reduced by
$188,000 from $1,384,000 as a result of acquisition fees paid by
the Partnerships to Captec Advisors. During 2000 and 1999 the
Company incurred approximately $269,000 and $104,000,
respectively, in acquisition fees to Captec Advisors. The amount
to be paid under the advisory agreement in 2001 will vary based
upon numerous circumstances, some of which are beyond the
Companys control, and the actual amount paid pursuant to
the advisory agreement may vary materially.

Mr. Beach and Mr. Martin have executed employment
agreements with the Company, each dated October 15, 1997,
pursuant to which they receive base annual salaries of $255,000
and $160,000, respectively, health and life insurance and
certain other benefits. Each employment agreement provides for
an initial three-year term that is automatically extended for an
additional year at the end of each term, subject to the right of
either party to terminate at the end of the then applicable term
by giving written notice of termination on or before
November 30 of any year. Pursuant to their employment
agreements Mr. Beach and Mr. Martin have been granted
options to purchase 400,000 and 200,000 shares of the
Companys common stock, respectively, through
November 12, 2007 at an exercise price of $18.00 per share.
The employment

24



---



##### Table of Contents





Financial Group was indebted to the Company in the principal
amount of $9,719,798 as of December 31, 2000 pursuant to a
master revolving note collateralized by a subordinate interest
in a portfolio of loans owned by Captec Financial Corporation, a
wholly-owned subsidiary of Captec Financial, under an assignment
of contracts with Captec Financial. This master note bears
interest at an annual rate of 10.0% and is payable on demand.
The outstanding principal balance of this master note at the
time of the Companys initial public offering in
November 1997 was approximately $21,247,000.

Captec Financial was indebted to the Company in the principal
amount of $1,560,436 as of December 31, 2000 pursuant to a
promissory note collateralized by a subordinate class
certificate issued by an affiliate which bears interest at an
annual rate of 15.70% and is payable on demand. The outstanding
principal balance of this note at the time of the Companys
initial public offering was $1,919,000.

In August 1998, the Company purchased from affiliates
100.0% of the general partnership interests in each of the
Partnerships for approximately $4.4 million in the
aggregate in transactions that were approved by the Board of
Directors of the Company and by the limited partners of each
Partnership. These general partnership interests entitle the
Company to receive 1.0% of each limited partnerships net
income, net loss and cash distributions and 10.0% of net sale or
refinancing proceeds. The Company earned $73,000 in asset
management fees during the year ended December 31, 2000.
During 1999, the Company earned $65,000 and $66,000 in
acquisition fees and asset management fees, respectively. During
1998, the Company earned $589,000 and $45,000 in acquisition
fees and asset management fees, respectively.

Mr. Beach and the Company are stockholders of Family
Realty, an affiliate of the Company formed in 1998 to invest in
net-leased entertainment-based and retail properties.
Mr. Beach owns all of the voting stock of Family Realty and
the Company owns 60.0% of the non-voting stock. Pursuant to an
agreement between the Company and Family Realty, the Company
will receive a quarterly asset management fee from Family
Realty. During 2000 the Company received total asset management
fees of approximately $1.1 million from Family Realty. The
amount to be received from Family Realty in 2001 will vary based
upon numerous circumstances, some of which are beyond the
Companys control, and the actual amount received may vary
materially.

Mr. Beach and the Company are also stockholders of Family
Realty II, an affiliate of the Company, which was formed in
November 1999 to continue the activities of Family Realty
in a second venture. Mr. Beach owns all of the voting stock
in Family Realty II and the Company owns 60.0% of the
non-voting stock. During 2000, the Company received $100,000 for
formation costs from Family Realty II.

Creed L. Ford, III, a Director, is the Chief Executive
Officer of Kona Restaurant Group which is a lessee of five
properties from the Company on which it operates Johnny
Carinos Italian Kitchen and Kona Steakhouse restaurants.
Total rent payments to the Company from the properties was
approximately $894,000 in 2000 and is anticipated to be
approximately $845,000 in 2001.

25



---



##### Table of Contents






PART IV

Item 14.  Exhibits, Financial Statement Schedules,
and Reports on Form 8-K

(a)  Exhibits

See page F-1 for an index to Financial Statements and
financial statement schedule.

|        |       |             |  |                                                                                                                                                                                                                          
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 3.2   |             |  | Bylaws of the Company**                                                                                                                                                                                                  
|        | 3.3   |             |  | Form of Amended and Restated Certificate of Incorporation**                                                                                                                                                              
|        | 4.1   |             |  | Rights Agreement***                                                                                                                                                                                                      
|        | 10.1  |             |  | Second Amended and Restated Credit Agreement***                                                                                                                                                                          
|        | 10.2  |             |  | Employment Agreement between the Company and Patrick L. Beach*                                                                                                                                                           
|        | 10.3  |             |  | Employment Agreement between the Company and W. Ross Martin*                                                                                                                                                             
|        | 10.6  |             |  | Advisory Agreement between the Company and Captec Net Lease
	Realty Advisors, Inc.**                                                                                                                                     
|        | 10.7  |             |  | Form of Indemnification Agreement to be entered into by the
	Companys directors and officers**                                                                                                                          
|        | 10.9  |             |  | Long-Term Incentive Plan*                                                                                                                                                                                                
|        | 10.10 |             |  | Directors Deferred Compensation Plan*                                                                                                                                                                                   
|        | 10.11 |             |  | First Amendment to Advisory Agreement***                                                                                                                                                                                 
|        | 10.12 |             |  | First Amendment to Limited Partnership Agreement between the
	Company and Captec Franchise Capital Partners L.P. III***                                                                                                  
|        | 10.13 |             |  | First Amendment to Limited Partnership Agreement between the
	Company and Captec Franchise Capital Partners L.P. IV***                                                                                                   
|        | 10.14 |             |  | FC Venture I, LLC Limited Liability Company Agreement***                                                                                                                                                                 
|        | 10.15 |             |  | Omnibus Agreement and Plan of Merger, dated as of December 
	20, 1999, by and among Captec Net Lease Realty, Inc., Captec
	Acquisition, Inc., Captec Financial Group, Inc. and Captec Net
	Lease Realty Advisors, Inc.***




|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Incorporated by reference from the Companys Registration
	Statement on Form  S-11 (Registration No. 333-34983)
	(the S-11) filed with the United States Securities
	and Exchange Commission on September 5, 1997.
|   
|**  | Incorporated by reference from Amendment No. 2 to the S-11
	filed with the United States Securities and Exchange Commission
	on November 6, 1997.                                                                   
|   
|*** | Previously filed                                                                                                                                                                                                    

(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended
December 31, 2000.




FORWARD-LOOKING STATEMENTS

This Form 10-K contains certain forward-looking
statements which represent the Companys expectations
or beliefs, including, but not limited to, statements concerning
industry performance and the Companys operations,
performance, financial condition, plans, growth and strategies.
Any statements contained in this Form 10-K which are not
statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of
the foregoing, words such as may, will,
expect, anticipate, intend,
could, estimate or continue
or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements.
These statements, by their nature, involve substantial risks and
uncertainties, certain of which are beyond the Companys
control, and actual results may differ materially depending on a
variety of important factors many of which are beyond the
control of the Company.

26



---



##### Table of Contents








SIGNATURES


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

March 30, 2001

| |                                      
| | -------------------------------------
| | CAPTEC NET LEASE REALTY, INC.        
|
| | /s/ PATRICK L. BEACH                 
| |                                      
| | Patrick L. Beach                     
| | Director, Chairman of the Board,     
| | President and Chief Executive Officer
| | (Principal Executive Officer)        

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

|               |  |                                                                                                                                                                                                                                        
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|March 30, 2001 |  | CAPTEC NET LEASE REALTY, INC.
	/s/ PATRICK L. BEACH
	--------------------------------------------------------
	Patrick L. Beach
	Director, Chairman of the Board,
	President and Chief Executive Officer
	(Principal Executive Officer)
|              
|March 30, 2001 |  | /s/ W. ROSS MARTIN
	--------------------------------------------------------
	W. Ross Martin
	Director, Executive Vice President
	and Chief Financial Officer
	(Principal Accounting Officer)                                          
|              
|March 30, 2001 |  | /s/ H. REID SHERARD
	--------------------------------------------------------
	H. Reid Sherard
	Director                                                                                                                               
|              
|March 30, 2001 |  | /s/ LEE C. HOWLEY, JR.
	--------------------------------------------------------
	Lee C. Howley, Jr.
	Director                                                                                                                         
|              
|March 30, 2001 |  | /s/ RICHARD J. PETERS
	--------------------------------------------------------
	Richard J. Peters
	Director                                                                                                                           
|              
|March 30, 2001 |  | /s/ CREED L. FORD, III
	--------------------------------------------------------
	Creed L. Ford, III
	Director                                                                                                                         
|              
|March 30, 2001 |  | /s/ WILLIAM H. KRUL, II
	--------------------------------------------------------
	William H. Krul
	Director                                                                                                                           
|              
|March 30, 2001 |  | /s/ WILLIAM J. CHADWICK
	--------------------------------------------------------
	William J. Chadwick
	Director                                                                                                                       
|              
|March 30, 2001 |  | /s/ ALBERT T. ADAMS
	--------------------------------------------------------
	Albert T. Adams
	Director                                                                                                                               

27



---



##### Table of Contents






INDEX TO FINANCIAL STATEMENTS

|                                                                                                                 |  |       |      | 
|---------------------------------------------------------------------------------------------------------------- |  | ----- | ---- | 
|                                                                                                                 |  | Pages
|                                                                                                                 |  |      
|Report of Independent Accountants                                                                                |  |       | F-2  | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Consolidated Balance Sheets as of December 31, 2000
	and  1999                                                   |  |       | F-3  | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Consolidated Statements of Operations for the Years Ended
	December 31, 2000, 1999 and 1998                      |  |       | F-4  | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Consolidated Statements of Changes in Stockholders Equity
	for the Years Ended December 31, 2000, 1999 and 1998 |  |       | F-5  | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Consolidated Statements of Cash Flows for the Years Ended
	December 31, 2000, 1999 and 1998                      |  |       | F-6  | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Notes to Consolidated Financial Statements                                                                       |  |       | F-7  | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Report of Independent Accountants                                                                                |  |       | F-19 | 
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Schedule III  Properties and Accumulated
	Depreciation as of December 31, 2000                                  |  |       | F-20 | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of



In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of operations, changes in
stockholders equity, and cash flows present fairly, in all
material respects, the financial position of Captec Net Lease
Realty, Inc. (the Company) and its subsidiaries
as of December 31, 2000, 1999 and 1998, and the
results of their operations and their cash flows for each of the
years then ended 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.

/s/ PRICEWATERHOUSECOOPERS LLP

February 5, 2001



F-2



---



##### Table of Contents








CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES







CONSOLIDATED BALANCE SHEETS


|                                     |                                                                                                  |                                            |           |              |             |   |           |             |             | 
|------------------------------------ | ------------------------------------------------------------------------------------------------ | ------------------------------------------ | --------- | ------------ | ----------- | - | --------- | ----------- | ----------- | 
|                                     |                                                                                                  | December 31,                               |           | December 31,
|                                     |                                                                                                  | 2000                                       |           | 1999        
|                                     |                                                                                                  |                                            |           |             
|ASSETS                               |                                                                                                  |                                            |           |              |             |   |           |            
|                                    
|                                    
|                                    
|                                    
|Cash and cash equivalents            |                                                                                                  | $                                          | 665,408   |              |             | $ | 1,035,607 |            
|                                    
|                                    
|                                    
|                                    
|Investments:                         |                                                                                                  |                                            |           |              |             |   |           |            
|                                    
|                                    
|                                    
|                                    
|                                     | Properties subject to operating leases, net                                                      |                                            |           | 195,842,231  |             |   |           | 217,615,654 |            
|                                    
|                                    
|                                    
|                                    
|                                     | Properties subject to financing leases, net                                                      |                                            |           | 4,535,446    |             |   |           | 4,407,195   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Loans to affiliates, collateralized by mortgage loans                                            |                                            |           | 11,280,234   |             |   |           | 10,979,804  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Investment in joint venture                                                                      |                                            |           | 7,031,073    |             |   |           | 7,305,894   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Investment in affiliated limited partnerships, net                                               |                                            |           | 4,163,069    |             |   |           | 4,251,568   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Other loans                                                                                      |                                            |           | 283,323      |             |   |           |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Other loans, related party                                                                       |                                            |           | 373,799      |             |   |           | 390,520     |            
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|                                     |                                                                                                  | Total investments                          |           |              | 223,509,175 |   |           |             | 244,950,635 | 
|                                    
|                                    
|                                    
|                                    
|Short-term loans to affiliates       |                                                                                                  |                                            |          |              |             |   | 398,471   |            
|                                    
|                                    
|                                    
|                                    
|Unbilled rent, net                   |                                                                                                  |                                            | 6,840,646 |              |             |   | 6,027,221 |            
|                                    
|                                    
|                                    
|                                    
|Accounts receivable                  |                                                                                                  |                                            | 693,101   |              |             |   | 491,052   |            
|                                    
|                                    
|                                    
|                                    
|Due from affiliates                  |                                                                                                  |                                            | 1,856,950 |              |             |   | 1,326,307 |            
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                                                                                  |                                            | 1,005,796 |              |             |   | 1,292,399 |            
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|                                     |                                                                                                  | Total assets                               |           | $            | 234,571,076 |   |           | $           | 255,521,692 | 
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|Liabilities:                         |                                                                                                  |                                            |           |              |             |   |           |            
|                                    
|                                    
|                                    
|                                    
|                                     | Notes payable                                                                                    |                                            | $         | 98,365,915   |             |   | $         | 116,921,555 |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable and accrued expenses                                                            |                                            |           | 952,252      |             |   |           | 2,672,529   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Federal income tax payable                                                                       |                                            |           |             |             |   |           | 719,000     |            
|                                    
|                                    
|                                    
|                                    
|                                     | Security deposits held on leases                                                                 |                                            |           | 225,612      |             |   |           | 272,943     |            
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|                                     |                                                                                                  | Total liabilities                          |           |              | 99,543,779  |   |           |             | 120,586,027 | 
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|Stockholders Equity:                |                                                                                                  |                                            |           |              |             |   |           |            
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, ($.01 par value) authorized: 40,000,000 shares;
	issued and outstanding: 9,508,108 |                                            |           | 95,081       |             |   |           | 95,081      |            
|                                    
|                                    
|                                    
|                                    
|                                     | Paid in capital                                                                                  |                                            |           | 134,711,056  |             |   |           | 134,711,056 |            
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                                |                                            |           | 221,160      |             |   |           | 129,528     |            
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|                                     |                                                                                                  | Total stockholders equity                 |           |              | 135,027,297 |   |           |             | 134,935,665 | 
|                                     |                                                                                                  |                                            |           |              |             |   |           |            
|                                     |                                                                                                  | Total liabilities and stockholders equity |           | $            | 234,571,076 |   |           | $           | 255,521,692 | 
|                                     |                                                                                                  |                                            |           |              |             |   |           |            

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

F-3



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES






CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |            |            |      | 
|------------------------------------------------------------------------ | --------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------------ | ---------- | ------------ | --------- | ---------- | ---------- | ----- | ---------- | ---------- | ---------- | ---- | 
|                                                                         |                                               | Year Ended                                                                                                           |                                 | Year Ended   |            | Year Ended  
|                                                                         |                                               | December 31,                                                                                                         |                                 | December 31, |            | December 31,
|                                                                         |                                               | 2000                                                                                                                 |                                 | 1999         |            | 1998        
|                                                                         |                                               |                                                                                                                      |                                 |              |            |             
|Revenue:                                                                 |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Rental income from operating leases           |                                                                                                                      | $                               | 23,910,679   |            |              | $         | 24,559,064 |            |       | $          | 22,451,150 |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Earned income from financing leases           |                                                                                                                      |                                 | 614,250      |            |              |           | 650,233    |            |       |            | 47,880     |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest income on loans to affiliates        |                                                                                                                      |                                 | 1,263,298    |            |              |           | 1,270,732  |            |       |            | 1,785,716  |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Other income, principally affiliated ventures |                                                                                                                      |                                 | 2,201,877    |            |              |           | 2,507,164  |            |       |            | 1,401,090  |           
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               | Total revenue                                                                                                        |                                 |              | 27,990,104 |              |           |            | 28,987,193 |       |            |            | 25,685,836 |     
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|Expenses:                                                                |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest                                      |                                                                                                                      |                                 | 9,865,097    |            |              |           | 9,272,453  |            |       |            | 6,799,695  |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Management fees, affiliates, net              |                                                                                                                      |                                 |             |            |              |           |           |            |       |            | 193,757    |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | General and administrative                    |                                                                                                                      |                                 | 1,473,686    |            |              |           | 1,566,515  |            |       |            | 1,422,212  |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Depreciation and amortization                 |                                                                                                                      |                                 | 3,440,884    |            |              |           | 3,485,349  |            |       |            | 3,069,074  |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Provision for unbilled rent                   |                                                                                                                      |                                 |             |            |              |           |           |            |       |            | 865,311    |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Non-recurring merger costs                    |                                                                                                                      |                                 | 2,442,234    |            |              |           |           |            |       |            |           |           
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               | Total expenses                                                                                                       |                                 |              | 17,221,901 |              |           |            | 14,324,317 |       |            |            | 12,350,049 |     
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               | Income before equity in joint venture, gain (loss) on sale of
	properties, other non-recurring and accounting change |                                 |              | 10,768,203 |              |           |            | 14,662,876 |       |            |            | 13,335,788 |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Equity in net income of joint venture                                    |                                               |                                                                                                                      | 560,873                         |              |            |              | 256,722   |            |            |       |           |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Gain (loss) on sale of properties, net                                   |                                               |                                                                                                                      | 2,508,459                       |              |            |              | (850,056  | )          |            |       | (1,837,524 | )         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Other non-recurring                                                      |                                               |                                                                                                                      | 706,421                         |              |            |              |          |            |            |       |           |           
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               | Income before accounting change                                                                                      |                                 |              | 14,543,956 |              |           |            | 14,069,542 |       |            |            | 11,498,264 |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Cumulative effect of accounting change                                   |                                               |                                                                                                                      |                                |              |            |              | (336,875  | )          |            |       |           |           
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               | Net income                                                                                                           |                                 | $            | 14,543,956 |              |           | $          | 13,732,667 |       |            | $          | 11,498,264 |     
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               | Basic and diluted EPS:                                                                                               |                                 |              |            |              |           |            |            |       |            |            |            |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                               |                                                                                                                      | Income before accounting change |              | $          | 1.53         |           |            | $          | 1.48  |            |            | $          | 1.21 | 
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               |                                                                                                                      | Accounting change               |              | $          |             |           |            | $          | (0.04 | )          |            | $          |     | 
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|                                                                         |                                               |                                                                                                                      | Net income                      |              | $          | 1.53         |           |            | $          | 1.44  |            |            | $          | 1.21 | 
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           
|Weighted average number of common shares outstanding, basic and
	diluted |                                               |                                                                                                                      | 9,508,108                       |              |            |              | 9,508,108 |            |            |       | 9,508,108  |           
|                                                                         |                                               |                                                                                                                      |                                 |              |            |              |           |            |            |       |            |           

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

F-4



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES






CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY


|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  
|---------------------------------------- |  | ------------ | --------- | ------- |  | -------- | ------ | ------------- |  | ------ | ----------- |  |  | - | ----------- | - |  | - | ----------- | -
|                                         |  |              |           |         |  |          |        |              
|                                         |  | Common Stock |           |         |  |          |        | Total        
|                                         |  |              |           | Paid-In |  | Retained |        | Stockholders
|                                         |  | Shares       |           | Amount  |  | Capital  |        | Earnings      |  | Equity
|                                         |  |              |           |         |  |          |        |               |  |       
|BALANCE, JANUARY 1, 1998                 |  |              | 9,508,108 |         |  | $        | 95,081 |               |  | $      | 134,711,056 |  |  | $ |            |   |  | $ | 134,806,137 |  
|                                        
|                                        
|                                        
|                                        
|Net income                               |  |              |          |         |  |          |       |               |  |        |            |  |  |   | 11,498,264  |   |  |   | 11,498,264  |  
|                                        
|                                        
|                                        
|                                        
|Common stock dividends ($1.13 per share) |  |              |          |         |  |          |       |               |  |        |            |  |  |   | (10,696,620 | ) |  |   | (10,696,620 | )
|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  
|BALANCE, DECEMBER 31, 1998               |  |              | 9,508,108 |         |  |          | 95,081 |               |  |        | 134,711,056 |  |  |   | 801,644     |   |  |   | 135,607,781 |  
|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  
|Net income                               |  |              |          |         |  |          |       |               |  |        |            |  |  |   | 13,732,667  |   |  |   | 13,732,667  |  
|                                        
|                                        
|                                        
|                                        
|Common stock dividends ($1.52 per share) |  |              |          |         |  |          |       |               |  |        |            |  |  |   | (14,404,783 | ) |  |   | (14,404,783 | )
|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  
|BALANCE, DECEMBER 31, 1999               |  |              | 9,508,108 |         |  |          | 95,081 |               |  |        | 134,711,056 |  |  |   | 129,528     |   |  |   | 134,935,665 |  
|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  
|Net income                               |  |              |          |         |  |          |       |               |  |        |            |  |  |   | 14,543,956  |   |  |   | 14,543,956  |  
|                                        
|                                        
|                                        
|                                        
|Common stock dividends ($1.52 per share) |  |              |          |         |  |          |       |               |  |        |            |  |  |   | (14,452,324 | ) |  |   | (14,452,324 | )
|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  
|BALANCE, DECEMBER 31, 2000               |  |              | 9,508,108 |         |  | $        | 95,081 |               |  | $      | 134,711,056 |  |  | $ | 221,160     |   |  | $ | 135,027,297 |  
|                                         |  |              |           |         |  |          |        |               |  |        |             |  |  |   |             |   |  |   |             |  

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

F-5



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES






CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |            |             |  
|-------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ----------- | ------------ | ----------- | ------------ | ----------- | ---------- | ----------- | - | ----------- | ---------- | ----------- | -
|                                                                                 |                                                              | Year Ended                                          |             | Year Ended   |             | Year Ended  
|                                                                                 |                                                              | December 31,                                        |             | December 31, |             | December 31,
|                                                                                 |                                                              | 2000                                                |             | 1999         |             | 1998        
|                                                                                 |                                                              |                                                     |             |              |             |             
|CASH FLOWS FROM OPERATING ACTIVITIES:                                            |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Net income                                                                       |                                                              | $                                                   | 14,543,956  |              |             | $            | 13,732,667  |            |             | $ | 11,498,264  |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Adjustments to net income:                                                       |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Depreciation and amortization                                |                                                     |             | 3,440,884    |             |              |             | 3,485,349  |             |   |             | 3,069,074  |            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accounting change                                            |                                                     |             |             |             |              |             | 336,875    |             |   |             |           |            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Amortization of debt issuance costs                          |                                                     |             | 1,098,398    |             |              |             | 721,862    |             |   |             | 439,407    |            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Equity in net income of joint venture                        |                                                     |             | (560,873     | )           |              |             | (256,722   | )           |   |             |           |            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | (Gain) loss on sale of property                              |                                                     |             | (2,508,459   | )           |              |             | 850,056    |             |   |             | 1,837,524  |            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Increase in unbilled rent                                    |                                                     |             | (813,425     | )           |              |             | (2,316,734 | )           |   |             | (1,439,444 | )          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Increase in accounts receivable and other assets             |                                                     |             | (984,844     | )           |              |             | (1,110,200 | )           |   |             | (513,689   | )          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | (Decrease) increase in accounts payable and accrued expenses |                                                     |             | (2,439,277   | )           |              |             | 1,244,488  |             |   |             | (6,627     | )          
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                 | Net cash provided by operating activities                    |                                                     |             | 11,776,360   |             |              |             | 16,687,641 |             |   |             | 14,884,509 |            
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Acquisition of properties subject to operating leases                            |                                                              |                                                     | (16,040,681 | )            |             |              | (22,600,058 | )          |             |   | (78,116,356 | )         
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Acquisition of properties subject to financing leases                            |                                                              |                                                     |            |              |             |              | (1,188,628  | )          |             |   | (3,128,824  | )         
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Collections on short-term loans to affiliates, net                               |                                                              |                                                     | 398,471     |              |             |              | 2,106,823   |            |             |   | 4,944,211   |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Proceeds from the transfer of properties to joint venture                        |                                                              |                                                     |             |              |             |              | 4,472,752   |            |             |   |            |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Proceeds from the disposition of properties                                      |                                                              |                                                     | 37,021,498  |              |             |              | 17,646,133  |            |             |   | 4,797,472   |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Collections (advances) on loans to affiliates,
	collateralized by mortgage loans |                                                              |                                                     | (300,430    | )            |             |              | (2,064,281  | )          |             |   | 4,146,322   |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Advances on other loans                                                          |                                                              |                                                     | (300,000    | )            |             |              |            |            |             |   |             |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Collection of principal on other loans                                           |                                                              |                                                     | 33,398      |              |             |              | 15,255      |            |             |   | 720,095     |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investment in affiliated partnerships                                            |                                                              |                                                     |            |              |             |              |            |            |             |   | (4,395,000  | )         
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investment in joint venture                                                      |                                                              |                                                     |             |              |             |              | (7,113,000  | )          |             |   |            |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Proceeds from joint venture distribution                                         |                                                              |                                                     | 835,694     |              |             |              | 63,828      |            |             |   |            |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Collection of principal on financing leases                                      |                                                              |                                                     | (128,251    | )            |             |              | (89,744     | )          |             |   |            |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Lease security deposits (refunds), net                                           |                                                              |                                                     | (47,331     | )            |             |              | 78,537      |            |             |   | 52,514      |           
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                 |                                                              | Net cash provided by (used in) investing activities |             |              | 21,472,368  |              |             |            | (8,672,383  | ) |             |            | (70,979,566 | )
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                            |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Dividends paid on common stock                                                   |                                                              |                                                     | (14,452,324 | )            |             |              | (14,404,783 | )          |             |   | (12,550,702 | )         
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Borrowings of notes payable                                                      |                                                              |                                                     | 16,445,000  |              |             |              | 15,616,360  |            |             |   | 113,984,988 |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Debt issuance costs                                                              |                                                              |                                                     | (610,963    | )            |             |              |            |            |             |   | (1,632,604  | )         
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Repayments of notes payable                                                      |                                                              |                                                     | (35,000,640 | )            |             |              | (12,679,793 | )          |             |   | (42,746,189 | )         
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                 |                                                              | Net cash used in financing activities               |             |              | (33,618,927 | )            |             |            | (11,468,216 | ) |             |            | 57,055,493  |  
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|NET CASH FLOWS                                                                   |                                                              |                                                     | (370,199    | )            |             |              | (3,452,958  | )          |             |   | 960,436     |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                   |                                                              |                                                     | 1,035,607   |              |             |              | 4,488,565   |            |             |   | 3,528,129   |           
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                         |                                                              | $                                                   | 665,408     |              |             | $            | 1,035,607   |            |             | $ | 4,488,565   |           
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Cash paid for interest                                       |                                                     | $           | 10,494,707   |             |              | $           | 7,660,588  |             |   | $           | 5,855,889  |            
|                                                                                 |                                                              |                                                     |             |              |             |              |             |            |             |   |             |           

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

F-6



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Organization and Summary of Significant Accounting
Policies

Organization:Captec Net Lease Realty, Inc. (the
Company), which has operated as a REIT since
November 1997, acquires, develops and owns freestanding
properties which are leased on a long-term triple-net basis to
operators of national and regional chain restaurants and
national retailers. Triple-net leases generally impose on the
lessee responsibility for all operating costs and expenses of
the property, including the costs of repairs, maintenance, real
property taxes, assessments, utilities and insurance. The
Companys leases typically provide for minimum rent plus
specified fixed periodic rent increases.

Following is a summary of the Companys significant
accounting policies:

Consolidation:The consolidated financial statements
include the accounts of the Company and all its majority owned
subsidiaries over all of which the Company has financial and
operating control. All significant intercompany accounts and
transactions have been eliminated.

Cash and Cash Equivalents:Cash equivalents consist of
investments in government securities money funds purchased with
original maturities of less than 90 days.

Properties Subject to Operating Leases:Properties
subject to operating leases are stated at cost, including
acquisition and closing costs, less accumulated depreciation.
Buildings are depreciated on the straight-line method over their
estimated useful lives (40 years). The Company 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. The Company estimates the
undiscounted cash flows from a property and compares it to the
current carrying value of the property. If an impairment loss is
indicated, the loss is measured as the amount by which the
carrying amount of the asset exceeds the estimated fair value of
the asset determined principally on the discounted cash flow
basis (see Note 2).

Properties Subject to Financing Leases:Properties
subject to financing leases are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the property, which includes miscellaneous acquisition
and closing costs). Unearned income is deferred and amortized
into income over the lease term so as to produce a constant
periodic rate of return on the Companys net investment in
the leases.

Property Sales:The Company will periodically sell
properties as a means of generating capital to meet its current
commitments of future acquisitions and developments. The Company
strategically chooses to explore the marketability of certain
properties in its portfolio that would contribute to greater
diversification levels in tenants, geography, property type and
property size thereby increasing the strength of its current
portfolio. At December 31, 2000, the Company has explored
the marketability of 13 properties representing a carrying value
of $19.7 million.

Investment in Affiliated Partnerships:Investments in
general partnership interests of Captec Franchise Capital
Partners L.P. III and Captec Franchise Capital Partners
L.P. IV (collectively the Partnerships),
represent a 1% interest in the Partnerships. The Company has the
ability to exercise significant influence but does not have
financial operating control over either Partnership. The
Partnerships are accounted for under the equity method. The
investment consists primarily of goodwill which is amortized
based on cash receipts.

Rental Income from Operating Leases:The Companys
operating leases have scheduled rent increases which occur at
various dates throughout the lease terms. The Company 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
leases of the Company also have percentage and overage rent
clauses, which such additional rent the Company recognizes after
the tenants reported sales have exceeded the applicable
sales breakpoint.

F-7



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Debt Financing Costs: Debt financing costs are amortized
over the term of the related note using the effective interest
method.

Income Taxes:The Company has made an election to be
taxed as a REIT under sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, and related
regulations. The Company generally will not be subject to
federal income taxes on amounts distributed to stockholders,
providing it distributes at least 95.0% of its real estate
investment trust taxable income and meets certain other
requirements for qualifying as a REIT. The return of capital
portion of dividends paid in 2000, 1999 and 1998 was 0%, 15% and
6%, respectively.

Income/(Loss) Per Common Share:Income/(Loss) per common
share is based on net income (loss) divided by the weighted
average number of common shares outstanding. Stock options
currently outstanding (see Note 9) were excluded from the
computation of diluted earnings per share because their exercise
price was in excess of the average market price of the
Companys common stock during 2000, 1999 and 1998.

Stock Option Plan:The Company accounts for the stock
option plan in accordance with the provisions of Accounting
Principles Board (APB) Opinion No. 25.
Accounting for Stock Issued to Employees.
Accordingly, compensation expense would be recorded only if on
the date of grant the current market price of the underlying
stock exceeded the exercise price. Statement of Financial
Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS No. 123),
permits entities to recognize as expense over the vesting period
the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro
forma net income and pro forma earnings per share disclosures as
if the fair-value based method defined in SFAS No. 123 had
been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123.

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.

Derivative Instruments:The Company is a party to
derivative financial instruments with off-balance-sheet risk
that it uses in the normal course of business to reduce its
exposure to fluctuations in interest rates. The Company enters
into these transactions for purposes other than trading. The
exposure to fluctuations in interest rates is managed in
accordance with Company policy and procedures. The objective of
the Companys use of derivative financial instruments is to
manage interest rate exposure associated with borrowing under
its floating rate credit facility.

The Company utilizes various contracts to manage interest rate
risk including an interest rate swap that is a contractual
agreement between the Company and another party to exchange the
net difference between a fixed and floating interest rate,
periodically over the life of the contract without the exchange
of the underlying principal amount; and an interest rate cap
agreement that provides protection against interest rate
movements above the rate established in the contract. In
exchange for assuming this risk, the writer receives a premium
at the outset of the agreement. The differential paid or
received on derivative instruments is recognized on an accrual
basis as an adjustment to interest expense.

New Pronouncements:In June 1998, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities,. In June
2000, the FASB issued SFAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging
Activities, which amends SFAS No. 133. The statement
requires that all derivative instruments be recorded at fair
value on the balance sheet with changes in fair value recorded
each period in current earnings

F-8



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

or other comprehensive income, depending on whether a derivative
is designated as part of a hedge transaction and, if it is, the
type of hedge transaction.

Pursuant to the provisions of the statement, all hedging
designations and the methodology for determining hedge
effectiveness must be documented at the inception of the hedge,
and upon the initial adoption of the standard, hedging
relationships must be designated anew. The documentation must
also indicate the risk management intended for entering into the
hedging arrangement. The Company adopted this accounting
standard on January 1, 2001, as required. The cumulative
effect of this accounting change as of January 1, 2001
resulted in the Company recording an asset of $206,399 and an
offset to comprehensive income for the same amount. The Company
currently has two derivative instruments that have been
identified to be accounted for under the provisions of the
standard; an interest rate swap contract and an interest rate
cap contract. Both contracts have been designated as cash flow
hedges used to hedge interest rate risk.

In December 1999, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 101
(SAB 101), Revenue Recognition in Financial
Statements. SAB 101 was adopted in the fourth quarter
2000. The Company examined its revenue recognition practices in
light of interpretive guidance and determined SAB 101 did
not have an effect on the earnings and financial position of the
Company.

In April 1998, the Accounting Standards Executive Committee
issued Statement of Position 98-5, Reporting on the
Costs of Start-Up Activities. This statement requires
start-up activities and organization costs to be expensed as
incurred. In accordance with the provisions of the statement,
the Company has recognized a $337,000 non-cash charge during the
three months ended March 31, 1999 representing the balance
of unamortized organization costs.

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

2.  Properties Subject to Operating Leases

The Companys real estate portfolio is leased to tenants
under long-term net operating leases. The lease agreements
generally provide for monthly rents based upon a percentage of
the propertys cost. The initial term of the leases
typically ranges from 15 to 20 years, although the Company
in certain cases will enter into leases with terms that are
shorter or longer. As of December 31, 2000, the initial
terms of the Companys leases extend through
September 30, 2021. Most leases also provide for one or
more five-year renewal options. In addition, certain leases
provide the tenant one or more options to purchase the
properties at a predetermined price, generally only during
stated periods during the fifth to seventh lease years. At
December 31, 2000, leases to a single lessee represented
approximately 12.8% of annualized total revenue (11.5% and 13.6%
in 1999 and 1998, respectively) while the next highest single
lessee represented approximately 4.2%. Leases to one national
restaurant concept represented approximately 7.8% of annualized
total revenue in 2000.

Net investment in properties subject to operating leases at
December 31, 2000 and 1999 includes capitalized acquisition
and interest costs totaling approximately $6.2 million and
$6.5 million, respectively,

F-9



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

which costs have been allocated between land and buildings and
improvements on a pro rata basis. The net investment in
properties subject to operating leases is comprised of the
following:

|                                 |  |              |             |      |  |   |             |  
|-------------------------------- |  | ------------ | ----------- | ---- |  | - | ----------- | -
|                                 |  |             
|                                 |  | December 31,
|                                 |  |             
|                                 |  | 2000         |             | 1999
|                                 |  |              |             |     
|Land                             |  | $            | 79,432,815  |      |  | $ | 83,344,971  |  
|                                
|                                
|                                
|                                
|Buildings and improvements       |  |              | 124,194,854 |      |  |   | 131,211,643 |  
|                                
|                                
|                                
|                                
|Construction draws on properties |  |              | 1,698,032   |      |  |   | 10,653,762  |  
|                                 |  |              |             |      |  |   |             |  
|                                 |  |              | 205,325,701 |      |  |   | 225,210,376 |  
|                                
|                                
|                                
|                                
|Less accumulated depreciation    |  |              | (9,483,470  | )    |  |   | (7,594,722  | )
|                                 |  |              |             |      |  |   |             |  
|Total                            |  | $            | 195,842,231 |      |  | $ | 217,615,654 |  
|                                 |  |              |             |      |  |   |             |  

The Company periodically invests in properties under
construction. All construction draws are subject to the terms of
a standard lease agreement with the Company which fully
obligates the tenant under the long-term lease to all
construction related costs advanced through construction draws,
including interest during the construction period. Upon
completion of construction and when the tenant lease payments
begin, the construction draws are then capitalized as land and
building. At December 31, 2000 and 1999, the Company had
approximately $0.2 million and $3.7 million
respectively, of unfunded commitments on properties under
construction.

Pursuant to the Companys policy for reviewing its real
estate portfolio for impaired properties, the Company recorded
an impairment loss, through a charge to gain (loss) on sale of
properties of approximately $497,000 and $445,000 for the years
ended December 31, 1999 and 1998, respectively, to reduce
the net carrying value to approximately $625,000 of one property
held for sale in 1999 and reduce the aggregate carrying value to
approximately $74,000 for two modular buildings held for sale in
1998. As of December 31, 2000, 7 properties with an
aggregate net cost of approximately $7.3 million are not
currently subject to lease and have not been deemed impaired.

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

|           |  |   |             | 
|---------- |  | - | ----------- | 
|          
|          
|          
|          
|2001       |  | $ | 19,742,298  | 
|          
|          
|          
|          
|2002       |  |   | 20,167,698  | 
|          
|          
|          
|          
|2003       |  |   | 20,406,183  | 
|          
|          
|          
|          
|2004       |  |   | 20,554,091  | 
|          
|          
|          
|          
|2005       |  |   | 20,500,479  | 
|          
|          
|          
|          
|Thereafter |  |   | 227,431,552 | 
|           |  |   |             | 
|Total      |  | $ | 328,802,301 | 
|           |  |   |             | 

Since lease renewal periods are exercisable at the option of the
tenant, the above table presents only future minimum lease
payments due during the initial lease terms.

F-10



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.  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 |                                      | $    | 9,703,037  |           |  | $ | 10,189,037 |           
|                                     
|                                     
|                                     
|                                     
|Estimated residual value              |                                      |      |           |           |  |   |           |           
|                                      |                                      |      |            |           |  |   |            |           
|                                      | Gross investment in financing leases |      |            | 9,703,037 |  |   |            | 10,189,037 | 
|                                     
|                                     
|                                     
|                                     
|Unearned income                       |                                      |      | (5,167,591 | )         |  |   | (5,781,842 | )         
|                                      |                                      |      |            |           |  |   |            |           
|                                      | Net investment in financing leases   |      | $          | 4,535,446 |  |   | $          | 4,407,195  | 
|                                      |                                      |      |            |           |  |   |            |           

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

|           |  |   |           | 
|---------- |  | - | --------- | 
|          
|          
|          
|          
|2001       |  | $ | 486,000   | 
|          
|          
|          
|          
|2002       |  |   | 486,000   | 
|          
|          
|          
|          
|2003       |  |   | 486,000   | 
|          
|          
|          
|          
|2004       |  |   | 533,633   | 
|          
|          
|          
|          
|2005       |  |   | 534,600   | 
|          
|          
|          
|          
|Thereafter |  |   | 7,176,804 | 
|           |  |   |           | 
|Total      |  | $ | 9,703,037 | 
|           |  |   |           | 

4.  Loans to Affiliate, Collateralized by Mortgage
Loans

Loans to affiliates, collateralized by mortgage loans consist of:

|                                                                                                                                                                                                          |  |              |            |      |  |   |            | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- |  | - | ---------- | 
|                                                                                                                                                                                                          |  |             
|                                                                                                                                                                                                          |  | December 31,
|                                                                                                                                                                                                          |  |             
|                                                                                                                                                                                                          |  | 2000         |            | 1999
|                                                                                                                                                                                                          |  |              |            |     
|Loan under a master revolving note, collateralized by a
	subordinate interest in a portfolio of loans owned by an
	affiliate                                                                              |  | $            | 9,719,798  |      |  | $ | 9,321,327  | 
|                                                                                                                                                                                                         
|                                                                                                                                                                                                         
|                                                                                                                                                                                                         
|                                                                                                                                                                                                         
|Promissory note collateralized by a subordinate class
	certificate issued in conjunction with an asset-backed
	securitization pool of long-term fixed rate mortgage loans and
	other collateralized loans |  |              | 1,560,436  |      |  |   | 1,658,477  | 
|                                                                                                                                                                                                          |  |              |            |      |  |   |            | 
|Total                                                                                                                                                                                                     |  | $            | 11,280,234 |      |  | $ | 10,979,804 | 
|                                                                                                                                                                                                          |  |              |            |      |  |   |            | 

The master revolving note bears interest at 10.0% per annum
at December 31, 2000 and 1999, respectively. The promissory
note bears interest at 15.70% per annum at
December 31, 2000 and 1999. Both notes are payable on
demand.

5.  Investment in Joint Venture

During 1999 the Company invested $7.1 million for a 22.6%
membership interest in FC Venture I, LLC (FC
Venture). The investment is accounted for under the equity
method. The partner in FC Venture has been granted an
option to convert either 25% or 75% of its joint venture
interest into the Companys common stock, as defined in the
joint venture agreement, during the period March 31, 2001
through March 31, 2003.

F-11



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Summarized financial information of the Companys joint
venture investment as of and for the years ended
December 31, 2000 and 1999 is set forth below:

|                                          |  |      |            |      |  |   |            | 
|----------------------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | 
|                                          |  | 2000 |            | 1999
|                                          |  |      |            |     
|Investments in property subject to leases |  | $    | 50,138,810 |      |  | $ | 33,358,192 | 
|                                         
|                                         
|                                         
|                                         
|Total assets                              |  |      | 53,098,859 |      |  |   | 35,376,647 | 
|                                         
|                                         
|                                         
|                                         
|Notes payable                             |  |      | 21,874,437 |      |  |   | 1,110,000  | 
|                                         
|                                         
|                                         
|                                         
|Total liabilities                         |  |      | 22,936,602 |      |  |   | 3,998,370  | 
|                                         
|                                         
|                                         
|                                         
|Members equity                           |  |      | 30,162,257 |      |  |   | 31,378,277 | 
|                                         
|                                         
|                                         
|                                         
|Revenues                                  |  |      | 4,973,616  |      |  |   | 1,567,637  | 
|                                         
|                                         
|                                         
|                                         
|Net income                                |  |      | 2,481,737  |      |  |   | 1,136,176  | 

6.  Notes Payable

In February 1998, the Company entered into a $175.0 million
syndicated credit facility with First Union National Bank, as
agent, to provide funds for the acquisition and development of
properties and working capital. Outstanding debt under the
facility is collateralized by the properties. At
December 31, 2000, the Company had $96.4 million of
aggregate outstanding borrowings under the credit facility.

Advances under the credit facility are subject to certain
borrowing base restrictions that are dependent on a cash basis
lease revenue. The credit facility contains covenants which,
among other restrictions, require the Company to maintain a
minimum net worth of $125.0 million, a maximum leverage
ratio of 60.0%, an interest coverage ratio greater than 2.25:1
and a fixed charge coverage ratio greater than 1.75:1. As of
December 31, 2000 the Company is in compliance with all
debt covenants.

Due to the filing by Boston Chicken, Inc. for Chapter 11
bankruptcy protection in October 1998, the Company was in
technical violation of a financial covenant and was precluded
from additional borrowings under the credit facility. At that
time, the Company was in negotiation with the credit facility
lender regarding an amendment to prevent the violation of this
covenant in the event that Boston Chicken chose to file for
bankruptcy protection. The credit facility lender agreed to
forbear from taking any action against the Company pursuant to
the credit facility. On December 1, 1998, the credit
facility was amended as follows: the facility borrowing capacity
was reduced from $175.0 million to $125.0 million, the
maximum leverage ratio was increased from 50.0% to 60.0%, and
annual interest rate spread over LIBOR was increased from a
range of 1.25% to 1.50% to a range of 1.25% to 1.75%.

In connection with the credit facility, the Company incurred
issuance costs of $1.7 million and is also required to pay
a commitment fee ranging from 0.125% to 0.20% per
annum on the unused amount of the commitment. Commitment fees
and closing expenses paid in conjunction with the credit
facility have been capitalized in other assets and are being
amortized under the effective interest method and classified as
additional interest expense over the term of the credit facility.

The credit facility expired in February 2001. In
February 2001, the Company amended and extended the
maturity of the credit facility. The amendment extends the
maturity to August 31, 2001. The amendment also increased
the interest rate spread over LIBOR to a range of 2.25% to 2.50%
dependent upon the ratio of debt to asset value, and reduced in
the facility borrowing capacity to $105 million. The
Company also has an option to extend the maturity of the credit
facility an additional three months.

During 2000, the Company entered into three promissory notes for
an aggregate amount of $1,945,000 with a lending institution.
The notes are collateralized by certain properties in the
Companys property portfolio. The notes have terms ranging
from 15 years to 20 years and bear interest at 9.0%
per annum. As of

F-12



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2000 the outstanding balance of the promissory
notes is $1,924,477 and the scheduled principal payments for the
promissory notes for the next five years and thereafter are as
follows:

|           |       |   |           |           | 
|---------- | ----- | - | --------- | --------- | 
|          
|          
|          
|          
|2001       |       | $ | 129,793   |          
|          
|          
|          
|          
|2002       |       |   | 141,968   |          
|          
|          
|          
|          
|2003       |       |   | 155,286   |          
|          
|          
|          
|          
|2004       |       |   | 169,853   |          
|          
|          
|          
|          
|2005       |       |   | 164,116   |          
|          
|          
|          
|          
|Thereafter |       |   | 1,163,461 |          
|           |       |   |           |          
|           | Total |   | $         | 1,924,477 | 
|           |       |   |           |          

In December 1999, the Company entered into a
$1.6 million promissory note in connection with the
acquisition of a property. The note was payable on demand with
interest at a rate of 10.25% per annum. In January 2000,
the Company paid this $1.6 million obligation.

7.  Financial Instruments

The estimated fair value of financial instruments held by the
Company at December 31, 2000 and 1999, and the valuation
techniques used to estimate the fair value, were as follows:

|                     |                                                      |       |   |            |  |       |   |            |  |  |   |             |  |  |   |             | 
|-------------------- | ---------------------------------------------------- | ----- | - | ---------- |  | ----- | - | ---------- |  |  | - | ----------- |  |  | - | ----------- | 
|                     |                                                      |       |   |           
|                     |                                                      | 2000  |   | 1999      
|                     |                                                      |       |   |           
|                     |                                                      | Book  |   | Estimated  |  | Book  |   | Estimated 
|                     |                                                      | Value |   | Fair Value |  | Value |   | Fair Value
|                     |                                                      |       |   |            |  |       |   |           
|Assets               |                                                      |       |   |            |  |       |   |            |  |  |   |             |  |  |   |            
|                    
|                    
|                    
|                    
|                     | Cash and cash equivalents                            |       | $ | 665,408    |  |       | $ | 665,408    |  |  | $ | 1,035,607   |  |  | $ | 1,035,607   | 
|                    
|                    
|                    
|                    
|                     | Loans to affiliate, collateralized by mortgage loans |       |   | 11,280,234 |  |       |   | 11,280,234 |  |  |   | 10,979,804  |  |  |   | 10,979,804  | 
|                    
|                    
|                    
|                    
|                     | Other loans                                          |       |   | 283,323    |  |       |   | 283,323    |  |  |   |            |  |  |   |            | 
|                    
|                    
|                    
|                    
|                     | Other loans, related party                           |       |   | 373,799    |  |       |   | 373,799    |  |  |   | 390,520     |  |  |   | 390,520     | 
|                    
|                    
|                    
|                    
|                     | Short-term loans to affiliates                       |       |   |           |  |       |   |           |  |  |   | 398,471     |  |  |   | 398,471     | 
|Liabilities          |                                                      |       |   |            |  |       |   |            |  |  |   |             |  |  |   |            
|                    
|                    
|                    
|                    
|                     | Notes payable                                        |       |   | 98,365,915 |  |       |   | 98,365,915 |  |  |   | 116,921,555 |  |  |   | 116,921,555 | 
|Derivative Contracts |                                                      |       |   |            |  |       |   |            |  |  |   |             |  |  |   |            
|                    
|                    
|                    
|                    
|                     | Interest rate instruments  assets (liabilities)     |       |   | 129,694    |  |       |   | 206,399    |  |  |   | 36,780      |  |  |   | 555,861     | 

Cash and Cash Equivalents.The book value approximates
fair value because of the short maturity of these instruments.

Loans to Affiliate, Collateralized by Mortgage Loans.The
book value approximates fair value because the fixed interest
rates charged under these investments approximate market
interest rates commensurate with this type of instrument and due
to the short maturity of these loans.

Other Loans.The book value approximates fair value
because the fixed interest rates charged under these investments
approximate market interest rates commensurate with this type of
instrument.

Short-Term Loans to Affiliates.The book value
approximates fair value because the fixed interest rate charged
under these investments approximates market interest rates
commensurate with this type of instrument and due to the short
maturity of these loans.

Notes Payable.The fair value of floating rate debt
approximates the book value due to the short re-pricing
mechanism of this debt. Fair value of fixed rate debt
approximates the book value due to the interest

F-13



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

rate ascribed to the fixed rate debt being commensurate with
current market debt with similar risk characteristics.

Interest Rate Instruments.The fair value of interest
rate instruments is the estimated amounts that the Company would
pay or receive to terminate the instruments at December 31,
2000 and 1999. The fair value of the interest rate swap is
estimated by discounting expected cash flows using quoted market
interest rates. The fair value of the interest rate cap is
estimated using broker/dealer quoted market prices.

The Company uses derivative financial instruments in the normal
course of business to manage its exposure to fluctuations in
interest rates. Those instruments involve, to varying degrees,
market risk, as the instruments are subject to rate and price
fluctuations, and elements of credit risk in the event the
counterparty should default. The Company does not enter into
derivative transactions for trading purposes. At
December 31, 2000 the Company had an interest rate swap
contract outstanding with a total notional amount of
$50 million, and an interest rate cap contract outstanding
with a total notional amount of $31.5 million. The notional
amounts serve solely as a basis for the calculation of payments
to be exchanged and are not a measure of the exposure of the
Company through the use of derivatives. Under the interest rate
swap contract, the Company agrees to pay a fixed rate of 5.8%
and the counterparty agrees to make payments based on 3-month
LIBOR. Under the interest rate cap agreement the counterparty
agrees to make payments to the Company if the LIBOR exceeds 6.5%
through July 1, 1999 or 7.5% thereafter. The Company
reduced interest expense by $341,000 during 2000 and incurred
additional interest expense of $209,000 during 1999, in
connection with the interest rate swap agreement. The interest
rate swap contract terminates July 2001 and the interest
rate cap contract terminates January 2001.

Considerable judgement is necessary to develop estimated fair
values of financial instruments. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts
the Company could realize on disposition of the
financial instruments.

8.  Related Party Transactions and Agreements

In August, 1997 the Company entered into an advisory agreement
with Captec Net Lease Advisors, Inc. (Captec
Advisors) an affiliate, which together with Captec
Financial Group, Inc., an affiliate, manages the operations of
the Company and provides it with investment and financial
advisory services pertaining to the acquisition, development,
and leasing of properties. According to the advisory agreement,
the Company pays to Captec Advisors a management fee in an
amount equal to the lesser of (i) 0.6% per annum of the
aggregate capitalized cost (excluding accumulated depreciation)
of all assets in the Companys portfolio, or (ii) 5.0%
of the Companys revenues. Under the advisory agreement,
the Company may pay Captec Advisors an incentive fee, which will
equal 15.0% of the amount by which any increase in annual Funds
From Operations (FFO) per share exceeds a 7.0%
annual increase in FFO per share multiplied by the weighted
average number of shares of common stock outstanding. The
Company is also subject to cost reimbursements to Captec
Advisors in an amount equal to all costs incurred in the
acquisition of properties. The sum of the incentive fee and the
cost reimbursement (the acquisition fee) will not
exceed 3.0% of the acquisition cost of properties identified by
the Captec Advisors and acquired during the term of the advisory
agreement. The advisory agreement has been amended
three times (Amendment). The effect of the
Amendment was to reduce the management fee to Captec Advisors by
the amount of acquisition fees paid directly to Captec Advisors
as a result of acquisitions made by Family Realty, Inc., Family
Realty II, Inc. or the Partnerships. During 2000, the
aggregate management fee of $1,444,000 was paid in its entirety
by CNLR Development, Inc. (Development) a
majority-owned subsidiary of the Company. During 1999, the
aggregate management fee paid by the Company and Development was
$1,196,000, which was reduced by $188,000 from $1,384,000 as a
result of acquisition fees paid by the Partnerships to Captec
Advisors. During 1998 the Company incurred $194,000 of asset
management fees. During 2000, 1999 and 1998 the Company incurred
approximately $269,000, $104,000

F-14



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and $1,123,000 respectively, in acquisition fees to Captec
Advisors. The acquisition fees were capitalized into the
Companys investment in land and buildings subject to
operating leases.

In August 1998 the Company purchased the general
partnership interests in the Partnerships, which are engaged in
substantially the same business as the Company. The Company
acquired the interests for $4.4 million in the aggregate,
$4.0 million of which was used to offset amounts included
in short-term loans to affiliates. Pursuant to the terms
outlined in the Amended and Restated Agreement of Limited
Partnership between the Company and the Partnerships, the
Company receives an acquisition fee equal to 5.0% of the
aggregate purchase price of properties and an asset management
fee equal to 1.0% of gross rental revenues from the
Partnerships properties and equipment. In connection with
the Amendment, the Amended and Restated Agreements of Limited
Partnership were amended retroactive to January 1, 1998.
The effect of the amended agreements is to provide a 2.0%
acquisition fee of the aggregate purchase price of properties to
the Company from the Partnerships and a 3.0% acquisition fee of
the aggregate purchase price of properties to Captec Advisors
from the Partnerships, for which the Company receives an equal
reduction in management fee expense to Captec Advisors. The
Company earned $73,000 in asset management fees during the year
ended December 31, 2000. During 1999, the Company earned
$65,000 and $66,000 in acquisition fees and asset management
fees, respectively. During 1998, the Company earned $589,000 and
$45,000 in acquisition fees and asset management fees
respectively. In addition, Captec Advisors earned approximately
$130,000 and $884,000 during 1999 and 1998, respectively, in
acquisition fees resulting in an equal reduction in the
management fee paid by the Company to Captec Advisors.
Summarized combined financial information of the Partnerships as
of and for the years ended December 31, 2000 and 1999, is
set forth below:

|                                |  |      |            |      |  |   |            | 
|------------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | 
|                                |  | 2000 |            | 1999
|                                |  |      |            |     
|Investments in leases           |  | $    | 56,265,090 |      |  | $ | 54,370,394 | 
|                               
|                               
|                               
|                               
|Total assets                    |  |      | 59,588,283 |      |  |   | 58,192,061 | 
|                               
|                               
|                               
|                               
|Notes payable                   |  |      | 21,583,750 |      |  |   | 17,845,000 | 
|                               
|                               
|                               
|                               
|Total liabilities               |  |      | 22,088,713 |      |  |   | 18,195,171 | 
|                               
|                               
|                               
|                               
|Partners capital               |  |      | 37,499,570 |      |  |   | 39,996,890 | 
|                               
|                               
|                               
|                               
|Revenues                        |  |      | 6,068,932  |      |  |   | 5,959,576  | 
|                               
|                               
|                               
|                               
|Net income                      |  |      | 3,612,401  |      |  |   | 3,593,312  | 
|                               
|                               
|                               
|                               
|Companys portion of net income |  |      | 36,124     |      |  |   | 35,565     | 

Cash flows of the Partnerships are allocated 99.0% to the
limited partners and 1.0% to the Company. The Company will also
receive liquidation fees limited to the lesser of 3.0% of the
gross sales price or 50.0% of the customary real estate
commissions in the event of a real estate liquidation by the
Partnerships. Net sale or refinancing proceeds of the
Partnership will be allocated 90.0% to the limited partners and
10.0% to the Company. The cash flow, liquidation fees, and net
sale proceeds to the Company are subordinate to an 10.5% to
11.0% preferred return (depending on the Partnership) plus
return of the original capital contributions to the limited
partners.

In December of 1998 the Company sold half of its interest in a
property under construction to an affiliate, Family
Realty, Inc. (Family Realty) and recognized a
$226,000 gain on the sale.

In 1999 Family Realty II, Inc. (Family Realty
II) was formed and as a result the Company received
$100,000 for formation costs incurred during the year ended
December 31, 2000.

Family Realty and Family Realty II (collectively, the
Family Realty Ventures) are obligated to pay
acquisition fees of 4.0% to Development. During 2000, 1999 and
1998, Development earned $2.3 million, $4.0 million and
$293,000 of acquisition fees from the Family Realty Ventures,
respectively. Pursuant to the Amendment, Captec Advisors earns
an advisory fee from Development up to 50.0% (not to exceed the
management fees paid by the Company to Captec Advisors) of the
acquisition fees earned by Development

F-15



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

from Family Realty and up to 60.0% (not to exceed the management
fees paid by the Company to Captec Advisors) of the acquisition
fees earned by Development from Family Realty II, collectively,
these advisory fees provide for an equal reduction in management
fee expense to the Company. During 2000 and 1999, Captec
Advisors earned approximately $1.4 million and
$1.2 million in advisory fees, respectively, resulting in
an equal reduction in the management fee paid by the Company to
Captec Advisors. The Company is also subject to a management fee
agreement with Family Realty whereby Family Realty pays a
quarterly management fee to the Company for services the Company
provides in connection with managing the operations and
providing investment and financial advisory services pertaining
to the acquisition of properties by Family Realty. During 2000
and 1999 the Company earned approximately $1.1 million and
$491,000, respectively, in management fees from Family Realty.

In connection with the Companys investment in FC Venture,
the Company is party to an asset management agreement. During
the years ended December 31, 2000 and 1999 the Company
earned approximately $129,000 and $37,000, respectively, in
management fees from FC Venture. In addition, the Company
received approximately $836,000 and $64,000 in cash
distributions from FC Venture during the years ended
December 31, 2000 and 1999, respectively. Also during 1999,
the Company transferred three properties at cost to
FC Venture for an aggregate cost of $4.5 million.

The Company invested in loans to affiliates, principally Captec
Financial Group Inc. (Captec Financial), which were
collateralized by mortgage loans (see Note 4). In addition,
the Company had short-term loans to affiliates of $398,471 at
December 31, 1999. The short-term loans principally
represent demand notes from affiliates, which were entered into
as a short-term investment by the Company. The proceeds of the
loans to Captec Financial are principally used as short-term
warehouse financing for Captec Financials lending and
leasing activities. These loans bear interest at the rate of
10.0% per annum at December 31, 1999 and 1998 and are
payable on demand. Interest earned on the loans during 2000,
1999, and 1998 was $1,228,061, $1,234,031 and $1,785,717,
respectively.

As of December 31, 2000, the Company also has a demand loan
with a principal balance of $373,799 collateralized by a first
mortgage on a real estate property to a related party. The loan
bears interest at a rate of 9.2% per annum. Interest earned on
the loan during 2000, 1999 and 1998 was approximately $35,000,
$37,000 and $38,000 respectively.

9.  Stock Option Plans

The Company established the Long-Term Incentive Plan (the
Plan) to promote the long-term growth and
profitability of the Company by enabling it to attract, retain
and reward key employees and directors of the Company and to
strengthen the mutuality of interest between such key employees
and directors and the Companys stockholders. Grants of
share options, restricted shares, share appreciation rights,
other share-based awards or any combination thereof, may be made
under the Plan. The options vest ratably over three years for
employees and over two years for directors. The exercise price
of share options granted under the Plan may not be less than the
fair market value of the shares on the date the options is
granted. The options expire ten years after the date of grant.
Eligible employees and directors of the Company may participate
in the Plan, which is administered by the Compensation Committee
of the Board of Directors. Prior to December 31, 2000,
930,000 stock options had been granted under the Plan. In
addition to the 930,000 stock

F-16



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

options that have been granted, as of December 31, 2000 the
Plan had reserved 140,000 shares of Common Stock for issuance.
The following summarizes transactions in the Plan for the years
ended December 31:

|                          |  |      |         |          |  |      |       |          |  |      |         |          |  |   |       |  |  |  |         |  |  |   |       | 
|------------------------- |  | ---- | ------- | -------- |  | ---- | ----- | -------- |  | ---- | ------- | -------- |  | - | ----- |  |  |  | ------- |  |  | - | ----- | 
|                          |  |      |         | Weighted |  |      |       | Weighted |  |      |         | Weighted
|                          |  |      |         | Average  |  |      |       | Average  |  |      |         | Average 
|                          |  |      |         | Exercise |  |      |       | Exercise |  |      |         | Exercise
|                          |  | 2000 |         | Price    |  | 1999 |       | Price    |  | 1998 |         | Price   
|                          |  |      |         |          |  |      |       |          |  |      |         |         
|Outstanding, January 1.   |  |      | 930,000 |          |  | $    | 17.19 |          |  |      | 780,000 |          |  | $ | 18.00 |  |  |  | 670,000 |  |  | $ | 18.00 | 
|                         
|                         
|                         
|                         
|New grants                |  |      |        |          |  |      |       |          |  |      | 150,000 |          |  |   | 12.97 |  |  |  | 110,000 |  |  | $ | 18.00 | 
|                          |  |      |         |          |  |      |       |          |  |      |         |          |  |   |       |  |  |  |         |  |  |   |       | 
|Outstanding, December 31. |  |      | 930,000 |          |  | $    | 17.19 |          |  |      | 930,000 |          |  | $ | 17.19 |  |  |  | 780,000 |  |  | $ | 18.00 | 
|                          |  |      |         |          |  |      |       |          |  |      |         |          |  |   |       |  |  |  |         |  |  |   |       | 
|Exercisable December 31.  |  |      | 801,667 |          |  | $    | 17.65 |          |  |      | 491,667 |          |  | $ | 18.00 |  |  |  | 226,667 |  |  | $ | 18.00 | 
|                          |  |      |         |          |  |      |       |          |  |      |         |          |  |   |       |  |  |  |         |  |  |   |       | 

The Company applies APB Opinion No. 25 in accounting for
its Plan and, accordingly, no compensation cost has been
recognized for its stock options in the consolidated financial
statements. Had the Company determined compensation cost based
on the fair value at the grant date for its stock options under
SFAS No. 123, the pro forma effects on the
Companys net income and earnings per share would have been
as follows for the years ended December 31, 2000, 1999 and
1998:

|                                |         |      |            |       |  |      |            |       |  |   |            |       | 
|------------------------------- | ------- | ---- | ---------- | ----- |  | ---- | ---------- | ----- |  | - | ---------- | ----- | 
|                                |         | 2000 |            | 1999  |  | 1998
|                                |         |      |            |       |  |     
|Net earnings as reported        |         | $    | 14,543,956 |       |  | $    | 13,732,667 |       |  | $ | 11,498,264 |      
|                                |         |      |            |       |  |      |            |       |  |   |            |      
|Pro forma net earnings          |         | $    | 13,728,089 |       |  | $    | 12,680,917 |       |  | $ | 10,644,881 |      
|                                |         |      |            |       |  |      |            |       |  |   |            |      
|Earnings per share as reported: |         |      |            |       |  |      |            |       |  |   |            |      
|                               
|                               
|                               
|                               
|                                | Basic   |      |            | $1.53 |  |      |            | $1.44 |  |   |            | $1.21 | 
|                                |         |      |            |       |  |      |            |       |  |   |            |      
|                                | Diluted |      |            | $1.53 |  |      |            | $1.44 |  |   |            | $1.21 | 
|                                |         |      |            |       |  |      |            |       |  |   |            |      
|Pro forma earnings per share:   |         |      |            |       |  |      |            |       |  |   |            |      
|                               
|                               
|                               
|                               
|                                | Basic   |      |            | $1.44 |  |      |            | $1.33 |  |   |            | $1.12 | 
|                                |         |      |            |       |  |      |            |       |  |   |            |      
|                                | Diluted |      |            | $1.44 |  |      |            | $1.33 |  |   |            | $1.12 | 
|                                |         |      |            |       |  |      |            |       |  |   |            |      

The fair value per share of each option granted was estimated at
the date of the grant using the Black-Scholes option-pricing
model using the following assumptions for grants in 1999 and
1998:

|                                                              |                                 |      |       |      |   |  |       |           |  
|------------------------------------------------------------- | ------------------------------- | ---- | ----- | ---- | - |  | ----- | --------- | -
|                                                              |                                 | 1999 |       | 1998
|                                                              |                                 |      |       |     
|Estimated fair value per share of Options granted during year |                                 |      | $2.60 |      |   |  | $3.15 |          
|                                                             
|                                                             
|                                                             
|                                                             
|Assumptions:                                                  |                                 |      |       |      |   |  |       |          
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Annualized dividend yield       |      |       | 11.6 | % |  |       | 8.33      | %
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Common stock price volatility   |      |       | 37   | % |  |       | 25%, 31   | %
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Risk-free rate of return        |      |       | 4.7  | % |  |       | 5.6%, 4.6 | %
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Expected option term (in years) |      |       | 5    |   |  |       | 5         |  

10.  Non-Recurring Items

On December 20, 1999 the Company executed an Omnibus
Agreement and Plan of Merger by and among the Company, Captec
Acquisition, Inc., a wholly-owned subsidiary of the Company,
Captec Financial and Captec Advisors. The merger agreement
provided for the merger of Captec Acquisition with and into
Captec Financial and of Captec Advisors with and into the
Company. On May 1, 2000, the merger agreement was
terminated by the mutual agreement of the parties thereto. In
September 2000, the Company announced

F-17



---



##### Table of Contents



CAPTEC NET LEASE REALTY, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

that the Board of Directors would pursue a sale of the Company.
As a result of these activities the Company incurred
$2.4 million in non-recurring costs.

Other non-recurring income for the year ended December 31,
2000 of approximately $706,000 represents the reversal of a
previously provided allowance for an estimated income tax
obligation which is no longer required due to the completion of
an IRS audit that resulted in no additional tax payment.

11.  Provision for Unbilled Rent

During 1998, Boston Chicken and the majority of its operating
subsidiaries filed for Chapter 11 bankruptcy protection. As
a consequence, 14 of the Companys 27 Boston Chicken leases
were rejected. During the year ended December 1998 the Company
recorded a one-time non-cash charge of approximately $865,000
related to unbilled rents on properties leased to Boston Chicken
and its subsidiaries and affiliates.

12.  Directors Deferred Compensation Plan

The Company sponsors a Directors Deferred Compensation
Plan (the Deferred Plan) for the purpose of
retaining persons of competence and stature to serve as
independent Directors by giving them an option to defer receipt
of the fees payable to them by the Company for their services as
directors. Expense related to the Deferred Plan was $132,000,
$125,000 and $103,000 for the years ended December 31,
2000, 1999 and 1998, respectively.

13.  Other Information

In January 2001, the Company declared dividends to its
shareholders of $3,613,081, or $0.38 per share of common stock,
which were paid on January 18, 2001.

14.  Unaudited Quarterly Results of Operations

The following table sets forth the quarterly results of
operations for the years ended December 31, 2000 and 1999
(not covered by Independent Accountants Report):

|                                                                                                                             |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |      | 
|---------------------------------------------------------------------------------------------------------------------------- | ------- | ------------------------------------- | ----- | ------ |  | ----- | ----- | ------ |  | - | ----- | ---- |  | - | ----- | ---- | 
|                                                                                                                             |         |                                      
|                                                                                                                             |         | Quarter                              
|                                                                                                                             |         |                                      
|                                                                                                                             |         | First                                 |       | Second |  | Third |       | Fourth
|                                                                                                                             |         |                                       |       |        |  |       |       |       
|                                                                                                                             |         |                                      
|                                                                                                                             |         | (in thousands, except per share data)
|2000                                                                                                                         |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |     
|                                                                                                                             |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |     
|Total revenue                                                                                                                |         | $                                     | 7,631 |        |  | $     | 7,043 |        |  | $ | 6,932 |      |  | $ | 6,383 |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Income before equity income of joint venture, gain/(loss) on
	sales of property and other non-recurring                      |         | $                                     | 2,734 |        |  | $     | 3,220 |        |  | $ | 3,301 |      |  | $ | 1,512 |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Net income                                                                                                                   |         | $                                     | 3,511 |        |  | $     | 5,057 |        |  | $ | 4,686 |      |  | $ | 1,291 |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Income per common share:                                                                                                     |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Basic   |                                       | $     | 0.37   |  |       | $     | 0.53   |  |   | $     | 0.49 |  |   | $     | 0.14 | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Diluted |                                       | $     | 0.37   |  |       | $     | 0.53   |  |   | $     | 0.49 |  |   | $     | 0.14 | 
|1999                                                                                                                         |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |     
|                                                                                                                             |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |     
|Total revenue                                                                                                                |         | $                                     | 7,036 |        |  | $     | 7,049 |        |  | $ | 7,372 |      |  | $ | 7,531 |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Income before equity income of joint venture, gain/(loss) on
	sales of property, other non-recurring and accounting 
	change |         | $                                     | 3,599 |        |  | $     | 3,669 |        |  | $ | 3,699 |      |  | $ | 3,695 |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Net income                                                                                                                   |         |                                       | 3,212 |        |  |       | 3,659 |        |  |   | 3,922 |      |  |   | 2,940 |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Income per common share:                                                                                                     |         |                                       |       |        |  |       |       |        |  |   |       |      |  |   |       |     
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Basic   |                                       | $     | 0.34   |  |       | $     | 0.38   |  |   | $     | 0.41 |  |   | $     | 0.31 | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Diluted |                                       | $     | 0.34   |  |       | $     | 0.38   |  |   | $     | 0.41 |  |   | $     | 0.31 | 

F-18



---



##### Table of Contents








REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of



In connection with our audit of the consolidated financial
statements of Captec Net Lease Realty, Inc. and subsidiaries 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 respects, the
information required to be included therein.

/s/  PRICEWATERHOUSECOOPERS LLP

February 5, 2001



F-19



---



##### Table of Contents



SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION

AS OF DECEMBER 31, 2000


|                                        |  |          |            |          |  |              |    |              |  |             |    |   |  |  |           |  |  |  |          |     
|--------------------------------------- |  | -------- | ---------- | -------- |  | ------------ | -- | ------------ |  | ----------- | -- | - |  |  | --------- |  |  |  | -------- | ----
|                                        |  |          |            |          |  |              |    |              |  | Cost       
|                                        |  |          |            |          |  |              |    |              |  | Capitalized
|                                        |  |          |            |          |  |              |    |              |  | Subsequent 
|                                        |  | Type Of  |            | State    |  |              |    | Initial Cost |  | To         
|Concept                                 |  | Property |            | Location |  | Encumbrances |    | To Company   |  | Acquisition
|                                        |  |          |            |          |  |              |    |              |  |            
|Properties Subject to Operating Leases: |  |          |            |          |  |              |    |              |  |             |    |   |  |  |           |  |  |  |          |     
|Commenced Leases                        |  |          |            |          |  |              |    |              |  |             |    |   |  |  |           |  |  |  |          |     
|                                       
|                                       
|                                       
|                                       
|Golden Corral                           |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 2,024,425 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 1,225,000 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | NC |              |  |             | (a | ) |  |  | 1,104,000 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Roadhouse Grill                         |  |          | Restaurant |          |  |              | NY |              |  |             | (a | ) |  |  | 1,048,395 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 662,144   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Popeyes                                |  |          | Restaurant |          |  |              | GA |              |  |             | (a | ) |  |  | 877,941   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 1,986,432 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 898,908   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 894,042   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |          | Restaurant |          |  |              | NC |              |  |             | (a | ) |  |  | 1,048,663 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |          | Restaurant |          |  |              | NC |              |  |             | (a | ) |  |  | 816,140   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |          | Restaurant |          |  |              | GA |              |  |             | (a | ) |  |  | 1,186,604 |  |  |  | (496,710 | )(b)
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |          | Restaurant |          |  |              | MO |              |  |             | (a | ) |  |  | 2,087,796 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Red Robin                               |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 3,153,767 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |          | Restaurant |          |  |              | MO |              |  |             | (a | ) |  |  | 1,772,000 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Stanfords                              |  |          | Restaurant |          |  |              | CO |              |  |             | (a | ) |  |  | 2,427,861 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Red Robin                               |  |          | Restaurant |          |  |              | CO |              |  |             | (a | ) |  |  | 3,283,130 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Carrows                                 |  |          | Restaurant |          |  |              | CA |              |  |             | (a | ) |  |  | 1,324,288 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 938,037   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market Vacant                    |  |          | Restaurant |          |  |              | PA |              |  |             | (a | ) |  |  | 708,627   |  |  |  | 4,813    |     
|                                       
|                                       
|                                       
|                                       
|Blockbuster Video                       |  |          | Retail     |          |  |              | TX |              |  |             | (a | ) |  |  | 843,130   |  |  |  | 1,505    |     
|                                       
|                                       
|                                       
|                                       
|Blockbuster Video                       |  |          | Retail     |          |  |              | TX |              |  |             | (a | ) |  |  | 790,158   |  |  |  | 1,506    |     
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 1,213,931 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 767,065   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | MI |              |  |             | (a | ) |  |  | 1,070,466 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | IL |              |  |             | (a | ) |  |  | 1,880,489 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | IL |              |  |             | (a | ) |  |  | 887,273   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market Vacant                    |  |          | Restaurant |          |  |              | IN |              |  |             | (a | ) |  |  | 1,644,324 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |          | Restaurant |          |  |              | LA |              |  |             | (a | ) |  |  | 1,182,368 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Mountain Jacks                         |  |          | Restaurant |          |  |              | MI |              |  |             | (a | ) |  |  | 1,125,645 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Babies R Us                             |  |          | Retail     |          |  |              | MO |              |  |             | (a | ) |  |  | 3,156,219 |  |  |  | 1,312    |     
|                                       
|                                       
|                                       
|                                       
|Mountain Jacks                         |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 1,655,360 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | IL |              |  |             | (a | ) |  |  | 1,909,327 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |          | Restaurant |          |  |              | PA |              |  |             | (a | ) |  |  | 1,122,178 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 2,836,183 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 2,030,575 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 2,350,611 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 2,472,004 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Golden Corral                           |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 2,273,361 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Burger King                             |  |          | Restaurant |          |  |              | WV |              |  |             | (a | ) |  |  | 993,425   |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Blockbuster Music                       |  |          | Retail     |          |  |              | AL |              |  |             | (a | ) |  |  | 1,526,653 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Video Update                            |  |          | Retail     |          |  |              | AZ |              |  |             | (a | ) |  |  | 1,098,541 |  |  |  |         |     
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |          | Retail     |          |  |              | IL |              |  |             | (a | ) |  |  | 1,330,484 |  |  |  |         |     

[Additional columns below]

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

|                                        |  |            |           |              |  |              |         |              |  |              |      |  |  |  |              |  |  |  |          | 
|--------------------------------------- |  | ---------- | --------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ---- |  |  |  | ------------ |  |  |  | -------- | 
|                                        |  | Gross      |           |              |  |              |         |              |  |             
|                                        |  | Amount At  |           |              |  |              |         |              |  |             
|                                        |  | Which      |           |              |  |              |         |              |  |             
|                                        |  | Carried At |           |              |  | Date Of      |         |              |  |             
|                                        |  | Close Of   |           | Accumulated  |  | Acquisition/ |         | Acquisition/ |  |             
|Concept                                 |  | Period     |           | Depreciation |  | Construction |         | Construction |  | Depreciation
|                                        |  |            |           |              |  |              |         |              |  |             
|Properties Subject to Operating Leases: |  |            |           |              |  |              |         |              |  |              |      |  |  |  |              |  |  |  |          | 
|Commenced Leases                        |  |            |           |              |  |              |         |              |  |              |      |  |  |  |              |  |  |  |          | 
|                                       
|                                       
|                                       
|                                       
|Golden Corral                           |  |            | 2,024,425 |              |  |              | 135,951 |              |  |              | 1994 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |            | 1,225,000 |              |  |              | 67,069  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 1,104,000 |              |  |              | 46,368  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Roadhouse Grill                         |  |            | 1,048,395 |              |  |              | 56,314  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |            | 662,144   |              |  |              | 76,332  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Popeyes                                |  |            | 877,941   |              |  |              | 54,615  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |            | 1,986,432 |              |  |              | 144,687 |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |            | 898,908   |              |  |              | 51,636  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |            | 894,042   |              |  |              | 52,402  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |            | 1,048,663 |              |  |              | 75,664  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |            | 816,140   |              |  |              | 62,969  |              |  |              | 1980 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |            | 689,894   |              |  |              | 78,362  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |            | 2,087,796 |              |  |              | 155,668 |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Red Robin                               |  |            | 3,153,767 |              |  |              | 224,321 |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Applebees                              |  |            | 1,772,000 |              |  |              | 89,844  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Stanfords                              |  |            | 2,427,861 |              |  |              | 195,011 |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Red Robin                               |  |            | 3,283,130 |              |  |              | 234,051 |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Carrows                                 |  |            | 1,324,288 |              |  |              | 76,232  |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 938,037   |              |  |              | 56,735  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market Vacant                    |  |            | 713,440   |              |  |              | 28,778  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Blockbuster Video                       |  |            | 844,635   |              |  |              | 56,046  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Blockbuster Video                       |  |            | 791,664   |              |  |              | 68,523  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |            | 1,213,931 |              |  |              | 84,214  |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 767,065   |              |  |              | 48,114  |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 1,070,466 |              |  |              | 63,708  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 1,880,489 |              |  |              | 116,171 |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 887,273   |              |  |              | 59,830  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market Vacant                    |  |            | 1,644,324 |              |  |              | 126,689 |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Dennys                                 |  |            | 1,182,368 |              |  |              | 82,046  |              |  |              | 1997 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Mountain Jacks                         |  |            | 1,125,645 |              |  |              | 77,084  |              |  |              | 1976 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Babies R Us                             |  |            | 3,157,534 |              |  |              | 45,484  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Mountain Jacks                         |  |            | 1,655,360 |              |  |              | 105,397 |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 1,909,327 |              |  |              | 104,330 |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Boston Market                           |  |            | 1,122,178 |              |  |              | 38,393  |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |            | 2,836,183 |              |  |              | 186,614 |              |  |              | 1984 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |            | 2,030,575 |              |  |              | 163,331 |              |  |              | 1983 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |            | 2,350,611 |              |  |              | 169,029 |              |  |              | 1983 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Black Angus                             |  |            | 2,472,004 |              |  |              | 148,295 |              |  |              | 1984 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Golden Corral                           |  |            | 2,273,361 |              |  |              | 116,691 |              |  |              | 1997 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Burger King                             |  |            | 993,425   |              |  |              | 54,786  |              |  |              | 1997 |  |  |  | Construction |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Blockbuster Music                       |  |            | 1,526,653 |              |  |              | 68,486  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Video Update                            |  |            | 1,098,541 |              |  |              | 70,247  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                       
|                                       
|                                       
|                                       
|Vacant                                  |  |            | 1,330,484 |              |  |              | 93,544  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 

F-20



---



##### Table of Contents



|                  |  |          |            |          |  |              |    |              |  |             |    |   |  |  |           |  |  |  |        | 
|----------------- |  | -------- | ---------- | -------- |  | ------------ | -- | ------------ |  | ----------- | -- | - |  |  | --------- |  |  |  | ------ | 
|                  |  |          |            |          |  |              |    |              |  | Cost       
|                  |  |          |            |          |  |              |    |              |  | Capitalized
|                  |  |          |            |          |  |              |    |              |  | Subsequent 
|                  |  | Type Of  |            | State    |  |              |    | Initial Cost |  | To         
|Concept           |  | Property |            | Location |  | Encumbrances |    | To Company   |  | Acquisition
|                  |  |          |            |          |  |              |    |              |  |            
|Golden Corral     |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 2,111,500 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Dennys           |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 1,103,891 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Golden Corral     |  |          | Restaurant |          |  |              | NE |              |  |             | (a | ) |  |  | 1,032,869 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Nissan            |  |          | Retail     |          |  |              | GA |              |  |             | (a | ) |  |  | 3,250,023 |  |  |  |       | 
|                 
|                 
|                 
|                 
|BMW               |  |          | Retail     |          |  |              | GA |              |  |             | (a | ) |  |  | 7,115,013 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Vacant            |  |          | Restaurant |          |  |              | MO |              |  |             | (a | ) |  |  | 1,169,979 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Damons           |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 1,429,445 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | GA |              |  |             | (a | ) |  |  | 752,097   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Schlotzskis Deli |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 838,167   |  |  |  | 15,734 | 
|                 
|                 
|                 
|                 
|Schlotzskis Deli |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 825,409   |  |  |  | 33,484 | 
|                 
|                 
|                 
|                 
|Schlotzskis Deli |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 898,896   |  |  |  | 33,364 | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |          | Retail     |          |  |              | SC |              |  |             | (a | ) |  |  | 1,377,353 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Whataburger       |  |          | Restaurant |          |  |              | NM |              |  |             | (a | ) |  |  | 894,568   |  |  |  | 53,500 | 
|                 
|                 
|                 
|                 
|Hooters           |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,048,870 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Video Update      |  |          | Retail     |          |  |              | NM |              |  |             | (a | ) |  |  | 1,344,400 |  |  |  | 3,750  | 
|                 
|                 
|                 
|                 
|Video Update      |  |          | Retail     |          |  |              | MN |              |  |             | (a | ) |  |  | 1,134,740 |  |  |  | 1,469  | 
|                 
|                 
|                 
|                 
|Burger King       |  |          | Restaurant |          |  |              | VA |              |  |             | (a | ) |  |  | 1,102,500 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |          | Retail     |          |  |              | GA |              |  |             | (a | ) |  |  | 1,033,801 |  |  |  | 1,153  | 
|                 
|                 
|                 
|                 
|Texas Roadhouse   |  |          | Restaurant |          |  |              | CO |              |  |             | (a | ) |  |  | 1,365,889 |  |  |  | 1,181  | 
|                 
|                 
|                 
|                 
|Texas Roadhouse   |  |          | Restaurant |          |  |              | CO |              |  |             | (a | ) |  |  | 1,663,919 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Carinos          |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 2,070,003 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Carinos          |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 1,917,860 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Boston Market     |  |          | Restaurant |          |  |              | MI |              |  |             | (a | ) |  |  | 1,171,769 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | MI |              |  |             | (a | ) |  |  | 787,500   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Kona Steakhouse   |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 1,728,621 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 907,322   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 1,782,822 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 1,236,922 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |          | Restaurant |          |  |              | OR |              |  |             | (a | ) |  |  | 866,356   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |          | Retail     |          |  |              | AL |              |  |             | (a | ) |  |  | 874,125   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |          | Retail     |          |  |              | AL |              |  |             | (a | ) |  |  | 1,115,282 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Sportmart         |  |          | Retail     |          |  |              | IL |              |  |             | (a | ) |  |  | 6,096,544 |  |  |  | 6,253  | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 685,139   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Claim Jumper      |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 4,017,722 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Circle K          |  |          | Retail     |          |  |              | CA |              |  |             | (a | ) |  |  | 1,417,579 |  |  |  | 2,697  | 
|                 
|                 
|                 
|                 
|Stop & Go         |  |          | Retail     |          |  |              | TX |              |  |             | (a | ) |  |  | 1,003,882 |  |  |  | 2,590  | 
|                 
|                 
|                 
|                 
|Stop & Go         |  |          | Retail     |          |  |              | TX |              |  |             | (a | ) |  |  | 991,496   |  |  |  | 2,575  | 
|                 
|                 
|                 
|                 
|Athletes Foot    |  |          | Retail     |          |  |              | GA |              |  |             | (a | ) |  |  | 1,691,680 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Applebees        |  |          | Restaurant |          |  |              | KY |              |  |             | (a | ) |  |  | 1,730,400 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |          | Retail     |          |  |              | KY |              |  |             | (a | ) |  |  | 762,936   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Red Robin         |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 2,085,750 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | NM |              |  |             | (a | ) |  |  | 772,500   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | NM |              |  |             | (a | ) |  |  | 927,000   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | NM |              |  |             | (a | ) |  |  | 745,720   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Arbys            |  |          | Restaurant |          |  |              | CO |              |  |             | (a | ) |  |  | 721,000   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Boston Market     |  |          | Restaurant |          |  |              | OH |              |  |             | (a | ) |  |  | 909,531   |  |  |  |       | 
|                 
|                 
|                 
|                 
|Kona Steakhouse   |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 2,204,200 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Hollywood Video   |  |          | Retail     |          |  |              | OH |              |  |             | (a | ) |  |  | 781,834   |  |  |  | 1,062  | 
|                 
|                 
|                 
|                 
|Perkins           |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 956,704   |  |  |  | 60,000 | 
|                 
|                 
|                 
|                 
|Bennigans        |  |          | Restaurant |          |  |              | CO |              |  |             | (a | ) |  |  | 1,844,419 |  |  |  |       | 
|                 
|                 
|                 
|                 
|Bennigans        |  |          | Restaurant |          |  |              | CT |              |  |             | (a | ) |  |  | 1,611,591 |  |  |  |       | 

[Additional columns below]

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

|                  |  |            |           |              |  |              |         |              |  |              |      |  |  |  |              |  |  |  |          | 
|----------------- |  | ---------- | --------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ---- |  |  |  | ------------ |  |  |  | -------- | 
|                  |  | Gross      |           |              |  |              |         |              |  |             
|                  |  | Amount At  |           |              |  |              |         |              |  |             
|                  |  | Which      |           |              |  |              |         |              |  |             
|                  |  | Carried At |           |              |  | Date Of      |         |              |  |             
|                  |  | Close Of   |           | Accumulated  |  | Acquisition/ |         | Acquisition/ |  |             
|Concept           |  | Period     |           | Depreciation |  | Construction |         | Construction |  | Depreciation
|                  |  |            |           |              |  |              |         |              |  |             
|Golden Corral     |  |            | 2,111,500 |              |  |              | 78,108  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Dennys           |  |            | 1,103,891 |              |  |              | 28,142  |              |  |              | 1997 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Golden Corral     |  |            | 1,032,869 |              |  |              | 45,940  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Nissan            |  |            | 3,250,023 |              |  |              | 196,023 |              |  |              | 1982 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|BMW               |  |            | 7,115,013 |              |  |              | 384,645 |              |  |              | 1984 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Vacant            |  |            | 1,169,979 |              |  |              | 59,371  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Damons           |  |            | 1,429,445 |              |  |              | 64,236  |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 752,097   |              |  |              | 36,723  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Schlotzskis Deli |  |            | 853,901   |              |  |              | 37,118  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Schlotzskis Deli |  |            | 858,893   |              |  |              | 39,181  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Schlotzskis Deli |  |            | 932,260   |              |  |              | 39,225  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |            | 1,377,353 |              |  |              | 61,245  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Whataburger       |  |            | 948,068   |              |  |              | 38,346  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Hooters           |  |            | 1,048,870 |              |  |              | 86,813  |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Video Update      |  |            | 1,348,150 |              |  |              | 67,214  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Video Update      |  |            | 1,136,209 |              |  |              | 62,605  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Burger King       |  |            | 1,102,500 |              |  |              | 49,044  |              |  |              | 1997 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |            | 1,034,954 |              |  |              | 55,244  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Texas Roadhouse   |  |            | 1,367,070 |              |  |              | 72,892  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Texas Roadhouse   |  |            | 1,663,919 |              |  |              | 63,722  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Carinos          |  |            | 2,070,003 |              |  |              | 90,109  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Carinos          |  |            | 1,917,860 |              |  |              | 105,353 |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Boston Market     |  |            | 1,171,769 |              |  |              | 55,865  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 787,500   |              |  |              | 45,719  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Kona Steakhouse   |  |            | 1,728,621 |              |  |              | 52,662  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |            | 907,322   |              |  |              | 36,379  |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |            | 1,782,822 |              |  |              | 48,739  |              |  |              | 1992 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |            | 1,236,922 |              |  |              | 59,631  |              |  |              | 1946 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Keg Steakhouse    |  |            | 866,356   |              |  |              | 8,200   |              |  |              | 1983 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |            | 874,125   |              |  |              | 39,463  |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |            | 1,115,282 |              |  |              | 39,929  |              |  |              | 1998 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Sportmart         |  |            | 6,102,797 |              |  |              | 290,468 |              |  |              | 1920 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 685,139   |              |  |              | 32,974  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Claim Jumper      |  |            | 4,017,722 |              |  |              | 60,849  |              |  |              | 2000 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Circle K          |  |            | 1,420,276 |              |  |              | 77,966  |              |  |              | 1989 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Stop & Go         |  |            | 1,006,472 |              |  |              | 51,291  |              |  |              | 1989 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Stop & Go         |  |            | 994,071   |              |  |              | 51,862  |              |  |              | 1989 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Athletes Foot    |  |            | 1,691,680 |              |  |              | 89,337  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Applebees        |  |            | 1,730,400 |              |  |              | 82,658  |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Blockbuster Video |  |            | 762,936   |              |  |              | 38,526  |              |  |              | 1998 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Red Robin         |  |            | 2,085,750 |              |  |              | 50,749  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 772,500   |              |  |              | 23,510  |              |  |              | 1998 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 927,000   |              |  |              | 34,910  |              |  |              | 1998 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 745,720   |              |  |              | 35,335  |              |  |              | 1998 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Arbys            |  |            | 721,000   |              |  |              | 27,789  |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Boston Market     |  |            | 909,531   |              |  |              | 42,639  |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Kona Steakhouse   |  |            | 2,204,200 |              |  |              | 57,165  |              |  |              | 1999 |  |  |  | Construction |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Hollywood Video   |  |            | 782,896   |              |  |              | 29,297  |              |  |              | 1998 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Perkins           |  |            | 1,016,704 |              |  |              | 34,099  |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Bennigans        |  |            | 1,844,419 |              |  |              | 78,776  |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                 
|                 
|                 
|                 
|Bennigans        |  |            | 1,611,591 |              |  |              | 43,623  |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 

F-21



---



##### Table of Contents



|                                               |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|---------------------------------------------- |  | -------- | ---------- | -------- |  | ------------ | -- | ------------ |  | ----------- | -- | - |  |  | ----------- |  |  |  | -------- | -
|                                               |  |          |            |          |  |              |    |              |  | Cost       
|                                               |  |          |            |          |  |              |    |              |  | Capitalized
|                                               |  |          |            |          |  |              |    |              |  | Subsequent 
|                                               |  | Type Of  |            | State    |  |              |    | Initial Cost |  | To         
|Concept                                        |  | Property |            | Location |  | Encumbrances |    | To Company   |  | Acquisition
|                                               |  |          |            |          |  |              |    |              |  |            
|Bennigans                                     |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,596,500   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,461,163   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,892,325   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,381,597   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | IL |              |  |             | (a | ) |  |  | 2,678,000   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | IN |              |  |             | (a | ) |  |  | 1,461,163   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | IN |              |  |             | (a | ) |  |  | 1,245,581   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | MI |              |  |             | (a | ) |  |  | 1,588,434   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | NC |              |  |             | (a | ) |  |  | 1,662,617   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | OK |              |  |             | (a | ) |  |  | 2,034,250   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | OK |              |  |             | (a | ) |  |  | 1,588,434   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 1,461,163   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 1,700,698   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | VA |              |  |             | (a | ) |  |  | 1,700,698   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 1,293,488   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,413,256   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Hollywood Video                                |  |          | Retail     |          |  |              | CO |              |  |             | (a | ) |  |  | 953,661     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Jared Jewelers                                 |  |          | Retail     |          |  |              | VA |              |  |             | (a | ) |  |  | 2,013,333   |  |  |  | 10,027   |  
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 1,725,250   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|KFC                                            |  |          | Restaurant |          |  |              | PA |              |  |             | (a | ) |  |  | 987,273     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 566,500     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 916,700     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |          | Restaurant |          |  |              | MN |              |  |             | (a | ) |  |  | 782,800     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Claim Jumper                                   |  |          | Restaurant |          |  |              | CA |              |  |             | (a | ) |  |  | 3,244,500   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|KFC                                            |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 1,162,547   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Arbys                                         |  |          | Restaurant |          |  |              | PA |              |  |             | (a | ) |  |  | 919,051     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Skippers Fish & Chips                         |  |          | Restaurant |          |  |              | WA |              |  |             | (a | ) |  |  | 976,089     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Rite Aid                                       |  |          | Retail     |          |  |              | AL |              |  |             | (a | ) |  |  | 3,320,830   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Wendys                                        |  |          | Restaurant |          |  |              | PA |              |  |             | (a | ) |  |  | 736,942     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Pizza Hut                                      |  |          | Restaurant |          |  |              | AL |              |  |             | (a | ) |  |  | 553,672     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Pizza Hut                                      |  |          | Restaurant |          |  |              | CT |              |  |             | (a | ) |  |  | 552,272     |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Champps                                        |  |          | Restaurant |          |  |              | GA |              |  |             | (a | ) |  |  | 3,804,820   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Champps                                        |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 3,166,220   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Fazolis Restaurant                            |  |          | Restaurant |          |  |              | MI |              |  |             | (a | ) |  |  | 1,164,338   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|TGI Fridays                                   |  |          | Restaurant |          |  |              | TX |              |  |             | (a | ) |  |  | 2,174,845   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Tony Romas                                    |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 1,915,800   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Skippers Fish & Chips                         |  |          | Restaurant |          |  |              | OR |              |  |             | (a | ) |  |  | 1,259,022   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|United Trust Bank                              |  |          | Retail     |          |  |              | IL |              |  |             | (a | ) |  |  | 1,293,062   |  |  |  |         |  
|                                               |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|Subtotal  Commenced Leases                    |  |          |            |          |  |              |    |              |  |             |   |   |  |  | 203,886,402 |  |  |  | (258,732 | )
|                                               |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|Construction Draws on Leases                   |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|                                              
|                                              
|                                              
|                                              
|Del Taco                                       |  |          | Restaurant |          |  |              | AZ |              |  |             | (a | ) |  |  | 1,003,288   |  |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |          | Restaurant |          |  |              | FL |              |  |             | (a | ) |  |  | 694,743     |  |  |  |         |  
|                                               |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|Subtotal  Construction Draws                  |  |          |            |          |  |              |    |              |  |             |   |   |  |  | 1,698,031   |  |  |  |         |  
|                                               |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|Total  Properties Subject to Operating Leases |  |          |            |          |  |              |    |              |  |             |   |   |  |  | 205,584,433 |  |  |  | (258,732 | )
|                                               |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|Properties Subject to Financing Leases:        |  |          |            |          |  |              |    |              |  |             |    |   |  |  |             |  |  |  |          |  
|                                              
|                                              
|                                              
|                                              
|Jared Jewelers                                 |  |          | Retail     |          |  |              | FL |              |  |             | (c | ) |  |  | 1,179,620   |  |  |  | 10,242   |  
|                                              
|                                              
|                                              
|                                              
|Jared Jewelers                                 |  |          | Retail     |          |  |              | TX |              |  |             | (c | ) |  |  | 1,087,808   |  |  |  | 63,603   |  
|                                              
|                                              
|                                              
|                                              
|Jared Jewelers                                 |  |          | Retail     |          |  |              | AZ |              |  |             | (a | ) |  |  | 861,396     |  |  |  | 32,708   |  

[Additional columns below]

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

|                                               |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|---------------------------------------------- |  | ---------- | ----------- | ------------ |  | ------------ | --------- | ------------ |  | ------------ | ---- |  |  |  | ------------ |  |  |  | -------- | 
|                                               |  | Gross      |             |              |  |              |           |              |  |             
|                                               |  | Amount At  |             |              |  |              |           |              |  |             
|                                               |  | Which      |             |              |  |              |           |              |  |             
|                                               |  | Carried At |             |              |  | Date Of      |           |              |  |             
|                                               |  | Close Of   |             | Accumulated  |  | Acquisition/ |           | Acquisition/ |  |             
|Concept                                        |  | Period     |             | Depreciation |  | Construction |           | Construction |  | Depreciation
|                                               |  |            |             |              |  |              |           |              |  |             
|Bennigans                                     |  |            | 1,596,500   |              |  |              | 57,776    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,461,163   |              |  |              | 53,470    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 1,892,325   |              |  |              | 64,131    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,381,597   |              |  |              | 38,777    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 2,678,000   |              |  |              | 81,949    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,461,163   |              |  |              | 63,448    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,245,581   |              |  |              | 63,236    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 1,588,434   |              |  |              | 63,871    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 1,662,617   |              |  |              | 54,795    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 2,034,250   |              |  |              | 80,662    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,588,434   |              |  |              | 66,253    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,461,163   |              |  |              | 63,191    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 1,700,698   |              |  |              | 69,214    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,700,698   |              |  |              | 62,197    |              |  |              | 1993 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Steak & Ale                                    |  |            | 1,293,488   |              |  |              | 58,312    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Bennigans                                     |  |            | 1,413,256   |              |  |              | 53,051    |              |  |              | 1988 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Hollywood Video                                |  |            | 953,661     |              |  |              | 31,901    |              |  |              | 1999 |  |  |  | Construction |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Jared Jewelers                                 |  |            | 2,023,360   |              |  |              | 66,481    |              |  |              | 1998 |  |  |  | Construction |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |            | 1,725,250   |              |  |              | 43,088    |              |  |              | 1999 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|KFC                                            |  |            | 987,273     |              |  |              | 53,909    |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |            | 566,500     |              |  |              | 8,802     |              |  |              | 1999 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |            | 916,700     |              |  |              | 18,926    |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |            | 782,800     |              |  |              | 13,619    |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Claim Jumper                                   |  |            | 3,244,500   |              |  |              | 4,198     |              |  |              | 2000 |  |  |  | Construction |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|KFC                                            |  |            | 1,162,547   |              |  |              | 56,109    |              |  |              | 1996 |  |  |  | Construction |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Arbys                                         |  |            | 919,051     |              |  |              | 51,868    |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Skippers Fish & Chips                         |  |            | 976,089     |              |  |              | 55,326    |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Rite Aid                                       |  |            | 3,320,830   |              |  |              | 37,516    |              |  |              | 1999 |  |  |  | Construction |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Wendys                                        |  |            | 736,942     |              |  |              | 30,590    |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Pizza Hut                                      |  |            | 553,672     |              |  |              | 1,461     |              |  |              | 1999 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Pizza Hut                                      |  |            | 552,272     |              |  |              | 5,603     |              |  |              | 1999 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Champps                                        |  |            | 3,804,820   |              |  |              | 44,466    |              |  |              | 1999 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Champps                                        |  |            | 3,166,220   |              |  |              | 4,355     |              |  |              | 2000 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Fazolis Restaurant                            |  |            | 1,164,338   |              |  |              | 51,147    |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|TGI Fridays                                   |  |            | 2,174,845   |              |  |              | 62,456    |              |  |              | 1995 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Tony Romas                                    |  |            | 1,915,800   |              |  |              | 9,828     |              |  |              | 1999 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|Skippers Fish & Chips                         |  |            | 1,259,022   |              |  |              | 88,187    |              |  |              | 1996 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                              
|                                              
|                                              
|                                              
|United Trust Bank                              |  |            | 1,293,062   |              |  |              | 57,530    |              |  |              | 1997 |  |  |  | Acquisition  |  |  |  | 40 Years | 
|                                               |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|Subtotal  Commenced Leases                    |  |            | 203,627,670 |              |  |              | 9,483,470 |              |  |              |      |  |  |  |              |  |  |  |          | 
|                                               |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|Construction Draws on Leases                   |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|                                              
|                                              
|                                              
|                                              
|Del Taco                                       |  |            | 1,003,288   |              |  |              |          |              |  |              | 2000 |  |  |  | Construction |  |  |  |         | 
|                                              
|                                              
|                                              
|                                              
|Taco Bell                                      |  |            | 694,743     |              |  |              |          |              |  |              | 2000 |  |  |  | Construction |  |  |  |         | 
|                                               |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|Subtotal  Construction Draws                  |  |            | 1,698,031   |              |  |              |          |              |  |              |      |  |  |  |              |  |  |  |          | 
|                                               |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|Total  Properties Subject to Operating Leases |  |            | 205,325,701 |              |  |              | 9,483,470 |              |  |              |      |  |  |  |              |  |  |  |          | 
|                                               |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|Properties Subject to Financing Leases:        |  |            |             |              |  |              |           |              |  |              |      |  |  |  |              |  |  |  |          | 
|                                              
|                                              
|                                              
|                                              
|Jared Jewelers                                 |  |            | 1,189,862   |              |  |              | (d        | )            |