CNL Restaurant Properties Inc · POS AM · On 4/27/98

Filed On 4/27/98   ·   SEC File 333-37657   ·   Accession Number 922981-98-20

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: POS AM      Cnl American Properties Fund, Inc. Pe #1             232  1,466K 
 2: EX-10.10    Material Contract                                     24    122K 
 3: EX-23.1     Consent of Experts or Counsel                          2      5K 

POS AM   ·   Cnl American Properties Fund, Inc. Pe #1
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As filed with the Securities and Exchange Commission on April 24, 1998          
                                                    Registration No. 333-37657

--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------------------------------------------------------------

POST-EFFECTIVE AMENDMENT NO. ONE
TO
 FORM S-11
REGISTRATION STATEMENT
 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED

--------------------------------------------------------------

CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)

 400 East South Street
Orlando, Florida 32801
 Telephone: (407) 422-1574
(Address of principal executive offices)

JAMES M. SENEFF, JR.
 Chief Executive Officer
 400 East South Street
Orlando, Florida 32801
 Telephone: (407) 422-1574
 (Name and Address of Agent for Service)

COPIES TO:

THOMAS H. McCORMICK, ESQUIRE
EDMUND D. GRAFF, ESQUIRE
 Shaw Pittman Potts & Trowbridge
 2300 N Street, N.W.
Washington, D.C. 20037

         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the  Securities  Act,  check the following box and
list the  Securities  Act  registration  statement  number of earlier  effective
registration statement for the same offering. [ ]                               

         If this  Form is a  post-effective  amendment  filed  pursuant  to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act  registration   statement  number  of  the  earlier  effective  registration
statement for the same offering. [ ]                                            

         If delivery of the  prospectus  is expected to be made pursuant to Rule
434, please check the following box. [ ]                                        

The registrant hereby amends this  registration  statement on such date or dates
as may be necessary to delay its effective date until the registrant  shall file
a further amendment which specifically  states that this registration  statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933  or  until  the  registration  statement  shall  become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.                                                                  

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                                                              PROSPECTUS
CNL AMERICAN PROPERTIES FUND, INC.
Shares of Common Stock

 Minimum Purchase -- 250 Shares ($2,500)
100 Shares ($1,000) for IRAs and Keogh and Pension Plans
(Minimum purchase may be higher in certain states)

         CNL  AMERICAN  PROPERTIES  FUND,  INC.  (the  "Company")  is a Maryland
corporation  which  operates  for federal  income tax  purposes as a real estate
investment  trust (a "REIT").  The Company may sell up to  34,500,000  Shares in
this offering for a maximum of  $345,000,000.  The Company invests in restaurant
properties (the "Properties") located across the United States to be leased on a
long-term,  "triple-net"  basis to operators  of selected  national and regional
fast-food,  family-style,  and casual dining  restaurant chains (the "Restaurant
Chains").  As of March 2, 1998, the Company owned a portfolio of 250 Properties,
all of which were acquired with the proceeds of its initial public offering (the
"Initial  Offering") which commenced in April 1995 and was completed on February
6, 1997, and its second public offering (the "1997 Offering") which commenced in
February  1997 and was  completed  on March 2, 1998  (collectively,  the  "Prior
Offerings").  The Company is expected to have a total portfolio of approximately
670 to 730  Properties,  if the  maximum  number of shares of common  stock (the
"Shares")  of the  Company  is  sold  in  this  offering.  Under  the  Company's
triple-net  leases, the tenant is responsible for property costs associated with
ongoing operations,  including repairs, maintenance,  property taxes, utilities,
and insurance.  In addition,  the leases are structured to require the tenant to
pay base annual rent with (i)  automatic  increases in the base rent and/or (ii)
percentage rent based on certain  restaurant  sales above a specified level. The
Company also provides  financing (the  "Mortgage  Loans") on a limited basis for
the purchase of buildings,  generally by tenants that lease the underlying  land
from the Company. To a lesser extent, the Company offers furniture,  fixture and
equipment  financing  ("Secured  Equipment  Leases") to operators of  Restaurant
Chains. The aggregate  outstanding  principal amount of Secured Equipment Leases
will not exceed 10% of gross proceeds of this offering,  the Prior Offerings and
any  subsequent  offerings.  The  Company is not a mutual  fund or other type of
investment company within the meaning of the Investment Company Act of 1940, and
is not subject to regulation thereunder.  The Company is not affiliated with the
United States Government.                                                       

         There  are  significant  risks  associated  with an  investment  in the
Company (see "Risk Factors" at page 9), including the following:                

o    The Company  will rely on CNL Fund  Advisors,  Inc.  (the  "Advisor")  with
     respect to all  investment  decisions  subject to  approval by the Board of
     Directors  in certain  circumstances.  The  experience  of the  Advisor and
     Directors of the Company with mortgage  financing and equipment  leasing is
limited, which could adversely affect the Company's business.         
o    The Advisor and its Affiliates  are or will be engaged in other  activities
     for other entities that will result in potential conflicts of interest with
     the services that the Advisor and  Affiliates  will provide to the Company,
     and could take actions that are more  favorable to such other entities than
to the Company.                                                       
o    The Company owned,  as of March 2, 1998, 250 Properties of the  anticipated
     total of 670 to 730 Properties,  and investors  therefore will not have the
     opportunity  to  evaluate  all of the  Properties  that  the  Company  will
acquire.                                                              
o    There is currently no public trading market for the Shares, and there is no
assurance that one will develop.                                      
o    If  the  Shares  are  not  listed  on a  national  securities  exchange  or
     over-the-counter market ("Listing") by December 31, 2005, as to which there
     can be no assurance,  the Company will commence  orderly sale of its assets
   and the distribution of the proceeds.  Listing does not assure liquidity.
o    Market and economic conditions that the Company cannot control will have an
     effect  (either  positive  or  negative)  on the  value  of  the  Company's
     investments  and the amount of  revenues  that the  Company  receives  from
tenants.                                                              
o    Prior to meeting certain conditions,  the Company may incur debt, including
     debt to make  Distributions to stockholders in order to maintain its status
as a REIT, but will not encumber Properties.                          

         THE COMPANY'S PRIMARY INVESTMENT  OBJECTIVES are to preserve,  protect,
and enhance the Company's assets while (i) making quarterly Distributions;  (ii)
obtaining  fixed income  through the receipt of base rent,  and  increasing  the
Company's income (and Distributions) and providing  protection against inflation
through  automatic  increases in base rent and receipt of percentage  rent,  and
obtaining  fixed income  through the receipt of payments from Mortgage Loans and
Secured  Equipment  Leases;  (iii)  continuing  to qualify as a REIT for federal
income  tax  purposes;  and (iv)  providing  stockholders  of the  Company  with
liquidity of their  investment  within two to seven years after  commencement of
this  offering,  either in whole or in part,  through  (a)  Listing,  or (b) the
commencement  of orderly sales of the Company's  assets and  distribution of the
proceeds  thereof  (outside the ordinary  course of business and consistent with
its  objective of qualifying  as a REIT).  There can be no assurance  that these
investment objectives will be met.                                              

         This  Prospectus  describes an investment in the Shares of the Company.
The Company will use stockholders' funds to purchase  additional  Properties and
make  additional  Mortgage  Loans. No stockholder may hold more than 9.8% of the
total  Shares.  Of the  proceeds  from  the  sale of  Shares  in this  offering,
approximately  84% will be used to acquire  Properties and make Mortgage  Loans,
and  approximately  9% will be paid in fees and  expenses to  Affiliates  of the
Company for their services and as reimbursement  for Offering  Expenses incurred
on behalf of the Company;  the balance will be used to pay other expenses of the
offering.  The Company has  registered  an offering of 34,500,000  Shares,  with
2,000,000 of such Shares available only to stockholders who elect to participate
in the Company's  reinvestment plan (the  "Reinvestment  Plan") and who purchase
Shares in this offering and receive a copy of this Prospectus,  or who purchased
Shares in one of the Prior  Offerings  of the  Company and who receive a copy of
this  Prospectus.  Any  participation  in such  plan by a person  who  becomes a
stockholder otherwise than by participating in this offering or one of the Prior
Offerings must be made pursuant to a solicitation  under a separate  prospectus.
See "Summary of Reinvestment  Plan." All  subscription  funds for Shares will be
deposited in an interest-bearing escrow account with SouthTrust Asset Management
Company of Florida, N.A., which will act as the escrow agent for this offering. 

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.                                                               

                              Price to       Selling         Proceeds to
                               Public     Commissions(1)      Company(2)
                              --------    --------------     -----------

Per Share .................  $        10.00  $        0.75     $         9.25   
---------                                                                       
Total Maximum..............  $  345,000,000  $  25,875,000     $  319,125,000   
-------------                                                                   
                                             (footnotes on following page)

CNL SECURITIES CORP.
April , 1998

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(1)      CNL  Securities  Corp.  (the  "Managing  Dealer") will receive  Selling
         Commissions of 7.5% on sales of Shares, subject to reduction in certain
         circumstances.  The  Managing  Dealer,  which  is an  Affiliate  of the
         Company,  may  engage  other  broker-dealers  that are  members  of the
         National  Association  of Securities  Dealers,  Inc. or other  entities
         exempt from broker-dealer registration  (collectively,  the "Soliciting
         Dealers")  to sell Shares and reallow to them  commissions  of up to 7%
         with  respect to Shares  which they sell.  The  amounts  indicated  for
         Selling  Commissions  assume that reduced  Selling  Commissions are not
         paid in connection with the purchase of any Shares and do not include a
         0.5%  marketing  support and due diligence  expense  reimbursement  fee
         payable  to the  Managing  Dealer,  all or a  portion  of which  may be
         reallowed to certain Soliciting  Dealers, in the Managing Dealer's sole
         discretion.  Such  amounts  also do not  include  a  Soliciting  Dealer
         Servicing  Fee  payable  to the  Managing  Dealer by the  Company  (see
         "Management Compensation"),  all or a portion of which may be reallowed
         to certain Soliciting Dealers in the Managing Dealer's sole discretion.
         See "The  Offering -- Plan of  Distribution"  for a  discussion  of the
         circumstances under which reduced Selling Commissions may be paid and a
         description  of  the  marketing   support  and  due  diligence  expense
reimbursement fee payable to the Managing Dealer.             

(2)      Before deducting (i) Offering  Expenses of the Company  estimated to be
         3% of gross offering proceeds computed at $10.00 per Share sold ("Gross
         Proceeds")  on the sale of  34,500,000  Shares  and (ii) the  marketing
         support and due diligence expense  reimbursement fee. Offering Expenses
         exclude Selling Commissions and the marketing support and due diligence
         reimbursement  fee. The Advisor will pay all  Offering  Expenses  which
exceed 3% of the Gross Proceeds.                              

         NEITHER THE ATTORNEY GENERAL OF THE STATE OF NEW YORK NOR THE BUREAU OF
SECURITIES  OF THE STATE OF NEW JERSEY HAS PASSED ON OR  ENDORSED  THE MERITS OF
THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.                  

 -----------------------------------------------------

         NO PERSON HAS BEEN  AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE
ANY  INFORMATION OR TO MAKE ANY  REPRESENTATIONS  OTHER THAN THOSE  CONTAINED IN
THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN
ANY STATE IN WHICH  SUCH OFFER OR SALE WOULD BE  UNLAWFUL,  AND NO  SUBSCRIPTION
WILL BE ACCEPTED FROM ANY PERSON WHO DOES NOT MEET THE SUITABILITY STANDARDS SET
FORTH HEREIN.  NEITHER THE DELIVERY OF THIS  PROSPECTUS  NOR ANY SALE  HEREUNDER
SHALL CREATE,  UNDER ANY  CIRCUMSTANCES,  AN IMPLICATION  THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY  SINCE THE DATE HEREOF.  IF,  HOWEVER,  ANY
MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS IS REQUIRED BY LAW TO BE DELIVERED,
THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.                    

         THE  USE  OF   FORECASTS   IN  THIS   OFFERING   IS   PROHIBITED.   ANY
REPRESENTATIONS TO THE CONTRARY, AND ANY PREDICTIONS, WRITTEN OR ORAL, AS TO THE
AMOUNT OR  CERTAINTY  OF ANY PRESENT OR FUTURE CASH  BENEFIT OR TAX  CONSEQUENCE
WHICH MAY FLOW FROM AN INVESTMENT IN THIS COMPANY IS PROHIBITED.                

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 TABLE OF CONTENTS

                                                                        Page

TABLE OF CONTENTS........................................................       
SUMMARY                                                                         
CNL American Properties Fund, Inc...................................  
Risk Factors........................................................  
Estimated Use of Proceeds...........................................  
Conflicts of Interest...............................................  
Management..........................................................  
Management Compensation.............................................  
Summary of Reinvestment Plan........................................  
Business............................................................  
Investment Objectives and Policies..................................  
Description of Shares...............................................  
Distribution Policy.................................................  
Prior Performance of Affiliates.....................................  
Tax Status Of The Company...........................................  
The Offering........................................................  
Definitions.........................................................  
RISK FACTORS.............................................................       
Investment Risks....................................................  
  Possible Inability to Further Diversify Investments.............
  Reliance on Management..........................................
  Reliance on Advisor.............................................
  Leverage........................................................
  Conflicts of Interest...........................................
       Competing Demands on Officers and Directors................
       Timing of Sales and Acquisitions Impact....................
       Property Development.......................................
The Company May Invest With Affiliates of           
           the Advisor............................................
No Independent Review of the Company or             
           the Prospectus by Managing Dealer......................
No Separate Counsel for the Company,                
           Affiliates and Investors...............................
  Lack of Liquidity of Shares.....................................
  Lack of Control by the Company over Joint Ventures..............
  Lack of Control of Property Management..........................
  Mortgage Loans..................................................
       Real Estate Market Conditions..............................
       Interest Rate Fluctuations.................................
       Delays in Liquidating Defaulted Mortgage Loans.............
       Regulation.................................................
  Secured Equipment Leases........................................
       Default by Lessee..........................................
       Regulation.................................................
       Tax Risks..................................................
  Impact of Inflation.............................................
Majority Stockholder Vote Binding                             
       on All Stockholders........................................
Broad Discretion by the Board of Directors                    
       in Management of the Company's Operations..................
  Restrictions on Transfer Relating to REIT Status................
  Limited Liability of Officers and Directors.....................
  Possible Effect of ERISA........................................
  Ability to Use Leverage to Make Distributions...................
Real Estate and Financing Risks ....................................  
  An Unspecified Property Offering................................
Inability of Potential Investors to                 
           Evaluate Properties....................................

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No Limitation on Number of Properties               
           of a Particular Chain..................................
No Assurance of Obtaining Suitable                  
           Investments............................................
       Conflicts of Interest......................................
  Possible Delays in Investment...................................
  Lack of Control Over Properties Under Construction..............
  Ground Lease Property Risks.....................................
  Impasse or Conflicts with Joint Venture Partner.................
       Impasse with Joint Venture Partner.........................
       Interests of Joint Venture Partner.........................
  Limitations on the Ability of the Company to Liquidate..........
  Inability to Control the Sale of Certain Properties.............
  Real Property Investments.......................................
Lack of Control Over Market and Business            
           Conditions.............................................
Multiple Property Leases or Mortgage Loans          
           with Individual Tenants or Borrowers...................
       Re-leasing of Properties...................................
       Third Party Franchise Agreements...........................
       Lack of Adequate Insurance.................................
  Impact of Adverse Trends........................................
  Competition.....................................................
  Possible Environmental Liabilities..............................
  Unspecified Secured Equipment Leases............................
Tax Risks    .......................................................  
  REIT Qualification..............................................
  Property Lease Treatment........................................
  Secured Equipment Lease Treatment...............................
  Effect of REIT Disqualification.................................
  Effect of Distribution Requirements.............................
  Restrictions on Maximum Share Ownership.........................
  Other Tax Liabilities...........................................
  Changes in Tax Laws.............................................
SUITABILITY STANDARDS AND HOW TO SUBSCRIBE ..............................       
Suitability Standards...............................................  
How to Subscribe....................................................  
ESTIMATED USE OF PROCEEDS ...............................................       
MANAGEMENT COMPENSATION .................................................       
CONFLICTS OF INTEREST ...................................................       
Prior and Future Programs ..........................................  
Acquisition of Properties ..........................................  
Sales of Properties ................................................  
Joint Investment With An Affiliated Program ........................  
Competition for Management Time ....................................  
Compensation of the Advisor ........................................  
Relationship with Managing Dealer ..................................  
Legal Representation ...............................................  
Certain Conflict Resolution Procedures .............................  
SUMMARY OF REINVESTMENT PLAN ............................................       
General      .......................................................  
Investment of Distributions.........................................  
Participant Accounts, Fees, and Allocation of Shares................  
Reports to Participants.............................................  
Election to Participate or Terminate Participation..................  
Federal Income Tax Considerations...................................  
Amendments and Termination..........................................  
REDEMPTION OF SHARES ....................................................       
BUSINESS                                                                        
General                                                               
Completed Investments...............................................  
Pending Investments.................................................  

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Investment of Offering Proceeds.....................................  
Site Selection and Acquisition of Properties .......................  
Standards for Investment in Properties .............................  
Description of Properties...........................................  
Description of Property Leases .....................................  
Joint Venture Arrangements .........................................  
Mortgage Loans......................................................  
Management Services ................................................  
Borrowing    .......................................................  
Sale of Properties, Mortgage Loans, and Secured Equipment Leases ...  
Franchise Regulation ...............................................  
Competition                                                           
Regulation of Mortgage Loans and Secured Equipment Leases ..........  
SELECTED FINANCIAL DATA..................................................       
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                     
OF THE COMPANY .....................................................  
Introduction .......................................................  
Liquidity and Capital Resources.....................................  
Results of Operations...............................................  
MANAGEMENT                                                                      
General                                                               
Fiduciary Responsibility of the Board of Directors .................  
Directors and Executive Officers....................................  
Independent Directors ..............................................  
Committees of the Board of Directors ...............................  
Compensation of Directors and Executive Officers ...................  
Management Compensation ............................................  
THE ADVISOR AND THE ADVISORY AGREEMENT ..................................       
The Advisor                                                           
The Advisory Agreement .............................................  
CERTAIN TRANSACTIONS.....................................................       
PRIOR PERFORMANCE INFORMATION ...........................................       
INVESTMENT OBJECTIVES AND POLICIES ......................................       
General                                                               
Certain Investment Limitations .....................................  
DISTRIBUTION POLICY .....................................................       
General                                                               
Distributions ......................................................  
SUMMARY OF THE ARTICLES OF INCORPORATION AND BYLAWS .....................       
General                                                               
Description of Capital Stock .......................................  
Board of Directors .................................................  
Stockholder Meetings ...............................................  
Advance Notice for Stockholder Nominations for                        
  Directors and Proposals of New Business ........................
Amendments to the Articles of Incorporation ........................  
Mergers, Combinations, and Sale of Assets ..........................  
Termination of the Company and REIT Status .........................  
Restriction of Ownership ...........................................  
Responsibility of Directors ........................................  
Limitation of Liability and Indemnification ........................  
Removal of Directors ...............................................  
Inspection of Books and Records ....................................  
Restrictions on "Roll-Up" Transactions .............................  
FEDERAL INCOME TAX CONSIDERATIONS .......................................       
Introduction                                                          
Taxation of the Company ............................................  
Taxation of Stockholders ...........................................  
State and Local Taxes ..............................................  
Characterization of Property Leases ................................  
Characterization of Secured Equipment Leases .......................  
Investment in Joint Ventures .......................................  

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REPORTS TO STOCKHOLDERS .................................................       
THE OFFERING                                                                    
General                                                               
Plan of Distribution ...............................................  
Subscription Procedures ............................................  
Escrow Arrangements ................................................  
ERISA Considerations ...............................................  
Determination of Offering Price ....................................  
SUPPLEMENTAL SALES MATERIAL .............................................       
LEGAL OPINIONS                                                                  
EXPERTS                                                                         
ADDITIONAL INFORMATION ..................................................       
DEFINITIONS                                                                     

Form of Amended Reinvestment Plan ................................   Exhibit A  
Financial Information ............................................   Exhibit B  
Prior Performance Tables .........................................   Exhibit C  
Subscription Agreement ...........................................   Exhibit D  

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 SUMMARY

         THIS SECTION SUMMARIZES CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS  AND IS INTENDED  FOR QUICK  REFERENCE  ONLY.  THIS IS NOT A COMPLETE
DESCRIPTION OF THE INVESTMENT. POTENTIAL STOCKHOLDERS MUST READ AND EVALUATE THE
FULL TEXT OF THIS PROSPECTUS AND ALL SUPPORTING  DOCUMENTS  ATTACHED AS EXHIBITS
HERETO IN ORDER TO EVALUATE AN INVESTMENT IN THE COMPANY.  THE FOLLOWING SUMMARY
THEREFORE  IS  QUALIFIED  IN ITS  ENTIRETY BY REFERENCE TO THE FULL TEXT OF THIS
PROSPECTUS AND THE SUPPORTING DOCUMENTS.                                        

CNL AMERICAN PROPERTIES FUND, INC.                                              

         CNL  American  Properties  Fund,  Inc.  (the  "Company")  is a Maryland
corporation  which  operates  for federal  income tax  purposes as a real estate
investment  trust (a "REIT").  The  Company's  address is 400 East South Street,
Orlando, Florida 32801, telephone (407) 422-1574 or toll free (800) 522-3863.   

         The  Company  was  formed   primarily   to  acquire   properties   (the
"Properties")  to be  leased on a  long-term  (generally,  15 to 20 years,  plus
renewal  options for an additional 10 to 20 years),  "triple-net"  basis,  which
means that the tenant will be  responsible  for repairs,  maintenance,  property
taxes,  utilities,  and  insurance.  As of March 2, 1998,  the  Company  owned a
portfolio  of 250  Properties  located  across the  United  States and leased to
operators  of  selected  national  and  regional  fast-food,   family-style  and
casual-dining  restaurant  chains  (the  "Restaurant  Chains").  The  Company is
expected to have a total portfolio of  approximately  670 to 730 Properties,  if
the maximum  number of Shares of Common Stock of the Company  (the  "Shares") is
sold in this  offering.  The Company  structures the leases of its Properties to
provide for payment of base annual  rent with (i)  automatic  increases  in base
rent and/or (ii) percentage rent based on gross sales above a certain level. The
Company  also offers  financing  for the  purchase of  buildings,  generally  by
tenants that lease the underlying land from the Company (the "Mortgage  Loans").
However, because it prefers to focus on investing in Properties,  which have the
potential to appreciate, the Company currently expects to provide Mortgage Loans
in the aggregate  principal  amount of  approximately 5% to 10% of the Company's
total investments if the maximum number of Shares is sold in this offering.  The
Company expects that the interest rates and terms  (generally 10 to 20 years) of
the Mortgage  Loans will be similar to those of its leases.  To a lesser extent,
the Company offers furniture,  fixtures and equipment ("Equipment") financing to
operators of Restaurant Chains pursuant to which the Company  provides,  through
direct  financing  leases or loans,  the Equipment  (collectively,  the "Secured
Equipment  Leases").  The  aggregate  outstanding  principal  amount of  Secured
Equipment  Leases  will  not  exceed  10% of the  gross  proceeds  of the  Prior
Offerings,  this  offering and any  subsequent  offerings.  See  "Business"  for
information  regarding the Company's existing  Properties,  a description of the
types of Properties  in which the Company  invests,  the Property  selection and
acquisition  processes,  and  the  nature  of the  Mortgage  Loans  and  Secured
Equipment Leases.                                                               

         Under  the   Company's   Articles   of   Incorporation,   the   Company
automatically will terminate and dissolve on December 31, 2005 unless the Shares
of the Company,  including the Shares offered  hereby,  are listed on a national
securities exchange or over-the-counter  market ("Listing"),  in which event the
Company  automatically  will become a perpetual life entity. If Listing does not
occur by December 31, 2005,  the Company  will  undertake,  outside the ordinary
course of business and  consistent  with its  objective of qualifying as a REIT,
the orderly Sale of the Company's assets, the distribution of Net Sales Proceeds
of such Sales to  stockholders  and the  limitation  of its  activities to those
related to its orderly liquidation, unless the stockholders owning a majority of
the Shares elect to amend the Articles of  Incorporation  to extend the duration
of the  Company.  See "Risk  Factors -- Real Estate and  Financing  Risks" for a
complete  discussion of risks  relating to future  disposition  of the Company's
assets. Until such time, if any, as Listing occurs, the Company may not encumber
Properties,  although  it may  incur  debt.  If  Listing  occurs  (which  is not
assured), then the Board of Directors may elect to cause the Company to encumber
any or all of the Company's  Properties in connection  with any  borrowing.  The
Board of Directors anticipates that such borrowing,  in the aggregate,  will not
exceed 50% of Real Estate Asset Value,  although the maximum  amount the Company
may borrow is 300% of Net Assets (an amount which the Company  anticipates  will
correspond to  approximately  75% of Real Estate Asset Value).  In general,  Net
Assets are the Company's  total assets (other than  intangibles),  calculated at
cost, less total liabilities.  As a perpetual life entity following Listing, the
Company would not be required to dissolve and return capital to stockholders. If
Listing occurs, in order to liquidate their investment,  stockholders would have
to sell their Shares in the market on which the Shares are traded. Listing is no
assurance of liquidity.  See "Risk Factors -- Investment Risks" for a discussion
of risks associated with the lack of liquidity of the Shares and with borrowing.
In addition,  following  Listing,  the Company intends to reinvest proceeds from
Sales of Properties rather than distribute such proceeds to stockholders.       

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RISK FACTORS                                                                    

         The "Risk Factors" section discusses in detail the more important risks
associated with an investment in the Company, including risks associated with an
investment  in a  real  estate  investment  trust  such  as the  Company,  risks
associated  with an  investment  in real  estate such as the  Properties,  risks
associated with the Mortgage  Loans,  risks  associated  with Secured  Equipment
Leases, and tax risks. These risks include the following:                       

o        The Company will rely on the Advisor and the Board of Directors,  which
         together will have responsibility for the management of the Company and
         its  investments,  subject to the ability of the  stockholders to elect
the Directors.                                                

o        The services to be performed by the Advisor and its  Affiliates for the
         Company in connection with the offering,  the selection and acquisition
         of the Properties,  the making of Mortgage Loans and Secured  Equipment
         Leases  and  the  general  operation  of the  Company  will  result  in
conflicts of interest.                                        

o        Because,  as of March 2, 1998, the Company owned only 250 Properties of
         the anticipated  total of 670 to 730 Properties,  stockholders will not
         have the opportunity to evaluate all of the Properties that the Company
will acquire.                                                 

o        The Board of Directors will have significant  flexibility regarding the
Company's operations.                                         

o        The Company may make investments that will not appreciate in value over
         time,  such as  building  only  Properties,  with the  land  owned by a
third-party, and Mortgage Loans.                              

o        Stockholders  who must sell their  Shares will not be able to sell them
         quickly  because  it is not  anticipated  that  there  will be a public
         market for the Shares in the near term,  and there can be no  assurance
that the Listing will occur.                                  

o        The amount of revenues the Company will receive from  tenants,  lessees
and borrowers cannot be predicted.                            

o        The  Company,  prior to meeting  certain  conditions,  may incur  debt,
         including debt to make Distributions in order to maintain its status as
a REIT, but will not encumber Properties.                     

o        Tenants,  lessees or  borrowers  may  default  resulting  in  decreased
income.                                                       

o        The vote of  stockholders  owning at least a majority but less than all
         of the Shares will bind all of the  stockholders  as to matters such as
         the election of Directors  and  amendment  of the  Company's  governing
documents.                                                    

o        Restrictions  on  ownership  of more  than  9.8% of the  shares  of the
         Company's  Common Stock (the "Common Stock") by any single  stockholder
         or certain  related  stockholders  may have the effect of  inhibiting a
         change  in  control  of the  Company  even if such a  change  is in the
interest of a majority of the stockholders.                   

o        The Company may not qualify or remain  qualified  as a REIT for federal
         income tax purposes,  which could result in  subjecting  the Company to
         federal  income tax on its taxable income at regular  corporate  rates,
         thereby reducing the amount of funds available for paying Distributions
to stockholders.                                              

ESTIMATED USE OF PROCEEDS                                                       

         The Company  will use the proceeds of the sale of the Shares to acquire
Properties,   to  make  Mortgage  Loans,   generally  in  connection  with  such
acquisitions, and to pay expenses relating to the sale of the Shares. Management
of the Company and the  Advisor  have  estimated  an average  purchase  price of
$800,000 to $900,000 per Property  based on their past  experience  in acquiring
similar properties and in light of current market conditions, although prices of
Properties  may be lower or higher.  Assuming the maximum of  34,500,000  Shares
($345,000,000)  are sold,  the Company  will  acquire  approximately  320 to 360
additional Properties with the proceeds of this offering.  See "Estimated Use of
Proceeds"  and  "Business -- General"  for a more  detailed  description  of the
anticipated use of offering  proceeds.  Management cannot estimate the number of
additional Mortgage Loans that may be entered into.                             

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The Company  currently  anticipates  providing  Mortgage  Loans in the aggregate
principal amount of  approximately 5% to 10% of the Company's total  investments
if the  maximum  number of Shares is sold in this  offering.  Secured  Equipment
Leases will be funded  solely from a portion of the proceeds of the  $35,000,000
unsecured  line of credit  (the  "Line of  Credit")  and the  number of  Secured
Equipment Leases will not depend on the amount raised in this offering.         

CONFLICTS OF INTEREST                                                           

         Certain  officers and Directors of the Company who are also officers or
directors  of the  Advisor  will  experience  conflicts  of  interest  in  their
management of the Company.  These arise  principally  from their  involvement in
other  activities  that will  conflict  with those of the  Company  and  include
matters  related to (i) allocation of new  investments  and management  time and
services between the Company and various  partnerships and other entities,  (ii)
the timing and terms of the  investment in or sale of a Property,  Mortgage Loan
or  Secured  Equipment  Lease,   (iii)  development  of  Company  Properties  by
Affiliates, (iv) investments with Affiliates of the Advisor, (v) compensation of
the Advisor, (vi) the Company's  relationship with the Managing Dealer, which is
an  Affiliate  of the  Company  and the  Advisor,  and  (vii)  the fact that the
Company's  securities  and tax counsel also serves as securities and tax counsel
for certain  Affiliates  of the  Company,  and that  neither the Company nor the
stockholders will have separate counsel.                                        

         The  Directors of the Company who are  independent  of the Advisor (the
"Independent  Directors")  are  responsible for monitoring the activities of the
Advisor and must approve all of the  Advisor's  actions that involve a potential
conflict other than certain such actions specifically  permitted by the Articles
of  Incorporation.  The "Conflicts of Interest" section discusses in more detail
the more  significant of these potential  conflicts of interest,  as well as the
procedures  that have been  established  to resolve a number of these  potential
conflicts.                                                                      

         The Company has  established  certain  conflict  resolution  procedures
relating  to (i)  transactions  between  the  Company  and  the  Advisor  or its
Affiliates,  (ii) certain future offerings,  and (iii) allocation of investments
among  certain  affiliated  entities.  See  "Conflicts  of  Interest  -- Certain
Conflict Resolution Procedures."                                                

MANAGEMENT                                                                      

         The Company has retained the Advisor, a Florida  corporation  organized
in March 1994, to provide  management,  advisory and administrative  services to
the Company.  Pursuant to an advisory  agreement  with the Company,  the Advisor
will handle the day-to-day operations of the Company,  select the Company's real
estate investments, and administer its Secured Equipment Lease program. The five
members of the Board of Directors  will oversee the  management  of the Company.
Three of the  Directors of the Company are  independent  of the Advisor and have
responsibility  for reviewing its performance.  The Directors are elected to the
Board of Directors annually by the stockholders.                                

         All of the officers  and  directors of the Advisor also are officers or
Directors of the Company. The Advisor will have responsibility for (i) selecting
the  Properties  that the Company will acquire,  formulating  and evaluating the
terms of each proposed  acquisition,  and arranging for the  acquisition  of the
Property by the Company,  (ii) identifying  potential lessees for the Properties
and potential borrowers for the Mortgage Loans, and formulating, evaluating, and
negotiating the terms of each lease of a Property and each Mortgage Loan,  (iii)
locating and identifying  potential  lessees and  formulating,  evaluating,  and
negotiating the terms of each Secured  Equipment Lease, and (iv) negotiating the
terms of any borrowing.  All of the foregoing actions are subject to approval by
the Board of  Directors.  The Advisor also will have the  authority,  subject to
approval  by a majority of the Board of  Directors,  including a majority of the
Independent  Directors,  to select assets for Sale in keeping with the Company's
investment  objectives  and based on an  analysis of  economic  conditions  both
nationally and in the vicinity of the asset being considered for Sale.          

         See  "Management"  and "The Advisor and the Advisory  Agreement"  for a
description of the business  background of the  individuals  responsible for the
management of the Company and the Advisor,  as well as for a description  of the
services that the Advisor will provide.                                         

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MANAGEMENT COMPENSATION                                                         

         The Advisor,  the Managing Dealer,  and other Affiliates of the Advisor
will receive  compensation  for  services  they will perform for the Company and
also will receive expense  reimbursements from the Company for expenses they pay
on  behalf  of  the  Company.  See  "Management  Compensation"  for  a  complete
description.  See also "Certain  Transactions" for a description of compensation
paid to the Advisor,  Managing Dealer and other  Affiliates of the Company since
its inception.  The following paragraphs summarize the more significant items of
compensation.                                                                   

         In  connection  with this  offering,  the Managing  Dealer will receive
Selling  Commissions of 7.5% (a maximum of $25,875,000 if 34,500,000  Shares are
sold), and a marketing  support and due diligence  expense  reimbursement fee of
0.5% (a maximum  of  $1,725,000  if  34,500,000  Shares are sold),  of the total
amount raised from the sale of Shares, computed at $10.00 per Share sold ("Gross
Proceeds"). The Managing Dealer in turn may reallow Selling Commissions of up to
7% on Shares sold,  and all or a portion of the 0.5%  marketing  support and due
diligence expense  reimbursement fee to certain Soliciting Dealers,  who are not
Affiliates of the Company in the Managing Dealer's sole discretion. In addition,
the Company will incur a Soliciting  Dealer  Servicing Fee in the amount of .20%
of  Invested  Capital (as  defined  below) (a maximum of $690,000 if  34,500,000
Shares  are  sold).  The  Soliciting  Dealer  Servicing  Fee will be  payable on
December 31 of each year,  commencing  on December 31 of the year  following the
year in which the related offering terminates,  and generally will be payable to
the Managing Dealer, which in turn may reallow, in its sole discretion, all or a
portion of such fee to  Soliciting  Dealers  whose  clients  held Shares on such
date.  In  general,  the  stockholders'  investment  in the  Company  ("Invested
Capital")  is the  number of Shares  they own,  multiplied  by $10.00 per Share,
reduced by the portion of all prior Distributions  received by stockholders from
the Sale of assets and by any amounts paid by the Company to  repurchase  Shares
pursuant to the redemption plan.                                                

         For  identifying   the   Properties,   structuring  the  terms  of  the
acquisition  and  leases  of the  Properties  and  structuring  the terms of the
Mortgage Loans, the Advisor will receive Acquisition Fees equal to 4.5% of Gross
Proceeds (a maximum of $15,525,000 if 34,500,000  Shares are sold) from the sale
of Shares.                                                                      

         For managing the Properties and the Mortgage Loans, the Advisor will be
entitled to receive a monthly Asset Management Fee of one-twelfth of .60% of the
Company's Real Estate Asset Value  (generally,  the total amount invested in the
Properties,  exclusive of Acquisition  Fees and  Acquisition  Expenses) plus the
total  outstanding  amount of the Mortgage  Loans as of the end of the preceding
month.                                                                          

         For negotiating  Secured  Equipment  Leases and supervising the Secured
Equipment  Lease  program,  the Advisor  will be  entitled  to receive  from the
Company a one-time  Secured  Equipment Lease Servicing Fee of 2% of the purchase
price of the Equipment that is the subject of a Secured Equipment Lease.        

         Prior to Listing, the Advisor may receive a real estate disposition fee
of 3% of the  gross  sales  price  of  one  or  more  Properties  for  providing
substantial  services in  connection  with the Sale,  which will be deferred and
subordinated until the stockholders have received Distributions equal to the sum
of an aggregate,  annual, cumulative,  noncompounded 8% return on their Invested
Capital,  (the  "Stockholders'  8%  Return")  plus  100%  of  the  stockholders'
aggregate  Invested  Capital.  Upon Listing,  if the Advisor has accrued but not
been paid such real estate  disposition  fee,  then for purposes of  determining
whether the subordination  conditions have been satisfied,  stockholders will be
deemed to have received a Distribution in an amount equal to the total number of
Shares outstanding  multiplied by the average closing price of the Shares over a
period of 30 days during which the Shares are traded, with such period beginning
180 days after  Listing.  See "The  Advisor and The  Advisory  Agreement  -- The
Advisory Agreement."                                                            

         A deferred,  subordinated  share of Net Sales  Proceeds will be paid to
the Advisor  upon the Sale of assets of the Company in an amount equal to 10% of
Net Sales  Proceeds.  This amount will be  subordinated  and paid only after the
stockholders  have  received  Distributions  equal  to the  sum of  100%  of the
stockholders' aggregate Invested Capital plus the Stockholders' 8% Return.      

         Payment of certain fees is subject to conditions and restrictions or to
change under certain  specified  circumstances.  The Advisor and its  Affiliates
also may receive  reimbursement  for  out-of-pocket  expenses that they incur on
behalf  of  the  Company,   subject  to  certain  expense  limitations,   and  a
subordinated incentive fee if Listing occurs.                                   

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SUMMARY OF REINVESTMENT PLAN                                                    

         The Company has  established  the  Reinvestment  Plan pursuant to which
stockholders  may  elect to have  their  cash  Distributions  from  the  Company
automatically reinvested in Shares. See "Summary of Reinvestment Plan," "Federal
Income  Tax  Considerations  --  Taxation  of  Stockholders,"  and  the  form of
Reinvestment  Plan  accompanying  this Prospectus as Exhibit A for more specific
information  about the Reinvestment  Plan.  Expenses incurred in connection with
the Reinvestment Plan,  including Selling  Commissions and marketing support and
due diligence expense  reimbursement fees, will be paid by the Company. A person
who becomes a stockholder  otherwise than by  participating  in this offering or
one of the Prior  Offerings may purchase  Shares through the  Reinvestment  Plan
only after receipt of a separate  prospectus relating solely to the Reinvestment
Plan.                                                                           

BUSINESS                                                                        

         As  of  March  2,  1998,  the  Company  owned  250  Properties.  It  is
anticipated  that the Company will acquire a total of 670 to 730  Properties  if
the maximum number of Shares is sold in this offering  (including  approximately
320 to 360  Properties  to be acquired with the proceeds of this offering and an
additional approximately 100 to 120 Properties to be acquired with the remaining
proceeds of the 1997 Offering).  A description of the types of Properties  which
the  Company  purchases  and  leases to third  parties  appears  in the  section
entitled  "Business." The Company invests in Properties of selected national and
regional restaurant chains, primarily fast-food, family-style, and casual dining
chains,  the most rapidly growing segments of the restaurant  industry in recent
years.   Management   structures  the  Company's  investments  to  allow  it  to
participate,  to the  maximum  extent  possible,  in any  sales  growth in these
industry segments,  as reflected in the Properties that it owns. The Properties,
which typically are freestanding  and are located across the United States,  are
leased on a "triple-net" basis to operators of the Restaurant Chains selected by
the Advisor and approved by the Board of Directors.  The  Properties  consist of
both land and building, the land underlying the building with the building owned
by the tenant or a third party,  or the  building  only with the land owned by a
third party.                                                                    

         As of March 2, 1998,  the Company had  provided  Mortgage  Loans to the
tenants of 44  Properties  that are land only to purchase the buildings on these
Properties and the buildings on two additional  properties.  It is expected that
Mortgage  Loans  will   constitute  from  5%  to  10%  of  the  Company's  total
investments,  if the  maximum  number  of Shares  is sold in this  offering.  In
general, the Company offers Mortgage Loans in circumstances in which the Company
owns the land  underlying the building to be financed and the borrower under the
Mortgage Loan also enters into a long-term ground lease for the underlying land.
Management  believes that this combined leasing and financing structure provides
the  benefit  of  allowing  the  Company to  receive  the return of its  initial
investment  plus  interest  on each  financed  building,  which is  generally  a
depreciating  asset, while retaining the ownership of the underlying land, which
is generally an appreciating asset.                                             

         The  Company  has  obtained  a  Line  of  Credit  in  an  amount  up to
$35,000,000,  which  will be used to  finance  Secured  Equipment  Leases and to
purchase and develop  Properties and fund Mortgage  Loans.  Management  believes
that,  during the offering period,  the Line of Credit will allow the Company to
take advantage of investment  opportunities  that might otherwise be lost if the
Company  was  forced  to delay  making  the  investments  until it had  raised a
sufficient amount of offering proceeds.  In addition,  management  believes that
the use of the Line of Credit will enable the Company to reduce or eliminate the
instances in which the Company will be required to pay  duplicate  closing costs
as a result  of an  Affiliate  of the  Advisor  purchasing  Properties,  pending
receipt by the Company of sufficient offering proceeds, in order to preserve the
investment opportunity for the Company, and the Company subsequently  purchasing
the Properties  from the  Affiliate.  Advances under the Line of Credit that are
used to purchase or develop  Properties  and fund Mortgage  Loans will be repaid
using additional  offering proceeds from the 1997 Offering or proceeds from this
offering or refinanced on a long-term basis. No Properties will be encumbered in
connection with the Line of Credit.                                             

         As of March 2, 1998,  the  Company  had funded  $23,388,700  in Secured
Equipment  Leases.  The  Secured  Equipment  Leases are funded  solely  from the
proceeds of the Line of Credit.  Advances under the Line of Credit that are used
to finance Secured  Equipment Leases will be repaid using payments received from
the Secured  Equipment  Leases and will be refinanced for any advances not fully
repaid  at the end of the term of the Line of  Credit.  The  Company  structures
Secured  Equipment  Leases so that  they will be  treated  as loans  secured  by
personal property for federal income tax purposes.                              

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         See  "Business"  for a description  of the types of Properties in which
the Company  invests,  the Property  selection and  acquisition  processes,  the
Mortgage Loans, the Secured Equipment Leases and the Line of Credit.            

INVESTMENT OBJECTIVES AND POLICIES                                              

The Company's primary investment objectives are:              

  o        to preserve, protect, and enhance the Company's assets.

o        to make quarterly Distributions.                     

         o        to obtain  fixed income  through the receipt of base rent,  as
                  well as to increase the Company's  income (and  Distributions)
                  and provide  protection  against  inflation  through automatic
                  increases in base rent and receipt of percentage  rent, and to
                  obtain  fixed  income  through  the  receipt  of  payments  on
Mortgage Loans and Secured Equipment Leases.

         o        to qualify  and  remain qualified as a REIT for federal income
tax purposes.                               

         o        to provide stockholders of the Company with liquidity of their
                  investment  within two to seven  years after  commencement  of
                  this offering,  although  liquidity cannot be assured thereby,
                  either through (i) Listing or (ii) outside the ordinary course
                  of business and consistent with its objective of qualifying as
                  a REIT,  the  commencement  of orderly  Sales of the Company's
    assets and distribution of the proceeds thereof.

         The  Company  intends to meet these  objectives  by  following  certain
investment  policies discussed herein, as summarized on the preceding pages. See
"Business  --  General,"   "Business  --  Site  Selection  and   Acquisition  of
Properties," "Business -- Description of Leases," and "Investment Objectives and
Policies" for a more complete  description  of the manner in which the structure
of the Company's  business  will  facilitate  the Company's  ability to meet its
investment  objectives.  There can be no assurance that these objectives will be
met.  The  Company's  investment   objectives  are  subject  to  review  by  the
Independent   Directors  and  may  not  be  changed   without  the  approval  of
stockholders owning a majority of the shares of outstanding Common Stock.       

DESCRIPTION OF SHARES                                                           

         A  stockholder's  investment  will  be  recorded  on the  books  of the
Company.  The Company will provide,  upon the request of any stockholder wishing
to transfer his or her Shares,  a transfer  form to be completed and executed by
the  stockholder  and returned to the Company.  The Company will not issue share
certificates  other  than to  stockholders  who make a  written  request  to the
Company.                                                                        

         During any period in which the Company is not making a public  offering
of Shares, any stockholder may request that the Company redeem for cash all or a
significant  portion of such stockholder's  Shares. The sole source of funds for
any such requested  redemption will be the net proceeds  available from the sale
of Shares pursuant to the Reinvestment Plan. There can be no assurance that such
net proceeds  will be sufficient to permit the Company to redeem all such Shares
presented for redemption. See "Redemption of Shares."                           

         An  annual  meeting  of  stockholders  will be held  each  year for the
election of the Directors. Other business matters may be presented at the annual
meeting or at special stockholder  meetings.  Each Share is entitled to one vote
on each matter to be voted on by  stockholders,  including  the  election of the
Directors.  Stockholders who do not vote with the majority of Shares entitled to
vote on questions presented nonetheless will be bound by the majority vote.     

         Stockholder  approval is required  under Maryland law and the Company's
Articles  of  Incorporation  and  Bylaws  for  certain  types  of  transactions.
Generally,  the  Articles  of  Incorporation  and Bylaws  may be amended  upon a
majority  vote of  stockholders.  Stockholders  holding a majority of the Shares
must approve a merger or a sale or other disposition of substantially all of the
Company's  assets  other than in the ordinary  course of business.  Stockholders
objecting to the terms of a merger,  sale, or other disposition of substantially
all of the Company's assets                                                     

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have the right to  petition a court for the  appraisal  and  payment of the fair
value of their Shares in certain  instances.  The affirmative vote of a majority
of the Shares  outstanding  and  entitled  to vote is  required  to approve  the
voluntary dissolution of the Company.                                           

         In order to facilitate  compliance with certain restrictions imposed on
REITs by the  Internal  Revenue  Code of 1986,  as  amended  (the  "Code"),  the
Articles  of  Incorporation  generally  restrict  direct or  indirect  ownership
(applying certain attribution rules) of more than 9.8% of the outstanding shares
of Common Stock by one Person, as defined in the Articles of Incorporation.  See
"Summary  of  the  Articles  of  Incorporation  and  Bylaws  --  Restriction  on
Ownership."                                                                     

         For a more complete description of the Shares and the capital structure
of the Company,  please  refer to the "Summary of the Articles of  Incorporation
and Bylaws -- Description of Capital Stock" section of the Prospectus.          

DISTRIBUTION POLICY                                                             

         The following table reflects total  Distributions and Distributions per
Share  declared  by the  Company  for each  month  since the  Company  commenced
operations.                                                                     

                                                        · Enlarge/Download Table


                       1995                       1996                        1997          
                       ----                       ----                        ----          
Month         Total         Per Share     Total        Per Share     Total         Per Share
-----      -----------      ---------  ----------      ---------  -----------      ---------
                                                                                            
January    $        -      $       -      $225,354     $0.058300    $  827,978     $0.059375
February            -              -       255,649      0.058300       884,806      0.059375
March               -              -       287,805      0.058300       980,573      0.060416
April               -              -       323,721      0.058300     1,091,142      0.061458
May                 -              -       368,155      0.058300     1,202,718      0.062500
June             15,148      0.030000      407,803      0.058300     1,295,253      0.062500
July             30,682      0.030000      458,586      0.059375     1,403,187      0.062500
August           57,739      0.035000      517,960      0.059375     1,516,980      0.062500
September        84,467      0.050000      558,394      0.059375     1,677,332      0.063540
October         104,733      0.050000      615,914      0.059375     1,844,923      0.063540
November        155,665      0.058300      683,907      0.059375     1,991,289      0.063540
December        190,184      0.058300      732,824      0.059375     2,138,116      0.063540

         Consistent  with the Company's  objective of qualifying as a REIT,  the
Company  expects to continue to  calculate  and  declare  Distributions  monthly
during the offering period,  and quarterly  thereafter,  and make  Distributions
quarterly. The Board of Directors, in its discretion,  will determine the amount
of the Distributions made by the Company,  which amount will depend primarily on
net cash from  operations.  The  Company  intends to increase  Distributions  in
accordance  with  increases  in net cash from  operations.  Consistent  with the
Company's  objective of qualifying as a REIT, the Company  expects to distribute
at least 95% of its real estate  investment  trust taxable income,  although the
Board of Directors, in its discretion,  may increase that percentage as it deems
appropriate.  If the cash  available  to the  Company  is  insufficient  to make
Distributions,  the  Company  may  obtain the needed  cash by  borrowing  funds,
issuing new securities, or selling assets. These methods of obtaining cash could
affect future Distributions by increasing operating costs or reducing income. In
such an event, it is possible that the Company could pay Distributions in excess
of its earnings  and profits and,  accordingly,  that such  Distributions  could
constitute a return of capital for federal  income tax  purposes,  although such
Distributions would not reduce stockholders' aggregate Invested Capital. For the
years ended  December 31,  1997,  1996 and 1995,  the Company  declared and made
Distributions  totalling  $16,854,297,  $5,436,072  and  $638,618,  respectively
(93.33%,  90.25%  and  59.82%,  respectively,  of which  were  characterized  as
ordinary income and 6.67%, 9.75% and 40.18%, respectively,  as return of capital
for federal income tax purposes).  In addition,  in January,  February and March
1998,  the  Company  declared   distributions  to  its  stockholders   totalling
$2,299,704, $2,423,262 and $2,557,810,  respectively, payable in March 1998. Due
to the fact that the  Company had not  acquired  all of its  Properties  and was
still in its offering  period as of December 31, 1997, the  characterization  of
Distributions for federal income tax purposes is not considered by management to
be necessarily representative of the characterization of Distributions in future
years.                                                                          

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PRIOR PERFORMANCE OF AFFILIATES                                                 

         The "Prior Performance Information" section of this Prospectus contains
a  narrative   discussion  of  the  public  and  private  real  estate   limited
partnerships  sponsored by Affiliates  of the Company and of the Advisor  during
the past ten years, including 18 public limited partnerships formed to invest in
restaurants leased on a "triple-net" basis to operators of national and regional
fast-food and  family-style  restaurant  chains.  As of December 31, 1997, these
partnerships,  which purchase  properties similar to those to be acquired by the
Company,  had purchased 708 fast-food and  family-style  restaurant  properties.
Based on an analysis  of the  operating  results of the 90 real  estate  limited
partnerships  in which  principals of the Company have served,  individually  or
with  others,  as  general  partners,  the  Company  believes  that each of such
partnerships  has met, or currently is in the process of meeting,  its principal
investment  objectives.  Certain statistical data relating to the public limited
partnerships with investment objectives similar to those of the Company, and the
offerings  of which became fully  subscribed  between  January 1993 and December
1997, are contained in Exhibit C--Prior Performance Tables.                     

TAX STATUS OF THE COMPANY                                                       

         The Company has made the election  under Section 856(c) of the Internal
Revenue Code of 1986, as amended (the  "Code"),  to be taxed as a REIT under the
Code  beginning  with its taxable year ending  December 31, 1995.  As a REIT for
federal  income  tax  purposes,  the  Company  generally  will not be subject to
federal income tax on income that it distributes to its stockholders.  Under the
Code, REITs are subject to numerous organizational and operational requirements,
including  a  requirement  that they  distribute  at least 95% of their  taxable
income,  as figured on an annual  basis.  If the  Company  fails to qualify  for
taxation as a REIT in any taxable year, it will be subject to federal income tax
(including  any  applicable  alternative  minimum tax) on its taxable  income at
regular  corporate rates and will not be permitted to qualify for treatment as a
REIT for federal  income tax purposes for four years  following  the year during
which qualification is lost. See "Risk Factors -- Tax Risks" and "Federal Income
Tax Considerations."  Even if the Company qualifies as a REIT for federal income
tax purposes,  it may be subject to certain  federal,  state, and local taxes on
its  income  and  property  and  to  federal  income  and  excise  taxes  on its
undistributed income. See "Federal Income Tax Considerations."                  

THE OFFERING                                                                    

         A maximum of 34,500,000 Shares  ($345,000,000) in the Company are being
offered at a price of $10.00 per Share. Of the Shares offered hereby,  2,000,000
will be available only to  stockholders  purchasing  Shares in this offering who
receive a copy of this  Prospectus,  or to stockholders  who purchased Shares in
one of the  Prior  Offerings  of the  Company  and who  received  a copy of this
Prospectus,  and  who  elect  to  participate  in  the  Reinvestment  Plan.  Any
participation  in such plan subsequent to this offering must be made pursuant to
solicitation under a separate prospectus. See "Summary of Reinvestment Plan."   

         The  Shares  are  being  offered  by  the  Managing  Dealer  and  other
broker-dealers  that are  members  of the  National  Association  of  Securities
Dealers,  Inc.  or  exempt  from  broker-dealer  registration  (the  "Soliciting
Dealers") on a "best  efforts"  basis,  which means that no one is  guaranteeing
that any minimum number of Shares will be sold. Both the Company and the Advisor
are  Affiliates  of  the  Managing   Dealer.   See  "The  Offering  --  Plan  of
Distribution."                                                                  

         All  subscription  funds for Shares of the Company will be deposited in
an  interest-bearing  escrow account with SouthTrust Asset Management Company of
Florida,  N.A. See "The Offering" for a description of the current status of the
offering.                                                                       

         A minimum  investment  of 250 Shares  ($2,500) is required,  except for
Nebraska,  New York,  and North  Carolina  stockholders  who must make a minimum
investment of 500 Shares  ($5,000).  IRAs,  Keogh plans,  and pension plans must
make a minimum  investment  of at least 100  Shares  ($1,000),  except  for Iowa
tax-exempt  stockholders  who  must  make a  minimum  investment  of 250  Shares
($2,500).  For Minnesota stockholders only, IRAs and qualified plans must make a
minimum investment of 200 Shares ($2,000). Following an initial subscription for
at least the required  minimum  investment,  any stockholder may make additional
purchases in  increments  of one Share.  Maine  stockholders,  however,  may not
purchase   additional  Shares  in  amounts  less  than  the  applicable  minimum
investment except with respect to Shares purchased  pursuant to the Reinvestment
Plan. See "The Offering -- General," "The Offering -- Subscription  Procedures,"
and "Summary of Reinvestment Plan."                                             

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DEFINITIONS                                                                     

         This Prospectus  includes  simplified terms and definitions to make the
Prospectus  easier to understand.  These simplified terms and definitions do not
include all of the details of the terms,  however,  and  stockholders  therefore
should review the "Definitions" section for a more complete understanding.      

RISK FACTORS

         The  purchase of Shares  involves  significant  risks and  therefore is
suitable  only for  persons  who  understand  the  possible  consequences  of an
investment  in the  Company  and who are  able to bear the risk of loss of their
investment.  Prospective  stockholders  should  consider the following  risks in
addition to other  information  describing an investment in the Shares set forth
elsewhere in this Prospectus.                                                   

INVESTMENT RISKS                                                                

         Possible  Inability to Further Diversify  Investments.  There can be no
assurance that the Company will sell the maximum number of Shares. The potential
ability of the Company to further diversify its investments, both geographically
and by type of restaurant Properties purchased, will be limited by the amount of
funds at its disposal.                                                          

         Reliance on Management.  Stockholders  will be relying  entirely on the
management  ability  of the  Advisor  and  on the  oversight  of  the  Board  of
Directors. Stockholders have no right or power to take part in the management of
the Company,  except  through the exercise of their  stockholder  voting rights.
Thus,  no  prospective  stockholder  should  purchase any of the Shares  offered
hereby unless the  prospective  stockholder is willing to entrust all aspects of
the  management  of the Company to the Advisor and the Board of  Directors.  See
"Conflicts of Interests"  for a discussion of the potential for  realization  by
the Advisor and its Affiliates of substantial  commissions,  fees, compensation,
and other income and for a discussion of various other conflicts of interest.   

         Reliance on  Advisor.  The  Advisor,  with  approval  from the Board of
Directors,  will  be  responsible  for  the  daily  management  of the  Company,
including all  acquisitions,  dispositions,  and financings.  The Advisor may be
terminated by the Board of Directors, with or without cause, but only subject to
payment  and  release  from all  guarantees  and other  obligations  incurred in
connection with its role as Advisor.  See "Management  Compensation."  Also, see
"Conflicts of Interest" for a discussion of the potential for realization by the
Advisor and its Affiliates of substantial commissions,  fees, compensation,  and
other income and for a discussion of various other conflicts of interest.       

         Leverage.  Other than the Line of Credit or to preserve its status as a
REIT, the Company does not intend to borrow money and until Listing occurs,  the
Company will not encumber  Properties in connection  with any borrowing.  At all
times,  the maximum  amount the Company may borrow is 300% of the  Company's Net
Assets, although the Board of Directors anticipates that the aggregate amount of
any borrowing by the Company will not exceed 50% of Real Estate Asset Value. The
use of borrowing  may present an element of risk in the event that the cash flow
from the Company's real estate and other  investments  are  insufficient to meet
its debt  obligations.  In  addition,  lenders to the Company may seek to impose
restrictions on future  borrowings,  Distributions and operating policies of the
Company.                                                                        

         Conflicts  of  Interest.  The Company  will be subject to  conflicts of
interest  arising out of its  relationship  to the  Advisor and its  Affiliates,
including the material  conflicts  discussed  below. See "Conflicts of Interest"
for a further  discussion of the  conflicts of interest  between the Company and
the Advisor and its Affiliates and the Company's policies to reduce or eliminate
certain potential conflicts.                                                    

                  Competing  Demands on Officers  and  Directors.  Officers  and
Directors  of the  Company  and  officers  and  directors  of the  Advisor  have
management  responsibilities for other entities,  including entities that invest
in the same types of assets in which the Company will  invest.  For this reason,
the officers and Directors will share their  management  time and services among
those  entities and the Company,  will not devote all of their  attention to the
Company,  and could take actions that are more  favorable to such other entities
than to the Company.                                                            

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                  Timing of Sales and Acquisitions Impact. Investment or Sale of
an asset by the Company may result in the immediate  realization  by the Advisor
of substantial commissions, fees and other compensation.  The Board of Directors
of the Company must approve such transactions,  but the Advisor's recommendation
to the Board may be affected by the impact of the  transaction  on the Advisor's
compensation.  None of the  agreements  between  the  Company  and  the  Advisor
pursuant to which the Advisor will perform services and receive compensation was
the result of arms-length negotiations.                                         

                  Property  Development.  Properties acquired by the Company may
require development prior to use of the Property by a tenant.  Affiliates of the
Company  may serve as  developer  and if so, the  Affiliates  would  receive the
development fee that would otherwise be paid to an unaffiliated  developer.  The
Board of Directors,  including the Independent Directors, must approve employing
an Affiliate of the Company to serve as a developer.  There is a risk,  however,
that the Company would acquire  Properties  that require  development so that an
Affiliate would receive the development fee.                                    

                  The Company May Invest With  Affiliates  of the  Advisor.  The
Company may invest in Joint  Ventures  with  another  program  sponsored  by the
Advisor or its  Affiliates.  The Board of Directors,  including the  Independent
Directors, must approve the transaction, but the Advisor's recommendation may be
affected by its relationship with one or more of the co-venturers.              

                  No  Independent  Review of the  Company or the  Prospectus  by
Managing Dealer. The Managing Dealer is an Affiliate of the Company and will not
make an independent review of the Company and the offering.                     
Accordingly, investors do not have the benefit of such independent review.      

                  No Separate Counsel for the Company, Affiliates and Investors.
Each of the Company,  its  Affiliates  and  investors may have  interests  which
conflict  with  one  another,  but none of them  currently  has the  benefit  of
separate counsel.                                                               

         For  a  description  of  the  types  and  amounts  of  fees  and  other
compensation  to be paid to  Affiliates  see  "Management  Compensation."  For a
description  of the types and amounts of fees  previously  paid to Affiliates of
the Company see "Exhibit B --  Financial  Information  -- Notes to  Consolidated
Financial  Statements."  See also  "Conflicts  of Interest  -- Certain  Conflict
Resolution Procedures."                                                         

         Lack of Liquidity of Shares. Stockholders may not be able to sell their
Shares promptly at a desired price;  therefore,  the Shares should be considered
as a long-term  investment  only.  Currently  there is no public  market for the
Shares. The Board of Directors, with or without the consent of the stockholders,
may apply for  Listing  if the  Board of  Directors  (including  a  majority  of
Independent  Directors)  determines  Listing to be in the best  interests of the
stockholders.  There can be no assurance,  however,  that the Company will apply
for  Listing,  that any such  application  will be made  before the passage of a
significant  period of time, that any  application  will be accepted or, even if
accepted,  that a public trading  market will develop.  If Listing  occurs,  the
business of the Company may  continue  indefinitely  without any  specific  time
limitation  by which the  Company  must  distribute  Net Sales  Proceeds  to the
stockholders. In that case, the stockholders would be dependent upon the sale of
their Shares for the return of their investment in the Company.  There can be no
assurance that the price a stockholder would receive in a sale on an exchange or
in the over-the-counter market will be representative of the value of the assets
owned by the  Company or that it will  equal or exceed the amount a  stockholder
paid for the  Shares.  In the  event  Listing  occurs,  Shares  may be sold only
through the national securities exchange or the over-the-counter market on which
the Shares are listed.                                                          

         Lack of Control by the Company  Over Joint  Ventures.  The  Independent
Directors of the Company must approve all Joint  Venture or general  partnership
arrangements  to which the  Company is a party.  Subject to such  approval,  the
Company may enter into a Joint Venture with an unaffiliated  party to purchase a
Property,  and the Joint Venture or general  partnership  agreement  relating to
that Joint  Venture or  partnership  may  provide  that the  Company  will share
management  control of the Joint  Venture with the  unaffiliated  party.  In the
event the Joint  Venture  or general  partnership  agreement  provides  that the
Company will have sole management  control of the Joint Venture,  such agreement
may be ineffective  as to a third party who has no notice of the agreement,  and
the Company  therefore  may be unable to control  fully the  activities  of such
Joint  Venture.  In the event that the Company  enters into a Joint Venture with
another program  sponsored by an Affiliate,  it is anticipated  that the Company
will not have sole management control of the Joint Venture.                     

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         Lack of Control of Property  Management.  The Company uses "triple-net"
leases and,  therefore,  day-to-day  management  of the  Properties  will be the
responsibility of the tenants of the Properties. In general, the Company intends
to enter into leasing  agreements  only with tenants  having  substantial  prior
experience in the  restaurant  industry,  but there can be no assurance that the
Company will be able to make such arrangements because, as of March 2, 1998, the
Company had purchased only 250 Properties.                                      

Mortgage Loans.                                               

                  Real Estate Market Conditions.  To the extent that the Company
makes Mortgage Loans, the results of the Company's  operations will be affected,
to the extent  there are  defaults on such loans,  by various  factors,  many of
which are beyond the control of the Company. The factors include local and other
economic  conditions  affecting real estate value and interest rate levels.  The
results of the Company's  operations  from making Mortgage Loans will depend on,
among other  things,  the level of interest  income  generated  by the  Mortgage
Loans,  the  market  value of  Mortgage  Loans and the  supply of and demand for
Mortgage  Loans.  No  assurance  can be given that the values of the  properties
securing the Mortgage  Loans will remain at the levels  existing on the dates of
origination of the Mortgage Loans.                                              

                  Interest Rate Fluctuations. Fluctuations in interest rates may
adversely  affect the Company to the extent it invests in fixed-rate,  long-term
Mortgage Loans.  In this  situation,  if interest rates rise, the Mortgage Loans
will yield a return lower than  then-current  market  rates.  If interest  rates
decrease,  the Company  will be adversely  affected to the extent that  Mortgage
Loans are  prepaid,  because the Company  will not be able to make new  Mortgage
Loans at the previously higher interest rate.                                   

                  Delays in Liquidating  Defaulted Mortgage Loans. Even assuming
that the  mortgaged  properties  underlying  Mortgage  Loans held by the Company
provide adequate  security for the Mortgage Loans,  substantial  delays could be
encountered in connection with the liquidation of defaulted Mortgage Loans, with
corresponding  delays in the  receipt of related  proceeds  by the  Company.  An
action  to  foreclose  on a  mortgaged  property  securing  a  Mortgage  Loan is
regulated  by state  statutes and rules and is subject to many of the delays and
expenses  of  other  lawsuits  if  defenses  or  counterclaims  are  interposed.
Furthermore,  in some  states an action to obtain a  deficiency  judgment is not
permitted following a nonjudicial sale of a mortgaged property.  In the event of
default by a mortgagor,  these restrictions,  among other things, may impede the
ability of the  Company to  foreclose  on or sell the  mortgaged  property or to
obtain  proceeds  sufficient  to repay all amounts  due on the related  Mortgage
Loan.                                                                           

                  Regulation.   The  Mortgage  Loans  may  also  be  subject  to
regulation by federal,  state and local  authorities and subject to various laws
and judicial and administrative decisions. The Company may determine not to make
Mortgage  Loans in any  jurisdiction  in which it  believes  the Company has not
complied in all material respects with applicable requirements. See "Business --
Mortgage Loans." See also "-- Real Estate and Financing Risks."                 

Secured Equipment Leases.                                     

                  Default by Lessee.  In the event that a lessee  defaults  on a
Secured  Equipment  Lease,  the  Company  may not be able  to sell  the  subject
Equipment  at a price  that  would  enable  the  Company  to  recover  its costs
associated with such Equipment.                                                 

                  Regulation.  The Secured  Equipment  Lease program may also be
subject to regulation  by federal,  state and local  authorities  and subject to
various  laws  and  judicial  and  administrative  decisions.  The  Company  may
determine not to operate the Secured Equipment Lease program in any jurisdiction
in which it believes the Company has not complied in all material  respects with
applicable requirements.                                                        

                  Tax Risks.  In addition,  there are certain federal income tax
risks associated with the Secured Equipment Lease program. See "-- Tax Risks."  

         Impact of  Inflation.  Inflation  may  impact  the value of some of the
Company's  investments.  For example,  a substantial  rise in inflation over the
term of an investment in Mortgage Loans and Secured  Equipment Leases may reduce
the  Company's  actual  return on those  investments,  if they do not  otherwise
provide for adjustments based upon inflation. Investments in Properties may also
be adversely affected by inflation, although leases with percentage             

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rent  provisions  may not be so  affected  because  inflation  could cause those
provisions to be triggered  earlier than they would otherwise become  effective,
and leases with  automatic  increases in base rent may be  sufficient to protect
against the effects of inflation.                                               

         Majority Stockholder Vote Binding on All Stockholders. Stockholders may
take certain  actions,  including  approving most  amendments to the Articles of
Incorporation and Bylaws, by a vote of a majority of the Shares  outstanding and
entitled to vote. All actions taken, if approved by the holders of the requisite
number  of  Shares,  would be  binding  on all  stockholders.  Certain  of these
provisions may discourage or make it more difficult for another party to acquire
control of the Company or to effect a change in the operation of the Company.   

         Broad  Discretion  by the  Board  of  Directors  in  Management  of the
Company's  Operations.  The Board of Directors has overall  authority to conduct
the Company's operations.  This authority includes significant flexibility.  For
example, the Board of Directors can (i) prevent the ownership,  transfer, and/or
accumulation  of Shares in order to protect the status of the Company as a REIT,
or, as otherwise  deemed by the Board of Directors,  to be in the best interests
of the stockholders  (see "Summary of the Articles of Incorporation and Bylaws -
Restriction of  Ownership");  (ii) issue  additional  Shares  without  obtaining
stockholder approval,  which could result in dilution to existing  stockholders;
(iii)  change  the  compensation  of the  Advisor,  and  employ  and  compensate
Affiliates;  (iv) direct the Company's  investments toward investments that will
not appreciate over time, such as building only Properties,  with the land owned
by a third-party,  and Mortgage Loans,  and (v) change minimum  creditworthiness
standards with respect to tenants.                                              

         Restrictions  on Transfer  Relating  to REIT  Status.  The  Articles of
Incorporation  generally restrict direct or indirect ownership (applying certain
attribution  rules) of more than 9.8% of the outstanding Common Stock or 9.8% of
any series of  outstanding  Preferred  Stock by one  Person  (as  defined in the
Articles of  Incorporation).  See "Summary of the Articles of Incorporation  and
Bylaws -- Restriction of Ownership."                                            

         Limited   Liability  of  Officers  and   Directors.   The  Articles  of
Incorporation and Bylaws provide that an officer or Director's  liability to the
Company, its stockholders, or third parties for monetary damages may be limited.
Generally,  the Company is obligated under the Articles of Incorporation and the
Bylaws to indemnify  its  officers and  Directors  against  certain  liabilities
incurred in connection with their services in such  capacities.  The Company has
executed  indemnification  agreements  with each officer and Director which will
indemnify  the  officer  or  Director  for any such  liabilities  that he or she
incurs. Such indemnification agreements could limit the legal remedies available
to the Company and the  stockholders  against the  Directors and Officers of the
Company.  See "Summary of the Articles of Incorporation and Bylaws -- Limitation
of Director and Officer Liability."                                             

         Possible Effect of ERISA.  The Company  believes that the assets of the
Company will not be deemed,  under ERISA,  to be "plan  assets" of any Plan that
invests in the Shares,  although it has not  requested  an opinion of Counsel to
that effect.  If the assets of the Company were deemed to be "plan assets" under
ERISA (i) it is not clear that the exemptions from the "prohibited  transaction"
rules under ERISA would be available  for the Company's  transactions,  and (ii)
the prudence  standards of ERISA would apply to investments  made by the Company
(and might not be met). ERISA makes plan fiduciaries  personally responsible for
any losses  resulting to the plan from any breach of fiduciary duty and the Code
imposes  nondeductible excise taxes on prohibited  transactions.  If such excise
taxes  were  imposed  on the  Company,  the  amount of funds  available  to make
Distributions to stockholders would be reduced.                                 

         Ability to Use  Leverage to Make  Distributions.  The Company may incur
indebtedness if necessary to satisfy the requirement that the Company distribute
at least 95% of its real estate investment trust taxable income or otherwise, as
is necessary or advisable to assure that the Company maintains its qualification
as a REIT for federal income tax purposes. In such an event, it is possible that
the Company could make  Distributions in excess of its earnings and profits and,
accordingly,  that such  Distributions  could constitute a return of capital for
federal  income  tax  purposes,  although  such  Distributions  would not reduce
stockholders' aggregate Invested Capital.                                       

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REAL ESTATE AND FINANCING RISKS                                                 

An Unspecified Property Offering.                             

                  Inability of Potential Investors to Evaluate  Properties.  The
Company has  established  certain  criteria for  evaluating  Restaurant  Chains,
particular  Properties,  and  the  operators  of  the  Properties  proposed  for
investment  by the  Company.  See  "Business -- Standards  for  Investment"  and
"Business  -- General"  for a  description  of these  criteria  and the types of
Properties in which the Company intends to invest. The Company has not set fixed
minimum  standards  relating to  creditworthiness  of tenants and  therefore the
Board of Directors has flexibility in assessing  potential tenants.  Prospective
investors have no information to assist them in evaluating the merits of the 320
to 360  Properties  expected to be acquired by the Company  with the proceeds of
this offering or  additional  Properties to be acquired with the proceeds of the
1997 Offering.                                                                  

                  No Limitation  on Number of Properties of a Particular  Chain.
There  is no  limit on the  number  of  restaurant  Properties  of a  particular
Restaurant Chain which the Company may acquire,  although the Board of Directors
currently does not anticipate  that the Company will invest more than 25% of its
Gross Proceeds in Properties of any one Restaurant Chain.                       

                  No Assurance of Obtaining Suitable  Investments.  No assurance
can be  given  that  the  Company  will  be  successful  in  obtaining  suitable
investments on financially  attractive  terms or that, if investments  are made,
the  objectives of the Company will be achieved.  There also can be no assurance
that all of the  Properties  will operate  profitably  or that defaults will not
occur.                                                                          

                  Conflicts of Interest. The Advisor or its Affiliates from time
to time may  acquire  properties  on a  temporary  basis with the  intention  of
subsequently  transferring the properties to one or more of the CNL Group,  Inc.
("CNL")  programs,  including  the  Company,  although  the  Company has adopted
guidelines to minimize such conflicts. See "Conflicts of Interest -- Acquisition
of  Properties."  Potential  investors will not have the opportunity to evaluate
the manner in which these conflicts of interest are resolved.                   

         Possible  Delays  in  Investment.  To the  extent  consistent  with the
Company's  objective of qualifying as a REIT,  the offering  proceeds may remain
uninvested  for up to the  later  of two  years  from the  initial  date of this
Prospectus  or one  year  after  termination  of the  offering,  although  it is
expected that  substantially all net offering proceeds will be invested prior to
the end of such  period.  See  "Prior  Performance  Information"  for a  summary
description of the investment  experience of Affiliates and the Advisor in prior
CNL  programs,  which is not  necessarily  indicative  of the rate at which  the
proceeds of this offering will be invested.                                     

         An  extended  offering  period,  the  inability  of the Advisor to find
suitable  Properties,  or the fact that a program  formed by  Affiliates  of the
Advisor  currently is in the process of  acquiring  fast-food  and  family-style
restaurant properties to substantially complete its acquisition program prior to
the time that the Company has funds available to invest in Properties may result
in delays in investment  of Company funds in Properties  and in the receipt of a
return from real property investments.                                          

         Revenues  received by the Company  pending  investment in Properties or
making  Mortgage  Loans  will be  limited  to the rates of return  available  on
short-term,  highly liquid  investments  with  appropriate  safety of principal.
These  rates of  return,  which  affect  the  amount of cash  available  to make
Distributions  to the  stockholders,  are  expected to be lower than the Company
would  receive  under its Property  leases or Mortgage  Loans.  Further,  to the
extent  consistent  with the Company's  objective of  qualifying as a REIT,  any
funds of the Company  required to be invested in Properties  and not so invested
or reserved for Company  purposes within the later of two years from the initial
date of this  Prospectus,  or one year after the  termination  of this offering,
will be  distributed  pro  rata  to the  then  stockholders  of the  Company  in
accordance with the Articles of Incorporation.                                  

         Lack of Control Over Properties Under Construction. The Company intends
to acquire sites on which a particular  restaurant to be owned by the Company is
to be built as well as existing restaurants (including restaurants which require
renovation).  To the  extent  that the  Company  acquires  a  Property  on which
improvements  are to be constructed or completed or renovations  are to be made,
the Company may be subject to certain risks in connection  with the  developer's
ability  to  control  construction  costs,  and  the  timing  of  completion  of
construction,  or  to  build  in  conformity  with  plans,  specifications,  and
timetables.  The Company's  agreements  with the developer will provide  certain
safeguards designed to minimize these risks.  Further, in the event of a default
by a developer, the Company                                                     

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generally  will have the right to require the tenant to repurchase  the Property
that is under development at a  pre-established  price designed to reimburse the
Company for all costs incurred by the Company in connection with the acquisition
and development of the Property. There can be no assurance,  however, that under
such  circumstances,  the  tenant  will have  sufficient  funds to  fulfill  its
obligations. See "Business -- Site Selection and Acquisition Properties."       

         Ground Lease  Property  Risks.  If the Company  invests in ground lease
Properties,  the  Company  will not own or,  except to the  extent of rights set
forth in any  assignment of lease or tripartite  agreement  that the Company may
enter into, have a leasehold interest in the underlying land. Thus, with respect
to ground lease  Properties,  the Company will have no economic  interest in the
land or building at the expiration of the lease on the underlying land, although
it  generally  will  retain  partial  ownership  of,  and will have the right to
remove, any equipment that the Company may own in the building. The Company will
not share in any  appreciation  of the land  associated  with any  ground  lease
Property. The Company,  however, will share in appreciation of the income stream
derived from the lease.                                                         

Impasse or Conflicts with Joint Venture Partner.              

                  Impasse  with  Joint  Venture  Partner.  In the event that the
Company enters into a Joint Venture with another program formed by Affiliates of
the Advisor,  there will be a potential risk of impasse in certain joint venture
decisions since the approval of the Company and of each  co-venturer is required
for certain decisions. In any Joint Venture with an affiliated program, however,
the Company  will have the right to buy the other  co-venturer's  interest or to
sell its own  interest  on  specified  terms and  conditions  in the event of an
impasse regarding a Sale. Under such circumstances,  it is possible that neither
party will have the funds necessary to consummate the transaction. See "Business
--  Joint  Venture  Arrangements."  In  addition,  the  Company  may  experience
difficulty in locating a third party  purchaser  for its Joint Venture  interest
and in obtaining a favorable sale price for such Joint Venture interest.        

                  Interests  of  Joint  Venture  Partner.  Investments  in Joint
Ventures may involve the risk that the Company's  co-venturer  may have economic
or business  interests or goals which,  at a particular  time, are  inconsistent
with the interests or goals of the Company,  that such  co-venturer  may be in a
position  to take  action  contrary  to the  Company's  instructions,  requests,
policies  or  objectives,  or that such  co-venturer  may  experience  financial
difficulties.  Among  other  things,  actions  by a  co-venturer  might  subject
property  owned  by  the  Joint  Venture  to  liabilities  in  excess  of  those
contemplated  by the terms of the joint  venture  agreement or to other  adverse
consequences.                                                                   

         Limitations  on the Ability of the Company to Liquidate.  For the first
two to seven years after  commencement of this offering,  the Company intends to
use any  proceeds  from the Sale of  Properties  or Mortgage  Loans that are not
required to be  distributed to  stockholders  in order to preserve the Company's
status  as a  REIT  for  federal  income  tax  purposes  to  acquire  additional
Properties, make additional Mortgage Loans and repay outstanding indebtedness on
the Line of Credit.  The proceeds from the Sale of Secured Equipment Leases will
be used to fund additional  Secured Equipment Leases, or to reduce the Company's
outstanding  indebtedness on the Line of Credit. If Listing occurs, the proceeds
from Sales may be reinvested in other  Properties,  Mortgage  Loans,  or Secured
Equipment  Leases for an indefinite  period of time.  Unless  Listing  occurs by
December 31, 2005, the Company will undertake, to the extent consistent with the
Company's  objective of qualifying as a REIT,  the orderly Sale of the Company's
assets,   the   distribution  of  the  Net  Sales  Proceeds  of  such  Sales  to
stockholders,  and  will  engage  only  in  activities  related  to its  orderly
liquidation unless the stockholders elect otherwise. Neither the Advisor nor the
Board of  Directors  may be able to  control  the  timing of Sales due to market
conditions,  and there can be no assurance that the Company will be able to sell
its assets so as to return stockholders' aggregate Invested Capital, to generate
a profit  for the  stockholders,  or to  fully  satisfy  its  debt  obligations.
Invested  Capital,  in the  aggregate,  will be  returned to  stockholders  upon
disposition  of the  Properties  only if the  Properties  are sold for more than
their original  purchase price,  although return of capital,  for federal income
tax purposes, is not necessarily limited to stockholder  distributions following
Sales of Properties.  See "Federal Income Tax Considerations." In the event that
a purchase money  obligation is taken in partial payment of the sales price of a
Property,  the  proceeds  of the Sale will be  realized  over a period of years.
Further,  entering into Mortgage  Loans with terms of 15 to 20 years and Secured
Equipment Leases with terms of seven years may cause any intended liquidation of
the Company to be delayed  beyond the time of  disposition of the Properties and
until such time as the Mortgage Loans and Secured Equipment Leases expire or are
sold.                                                                           

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         Inability to Control the Sale of Certain  Properties.  Certain  tenants
are  expected  to have the right to  purchase  the  Property  from the  Company,
commencing  a specified  number of years after the date of the lease,  which may
lessen the ability of the Advisor and the Board of Directors  to freely  control
the Sale of the Property.  The leases also  generally  provide the tenant with a
right of first  refusal  on any  proposed  sale  provisions.  See  "Business  --
Description  of Leases -- Right of Tenant to  Purchase."  A tenant  will have no
obligation to purchase the restaurant it leases.                                

Real Property Investments.                                    

                  Lack of Control Over Market and Business Conditions. The value
of  Properties  such as those to be acquired by the Company,  the ability of the
tenants  to pay rent on a timely  basis,  and the  amount of the  rent,  and the
ability of borrowers  to make  Mortgage  Loan  payments on a timely basis may be
adversely  affected  by certain  changes in general or local  economic or market
conditions,  increased  costs of energy or food  products,  increased  costs and
shortages of labor,  competitive factors, fuel shortages,  quality of restaurant
management,  the ability of a  Restaurant  Chain to fulfill any  obligations  to
operators  of its  restaurants,  limited  alternative  uses  for  the  building,
changing   consumer   habits,   condemnation  or  uninsured   losses,   changing
demographics,   changing  traffic   patterns,   inability  to  remodel  outmoded
restaurants  as  required  by  the  franchise  or  lease  agreement,   voluntary
termination  by a tenant of its  obligations  under a lease,  and other factors.
Neither the Company nor the Board of Directors can control these factors.       

                  Multiple  Property  Leases or Mortgage  Loans with  Individual
Tenants or Borrowers. Tenants may lease more than one Property and borrowers may
enter into more than one Mortgage Loan.  Events such as the default or financial
failure of a tenant or borrower  therefore could cause one or more Properties to
become  vacant  under  certain  circumstances.  Vacancies  would reduce the cash
receipts of the Company  and, at least until the Company is able to re-lease any
such  Properties,  could decrease their ultimate resale value.  The value of the
Company's Properties will depend principally upon the value of the leases of the
Properties.  Minor  defaults by a tenant or borrower  may continue for some time
before the Advisor or Board of Directors  determines  that it is in the interest
of the  Company  to evict  that  tenant  or  foreclose  on the  property  of the
borrower.                                                                       

                  Re-leasing of Properties.  If a Property  becomes vacant,  the
Company may be unable  either to release the Property for the rent due under the
prior  lease  or  to  re-lease  the  Property   without   incurring   additional
expenditures  relating to the Property.  The Company could experience  delays in
enforcing  its  rights  against,   and  collecting  rents  (and,  under  certain
circumstances,  real estate  taxes and  insurance  costs) due from, a defaulting
tenant.                                                                         

                  Third Party  Franchise  Agreements.  The Company will not be a
party to any franchise  agreement  between a Restaurant Chain and a tenant,  and
such agreement could therefore be modified or canceled without notice to, or the
prior  consent of, the Company.  In that event,  the tenant could be required to
cease its operations at a Property, although the tenant's obligation to pay rent
to the Company would continue.  Before  operations at the Property could resume,
however,  the Company  would be required to locate a new tenant  acceptable to a
Restaurant Chain.                                                               

                  Lack of Adequate Insurance.  If the Company, as lessor, incurs
any  liability  which is not fully  covered by  insurance,  the Company would be
liable for such amounts,  and returns to the stockholders could be reduced.  See
"Business -- Description of Leases - Insurance, Taxes, Maintenance, and Repairs"
for a description  of the types of insurance  that the leases of the  Properties
will require the tenant to obtain.                                              

         The inability of tenants to make lease payments or of borrowers to make
Mortgage  Loan  payments as a result of any of these  factors  could result in a
decrease  in  the  amount  of  cash  available  to  make  Distributions  to  the
stockholders.                                                                   

         Impact of Adverse  Trends.  The  success of the  future  operations  of
fast-food, family-style, and casual dining segments will depend largely on their
ability  to adapt to  dominant  trends  in the  restaurant  industry,  including
greater competitive pressures,  increased consolidation of the leading fast-food
chains,  industry  overbuilding,  dependence  on  consumer  spending  and dining
patterns and changing  demographics,  the  introduction of new concepts and menu
items,  availability  of labor,  levels of food  prices,  and  general  economic
conditions.  See "Business -- General" for a description  of the size and nature
of the restaurant industry and current trends in the industry.  The success of a
particular  Restaurant Chain concept,  the Restaurant Chain's ability to fulfill
any  obligations to operators of its  restaurants,  and trends in the fast-food,
family-style,  and casual dining segments of the restaurant industry will affect
the income  that the Company  derives  from  restaurants  which are part of such
Restaurant Chain.                                                               

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         Competition.  The Company will compete with other  entities,  including
Affiliates,  for the acquisition of restaurant sites and completed  restaurants.
See  "Conflicts  of Interest -- Prior and Future  Programs."  In  addition,  the
restaurant  business  is  highly  competitive,  and it is  anticipated  that any
restaurant  Property acquired by the Company will compete with other restaurants
in the  vicinity.  The extent to which the  Company  will be entitled to receive
rent,  in the form of  percentage  rent,  in excess of the base rent  (including
automatic  increases in the base rent) for the Properties will depend in part on
the ability of the tenants to compete successfully with other restaurants in the
vicinity. In addition, the Company will compete with other financing sources for
suitable tenants and properties.                                                

         Possible  Environmental  Liabilities.  Under various  federal and state
environmental  laws and regulations,  a current or previous owner or operator of
real estate may be required to  investigate  and clean up certain  hazardous  or
toxic substances,  asbestos-containing  materials, or petroleum product releases
at the  property,  and may be held liable to a  governmental  entity or to third
parties for property damage and for  investigation and cleanup costs incurred by
such  parties  in  connection  with  the   contamination.   In  addition,   some
environmental  laws  create  a lien on the  contaminated  site in  favor  of the
government for damages and costs it incurs in connection with the contamination.
The presence of  contamination  or the failure to remediate  contaminations  may
adversely  affect the owner's  ability to sell or lease real estate or to borrow
using the real  estate as  collateral.  The owner or  operator  of a site may be
liable under common law to third parties for damages and injuries resulting from
environmental contamination emanating from the site.                            

         All of the  Properties  will be  acquired  by the  Company  subject  to
satisfactory  Phase  I  environmental   assessments  or  satisfactory  Phase  II
environmental assessments. A Phase I or Phase II environmental assessment may be
determined  by the Board of  Directors  or the Advisor to be  satisfactory  if a
problem  exists and has not been  resolved at the time the  Property is acquired
provided that the seller has agreed in writing to indemnify  the Company.  There
can be no  assurance,  however,  that any  seller  will be able to pay  under an
indemnity obtained by the Company.  Further, no assurances can be given that all
environmental  liabilities have been identified or that no prior owner, operator
or current  occupant  has created an  environmental  condition  not known to the
Company.  Moreover,  no assurances can be given that (i) future laws, ordinances
or regulations will not impose any material environmental  liability or (ii) the
current  environmental  condition  of the  Properties  will not be  affected  by
tenants and occupants of the Properties,  by the condition of land or operations
in the vicinity of the Properties  (such as the presence of underground  storage
tanks), or by third parties unrelated to the Company.                           

         Unspecified Secured Equipment Leases.  Prospective stockholders have no
information  to assist them in  evaluating  the merits of any Secured  Equipment
Lease entered into after the date of this Prospectus.  No assurance can be given
that the Company  will be  successful  in  identifying  additional  operators or
negotiating  additional Secured Equipment Leases on financially attractive terms
or that lessees will fulfill their obligations under Secured Equipment Leases.  

TAX RISKS                                                                       

         REIT  Qualification.  The Company operates as a REIT for federal income
tax purposes.  A qualified REIT generally is not taxed at the corporate level on
income it currently  distributes to its stockholders,  so long as it distributes
at least 95% of its real estate  investment  trust taxable income.  See "Federal
Income Tax  Considerations  -- Taxation of the Company." The Company  expects to
have qualified as a REIT in its taxable years ending through  December 31, 1997,
but no assurance can be given that it did so qualify or that it will continue to
qualify in the future.  In this  regard,  based on certain  representations  and
assumptions,  the Company has  received an opinion of tax counsel to the Company
("Counsel")  to the effect that the Company  qualified as a REIT for the taxable
years  ending  through  December  31,  1997,  that the Company is  organized  in
conformity  with the  requirements  for  qualification  as a REIT,  and that the
Company's  proposed method of operation will enable it to meet the  requirements
for qualification as a REIT for federal income tax purposes.  Qualification as a
REIT,  however,  involves the  application of highly  technical and complex Code
provisions  as to which  there  are only  limited  judicial  and  administrative
interpretations.  Certain  facts  and  circumstances  which  may  be  wholly  or
partially  beyond the Company's  control may affect its ability to qualify on an
ongoing  basis as a REIT.  In addition,  no  assurance  can be given that future
legislation, new regulations,  administrative interpretations or court decisions
will not  significantly  change the tax laws (or the  application  thereof) with
respect  to  qualification  as a REIT for  federal  income tax  purposes  or the
federal income tax consequences of such qualification. The opinion of Counsel is
not binding on the Internal Revenue Service ("IRS") or the courts.              

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         Property Lease Treatment. Counsel is of the opinion, based upon certain
assumptions, that the leases of Properties where the Company owns the underlying
land constitute leases for federal income tax purposes. However, with respect to
the Properties  where the Company does not own the underlying  land,  Counsel is
unable to render this opinion.  If the lease of a Property does not constitute a
lease for  federal  income tax  purposes,  it would be  treated  as a  financing
arrangement. In the opinion of Counsel, the income derived from such a financing
arrangement  would  satisfy  the 75% and the 95%  gross  income  tests  for REIT
qualification  because it would be  considered  to be interest on an  obligation
secured by an interest in real property. Nevertheless, the recharacterization of
a lease in this fashion may have adverse tax  consequences  for the Company,  in
particular  that  the  Company  would  not be  entitled  to  claim  depreciation
deductions with respect to such Property (although the Company would be entitled
to treat part of the  payments it would  receive  under the  arrangement  as the
repayment of principal).  In such event,  in certain taxable years the Company's
taxable  income,  and the  corresponding  obligation to  distribute  95% of such
income, would be increased.                                                     

         Secured  Equipment Lease  Treatment.  In order to qualify as a REIT for
federal income tax purposes, not more than 25% of the Company's total assets may
be represented by personal  property,  or loans secured by personal  property on
certain testing dates. In addition,  loans secured by personal  property made to
each borrower must represent less than 5% of the Company's  total assets on such
testing dates. Counsel is of the opinion, based on certain assumptions, that the
Secured  Equipment Leases will be treated as loans secured by personal  property
for federal  income tax  purposes.  The Company  believes  that the value of the
Secured  Equipment  Leases  together  with any  personal  property  owned by the
Company,  will in the aggregate  represent less than 25% of the Company's  total
assets and that the value of the Secured  Equipment Leases entered into with any
particular  lessee will  represent  less than 5% of the Company's  total assets.
Counsel has relied on the  representations  of the Company regarding such values
in rendering  its opinion as to the  qualification  of the Company as a REIT. If
the  Company  fails to satisfy the 25% test or the 5% test either at the time of
the offering or on any subsequent testing date, the Company will fail to qualify
(or  cease to  qualify,  as the case may be) as a REIT for  federal  income  tax
purposes.  In  addition,  if,  contrary to the  opinion of Counsel,  the Secured
Equipment Leases are not treated as loans, but are instead treated as leases for
federal  income tax  purposes,  income  from the Secured  Equipment  Leases will
generally  not  satisfy  either the 95% or the 75% gross  income  tests for REIT
qualification.  See  "Federal  Income  Tax  Considerations  --  Taxation  of the
Company,"and "-- Characterization of the Secured Equipment Leases."             

         Effect of REIT  Disqualification.  If, in any taxable year, the Company
were to fail to qualify as a REIT for federal income tax purposes,  it would not
be allowed a deduction for dividends to stockholders in computing taxable income
and would be subject to federal income tax (including any applicable alternative
minimum  tax) on its taxable  income at regular  corporate  rates.  In addition,
unless entitled to relief under certain statutory provisions,  the Company would
be disqualified from treatment as a REIT for federal income tax purposes for the
four taxable years following the year during which REIT  qualification  is lost.
The  additional  tax  liability  resulting  from the failure to so qualify would
significantly  reduce the amount of funds  available  to make  Distributions  to
stockholders.  Distributions  to  stockholders  generally  would be  taxable  as
ordinary  income to the extent of current and  accumulated  earnings and profits
and,  subject  to  certain  limitations,  would be  eligible  for the  corporate
dividends  received  deduction.  Although  the  Company  intends to operate in a
manner  designed  to permit  it to  qualify  as a REIT for  federal  income  tax
purposes,  it is possible that future  economic,  market,  legal,  tax, or other
events or  circumstances  could  cause it to fail to so  qualify.  See  "Federal
Income Tax Considerations -- Taxation of the Company."                          

         Effect of Distribution Requirements. The Company may be required, under
certain circumstances,  to accrue as income for tax purposes interest,  rent and
other  items  treated  as  earned  for tax  purposes  but not yet  received.  In
addition, the Company may be required not to accrue as expenses for tax purposes
certain  items  which  actually  have  been  paid or  certain  of the  Company's
deductions  might be disallowed by the Service.  In any such event,  the Company
could have taxable income in excess of cash available for  distribution.  If the
Company has taxable  income in excess of cash  available for  distribution,  the
Company  could  be  required  to  borrow  funds  or  liquidate   investments  on
unfavorable terms in order to meet the distribution  requirement applicable to a
REIT.  See  "Federal  Income Tax  Considerations  --  Taxation of the Company --
Distribution Requirements."                                                     

         Restrictions  on Maximum Share  Ownership.  In order for the Company to
qualify  as a REIT,  no more  than 50% of the  value of the  outstanding  equity
securities may be owned,  directly or indirectly  (applying certain  attribution
rules),  by five or fewer  individuals (or certain  entities) at any time during
the last half of the Company's taxable year. To ensure that the Company will not
fail  to  qualify  as  a  REIT  under  this  test,  the  Company's  Articles  of
Incorporation include certain provisions restricting the accumulation of Shares.
These  restrictions may (i) discourage a change of control of the Company;  (ii)
deter individuals and entities from making tender offers for                    

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Shares,  which  offers may be  attractive  to  stockholders;  or (iii) limit the
opportunity for  stockholders to receive a premium for their Shares in the event
a  stockholder  is making  purchases  of  Shares in order to  acquire a block of
Shares.                                                                         

         Other Tax  Liabilities.  Even if the  Company  qualifies  as a REIT for
federal  income tax purposes,  it may be subject to certain  federal,  state and
local taxes on its income and property.  See "Federal Income Tax  Considerations
-- State and Local Taxes."                                                      

         Changes in Tax Laws. The  discussions of the federal income tax aspects
of the offering are based on current law,  including the Code,  the  Regulations
issued thereunder,  certain  administrative  interpretations  thereof, and court
decisions.  Consequently,  future  events that modify or otherwise  affect those
provisions  may result in  treatment  for  federal  income tax  purposes  of the
Company and the  stockholders  that is materially  and adversely  different from
that  described in this  Prospectus,  both for taxable years arising  before and
after  such  events.   There  is  no  assurance  that  future   legislation  and
administrative interpretations will not be retroactive in effect.               

SUITABILITY STANDARDS AND HOW TO SUBSCRIBE

SUITABILITY STANDARDS                                                           

         The Shares offered  hereby are suitable only as a long-term  investment
for persons of adequate  financial  means who have no need for liquidity in this
investment.  Initially,  there is not  expected to be any public  market for the
Shares, which means that it may be difficult to sell Shares. See "Summary of the
Articles  of  Incorporation  and  Bylaws --  Restrictions  on  Ownership"  for a
description  of  the  transfer  requirements.  As  a  result,  the  Company  has
established  suitability  standards which require investors to have either (i) a
net worth (exclusive of home, furnishings, and personal automobiles) of at least
$45,000  and an annual  gross  income of at least  $45,000,  or (ii) a net worth
(exclusive of home, furnishings, and personal automobiles) of at least $150,000.

         Iowa, Maine,  Massachusetts,  Missouri, New Hampshire,  North Carolina,
Ohio,   Pennsylvania  and  Tennessee  have  established   suitability  standards
different from those established by the Company, and Shares will be sold only to
investors in those states who meet the special  suitability  standards set forth
below.                                                                          

         IOWA,  MASSACHUSETTS,  MISSOURI,  NORTH  CAROLINA AND  TENNESSEE -- The
investor  has  either  (i) a net  worth  (exclusive  of home,  furnishings,  and
personal automobiles) of at least $60,000 and an annual gross income of at least
$60,000,  or (ii) a net worth  (exclusive  of home,  furnishings,  and  personal
automobiles) of at least $225,000.                                              

         MAINE -- The  investor has either (i) a net worth  (exclusive  of home,
furnishings,  and personal  automobiles) of at least $50,000 and an annual gross
income of at least $50,000, or (ii) a net worth (exclusive of home, furnishings,
and personal automobiles) of at least $200,000.                                 

         NEW HAMPSHIRE -- The investor has either (i) a net worth  (exclusive of
home, furnishings,  and personal automobiles) of at least $125,000 and an annual
gross  income  of at least  $50,000,  or (ii) a net  worth  (exclusive  of home,
furnishings, and personal automobiles) of at least $250,000.                    

         OHIO -- The investor's investment in the Shares shall not exceed 10% of
the  investor's  net  worth  (exclusive  of  home,  furnishings,   and  personal
automobiles).                                                                   

         PENNSYLVANIA  -- The investor has (i) a net worth  (exclusive  of home,
furnishings,  and  personal  automobiles)  of at least ten times the  investor's
investment in the Company,  and (ii) either (a) a net worth  (exclusive of home,
furnishings,  and personal  automobiles) of at least $45,000 and an annual gross
income of at least $45,000, or (b) a net worth (exclusive of home,  furnishings,
and personal automobiles) of at least $150,000.                                 

         The  foregoing  suitability  standards  must be met by the investor who
purchases the Shares.  If the  investment is being made for a fiduciary  account
(such as an IRA, Keogh Plan, or corporate pension or  profit-sharing  plan), the
beneficiary,  the  fiduciary  account,  or any  donor  or  grantor  that  is the
fiduciary of the account who  directly or  indirectly  supplies  the  investment
funds must meet such suitability standards.                                     

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         In addition,  under the laws of certain states,  investors may transfer
their  Shares only to persons who meet  similar  standards,  and the Company may
require certain  assurances that such standards are met.  Investors  should read
carefully the  requirements in connection with resales of Shares as set forth in
the Articles of  Incorporation  and as summarized under "Summary of the Articles
of Incorporation and Bylaws -- Restrictions of Ownership."                      

         In  purchasing  Shares,  custodians  or trustees  of  employee  pension
benefit  plans or IRAs may be subject  to the  fiduciary  duties  imposed by the
Employee  Retirement  Income Security Act of 1974 ("ERISA") or other  applicable
laws and to the  prohibited  transaction  rules  prescribed by ERISA and related
provisions of the Code.  See "Federal  Income Tax  Considerations  -- Retirement
Plan  Stockholders."  In addition,  prior to purchasing  Shares,  the trustee or
custodian of an employee  pension  benefit plan or an IRA should  determine that
such an investment would be permissible under the governing  instruments of such
plan or  account  and  applicable  law.  For  information  regarding  "unrelated
business taxable income," see "Federal Income Tax  Considerations -- Taxation of
Stockholders -- Tax-Exempt Stockholders."                                       

         In order to insure  adherence to the  suitability  standards  described
above,  requisite  suitability  standards  must  be  met,  as set  forth  in the
Subscription  Agreement  in one of the forms  attached  hereto as  Exhibit D. In
addition,  Soliciting  Dealers who sell Shares have the  responsibility  to make
every  reasonable  effort to determine that the purchase of Shares is a suitable
and appropriate  investment for an investor.  In making this determination,  the
Soliciting Dealers will rely on relevant  information  provided by the investor,
including   information  as  to  the  investor's  age,  investment   objectives,
investment   experience,   income,  net  worth,   financial   situation,   other
investments,   and  any  other  pertinent  information.  See  "The  Offering  --
Subscription Procedures." Executed Subscription Agreements will be maintained in
the Company's records for six years.                                            

HOW TO SUBSCRIBE                                                                

         An investor who meets the  suitability  standards  described  above may
subscribe for Shares by completing and executing the Subscription  Agreement and
delivering  it to a  Soliciting  Dealer,  together  with a check  for  the  full
purchase  price of the  Shares  subscribed  for,  payable to  "SouthTrust  Asset
Management  Company of  Florida,  N.A.,  Escrow  Agent."  See "The  Offering  --
Subscription  Procedures." Certain Soliciting Dealers who have "net capital," as
defined in the applicable  federal securities  regulations,  of $250,000 or more
may instruct  their  customers to make their  checks for Shares  subscribed  for
payable directly to the Soliciting  Dealer.  Care should be taken to ensure that
the Subscription Agreement is filled out correctly and completely. Partnerships,
individual  fiduciaries  signing  on behalf  of  trusts,  estates,  and in other
capacities, and persons signing on behalf of corporations and corporate trustees
may be required to obtain  additional  documents from  Soliciting  Dealers.  Any
subscription  may be rejected by the Company in whole or in part,  regardless of
whether the subscriber meets the minimum suitability standards.                 

         Certain   Soliciting   Dealers  may  permit   investors  who  meet  the
suitability  standards  described  above to subscribe  for Shares by  telephonic
order to the Soliciting  Dealer.  This procedure may not be available in certain
states. See "The Offering -- Subscription  Procedures" and "The Offering -- Plan
of Distribution."                                                               

         A minimum  investment  of 250 Shares  ($2,500) is required,  except for
Nebraska,  New  York,  and  North  Carolina  investors  who must  make a minimum
investment of 500 Shares  ($5,000).  IRAs,  Keogh plans,  and pension plans must
make a minimum  investment  of at least 100  Shares  ($1,000),  except  for Iowa
tax-exempt  investors who must make a minimum investment of 250 Shares ($2,500).
For  Minnesota  investors  only,  IRAs and  qualified  plans must make a minimum
investment  of 200 Shares  ($2,000).  Following an initial  subscription  for at
least  the  required  minimum  investment,  any  investor  may  make  additional
purchases in increments of one Share.  Maine  investors,  however,  may not make
additional  purchases in amounts  less than the  applicable  minimum  investment
except with respect to Shares purchased  pursuant to the Reinvestment  Plan. See
"The  Offering --  General,"  "The  Offering --  Subscription  Procedures,"  and
"Summary of Reinvestment Plan."                                                 

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 ESTIMATED USE OF PROCEEDS

         The table set forth below summarizes  certain  information  relating to
the  anticipated  use  of  offering  proceeds  by  the  Company,  assuming  that
34,500,000  Shares are sold.  The Company  estimates  that 84% of Gross Proceeds
will be  available  for the  purchase of  Properties  and the making of Mortgage
Loans, and  approximately 9% of Gross Proceeds will be paid in fees and expenses
to  Affiliates  of the  Company  for their  services  and as  reimbursement  for
Offering Expenses incurred on behalf of the Company.  While the estimated use of
proceeds set forth in the table below is believed to be  reasonable,  this table
should  be  viewed  only as an  estimate  of the  use of  proceeds  that  may be
achieved.                                                                       

                                                        · Enlarge/Download Table


                                                                                        Maximum of      
                                                                                  34,500,000 Shares (1) 
                                                                                  --------------------- 
                                                                                  Amount        Percent 
                                                                                  ------        ------- 
                                                                                                        
GROSS PROCEEDS TO THE COMPANY (2)............................................... $345,000,000     100.0%
Less:                                                                                                   
   Selling Commissions to CNL                                                                           
      Securities Corp. (2)......................................................   25,875,000       7.5%
   Marketing Support and Due Diligence                                                                  
      Expense Reimbursement Fee to                                                                      
      CNL Securities Corp. (2)..................................................    1,725,000       0.5%
   Offering Expenses (3)........................................................   10,350,000       3.0%
                                                                                 ------------     ------

NET PROCEEDS TO THE COMPANY.....................................................  307,050,000      89.0%
Less:                                                                                                   
   Acquisition Fees to the Advisor (4)..........................................   15,525,000       4.5%
   Acquisition Expenses (5).....................................................    1,725,000       0.5%
   Initial Working Capital Reserve..............................................       (6)              
                                                                                 ------------     ------

CASH PAYMENT FOR PURCHASE OF PROPERTIES                                                                 
   AND THE MAKING OF MORTGAGE LOANS                                                                     
   BY THE COMPANY (7)........................................................... $289,800,000      84.0%
                                                                                 ============     ======

--------------------------------------------                                    

FOOTNOTES:                                                                      

(1)  Includes   2,000,000   Shares  that  may  be  sold  only  pursuant  to  the
Reinvestment Plan.                                                    
(2)  Gross  Proceeds of the offering are calculated as if all Shares are sold at
     $10.00  per Share and do not take into  account  any  reduction  in Selling
     Commissions.  See "The Offering -- Plan of Distribution"  for a description
     of the  circumstances  under  which  Selling  Commissions  may be  reduced,
     including  commission  discounts  available  for  purchases  by  registered
     representatives or principals of the Managing Dealer or Soliciting Dealers,
     certain  Directors and officers and certain  investment  advisers.  Selling
     Commissions are calculated  assuming that reduced  commissions are not paid
     in connection with the purchase of any Shares. The Shares are being offered
     to the public  through CNL  Securities  Corp.,  which will receive  Selling
     Commissions of 7.5% on all sales of Shares and will act as Managing Dealer.
     The Managing  Dealer is an Affiliate of the Advisor.  Other  broker-dealers
     may be engaged as Soliciting  Dealers to sell Shares and reallowed  Selling
     Commissions  of up to 7%  with  respect  to  Shares  which  they  sell.  In
     addition,  all or a portion  of the  marketing  support  and due  diligence
     expense  reimbursement fee may be reallowed to certain  Soliciting  Dealers
     for   expenses   incurred  by  them  in  selling   the  Shares,   including
     reimbursement  for bona  fide  expenses  incurred  in  connection  with due
     diligence  activities,  in the Managing Dealer's sole discretion.  See "The
     Offering -- Plan of Distribution"  for a more complete  description of this
fee.                                                                  
(3)  Offering  Expenses include legal,  accounting,  printing,  escrow,  filing,
     registration,  qualification, and other expenses of the organization of the
     Company and the offering of the Shares, but exclude Selling Commissions and
     the marketing  support and due  diligence  expense  reimbursement  fee. The
   Advisor will pay all Offering Expenses which exceed 3% of Gross Proceeds.
(4)  Acquisition  Fees include all fees and  commissions  paid by the Company to
     any  person or entity  in  connection  with the  purchase,  development  or
     construction  of any Property or investing in any Mortgage Loan,  including
     to Affiliates or nonaffiliates. Acquisition Fees do not include Acquisition
Expenses.                                                             
(5)  Represents  Acquisition Expenses that are neither reimbursed to the Company
     nor included in the purchase price of the Properties,  and on which rent is
     not  received,  but does  not  include  certain  expenses  associated  with
     Property   acquisitions  that  are  part  of  the  purchase  price  of  the
     Properties,  that are included in the basis of the Properties, and on which
     rent is  received.  Acquisition  Expenses  include  any  and  all  expenses
     incurred by the Company,  the Advisor,  or any  Affiliate of the Advisor in
     connection  with the selection or acquisition of any Property or the making
     of any Mortgage Loan, whether or not acquired or made,  including,  without
     limitation,  legal fees and expenses,  travel and  communication  expenses,
     costs  of  appraisals,   nonrefundable  option  payments  on  property  not
     acquired,  accounting fees and expenses,  taxes, and title  insurance,  but
     exclude  Acquisition Fees. The expenses that are attributable to the seller
     of the  Properties  and part of the  purchase  price of the  Properties  is
anticipated to range between 1% and 2% of Gross Proceeds.             
(6)  Because leases will be on a "triple-net"  basis, it is not anticipated that
     a  permanent  reserve for  maintenance  and  repairs  will be  established.
     However,  to the extent that the Company  has  insufficient  funds for such
     purposes,  the Advisor  may,  but is not  required  to,  contribute  to the
     Company  an  aggregate  amount  of up to 1% of the  net  offering  proceeds
     available to the Company for maintenance and repairs. The Advisor also may,
     but  is  not  required  to,  establish  reserves  from  offering  proceeds,
operating funds, and the available proceeds of any Sales.             
(7)  Offering proceeds  designated for investment in Properties or the making of
     Mortgage Loans  temporarily  may be invested in  short-term,  highly liquid
investments with appropriate safety of principal.                     

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 MANAGEMENT COMPENSATION

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation,  and estimated amounts of all compensation,  fees,  reimbursements,
and  distributions  to be paid  directly  or  indirectly  by the  Company to the
Advisor and its Affiliates,  exclusive of any distributions to which the Advisor
or its  Affiliates  may be entitled by reason of their purchase and ownership of
Shares. See "The Advisor and the Advisory Agreement." For information concerning
compensation  and fees paid to the Advisor and its Affiliates  since the date of
inception of the Company, see "Certain Transactions." For information concerning
compensation to the Directors, see "Management."                                

         A maximum of 34,500,000 Shares  ($345,000,000) may be sold. This amount
includes  2,000,000  Shares that may be sold only  pursuant to the  Reinvestment
Plan.                                                                           

         The following arrangements for compensation and fees to the Advisor and
its Affiliates were not determined by arm's-length negotiations.  See "Conflicts
of Interest."  There is no item of  compensation  and no fee that can be paid to
the Advisor or its Affiliates under more than one category.                     

         Capitalized  terms used but not defined in this  section are defined at
the end of this Prospectus under "Definitions."                                 

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      Type of                                                                                                                       
   Compensation                                                                                                    Estimated        
   and Recipient                                 Method of Computation                                          Maximum Amount      
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                                                    Offering Stage                                                                  
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Selling Com-       Selling Commissions of 7.5% per Share on all Shares sold, subject to reduction         $25,875,000  if 34,500,000
missions to        under certain circumstances as described in "The Offering -- Plan of Distribution."    Shares are sold.          
Managing Dealer    Soliciting Dealers may be reallowed Selling Commissions of up to 7% with respect                                 
and Soliciting     to Shares they sell.                                                                                             
Dealers                                                                                                                             
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Marketing          Expense allowance of 0.5% of Gross Proceeds to the Managing Dealer, all or a           $1,725,000  if  34,500,000
support and due    portion of which may be reallowed to Soliciting Dealers in the Managing Dealer's       Shares are sold.          
diligence expense  sole discretion.  The Managing Dealer will pay all sums attributable to bona fide due                            
reimbursement      diligence expenses from this fee.                                                                                
fee to Managing                                                                                                                     
Dealer and                                                                                                                          
Soliciting Dealers                                                                                                                  
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Reimbursement to   Actual expenses incurred, except that the Advisor will pay all such expenses in      Amount is  not  determinable
the Advisor and    excess of 3% of Gross Proceeds.                                                      at  this  time  but will not
its Affiliates for                                                                                      exceed 3% of Gross Proceeds,
Offering Expenses                                                                                       $6,900,000   of   34,500,000
                                                                                                        Shares are sold.            
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                                                   Acquisition Stage                                                                
------------------------------------------------------------------------------------------------------------------------------------
Acquisition Fee    4.5% of Gross Proceeds payable to the Advisor as Acquisition Fees.                   $15,525,000   if  34,500,000
to the Advisor                                                                                          Shares are sold.            
------------------------------------------------------------------------------------------------------------------------------------

Other  Acquisition Any fees paid to Affiliates of the Advisor in connection with financing,             Amount is not determinable  
Fees to Affiliates development, construction or renovation of a Property.  Such fees are in             at this time.               
of the Advisor     addition to 4.5% of Gross Proceeds payable to the Advisor as Acquisition                                         
                   Fees, and payment of such fees will be subject to approval by the Board                                          
                   of Directors, including a majority of the Independent Directors, not                                             
                   otherwise interested in the transaction.                                                                         
------------------------------------------------------------------------------------------------------------------------------------

Reimbursement of   Reimbursement to the Advisor and its Affiliates for expenses actually incurred.   Acquisition Expenses, which are
Acquisition                                                                                          based on  a number of factors, 
Expenses to the                                                                                      including the purchase price of
Advisor and its                                                                                      the Properties, are not        
Affiliates                                                                                           determinable at this time.     

                      The  total of all  Acquisition  Fees  and any  Acquisition                                                    
                      Expenses  payable to the Advisor and its Affiliates  shall                                                    
                      be  reasonable  and shall not exceed an amount equal to 6%                                                    
                      of the Real Estate  Asset  Value of a Property,  or in the                                                    
                      case of a Mortgage Loan, 6% of the funds advanced,  unless                                                    
                      a majority of the Board of Directors, including a majority                                                    
                      of the Independent  Directors not otherwise  interested in                                                    
                      the  transaction,  approves  fees in excess of this  limit                                                    
                      subject  to  a  determination   that  the  transaction  is                                                    
                      commercially  competitive,  fair  and  reasonable  to  the                                                    
                      Company.  Acquisition  Fees shall be reduced to the extent                                                    
                      that,  and if necessary to limit,  the total  compensation                                                    
                      paid to all  persons  involved in the  acquisition  of any                                                    
                      Property to the amount customarily  charged in arms-length                                                    
                      transactions  by  other  persons  or  entities   rendering                                                    
                      similar services as an ongoing public activity in the same                                                    
                      geographical   location  and  for   comparable   types  of                                                    
                      Properties, and to the extent that other acquisition fees,                                                    
                      finder's fees, real estate  commissions,  or other similar                                                    
                      fees or  commissions  are paid by any person in connection                                                    
                      with the transaction.  "Real Estate Asset Value" means the                                                    
                      amount   actually  paid  or  allocated  to  the  purchase,                                                    
                      development,  construction,  or improvement of a Property,                                                    
                      exclusive of Acquisition Fees and Acquisition Expenses.                                                       

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                                                   Operational Stage                                                                
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Asset Manage-       A monthly Asset  Management  Fee in an amount equal to one-twelfth                    Amount is not determinable
ment Fee to         of .60% of the Company's Real Estate Asset Value and the outstanding                  at this time.  The amount 
the Advisor         principal amount of the Mortgage Loans as of the end of the preceding                 of the Asset Management   
                    month.  Specifically,  Real Estate Asset Value equals the amount invested             Fee will depend upon,     
                    in the Properties wholly owned by the Company, determined on the basis of             among other things, the   
                    cost, plus, in the case of Properties owned by any Joint Venture or                   cost of the Properties and
                    partnership in which the Company is a co-venturer or partner, the portion             the amount invested in    
                    of the cost of such Properties paid by the Company, exclusive of Acquisition          Mortgage Loans.           
                    Fees and Expenses.  The Asset Management Fee, which will not exceed fees which                                  
                    are competitive for similar services in the same geographic area, may or may not                                
                    be taken, in whole or in part as to any year, in the sole discretion of the                                     
                    Advisor.  All or any portion of the Asset Management Fee not taken as to any fiscal                             
                    year shall be deferred  without  interest and may be taken in such other fiscal                                 
                    year as the Advisor shall determine.                                                                            
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Reimbursement to    Operating Expenses (which, in general, are those expenses relating to                 Amount is not determinable
the Advisor and     administration of the  Company on an ongoing  basis) will be reimbursed by            at this time.             
Affiliates for      the Company.  To the extent that Operating Expenses payable or reimbursable                                     
operating expenses  by the Company,  in any four consecutive fiscal quarters (the "Expense                                          
                    Year"), exceed (the "Excess Amount") the greater of 2% of Average Invested                                      
                    Assets or 25% of Net Income (the "2%/25% Guidelines") and the Independent                                       
                    Directors determine that the Excess Amount was justified  based on unusual                                      
                    nonrecurring factors which they deem sufficient, the Excess Amount may be                                       
                    carried over and included in Operating Expenses in subsequent Expense Years,                                    
                    and reimbursed to the Advisor in one or more of such  years, but only to the                                    
                    extent such reimbursement would not cause the Company's Operating Expenses to                                   
                    exceed the 2%/25% Guidelines in any Expense Year.  Within 60 days after the                                     
                    end of any fiscal  quarter of the  Company for which total Operating  Expenses                                  
                    (for the  Expense  Year)  exceed  the 2%/25% Guidelines and the Independent                                     
                    Directors determine that the Excess Amount was justified,  there shall be sent                                  
                    to the  stockholders  a written  disclosure  of such fact, together with an                                     
                    explanation of the factors the Independent Directors considered in determining                                  
                    that such Excess Amount was justified.  In the event the Independent Directors                                  
                    do not determine that such Excess Amount was justified, the Advisor shall                                       
                    reimburse the Company at the end of the Expense Year the amount by which the                                    
                    total Operating  Expenses paid or incurred by the Company exceed the limitations                                
                    herein provided.                                                                                                
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Soliciting  Dealer  An annual fee of .20% of Invested Capital on December 31 of each year, commencing     Amount is not determinable
Servicing Fee to    on December 31 of the year following the year in which the related offering           at this time. Until such  
Managing Dealer     terminates, generally payable to the Managing Dealer, which in turn may reallow       time as assets are sold,  
                    all or a portion of such fee to Soliciting Dealers whose clients hold Shares on       the estimated amounts     
                    such date. In general, Invested Capital is the amount of cash paid by the             payable to the Managing   
                    stockholders to the Company for their Shares, reduced by certain prior Distributions  Dealer for each of the    
                    to the stockholders from the Sale of one or more Properties,  Mortgage Loans or       years following the year  
                    Secured Equipment Leases.  The Soliciting Dealer Servicing Fee will terminate as of   of termination of the     
                    the beginning of any year in which the Company is liquidated or in which Listing      offering are expected to  
                    occurs, provided, however, that any previously accrued but unpaid portion of the      be $690,000 if 34,500,000 
                    Soliciting Dealer Servicing Fee may be paid in such year or any subsequent year.      Shares are sold.  The     
                                                                                                          maximum total amount      
                                                                                                          payable to the Managing   
                                                                                                          Dealer through December   
                                                                                                          31, 2005 if $4,140,000 if 
                                                                                                          34,500,000 Shares are     
                                                                                                          sold.                     
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Deferred, sub-        A deferred, subordinated real estate disposition fee, payable upon Sale of one      Amount is not determinable
ordinated real        or more Properties, in an amount equal to the lesser of (i) one-half of a           at this time.  The amount 
estate disposition    Competitive Real Estate Commission, or (ii) 3% of the sales price of such           of this fee, if it becomes
fee payable to        Property or Properties. Payment of such fee shall be made only if the Advisor       payable, will depend upon 
the Advisor from      provides a substantial amount of services in connection with the Sale of a          the  price  at  which     
a Sale or Sales       Property or Properties and shall be subordinated to receipt by the stockholders     Properties are sold.      
of a Property not     of Distributions equal to the sum of (i) their aggregate Stockholders' 8% Return                              
in liquidation of     and (ii) their aggregate Invested Capital.  If, at the time of a Sale, payment of                             
the Company           the disposition fee is deferred because the subordination conditions have not been                            
                      satisfied, then the disposition fee shall be paid at such later time as the                                   
                      subordination conditions are satisfied.  Upon Listing, if the Advisor has accrued                             
                      but not been paid such real estate disposition fee, then for purposes of determining                          
                      whether the subordination conditions have been satisfied, stockholders will be                                
                      deemed to have received a Distribution in the amount equal to the product of the                              
                      total number of Shares outstanding and the average closing price of the Shares over                           
                      a period, beginning 180 days after Listing, of 30 days during which the Shares are                            
                      traded.  "Stockholders' 8% Return," as of each date, means an aggregate amount equal                          
                      to an 8% cumulative, noncompounded, annual return on Invested Capital.                                        
------------------------------------------------------------------------------------------------------------------------------------
Subordinated          At such time, if any, as Listing occurs,  the Advisor shall be paid                Amount is not determinable 
Incentive Fee         the Subordinated Incentive Fee in an amount  equal to 10% of the                   at this time.              
payable to the        amount by which (i) the market value of the Company (as defined                                               
Advisor at such       below) plus the total  Distributions  made to stockholders from the                                           
time, if any, as      Company's inception until the date of Listing exceeds (ii) the sum                                            
Listing occurs        of (A) 100% of Invested Capital and (B) the total Distributions                                               
                      required to be made to the stockholders in order to pay the                                                   
                      Stockholders' 8% Return from inception through the date the market                                            
                      value is determined. For purposes of calculating the Subordinated                                             
                      Incentive Fee, the market value of the Company shall be the average                                           
                      closing  price or average of bid and asked  price,  as the                                                    
                      case may be,  over a period  of 30 days  during  which the                                                    
                      Shares  are traded  with such  period  beginning  180 days                                                    
                      after  Listing.  The  Subordinated  Incentive  Fee will be                                                    
                      reduced by the amount of any prior  payment to the Advisor                                                    
                      of a deferred,  subordinated  share of Net Sales  Proceeds                                                    
                      from Sales of assets of the Company.                                                                          
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Deferred, sub-        A deferred, subordinated share equal to 10% of Net Sales Proceeds from Sales       Amount is not determinable 
ordinated share       of assets of the Company payable after receipt by the stockholders of              at this time.              
of Net Sales          Distributions equal to the sum of (i) the Stockholders' 8% Return and (ii)                                    
Proceeds from         100% of Invested Capital.  Following Listing, no share of Net Sales Proceeds                                  
Sales of assets       will be paid to the Advisor.                                                                                  
of the Company                                                                                                                      
not in liquidation                                                                                                                  
of the Company                                                                                                                      
payable to the                                                                                                                      
Advisor                                                                                                                             
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Secured Equip-        A fee paid to the Advisor out of the proceeds of the Line of Credit for            Amount is not determinable 
ment Lease Ser-       negotiating Secured Equipment Leases and supervising the Secured Equipment         at this time.              
vicing Fee to the     Lease program equal to 2% of the purchase price of the Equipment subject to                                   
Advisor               each Secured Equipment Lease and paid upon entering into such lease.  No other                                
                      fees will be payable in connection with the Secured Equipment Lease program.                                  
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Reimbursement to      Repayment by the Company of actual expenses incurred.  The total of such           Amount is not determinable 
the Advisor and       expenses will not exceed an amount equal to 0.5% of the purchase price of the      at this time.              
Affiliates for        Equipment subject to each Secured Equipment Lease.                                                            
Secured Equip-                                                                                                                      
ment Lease                                                                                                                          
servicing ex-                                                                                                                       
penses                                                                                                                              

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                                                   Liquidation Stage                                                                
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Deferred, sub-        A deferred, subordinated real estate disposition fee, payable upon Sale of one      Amount is not determinable
ordinated real        or more Properties, in an amount equal to the lesser of (i) one-half of a           at this time.  The amount 
estate disposition    Competitive Real Estate Commission, or (ii) 3% of the sales price of such           of this fee, if it becomes
fee payable to        Property or Properties.  Payment of such fee shall be made only if the Advisor      payable, will depend upon 
the Advisor from      provides a substantial amount of services in connection with the Sale of a          the  price  at  which     
a Sale or Sales       Property or Properties and shall be subordinated to receipt by the stockholders     Properties are sold.      
in liquidation of     of Distributions equal to the sum of (i) their aggregate Stockholders' 8% Return                              
the Company           and (ii) their aggregate Invested Capital.  If, at the time of a Sale, payment of                             
                      the disposition fee is deferred because the subordination conditions have not been                            
                      satisfied, then the disposition fee shall be paid at such  later  time as the                                 
                      subordination conditions are satisfied.                                                                       
------------------------------------------------------------------------------------------------------------------------------------
Deferred, sub-        A deferred, subordinated share equal to 10% of Net Sales Proceeds from Sales        Amount is not determinable
ordinated share       of assets of the Company payable after receipt by the stockholders of Distributions at this time.             
of Net Sales          equal to the sum of (i) the Stockholders' 8% Return and (ii) 100% of Invested                                 
Proceeds from         Capital.  Following Listing, no share of Net Sales Proceeds will be paid to the                               
Sales of assets       Advisor.                                                                                                      
of the Company                                                                                                                      
in liquidation of                                                                                                                   
the Company                                                                                                                         
payable to the                                                                                                                      
Advisor                                                                                                                             
------------------------------------------------------------------------------------------------------------------------------------

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 CONFLICTS OF INTEREST

         The Company will be subject to various  conflicts  of interest  arising
out of its relationship to the Advisor and its Affiliates, as described below.  

         The following chart indicates the relationship  between the Advisor and
those Affiliates that will provide services to the Company.                     

--------------------------------              ----------------------------      
|    CNL AMERICAN PROPERTIES   |              |                          |      
|         FUND, INC.           |              |    CNL GROUP, INC. (1)   |      
|       (the Company)          |              |                          |      
--------------------------------              ----------------------------      
|                                  |    
|                                  |    
(Advisory Agreement)                       |  100%      
|                                  |    
|                                  |    
      |            |-------------------------------|
      |            |                               |
          -------------------------------        ---------------------------
          |    CNL FUND ADVISORS, INC.  |        |    CNL SECURITIES CORP. |
          |     (Advisor to Company)    |        |     (Managing Dealer)   |
          -------------------------------        ---------------------------

---------------                                                                 

(1)      James M. Seneff, Jr., Chairman of the Board and Chief Executive Officer
         of the Company,  shares ownership and voting control of CNL Group, Inc.
with Dayle L. Seneff, his wife.                               

PRIOR AND FUTURE PROGRAMS                                                       

         In the past,  Affiliates of the Advisor have  organized  over 100 other
real estate investments,  currently have other real estate holdings,  and in the
future expect to form, offer interests in, and manage other real estate programs
in addition to the Company, and make additional real estate investments. Some of
these (including 18 public partnerships, one unlisted public REIT and one listed
public  REIT)  involve  and  will  involve  Affiliates  of  the  Advisor  in the
ownership,  operation, leasing, and management of fast-food,  family-style,  and
casual dining, including restaurants that may be suitable for the Company.      

         Certain of these  affiliated  public or private  real  estate  programs
invest or may  invest  solely in  fast-food,  family-style,  and  casual  dining
restaurants, may purchase properties concurrently with the Company and may lease
fast-food,  family-style,  and casual dining restaurant  properties to operators
who also lease or operate certain of the Company's Properties. These properties,
if located in the  vicinity  of, or  adjacent  to,  Properties  acquired  by the
Company may affect the  Properties'  gross  revenues.  Additionally,  such other
programs  may offer  mortgage  or  equipment  financing  to the same or  similar
entities as those  targeted by the  Company,  thereby  affecting  the  Company's
Mortgage Loan and Secured  Equipment Lease programs.  Such conflicts between the
Company  and  affiliated   programs  may  affect  the  value  of  the  Company's
investments as well as its Net Income. The Company believes that the Advisor has
established  guidelines  to  minimize  such  conflicts.  See  "Certain  Conflict
Resolution Procedures" below.                                                   

         An Affiliate of the Advisor  currently is purchasing  properties  for a
private program that was organized to purchase,  lease and/or finance fast-food,
family-style  and casual  dining  restaurant  facilities,  including  furniture,
fixtures,  equipment  and  start-up  costs  associated  therewith.  Such program
generally will purchase  restaurant  properties or an interest therein only when
furniture,  fixtures,  equipment and start-up costs also will be supplied by the
program.  It is not expected that the financing  offered by such program will be
segregable  and,  therefore,  the program  will not compete with the Company for
lessees.   If  the  equipment   arrangement  offered  by  such  program  becomes
segregable,  a conflict  could arise  between  such  program and the Company for
lessees.                                                                        

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ACQUISITION OF PROPERTIES                                                       

         Affiliates  of the  Advisor  regularly  have  opportunities  to acquire
restaurant  properties  of a type suitable for  acquisition  by the Company as a
result  of  their  existing  relationships  and  past  experience  with  various
fast-food,   family-style  and  casual  dining   restaurant   chains  and  their
franchisees. See "Business -- General." A purchaser who wishes to acquire one or
more of these  properties  must do so within a relatively  short period of time,
occasionally at a time when the Company (due to insufficient funds, for example)
may be unable to make the acquisition.                                          

         In an effort to address these  situations and preserve the  acquisition
opportunities  for the Company (and other entities with which the Advisor or its
Affiliates are  affiliated),  Affiliates of the Advisor maintain lines of credit
which  enable  them  to  acquire  restaurant  properties  on an  interim  basis.
Typically, no more than ten to 15 restaurant properties are temporarily owned by
Affiliates of the Advisor on this interim basis at any  particular  time.  These
restaurant  properties  generally  will  be  purchased  from  Affiliates  of the
Advisor,  at their cost,  by one or more  existing  or future  public or private
programs formed by Affiliates of the Advisor.                                   

         The  Advisor  could  experience  potential  conflicts  of  interest  in
connection  with the  negotiation  of the purchase  price and other terms of the
acquisition of a Property, as well as the terms of the lease of a Property,  due
to its relationship with its Affiliates and the ongoing business relationship of
its Affiliates with operators of Restaurant Chains.                             

         The  Advisor  or its  Affiliates  also  may  be  subject  to  potential
conflicts of interest at such time as the Company  wishes to acquire a property,
make a mortgage loan or enter into a secured  equipment lease that also would be
a suitable  investment for an Affiliate of CNL.  Affiliates of the Advisor serve
as Directors of the Company and, in this capacity,  have a fiduciary  obligation
to act in the best interest of the  stockholders  of the Company and, as general
partners or directors  of CNL  Affiliates,  to act in the best  interests of the
stockholders in other programs with  investments that may be similar to those of
the Company and will use their best  efforts to assure that the Company  will be
treated as favorably as any such other  program.  See  "Management  -- Fiduciary
Responsibility  of the  Board  of  Directors."  In  addition,  the  Company  has
developed   procedures  to  resolve  potential  conflicts  of  interest  in  the
allocation of properties between the Company and certain of its Affiliates.  See
"Certain Conflict Resolution Procedures" below.                                 

SALES OF PROPERTIES                                                             

         A  conflict  also  could  arise  in   connection   with  the  Advisor's
determination  as to whether or not to sell a Property,  since the  interests of
the  Advisor  and the  stockholders  may  differ as a result  of their  distinct
financial  and tax positions  and the  compensation  to which the Advisor or its
Affiliates may be entitled upon the Sale of a Property. See "Compensation of the
Advisor," below for a description of these compensation  arrangements.  In order
to resolve this potential  conflict,  the Board of Directors will be required to
approve  each Sale of a  Property.  In the  unlikely  event that the Company and
another CNL program  attempted  to sell similar  properties  at the same time, a
conflict could arise since the two programs  potentially could compete with each
other for a suitable purchaser. In order to resolve this potential conflict, the
Advisor  has agreed not to approve the sale of any of the  Company's  Properties
contemporaneously  with the sale of a property  owned by another  CNL program if
the two  properties  are  part of the same  Restaurant  Chain  and are  within a
three-mile  radius of each other,  unless the Advisor and the  principals of the
other CNL program are able to locate a suitable purchaser for each property.    

JOINT INVESTMENT WITH AN AFFILIATED PROGRAM                                     

         The Company may invest in Joint Ventures with another program sponsored
by the Advisor or its  Affiliates  if a majority of the  Directors,  including a
majority  of  the  Independent  Directors,   not  otherwise  interested  in  the
transaction,  determine  that the  investment  in the Joint  Venture is fair and
reasonable to the Company and on substantially  the same terms and conditions as
those to be received by the co-venturer or co-venturers.                        

COMPETITION FOR MANAGEMENT TIME                                                 

         The  officers  and  directors  of the  Advisor  and  the  officers  and
Directors of the Company  currently are engaged,  and in the future will engage,
in the  management  of  other  business  entities  and  properties  and in other
business activities. They will devote only as much of their time to the business
of the Company as they, in their                                                

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judgment,  determine is reasonably  required,  which will be substantially  less
than their full time.  These  officers and Directors of the Company and officers
and directors of the Advisor may experience  conflicts of interest in allocating
management  time,  services,  and  functions  among the  Company and the various
entities, investor programs (public or private), and any other business ventures
in which any of them are or may become involved.                                

COMPENSATION OF THE ADVISOR                                                     

         The  Advisor has been and will be engaged to perform  various  services
for the  Company  and has and  will  receive  fees  and  compensation  for  such
services.  None of the  agreements  for such  services were the result of arm's-
length  negotiations.  All such  agreements,  including the Advisory  Agreement,
require  approval by a majority of the Board of Directors,  including a majority
of the Independent Directors, not otherwise interested in such transactions,  as
being fair and  reasonable  to the Company and on terms and  conditions  no less
favorable  than those which could be obtained from  unaffiliated  entities.  The
timing  and  nature  of fees and  compensation  to the  Advisor  could  create a
conflict between the interests of the Advisor and those of the  stockholders.  A
transaction  involving the  purchase,  lease,  and sale of any Property,  or the
entering  into or sale of a Mortgage  Loan or a Secured  Equipment  Lease by the
Company  may  result  in the  immediate  realization  by  the  Advisor  and  its
Affiliates of substantial  commissions,  fees,  compensation,  and other income.
Although  the  Advisory  Agreement   authorizes  the  Advisor  to  take  primary
responsibility for all decisions relating to any such transaction,  the Board of
Directors must approve all of the Company's acquisitions and Sales of Properties
and the entering into and Sales of Mortgage Loans or Secured  Equipment  Leases.
Potential  conflicts  may  arise in  connection  with the  determination  by the
Advisor on behalf of the Company of whether to hold or sell a Property, Mortgage
Loan, or Secured Equipment Lease as such  determination  could impact the timing
and amount of fees  payable to the  Advisor.  See "The  Advisor and the Advisory
Agreement."                                                                     

RELATIONSHIP WITH MANAGING DEALER                                               

         The  Managing  Dealer is CNL  Securities  Corp.,  an  Affiliate  of the
Company. Certain of the officers and Directors of the Company are also officers,
directors,  and registered  principals of the Managing Dealer. This relationship
may create  conflicts in connection  with the fulfillment by the Managing Dealer
of its due diligence obligations under the federal securities laws. Although the
Managing  Dealer will examine the information in the Prospectus for accuracy and
completeness,  the  Managing  Dealer is an Affiliate of the Company and will not
make an  independent  review of the Company and the offering.  Accordingly,  the
investors  do not have the benefit of such  independent  review.  Certain of the
Soliciting Dealers have made, or are expected to make, their own independent due
diligence  investigations.  The Managing Dealer is not prohibited from acting in
any  capacity in  connection  with the offer and sale of  securities  offered by
entities that may have some or all investment objectives similar to those of the
Company and is expected to  participate in other  offerings  sponsored by one or
more of the officers or Directors of the Company.                               

LEGAL REPRESENTATION                                                            

         Shaw Pittman  Potts & Trowbridge,  which serves as  securities  and tax
counsel to the  Company in this  offering,  also  serves as  securities  and tax
counsel for certain of its Affiliates,  including other real estate programs, in
connection with other matters. In addition,  certain members of the firm of Shaw
Pittman Potts & Trowbridge  have invested as limited  partners in prior programs
sponsored by Affiliates of the Advisor in aggregate  amounts which do not exceed
one percent of the  amounts  sold by any of these  programs,  and members of the
firm also may invest in the  Company.  Neither the Company nor the  stockholders
will have separate  counsel.  In the event any controversy  arises following the
termination  of this offering in which the interests of the Company appear to be
in conflict  with those of the Advisor or its  Affiliates,  other counsel may be
retained for one or both parties.                                               

CERTAIN CONFLICT RESOLUTION PROCEDURES                                          

         In  order  to  reduce  or  eliminate  certain  potential  conflicts  of
interest,  the  Articles  of  Incorporation  contain  a number  of  restrictions
relating  to (i)  transactions  between  the  Company  and  the  Advisor  or its
Affiliates,  (ii) certain future  offerings,  and (iii) allocation of restaurant
properties, mortgage loans and secured equipment leases among certain affiliated
entities. These restrictions include the following:                             

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         1.  No  goods  or  services  will be  provided  by the  Advisor  or its
Affiliates to the Company  except for  transactions  in which the Advisor or its
Affiliates  provide  goods or  services to the  Company in  accordance  with the
Articles  of  Incorporation  which  provides  that a majority  of the  Directors
(including a majority of the Independent  Directors) not otherwise interested in
such  transactions  must approve such transactions as fair and reasonable to the
Company and on terms and conditions not less favorable to the Company than those
available  from  unaffiliated  third parties and not less  favorable  than those
available from the Advisor or its Affiliates in transactions  with  unaffiliated
third parties.                                                                  

         2. The  Company  will not  purchase  or lease  Properties  in which the
Advisor or its  Affiliates  has an  interest  without  the  determination,  by a
majority of the Directors  (including a majority of the  Independent  Directors)
not  otherwise  interested  in  such  transaction,   that  such  transaction  is
competitive  and  commercially  reasonable  to the Company and at a price to the
Company no greater  than the cost of the asset to the  Advisor or its  Affiliate
unless there is substantial  justification for any amount that exceeds such cost
and such excess  amount is determined  to be  reasonable.  In no event shall the
Company  acquire any such asset at an amount in excess of its  appraised  value.
The Company will not sell or lease  Properties to the Advisor or its  Affiliates
unless a majority of the  Directors  (including  a majority  of the  Independent
Directors) not interested in the  transaction  determine the transaction is fair
and reasonable to the Company.                                                  

         3. The Company will not make any loans to  Affiliates.  The Advisor and
its Affiliates will not make loans to the Company, or to Joint Ventures in which
the Company is a co-venturer,  for the purchase of Properties.  Any loans to the
Company by the Advisor or its  Affiliates for other purposes must be approved by
a majority of the Directors (including a majority of the Independent  Directors)
not  otherwise  interested  in  such  transaction  as  fair,  competitive,   and
commercially  reasonable,  and no less favorable to the Company than  comparable
loans between  unaffiliated  parties.  It is anticipated that the Advisor or its
Affiliates  shall be entitled to  reimbursement,  at cost,  for actual  expenses
incurred  by the  Advisor or its  Affiliates  on behalf of the  Company or Joint
Ventures in which the Company is a co-venturer, subject to the 2%/25% Guidelines
(2% of  Average  Invested  Assets or 25% of Net  Income)  described  under  "The
Advisor and the Advisory Agreement -- The Advisory Agreement."                  

         4. Until  completion of this  offering,  the Advisor and its Affiliates
will not offer or sell interests in any subsequently  formed public program that
has investment objectives and structure similar to those of the Company and that
intends to (i)  invest,  on a cash  and/or  leveraged  basis,  in a  diversified
portfolio  of  solely  restaurant  properties  (either  existing  properties  or
properties  upon  which  restaurants  are to be  constructed)  to be leased on a
"triple-net"   basis  to  operators   of  national   and   regional   fast-food,
family-style,  and casual  dining  Restaurant  Chains,  and (ii)  offer  Secured
Equipment Leases. The Advisor and its Affiliates also will not purchase property
or offer a mortgage loan or secured  equipment  lease for any such  subsequently
formed public  program that has investment  objectives and structure  similar to
the  Company  and that  intends  to  invest  on a cash  and/or  leveraged  basis
primarily in a diversified  portfolio of solely  restaurant  properties  (either
existing  properties or properties upon which restaurants are to be constructed)
to be leased on a  "triple-net"  basis to  operators  of national  and  regional
fast-food, family-style, and casual dining Restaurant Chains until substantially
all  (generally,  80%) of the  funds  available  for  investment  (Net  Offering
Proceeds) by the Company have been  invested or  committed to  investment.  (For
purposes of the preceding sentence only, funds are deemed to have been committed
to  investment  to the extent  written  agreements  in  principle  or letters of
understanding  are executed  and in effect at any time,  whether or not any such
investment is  consummated,  and also to the extent any funds have been reserved
to make contingent payments in connection with any Property,  whether or not any
such  payments are made.)  Affiliates  of the Advisor are  currently  purchasing
restaurant  properties,   including  furniture,   fixtures  and  equipment,  and
incurring related costs for public and private  programs,  which have investment
objectives  that are not identical,  and/or a structure not similar to, those of
the Company,  but which make  investments  that include  "triple-net"  leases of
fast-food, family-style, and casual dining restaurant properties. The Advisor or
its Affiliates currently and/or in the future may offer interests in one or more
public  or  private   programs   organized  to  purchase  and  lease  fast-food,
family-style, and casual dining restaurants on a "triple-net" basis.            

         5. The Board of  Directors  and the Advisor  have agreed  that,  in the
event that an investment  opportunity  becomes  available  which is suitable for
both the  Company  and a public or private  entity with which the Advisor or its
Affiliates are affiliated,  for which both entities have  sufficient  uninvested
funds,  then the entity which has had the longest period of time elapse since it
was  offered an  investment  opportunity  will first be offered  the  investment
opportunity.  An investment  opportunity  will not be considered  suitable for a
program  if the  requirements  of Item 4 above  could  not be  satisfied  if the
program were to make the investment. In determining whether or not an investment
opportunity  is  suitable  for  more  than  one  program,  the  Advisor  and its
Affiliates will examine such factors,  among others, as the cash requirements of
each program, the effect of the acquisition both on diversification             

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of each program's  investments by types of restaurants and geographic  area, and
on  diversification  of the tenants of its properties (which also may affect the
need for one of the programs to prepare or produce audited financial  statements
for a property or a tenant), the anticipated cash flow of each program, the size
of the investment, the amount of funds available to each program, and the length
of  time  such  funds  have  been  available  for  investment.  If a  subsequent
development,  such as a delay in the  closing  of a  property  or a delay in the
construction of a property,  causes any such  investment,  in the opinion of the
Advisor and its Affiliates,  to be more appropriate for an entity other than the
entity which  committed  to make the  investment,  however,  the Advisor has the
right to  agree  that the  other  entity  affiliated  with  the  Advisor  or its
Affiliates may make the investment.  The Advisor and certain other Affiliates of
the Company  are  affiliated  with CNL  American  Realty  Fund,  Inc.,  a public
program,  and CNL Income & Growth Fund VIII, Ltd., a private program,  offerings
of securities  of which are ongoing.  As of March 2, 1998,  CNL American  Realty
Fund, Inc. and CNL Income & Growth Fund VIII, Ltd. had approximately $12,475,000
and $2,254,000,  respectively,  available for investment.  In the future,  other
public and private programs  affiliated with the Advisor and other Affiliates of
the Company are expected to engage in offerings of securities  and have offering
proceeds available for investment.                                              

         6. With respect to Shares owned by the Advisor,  the Directors,  or any
Affiliate, neither the Advisor, nor the Directors may vote or consent on matters
submitted to the stockholders  regarding the removal of the Advisor,  Directors,
or any  Affiliate  or any  transaction  between the Company and any of them.  In
determining the requisite  percentage in interest of Shares necessary to approve
a matter on which the  Advisor,  Directors,  and any  Affiliate  may not vote or
consent, any Shares owned by any of them shall not be included.                 

         Additional conflict resolution  procedures are identified under "--Sale
of Properties," "-- Joint Investment With An Affiliated  Program," and "-- Legal
Representation."                                                                

SUMMARY OF REINVESTMENT PLAN

         The  Company  has  adopted  the  Reinvestment  Plan  pursuant  to which
stockholders may elect to have the full amount of their cash  Distributions from
the Company  reinvested in additional  Shares of the Company.  Each  prospective
investor who wishes to participate in the Reinvestment  Plan should consult with
such  investor's  Soliciting  Dealer  as to  the  Soliciting  Dealer's  position
regarding  participation  in the  Reinvestment  Plan.  The following  discussion
summarizes the principal terms of the Reinvestment  Plan. The Reinvestment  Plan
is attached hereto as Exhibit A.                                                

GENERAL                                                                         

         An independent agent (the "Reinvestment Agent"), which currently is MMS
Escrow and Transfer Agency,  Inc., will act on behalf of the participants in the
Reinvestment Plan (the "Participants").  For any period during which the Company
is making a public offering of Shares,  the  Reinvestment  Agent will invest all
Distributions  attributable  to Shares  owned by  Participants  in Shares of the
Company at the public  offering  price per Share,  which during the term of this
offering  is $10.00 per  Share.  If no public  offering  is  ongoing,  and until
Listing,  the price per Share  will be  determined  by (i)  quarterly  appraisal
updates performed by the Company based on a review of the existing appraisal and
lease of each Property,  focusing on a re-examination of the capitalization rate
applied to the rental stream to be derived from that Property; and (ii) a review
of the  outstanding  Mortgage Loans and Secured  Equipment  Leases focusing on a
determination of present value by a re-examination  of the  capitalization  rate
applied to the stream of payments due under the terms of each  Mortgage Loan and
Secured Equipment Lease. The  capitalization  rate used by the Company and, as a
result,  the price per Share paid by Participants in the Reinvestment Plan prior
to Listing will be determined by the Advisor in its sole discretion. The factors
that the Advisor will use to determine the  capitalization  rate include (i) its
experience in selecting, acquiring and managing restaurant properties similar to
the Properties;  (ii) an examination of the conditions in the market;  and (iii)
capitalization  rates  in use by  private  appraisers,  to the  extent  that the
Advisor  deems such factors  appropriate,  as well as any other factors that the
Advisor deems relevant or appropriate in making its determination. The Company's
internal accountants then convert the most recent quarterly balance sheet of the
Company from a "GAAP"  balance  sheet to a "fair market  value"  balance  sheet.
Based on the "fair market value" balance sheet,  the internal  accountants  then
assume a sale of the  Company's  assets and the  liquidation  of the  Company in
accordance  with its  constitutive  documents and applicable law and compute the
appropriate   method  of  distributing  the  cash  available  after  payment  of
reasonable  liquidation  expenses,  including closing costs typically associated
with the sale of assets and shared by the buyer and seller,  and the creation of
reasonable  reserves to provide for the payment of any  contingent  liabilities.
All  Shares  available  for  purchase  under the  Reinvestment  Plan  either are
registered pursuant to this Prospectus or                                       

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will  be  registered  under  the  Securities  Act of  1933  through  a  separate
prospectus  relating solely to the  Reinvestment  Plan.  Until this offering has
terminated,  Shares  will  be  available  for  purchase  out of  the  additional
2,000,000  Shares  registered  with the Securities and Exchange  Commission (the
"Commission")  in connection  with this  offering.  See "The Offering -- Plan of
Distribution"  and  "Summary  of the  Articles  of  Incorporation  and Bylaws --
Description of Capital Stock." After the offering has terminated, Shares will be
available from any  additional  Shares which the Company elects to register with
the Commission for the Reinvestment  Plan. The Reinvestment  Plan may be amended
or supplemented by an agreement  between the Reinvestment  Agent and the Company
at any time,  including but not limited to an amendment to the Reinvestment Plan
to add a voluntary cash contribution feature or to substitute a new Reinvestment
Agent to act as agent for the  Participants  or to increase  the  administrative
charge payable to the  Reinvestment  Agent, by mailing an appropriate  notice at
least 30 days prior to the effective date thereof to each  Participant at his or
her last address of record;  provided,  that any such amendment must be approved
by a majority of the  Independent  Directors of the Company.  Such  amendment or
supplement  shall be deemed  conclusively  accepted by each  Participant  except
those  Participants from whom the Company receives written notice of termination
prior to the effective date thereof.                                            

         Stockholders   who  have  received  a  copy  of  this   Prospectus  and
participate  in  this  offering  or one of the  Prior  Offerings  can  elect  to
participate in and purchase Shares through the Reinvestment Plan at any time and
would  not  need  to  receive  a  separate  prospectus  relating  solely  to the
Reinvestment  Plan.  A  person  who  becomes  a  stockholder  otherwise  than by
participating in this offering may purchase Shares through the Reinvestment Plan
only after receipt of a separate  prospectus relating solely to the Reinvestment
Plan.                                                                           

         At any time that the Company is not engaged in an  offering,  the price
per Share purchased  pursuant to the Reinvestment  Plan shall be the fair market
value of the Shares based on quarterly appraisal updates of the Company's assets
until such time,  if any,  as Listing  occurs.  Upon  Listing,  the Shares to be
acquired for the Reinvestment Plan may be acquired either through such market or
directly from the Company pursuant to a registration  statement  relating to the
Reinvestment   Plan,  in  either  case  at  a  per-Share   price  equal  to  the
then-prevailing   market   price  on  the   national   securities   exchange  or
over-the-counter  market on which the Shares are listed at the date of purchase.
The Company is unable to predict the effect which such a proposed  listing would
have on the price of the Shares acquired through the Reinvestment Plan.         

INVESTMENT OF DISTRIBUTIONS                                                     

         Distributions  will  be  used  by  the  Reinvestment  Agent,   promptly
following  the  payment  date with  respect to such  Distributions,  to purchase
Shares on behalf of the Participants  from the Company.  All such  Distributions
shall be  invested  in Shares  within  30 days  after  such  payment  date.  Any
Distributions not so invested will be returned to Participants.                 

         At this time,  Participants  will not have the option to make voluntary
contributions  to the  Reinvestment  Plan to  purchase  Shares  in excess of the
amount of Shares that can be purchased  with their  Distributions.  The Board of
Directors  reserves the right,  however,  to amend the Reinvestment  Plan in the
future  to  permit  voluntary   contributions   to  the  Reinvestment   Plan  by
Participants,   to  the  extent  consistent  with  the  Company's  objective  of
qualifying as a REIT.                                                           

PARTICIPANT ACCOUNTS, FEES, AND ALLOCATION OF SHARES                            

         For each  Participant,  the  Reinvestment  Agent will maintain a record
which shall reflect for each fiscal  quarter the  Distributions  received by the
Reinvestment  Agent  on  behalf  of  such  Participant.  The  Company  shall  be
responsible  for  all  administrative   charges  and  expenses  charged  by  the
Reinvestment  Agent. Any interest earned on such  Distributions  will be paid to
the Company to defray  certain  costs  relating to the  Reinvestment  Plan.  The
administrative  charge for each fiscal  quarter  will be the lesser of 5% of the
amount  reinvested for the Participant or $2.50, with a minimum charge of $0.50.
The maximum annual charge is $10.00.                                            

         The  Reinvestment  Agent will use the aggregate amount of Distributions
to all  Participants  for  each  fiscal  quarter  to  purchase  Shares  for  the
Participants.  If the aggregate amount of Distributions to Participants  exceeds
the amount  required to purchase all Shares then  available  for  purchase,  the
Reinvestment  Agent will  purchase  all  available  Shares  and will  return all
remaining  Distributions to the Participants  within 30 days after the date such
Distributions  are  made.  The  purchased  Shares  will be  allocated  among the
Participants based on the portion of the                                        

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aggregate  Distributions  received by the  Reinvestment  Agent on behalf of each
Participant,  as reflected in the records maintained by the Reinvestment  Agent.
The ownership of the Shares purchased pursuant to the Reinvestment Plan shall be
reflected on the books of the Company.                                          

         Subject to the provisions of the Articles of Incorporation  relating to
certain  restrictions  on and the effective  dates of transfer,  Shares acquired
pursuant  to the  Reinvestment  Plan will  entitle the  Participant  to the same
rights  and  to be  treated  in  the  same  manner  as  those  purchased  by the
Participants  in the  offering.  Accordingly,  the Company will pay the Managing
Dealer Selling Commissions of 7.5% (subject to reduction under the circumstances
provided under "The Offering -- Plan of  Distribution")  and a marketing support
and due diligence fee of .5%. The Company will also pay the Advisor  Acquisition
Fees  of  4.5%  of  the  purchase  price  of the  Shares  sold  pursuant  to the
Reinvestment Plan until the termination of the offering. Thereafter, Acquisition
Fees will be paid by the Company only in the event that  proceeds of the sale of
Shares are used to  acquire  Properties  or to invest in  Mortgage  Loans.  As a
result,  aggregate  fees payable to Affiliates of the Company will total between
8.0% and 12.5% of the proceeds of reinvested Distributions,  up to 7.5% of which
may be reallowed to Soliciting Dealers.                                         

         The allocation of Shares among Participants may result in the ownership
of fractional Shares, computed to four decimal places.                          

REPORTS TO PARTICIPANTS                                                         

         Within 60 days after the end of each fiscal quarter,  the  Reinvestment
Agent will mail to each  Participant  a statement of account  describing,  as to
such Participant, the Distributions reinvested during the quarter, the number of
Shares  purchased  during the  quarter,  the per Share  purchase  price for such
Shares,  the total  administrative  charge paid by the Company on behalf of each
Participant (see "Participant Accounts,  Fees, and Allocation of Shares" above),
and the total number of Shares  purchased on behalf of the Participant  pursuant
to the  Reinvestment  Plan.  Until such time,  if any,  as Listing  occurs,  the
statement  of account  also will report the most recent fair market value of the
Shares, determined as described above. See "General" above.                     

         Tax information for income earned on Shares under the Reinvestment Plan
will be sent to each  participant  by the Company or the  Reinvestment  Agent at
least annually.                                                                 

ELECTION TO PARTICIPATE OR TERMINATE PARTICIPATION                              

         Stockholders  of the Company who purchase  Shares in this  offering may
become  Participants in the  Reinvestment  Plan by making a written  election to
participate  on their  Subscription  Agreements  at the time they  subscribe for
Shares.  Any other  stockholder  who  receives  a copy of this  Prospectus  or a
separate  prospectus  relating solely to the  Reinvestment  Plan and who has not
previously  elected to participate in the Reinvestment  Plan may so elect at any
time by written notice to the Board of Directors of such stockholder's desire to
participate in the Reinvestment  Plan.  Participation  in the Reinvestment  Plan
will commence with the next Distribution made after receipt of the Participant's
notice,  provided  it is received at least ten days prior to the record date for
such  Distribution.   Subject  to  the  preceding  sentence,   the  election  to
participate  in  the   Reinvestment   Plan  will  apply  to  all   Distributions
attributable  to the fiscal quarter in which the  stockholder  made such written
election to  participate  in the  Reinvestment  Plan and to all fiscal  quarters
thereafter,  whether made (i) upon subscription or subsequently for stockholders
who participate in this offering,  or (ii) upon receipt of a separate prospectus
relating solely to the Reinvestment Plan for stockholders who do not participate
in this offering.  Participants will be able to terminate their participation in
the Reinvestment  Plan at any time without penalty by delivering  written notice
to the Board of Directors ten business days before the end of a fiscal quarter. 

         A   Participant   who  chooses  to  terminate   participation   in  the
Reinvestment  Plan  must  terminate  his  or  her  entire  participation  in the
Reinvestment Plan and will not be allowed to terminate in part. If a Participant
terminates his or her participation the Reinvestment  Agent will send him or her
a check in payment for any fractional  Shares in his or her account based on the
then  market  price of the Shares and the record  books of the  Company  will be
revised to reflect the  ownership of records of his or her whole  Shares.  There
are no fees associated  with a Participant's  terminating his or her interest in
the Reinvestment Plan. A Participant in the Reinvestment Plan who terminates his
or her interest in the  Reinvestment  Plan will be allowed to participate in the
Reinvestment  Plan again by notifying the Reinvestment  Agent and completing any
required forms.                                                                 

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         The Board of Directors  reserves the right to prohibit  Qualified Plans
from  participating in the Reinvestment Plan if such  participation  would cause
the  underlying  assets of the Company to constitute  "plan assets" of Qualified
Plans. See "The Offering -- ERISA Considerations."                              

FEDERAL INCOME TAX CONSIDERATIONS                                               

         Stockholders  subject to federal  taxation who elect to  participate in
the Reinvestment Plan will incur a tax liability for Distributions  allocated to
them even though they have elected not to receive  their  Distributions  in cash
but rather to have their  Distributions  held pursuant to the Reinvestment Plan.
Specifically,  stockholders  will  be  treated  as if  they  have  received  the
Distribution  from the Company and then  applied such  Distribution  to purchase
Shares in the  Reinvestment  Plan. A stockholder  designating a Distribution for
reinvestment will be taxed on the amount of such Distribution as ordinary income
to the extent such  Distribution  is from  current or  accumulated  earnings and
profits,  unless the Company has designated all or a portion of the Distribution
as a capital  gain  dividend.  In such  case,  such  designated  portion  of the
Distribution will be taxed as long-term capital gain.                           

AMENDMENTS AND TERMINATION                                                      

         The Company reserves the right to renew, extend, or amend any aspect of
the Reinvestment Plan without the consent of stockholders,  provided that notice
of the amendment is sent to Participants at least 30 days prior to the effective
date thereof.  The Company also reserves the right to terminate the Reinvestment
Plan for any reason at any time by ten days' prior written notice of termination
to all Participants.                                                            

REDEMPTION OF SHARES

         At any  time  during  which  the  Company  is not  engaged  in a public
offering and prior to such time, if any, as Listing occurs,  any stockholder who
purchases  Shares in this offering or otherwise from the Company or who has held
Shares for not less than one year  (other than the  Advisor)  may present all or
any portion  equal to at least 25% of such  stockholder's  Shares to the Company
for redemption at any time, in accordance with the procedures  outlined  herein.
At such  time,  the  Company  may,  at its  option,  subject  to the  conditions
described  below,  redeem such Shares  presented for  redemption for cash to the
extent it has sufficient net proceeds ("Reinvestment Proceeds") from the sale of
Shares under the  Reinvestment  Plan.  There is no assurance  that there will be
Reinvestment Proceeds available for redemption and, accordingly, a stockholder's
Shares  may  not  be  redeemed.   The  full  amount  of  Reinvestment   Proceeds
attributable  to any  quarter  will be  used  to  redeem  Shares  presented  for
redemption  during such  quarter.  If the full amount of  Reinvestment  Proceeds
available  for  any  given  quarter  exceeds  the  amount   necessary  for  such
redemptions,  the  remaining  amount  shall be held for  subsequent  redemptions
unless such amount is sufficient to acquire an additional  Property (directly or
through a Joint Venture). In that event, the Company may use all or a portion of
such amount to acquire one or more additional Properties, or to make one or more
additional  Mortgage  Loans,  provided that the Company (or, if applicable,  the
Joint  Venture)  enters into a binding  contract to  purchase  such  Property or
Properties, or enter into such Mortgage Loan or Mortgage Loans, prior to payment
of the next Distribution and the Company's receipt of requests for redemption of
Shares.  If the full amount of  Reinvestment  Proceeds for any given  quarter is
insufficient to fund all of the requested  redemptions,  the Company will redeem
the Shares presented for redemption in order of receipt.                        

         A  stockholder  (other than a resident of Nebraska)  who wishes to have
his or her  Shares  redeemed  must mail or  deliver a written  request on a form
provided  by the  Company  and  executed  by the  stockholder,  its  trustee  or
authorized  agent, to the Company.  Nebraska  stockholders must deliver the same
type of request to a  broker-dealer  registered in Nebraska and must have his or
her Shares redeemed through such  broker-dealer,  who will communicate  directly
with  the  Company.  Within  30 days  following  the  Company's  receipt  of the
stockholder's  request,  the  Company  will  forward  to  such  stockholder  the
documents necessary to effect the redemption,  including any signature guarantee
the  Company may  require.  The Company  will  effect  such  redemption  for the
calendar  quarter  provided  that the Company  receives the  properly  completed
redemption  documents relating to the Shares to be redeemed from the stockholder
at least  one  calendar  month  prior to the  last day of the  current  calendar
quarter and has  sufficient  Reinvestment  Proceeds to redeem such  Shares.  The
effective date of any  redemption  will be the last date during a quarter during
which the Company receives the properly  completed  redemption  documents.  As a
result, the Company anticipates that, assuming sufficient Reinvestment Proceeds,
the effective  date of  redemptions  will be no later than thirty days after the
quarterly determination of the availability of Reinvestment Proceeds.           

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         Upon the  Company's  receipt of notice for  redemption  of Shares,  the
redemption  price will be on such other  terms as the  Reinvestment  Agent shall
determine.  It is not  anticipated  that  there  will be a market for the Shares
before  Listing  occurs  (although  liquidity  is  not  assured  thereby).   The
redemption  plan will  terminate,  and the Company no longer shall accept Shares
for  redemption,  if and when Listing  occurs.  See "Risk  Factors -- Investment
Risks -- Lack of Liquidity of Shares."  Accordingly,  in determining the "market
price" of the Shares for this purpose,  it is expected  that the purchase  price
for Shares  purchased from  stockholders  will be determined by reference to the
following  factors,  as well as any others deemed relevant or appropriate by the
Reinvestment  Agent:  (i) the price at which  Shares  have been  purchased  from
stockholders,  either  pursuant  to the  Reinvestment  Plan  or  outside  of the
Reinvestment  Plan (to the extent the  Company  has  information  regarding  the
prices paid for Shares purchased outside the Reinvestment Plan), (ii) the annual
statement of Share valuation  provided to certain  stockholders (see "Reports to
Stockholders"),  and (iii) the price at which  stockholders  are willing to sell
their Shares.  Shares purchased  during any particular  period of time therefore
may be purchased at varying  prices.  The Board of Directors  will  announce any
price adjustment and the time period of its effectiveness as part of its regular
communications  with stockholders.  Any Shares acquired pursuant to a redemption
will be retired and no longer available for issuance by the Company.            

         A  stockholder  may  present  fewer  than all his or her  Shares to the
Company for redemption, provided, however, that (i) the minimum number of Shares
which  must be  presented  for  redemption  shall be at least  25% of his or her
Shares,  and (ii) if such stockholder  retains any Shares, he or she must retain
at least 250 Shares (100 Shares for an IRA, Keogh Plan or pension plan).        

         The  Directors,  in their sole  discretion,  may amend or  suspend  the
redemption  plan at any time they determine that such amendment or suspension is
in the best interest of the Company. The Directors may suspend the redemption of
Shares if (i) they  determine,  in their sole  discretion,  that such redemption
impairs the capital or the operations of the Company;  (ii) they  determine,  in
their sole  discretion,  that an emergency  makes such redemption not reasonably
practical;  (iii) any governmental or regulatory  agency with  jurisdiction over
the  Company  so  demands  for the  protection  of the  stockholders;  (iv) they
determine, in their sole discretion, that such redemption would be unlawful; (v)
they determine, in their sole discretion,  that such redemption, when considered
with all other  redemptions,  sales,  assignments,  transfers  and  exchanges of
Shares in the Company, could cause direct or indirect ownership of Shares of the
Company to become concentrated to an extent which would prevent the Company from
qualifying  as a REIT  under  the  Code;  or  (vi)  such  other  reasons  as the
Directors,  in their sole  discretion,  deem to be in the best  interest  of the
Company. For a discussion of the tax treatment of such redemptions, see "Federal
Income Tax Considerations -- Taxation of Stockholders."                         

BUSINESS

GENERAL                                                                         

         The  Company  acquires  Properties  which  are  leased  on a  long-term
(generally,  15 to 20 years,  plus renewal  options for an  additional  10 to 20
years),  "triple-net" basis. With proceeds of this offering, the Company intends
to purchase fast-food,  family-style,  and casual dining restaurant  Properties.
"Triple-net" means that the tenant will be responsible for repairs, maintenance,
property taxes, utilities and insurance.  The Properties may consist of land and
building, the land underlying the restaurant building with the building owned by
the  tenant or a third  party,  and the  building  only with the land owned by a
third  party.  The Company  also  provides  Mortgage  Loans for the  purchase of
buildings, generally by tenants that lease the underlying land from the Company.
To a lesser extent,  the Company offers Secured Equipment Leases to operators of
Restaurant  Chains  pursuant to which the Company will finance,  through  direct
financing leases or loans, the Equipment.                                       

         Upon  completion  of its Initial  Offering  on  February  6, 1997,  the
Company had received subscription proceeds of $150,591,765  (15,059,177 shares),
including 59,177 shares  ($591,765)  issued pursuant to the  Reinvestment  Plan.
Following the completion of its Initial Offering, the Company commenced its 1997
Offering of up to  27,500,000  shares and upon  completion  of such  offering on
March 2, 1998,  had received  aggregate  subscription  proceeds of  $251,872,648
(25,187,265  shares),  including 187,265 shares  ($1,872,648) issued pursuant to
the  Reinvestment  Plan.  Net  offering  proceeds to the Company  from the Prior
Offerings,  after deduction of selling  commissions,  marketing  support and due
diligence   expense   reimbursement   fees  and  offering   expenses,   totalled
approximately  $361,100,000.  As of March 2, 1998,  the Company had  invested or
committed for investment approximately $282,900,000 of aggregate net proceeds in
250 Properties, in providing mortgage financing through                         

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Mortgage Loans, and in paying acquisition fees and certain acquisition expenses,
leaving  approximately  $78,200,000 in aggregate net offering proceeds available
for investment in Properties  and Mortgage  Loans.  It is  anticipated  that the
Company will acquire a total of 670 to 730  Properties if the maximum  number of
Shares is sold in this offering  (including  approximately 320 to 360 Properties
to  be  acquired   with  the  proceeds  of  this   offering  and  an  additional
approximately  100 to 120 Properties to be acquired with the remaining  proceeds
of the 1997 Offering).                                                          

         The Properties, which typically are freestanding and are located across
the United States,  are leased to operators of the Restaurant Chains selected by
the Advisor and approved by the Board of Directors.  Each  Property  acquisition
and Mortgage  Loan  commitment  by the Company is subject to the approval of the
Board of  Directors.  Properties  purchased  by the  Company  are  leased  under
arrangements  requiring base annual rent equal to a specified  percentage of the
Company's  cost  of  purchasing  a  particular  Property,  with  automatic  rent
increases,  and/or  percentage  rent based on gross sales.  See  "Description of
Leases -- Computation of Lease Payments," below.                                

         The Company  invests in Properties of selected  Restaurant  Chains that
are national and regional restaurant chains, primarily fast-food,  family-style,
and casual dining chains.  Fast-food  restaurants feature quality food and quick
service, which often includes drive-through service, and offer a variety of menu
items such as hamburgers,  steaks, seafood, chili, pizza, pasta dishes, chicken,
hot and cold sandwiches,  and salads.  Family-style restaurants feature services
that generally are associated with full-service restaurants,  such as full table
service and cooked-to-order food, but at more moderate prices. The casual dining
(or dinner house) concept features a variety of popular contemporary foods, full
table service, moderate prices, and surroundings that are appealing to families.
The casual dining  segment of the  restaurant  industry,  like the  family-style
segment,  features  services that generally are associated with the full-service
restaurant  category.  According to  forecasts  appearing in the January 1, 1997
issue of Restaurants  and  Institutions,  it is projected that the casual dining
segment of  full-service  restaurants  sales will experience 3.8% real growth in
sales this year,  with sales  predicted to reach $49 billion.  The top 15 casual
dining chains by sales have a total of 2,977  restaurants  throughout the United
States.                                                                         

         The restaurant  industry is one of the largest industries in the United
States in volume of sales and number of employees (more than 9 million  persons)
and includes  fast-food outlets,  cafeterias,  lunchrooms,  convenience  stores,
family-style  restaurants,  casual dining facilities,  full-service restaurants,
and contract and industrial  feeders.  By the year 2000,  food service sales are
expected to exceed $392 billion.  Industry  publications project that restaurant
industry  sales will  increase  from $173.7  billion in 1985 to $336  billion in
1998.  Restaurant  industry  sales for 1997 are projected to be $321.3  billion.
Nominal growth,  which is comprised of real growth and inflationary  growth,  is
estimated to be 4.7% in 1998. Real growth of the restaurant industry in 1997 was
1.7%, and industry analysts currently estimate that the restaurant industry will
achieve 1.8% real growth in 1998; however,  according to the National Restaurant
Association,  fast-food restaurants should outpace the industry average for real
growth,  with a projected 2.1% increase over 1997.  Sales in this segment of the
restaurant industry are projected to be $105.7 billion for 1998.                

         The Company invests in the fast-food,  family-style,  and casual dining
segments of the restaurant industry, the most rapidly growing segments in recent
years. According to the National Restaurant Association,  51% of adults eat at a
quick-service  restaurant and 42% of adults patronize a moderately-priced family
restaurant  at least  once each  week.  In  addition,  the  National  Restaurant
Association  indicates that Americans spend approximately 44 cents of every food
dollar on dining  away from  home.  Surveys  published  in  Restaurant  Business
indicate that families with children choose  quick-service  restaurants four out
of every five times they dine out.  Additionally,  according  to The Wall Street
Journal (May 11, 1992),  the average  American  spends $19,791 on fast-food in a
lifetime.  Further,  according  to  Nation's  Restaurant  News,  the 100 largest
restaurant  chains posted an average of 4.59% growth in their  systemwide  sales
figures  for 1996.  Casual-theme  dining  concepts  are the chains  showing  the
strongest growth. In 1996, the family-style  segment experienced sales growth of
3.61% over 1995 figures,  and, the casual dining segment experienced  systemwide
sales growth in 1996 of 12.37%,  compared to 12.99% in 1995. Management believes
that the Company will have the opportunity to participate in this growth through
the ownership of Properties leased to operators of the Restaurant Chains.       

         The  fast-food,   family-style   and  casual  dining  segments  of  the
restaurant  industry  have  demonstrated  their  ability  to adapt to changes in
consumer  preferences,  such as health  and  dietary  issues,  decreases  in the
disposable  income of consumers and  environmental  awareness,  through  various
innovative techniques, including special value pricing and promotions, increased
advertising, menu changes featuring low-calorie, low-cholesterol menu items, and
new packaging and energy conservation techniques.                               

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         The table set forth below provides  information with respect to certain
Restaurant Chains in which the Company and Affiliates of the Company (consisting
of 18 public  partnerships and 8 private  partnerships) and a listed public REIT
(which was managed by an Affiliate through December 31, 1997, at which time such
Affiliate merged with the REIT) had invested, as of December 31, 1997:          

                                                                · Download Table


                            Approximate        Aggregate                   
                         Dollars Invested    Percentage of      Number of  
Restaurant Chain           by Affiliates   Dollars Invested  Prior Programs
----------------           -------------   ----------------  --------------
                                                                           
Golden Corral              $158,221,000           16.4%            26      
Burger King                 105,659,000           11.0%            25      
Jack in the Box              97,713,000           10.1%            15      
Denny's                      91,365,000            9.5%            20      
Hardee's                     58,599,000            6.1%            13      
Boston Market                53,732,000            5.6%            11      
IHOP                         37,970,000            3.9%             8      
Shoney's                     37,240,000            3.9%            13      
Long John Silver's           32,029,000            3.3%             6      
Wendy's                      31,499,000            3.3%            16      
TGI Friday's                 30,228,000            3.1%             9      
Darryl's                     22,296,000            2.3%             4      
Checkers                     21,263,000            2.2%             7      
Chevy's Fresh Mex            16,313,000            1.7%             6      
Perkins                      16,311,000            1.7%             9      
Ground Round                 15,751,000            1.6%             3      
Pizza Hut                    15,578,000            1.6%             8      
Black-eyed Pea               15,211,000            1.6%             4      
KFC                          14,436,000            1.5%            11      
Popeyes                      10,589,000            1.1%             9      
Arby's                       10,493,000            1.1%             6      
Taco Bell                     7,435,000            0.8%             8      
Tumbleweed Southwest                                                       
   Mesquite Grill & Bar       6,402,000            0.7%             1      
Houlihan's                    4,741,000            0.5%             1      

         Management   structures  the  Company's  investments  to  allow  it  to
participate,  to the  maximum  extent  possible,  in any  sales  growth in these
industry  segments,  as reflected in the  Properties  that it owns.  The Company
therefore  generally  structures its leases with  percentage  rent  requirements
which are based on gross  sales of the  particular  restaurant.  Gross sales may
increase even absent real growth  because  increases in the  restaurant's  costs
typically are passed on to the consumers through increased prices, and increased
prices are reflected in gross sales.  In an effort to provide  regular cash flow
to the Company, the Company generally structures its leases to provide a minimum
level of rent,  with automatic  increases in the minimum rent,  which is payable
regardless  of the amount of gross sales at a particular  Property.  The Company
also endeavors to maximize  growth and minimize risks  associated with ownership
and leasing of real estate that  operates  in these  industry  segments  through
careful  selection and screening of its tenants (as described in "Standards  for
Investment"  below) in order to reduce risks of default;  monitoring  statistics
relating to restaurant  chains and  continuing to develop  relationships  in the
industry in order to reduce  certain risks  associated  with  investment in real
estate;  and  acquisition  of properties  which will not be encumbered  prior to
Listing. See "Standards for Investment" below for a description of the standards
which  the  Board of  Directors  employs  in  selecting  Restaurant  Chains  and
particular restaurant Properties within a Restaurant Chain for investment.      

         Management  acquires  Properties in part with a view to diversification
among Restaurant Chains and the geographic location of the Properties. There are
no  restrictions  on the  geographic  area or areas within the United  States in
which Properties acquired by the Company may be located.                        

         Management  believes that freestanding,  "triple-net" leased restaurant
properties  of the type in which the Company  invests are  attractive to tenants
because  freestanding  properties  typically  offer high  visibility  to passing
traffic,  ease of access from a busy thoroughfare,  tenant control over the site
to set hours of operation and  maintenance  standards and  distinctive  building
designs conductive to customer name recognition.                                

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COMPLETED INVESTMENTS                                                           

         As of  March 2,  1998,  the  Company  had  invested  or  committed  for
investment  approximately  $282,900,000  of the  net  proceeds  from  the  Prior
Offerings in 250 Properties (185 Properties  which consist of land and building,
44  Properties  which  consist of land only and 21  Properties  which consist of
building  only),  in  providing  mortgage  financing  to the  tenants  of the 44
Properties consisting of land only to purchase the buildings on these Properties
and the buildings on two additional  properties  through  Mortgage Loans, and to
pay  related   acquisition   fees  and   acquisition   expenses.   See  "Certain
Transactions."  All of the Properties are owned directly by the Company,  except
for one Property which is owned through a joint venture arrangement.  All of the
Properties were acquired since the Company commenced  operations on June 1, 1995
and have leases  expiring  from 5 to 25 years after the date on which each lease
commenced.                                                                      

         The following tables set forth  information for the Properties owned by
the  Company  as of March  2,  1998,  including  the  number  of  Properties  by
Restaurant Chain and the number of Properties by state.                         

       Restaurant                                       Number of Properties
       ----------                                       --------------------

Applebee's                                                  2 
Arby's                                                     10 
Bennigan's                                                  1 
Black-eyed Pea                                             18 
Boston Market                                              32 
Burger King                                                 9 
Charley's Place                                             2 
Chevy's Fresh Mex                                           4 
Darryl's                                                   15 
Denny's                                                     4 
Einstein Bros. Bagels                                       2 
Golden Corral                                              30 
Ground Round                                               13 
Houlihan's                                                  3 
IHOP                                                        8 
Jack in the Box                                            30 
KFC                                                         1 
Mr. Fable's                                                 1 
On The Border                                               1 
Pizza Hut                                                  44 
Popeyes                                                     1 
Ruby Tuesday's                                              1 
Ruth's Chris Steak House                                    1 
Ryan's Family Steak House                                   1 
Shoney's                                                    3 
TGI Friday's                                                1 
Tumbleweed Southwest Mesquite Grill & Bar                   7 
Wendy's                                                     5 
                                                        ----

    Total                                                250
                                                        ====

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     State                                          Number of Properties
     -----                                          --------------------

Alabama                                                  5    
Arizona                                                  8    
California                                              23    
Colorado                                                 5    
Connecticut                                              1    
Delaware                                                 1    
Florida                                                 14    
Georgia                                                  2    
Idaho                                                    1    
Illinois                                                 5    
Indiana                                                  5    
Iowa                                                     5    
Kansas                                                   3    
Kentucky                                                 4    
Maryland                                                 7    
Michigan                                                 8    
Minnesota                                                3    
Missouri                                                 7    
Nebraska                                                 1    
Nevada                                                   2    
New Jersey                                               2    
New Mexico                                               3    
New York                                                 1    
North Carolina                                           9    
Ohio                                                    37    
Oklahoma                                                 6    
Oregon                                                   3    
Pennsylvania                                             6    
Tennessee                                               15    
Texas                                                   35    
Utah                                                     1    
Virginia                                                 8    
Washington                                               2    
West Virginia                                           10    
Wisconsin                                                2    
                                                  ----

 Total                                             250
                                                  ====

PROPERTY ACQUISITIONS                                                           

         Between  January 1, 1998 and March 2, 1998,  the Company  acquired  six
Properties  consisting of land and  building.  These  Properties  are two Golden
Corral  Properties  (one in each of Dubuque,  Iowa; and Edmond,  Oklahoma),  two
Tumbleweed Southwest Mesquite Grill & Bar Properties (one in each of Clarksville
and Hermitage,  Tennessee),  one Arby's Property (in Jacksonville,  Florida) and
one Jack in the Box Property (in Los Angeles, California).                      

         In connection with the purchase of these six  Properties,  the Company,
as lessor,  entered into long-term lease agreements with  unaffiliated  lessees.
The  general  terms  of the  lease  agreements  are  described  in  "Business  -
Description of Property Leases." In addition, in connection with the purchase of
these  Properties,  which are to be  constructed,  the Company has entered  into
development and  indemnification and put agreements with the lessee. The general
terms of these  agreements  are  described  in  "Business - Site  Selection  and
Acquisition of Properties - Construction and Renovation."                       

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         The  following  table sets  forth the  location  of the six  Properties
consisting  of land and  building,  acquired by the Company from January 1, 1998
through March 2, 1998, a description  of the  competition,  and a summary of the
principal terms of the  acquisition and lease of each Property.  For information
regarding the  Properties  acquired by the Company prior to January 1, 1998, see
Exhibit B, Schedule III - Real Estate and Accumulated Depreciation attached.    

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 PROPERTY ACQUISITIONS
From January 1, 1998 through March 2, 1998

                                                        · Enlarge/Download Table


                                                       Lease Expira-                                                         
Property Location and       Purchase         Date        tion and             Minimum                              Option    
Competition                 Price (1)      Acquired   Renewal Options     Annual Rent (2)     Percentage Rent   To Purchase  
---------------------     ------------     --------   ---------------     ---------------     ---------------   -----------  
                                                                                                                             
Golden Corral (6)        $520,186         01/20/98   07/2013; four     10.75% of Total        for each lease    during the   
(the  "Dubuque #2        (excluding                  five-year         Cost (4)               year, 5% of       first through
Property ")              development                 renewal options                          the amount by     seventh      
Restaurant to be         costs) (3)                                                           which annual      lease years  
constructed                                                                                   gross sales       and the      
                                                                                              exceed            tenth        
The Dubuque #2                                                                                $2,833,105 (5)    through      
Property is located on                                                                                          fifteenth    
the northeast corner of                                                                                         lease years  
the intersection of                                                                                             only         
Northwest Arterial and                                                                                                       
Chavenelle Road, in                                                                                                          
Dubuque, Dubuque                                                                                                             
County, Iowa, in an                                                                                                          
area of mixed retail,                                                                                                        
commercial, and                                                                                                              
residential                                                                                                                  
development.                                                                                                                 

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Golden Corral (6)        $546,484         01/20/98   07/2013; four     10.75% of Total        for each lease    during the   
(the  "Edmond            (excluding                  five-year         Cost (4)               year, 5% of       first through
Property ")              development                 renewal options                          the amount by     seventh      
Restaurant to be         costs) (3)                                                           which annual      lease years  
constructed                                                                                   gross sales       and the      
                                                                                              exceed            tenth        
The Edmond Property                                                                           $2,776,470 (5)    through      
is located on the                                                                                               fifteenth    
northwest corner of                                                                                             lease years  
Broadway Extension                                                                                              only         
and Comfort Drive, in                                                                                                        
Edmond, Oklahoma                                                                                                             
County, Oklahoma, in                                                                                                         
an  area  of  mixed                                                                                                          
retail,  commercial,                                                                                                         
and  residential                                                                                                             
development.  Other                                                                                                          
fast-food,family-style                                                                                                       
and casual dining                                                                                                            
restaurants located in                                                                                                       
proximity to the Edmond                                                                                                      
Property include an                                                                                                          
Applebee's, a Chili's,                                                                                                       
an Outback Steak House, a                                                                                                    
Perkins, a Chick-Fil-A, a                                                                                                    
Taco Bell, a McDonald's,                                                                                                     
a Burger King, a Hardee's,                                                                                                   
and several local restaurants.                                                                                               

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                                                       Lease Expira-                                                         
Property Location and       Purchase         Date        tion and             Minimum                              Option    
Competition                 Price (1)      Acquired   Renewal Options     Annual Rent (2)     Percentage Rent    To Purchase 
---------------------     ------------     --------   ---------------     ---------------     ---------------    ----------- 

Tumbleweed               $565,440         02/10/98   02/2018; two      11% of Total Cost      for each lease    at any time  
Southwest Mesquite       (excluding                  five-year         (4); increases by      year, (i) 5% of   after the    
   Grill & Bar (7)       development                 renewal options   10% after the fifth    annual gross      seventh      
(the  "Clarksville       costs) (3)                                    lease year and after   sales  minus      lease year   
Property ")                                                            every five years       (ii) the minimum               
Restaurant to be                                                       thereafter during the  annual rent for                
constructed                                                            lease term             such lease year                

The Clarksville Property                                                                                                     
is located on the northwest                                                                                                  
corner of Wilma-Rudolph                                                                                                      
Boulevard and SR 374, in                                                                                                     
Clarksville, Montgomery                                                                                                      
County, Tennessee, in an area                                                                                                
of mixed retail, commercial,                                                                                                 
and residential development.                                                                                                 

Tumbleweed               $511,103         02/10/98   02/2018; two      11% of Total Cost      for each lease    at any time  
Southwest Mesquite       (excluding                  five-year         (4); increases by      year, (i) 5% of   after the    
   Grill & Bar (7)       development                 renewal options   10% after the fifth    annual gross      seventh      
(the  "Hermitage         costs) (3)                                    lease year and after   sales minus (ii)  lease year   
Property ")                                                            every five years       the minimum                    
Restaurant to be                                                       thereafter during the  annual rent for                
constructed                                                            lease term             such lease year                

The Hermitage Property                                                                                                       
is located on the east                                                                                                       
side of Old Hickory                                                                                                          
Boulevard,  in Hermitage,                                                                                                    
Davidson County,                                                                                                             
Tennessee, in an area of                                                                                                     
mixed retail, commercial,                                                                                                    
and residential development.                                                                                                 
Other fast-food, family-                                                                                                     
style and casual dining                                                                                                      
restaurants located in                                                                                                       
proximity to the                                                                                                             
Hermitage Property include                                                                                                   
an Applebee's and a                                                                                                          
Schlotzsky's Deli.                                                                                                           

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                                                       Lease Expira-                                                         
Property Location and       Purchase         Date        tion and             Minimum                             Option     
Competition                 Price (1)      Acquired   Renewal Options     Annual Rent (2)    Percentage Rent   To Purchase   
---------------------     ------------     --------   ---------------     ---------------    ---------------   -----------   

Arby's                   $424,738         02/20/98   02/2018; two               (8)                None         at any time  
(the "Jacksonville      (excluding                   five-year                                                  after the    
Property")              development                  renewal options                                            seventh      
Restaurant to be        costs) (3)                                                                              lease year   
constructed                                                                                                                  

The Jacksonville Property                                                                                                    
is    located    on   the                                                                                                    
northwest    corner    of                                                                                                    
DeBarry  Avenue and Wells                                                                                                    
Road,  in   Jacksonville,                                                                                                    
Clay County,  Florida, in                                                                                                    
an area of mixed  retail,                                                                                                    
commercial,           and                                                                                                    
residential  development.                                                                                                    
Other          fast-food,                                                                                                    
family-style  and  casual                                                                                                    
dining        restaurants                                                                                                    
located in  proximity  to                                                                                                    
the Jacksonville Property                                                                                                    
include a Steak-n- Shake,                                                                                                    
a  Chili's,   an  Outback                                                                                                    
Steak  House,   a  Burger                                                                                                    
King, a Ruby  Tuesday,  a                                                                                                    
Tony Roma's,  and several                                                                                                    
local restaurants.                                                                                                           

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Jack in the Box          $1,380,250       02/23/98   02/2016; four     $134,574 (9);               None         at any time  
(the  "Los Angeles #4    (3) (9)                     five-year         increases by 8%                          after the    
Property ")                                          renewal options   after the fifth lease                    seventh      
Restaurant to be                                                       year and after every                     lease year   
constructed                                                            five years thereafter                                 
                                                                       during the lease                                      
The Los Angeles #4                                                     term                                                  
Property is located on                                                                                                       
the southeast corner of                                                                                                      
Pico Boulevard and                                                                                                           
Hoover Street, in Los                                                                                                        
Angeles, Los Angeles                                                                                                         
County, California, in                                                                                                       
an area of mixed retail,                                                                                                     
commercial, and residential                                                                                                  
development. Other fast-                                                                                                     
food, family-style and                                                                                                       
casual dining restaurants                                                                                                    
located in proximity to                                                                                                      
the Los Angeles #4 Property                                                                                                  
include a Wendy's, a Domino's                                                                                                
Pizza and several local                                                                                                      
restaurants.                                                                                                                 


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----------------------                                                          
FOOTNOTES:                                                                      

(1)      The estimated federal income tax basis of the depreciable  portion (the
         building portion) of each of the construction Properties acquired, once
the buildings are constructed, is set forth below:            

Property                                Federal Tax Basis     
--------                                -----------------     

Dubuque #2 Property                            $1,074,000     
Edmond Property                                 1,012,000     
Clarksville Property                              926,000     
Hermitage Property                                926,000     
Jacksonville Property                             599,000     
Los Angeles #4 Property                           620,000     

(2)      For the Dubuque #2,  Edmond,  Clarksville,  Hermitage and  Jacksonville
         Properties,  minimum  annual  rent will  become due and  payable on the
         earlier of (i) 180 days after execution of the lease, (ii) the date the
         certificate  of occupancy for the  restaurant  is issued,  or (iii) the
         date the  restaurant  opens  for  business  to the  public  or (for the
         Clarksville,  Hermitage and Jacksonville Properties), (iv) the date the
         tenant receives from the landlord its final funding of the construction
         costs.  During the period  commencing  with the  effective  date of the
         lease to the date minimum  annual rent becomes  payable for the Dubuque
         #2 and Edmond Properties, as described above, interim rent equal to ten
         percent  per annum of the amount  funded by the  Company in  connection
         with the purchase and  construction of the Properties  shall accrue and
         be  payable  in a single  lump sum at the time of final  funding of the
         construction  costs.  During the period  commencing  with the effective
         date of the lease to the date minimum  annual rent becomes  payable for
         the  Clarksville  and Hermitage  Properties,  as described  above,  the
         tenant  shall pay  monthly  interim  rent equal to 11% per annum of the
         amount  funded by the  Company  in  connection  with the  purchase  and
         construction of the Properties.  During the period  commencing with the
         effective  date of the lease to the date  minimum  annual rent  becomes
         payable for the Jacksonville  Property,  as described above, the tenant
         shall pay interim  rent equal to the  product of 325 basis  points over
         the  "Applicable  Treasury Rate" (US Treasuries with a maturity date of
         20 years) multiplied by the amounts funded by the Company in connection
with the purchase and construction of the Property.           

(3)      The  development   agreements  for  the  Properties  which  are  to  be
         constructed, provides that construction must be completed no later than
         the dates set forth below. The maximum cost to the Company,  (including
         the  purchase  price of the land,  development  costs,  and closing and
         acquisition  costs) is not expected to, but may,  exceed the amount set
forth below:                                                  

                                                                · Download Table


Property                 Estimated Maximum Cost  Estimated Final Completion Date
--------                 ----------------------  -------------------------------
                                                                                 
Dubuque #2 Property              $1,647,329             July 19, 1998           
Edmond Property                   1,616,169             July 19, 1998           
Clarksville Property              1,488,802             August 9, 1998          
Hermitage Property                1,432,291             August 9, 1998          
Jacksonville Property             1,025,168             August 19, 1998         
Los Angeles #4 Property           1,380,250             August 22, 1998         

(4)      The "Total Cost" is equal to the sum of (i) the  purchase  price of the
         property,  (ii)  closing  costs,  and (iii)  actual  development  costs
incurred under the development agreement.                     

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(5)      Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).                                              

(6)      The  lessee  of  the  Dubuque  #2 and  Edmond  Properties  is the  same
unaffiliated lessee.                                          

(7)      The lessee of the  Clarksville  and  Hermitage  Properties  is the same
unaffiliated lessee.                                          

(8)      Initial  minimum annual rent shall equal the rate which is in effect 15
         business  days  prior  to the  commencement  of the  annual  rent  (2),
         multiplied by the amounts funded by the Company in connection  with the
         purchase and construction of the Property. Minimum annual rent shall be
         adjusted  upward at the end of each 36 month period after the Company's
         closing on the property by the lower of (i) 4.14% of the minimum annual
         rent or (ii) an amount equal to the product obtained by multiplying the
Consumer Price Index by three.                                

(9)      The  Company  paid for all  construction  costs in advance at  closing;
         therefore,  minimum annual rent was determined on the date acquired and
is not expected to change.                                    

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PENDING INVESTMENTS                                                             

         As of March 2, 1998, the Company had initial commitments to acquire ten
properties,  including eight properties  consisting of land and building and two
properties  consisting  of  building  only.  The  acquisition  of each of  these
properties is subject to the fulfillment of certain conditions,  including,  but
not limited to, a  satisfactory  environmental  survey and  property  appraisal.
There can be no assurance  that any or all of the  conditions  will be satisfied
or, if satisfied,  that one or more of these  properties will be acquired by the
Company. If acquired,  the leases of all ten of these properties are expected to
be  entered  into on  substantially  the same terms  described  in  "Business  -
Description of Property Leases."                                                

         In connection with the IHOP property in Saugus, Massachusetts,  and one
of the Shoney's properties in Phoenix,  Arizona,  the Company anticipates owning
only the building and not the underlying land. However, for the Saugus property,
the Company  anticipates  entering into a landlord  estoppel  agreement with the
landlord of the land and a  collateral  assignment  of the ground lease with the
lessee, and for the Phoenix property,  the Company  anticipates  entering into a
tri-party  agreement  with the lessee and the landlord of the land,  in order to
provide the Company  with  certain  rights with respect to the land on which the
buildings are located.                                                          

         Set forth below are  summarized  terms  expected to apply to the leases
for each of the properties.                                                     

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                                                        · Enlarge/Download Table

                                Lease Term and                                                                                     
Property                        Renewal Options            Minimum Annual Rent               Percentage Rent     Option to Purchase
--------                        ---------------            -------------------               ---------------     ------------------
                                                                                                                                   
Boston Market              15 years; five five-year  10.38% of the Company's total    for each lease year after   at any time after
Colorado Springs, CO       renewal options           cost to purchase the property;   the fifth lease year, (i)   the fifth lease  
Existing restaurant                                  increases by 10% after the fifth 4% of annual gross sales    year             
                                                     lease year and after every five  minus (ii) the minimum                       
                                                     years thereafter during the      annual rent for such lease                   
                                                     lease term                       year                                         

Ground  Round              20 years; five five-year  10.25% of the Company's total              (2)               at any time after
Maple Shade, NJ            renewal options           cost to purchase the property                                the seventh lease
Existing restaurant                                                                                               year             

IHOP (3)                                 (4)         11.78% of the Company's total    for each lease year, (i)    at any time after
Saugus, MA                                           cost to purchase the building;   3% of annual gross sales    the fifth lease  
Existing restaurant                                  increases by 5.81% after the     minus (ii) the minimum      year             
                                                     fifth lease year, 4.66% after    annual rent for such                         
                                                     the tenth lease year, and 2.83%  lease year                                   
                                                     after the fifteenth lease year                                                

Jack in the Box            18 years; four five-year  9.75% of Total Cost (1);                   None              at any time after
Pflugerville, TX           renewal options           increases by 8% after the fifth                              the seventh lease
Restaurant to be constructed                         lease year and after every five                              year (5)         
                                                     years thereafter during the lease                                             
                                                     term                                                                          

Jack in the Box            18 years; four five-year  9.75% of Total Cost (1);                   None              at any time after
St. Louis, MO              renewal options           increases by 8% after the fifth                              the seventh lease
Restaurant to be constructed                         lease year and after every five                              year (5)         
                                                     years thereafter during the lease                                             
                                                     term                                                                          

Jack in the Box            18 years; four five-year  9.75% of Total Cost (1); increases         None              at any time after
Waxahachie, TX             renewal options           by 8% after the fifth lease year and                         the seventh lease
Restaurant to be constructed                         after every five years thereafter                            year (5)         
                                                     during the lease term                                                         

Ruby Tuesday               20 years; two five-year   11% of Total Cost (1);            for each lease year, (i)   at any time after
Georgetown, KY             renewal options           increases by 10% after the fifth  6% of annual gross sales   the seventh lease
Restaurant to be constructed                         lease year and after every five   minus (ii) the minimum     year             
                                                     years thereafter during the lease annual rent for such lease                  
                                                     term                              year                                        

Ruby Tuesday               20 years; two five-year   11% of Total Cost (1);            for each lease year, (i)   at any time after
Somerset, KY               renewal options           increases by 10% after the fifth  6% of annual gross sales   the seventh lease
Restaurant to be constructed                         lease year and after every five   minus (ii) the minimum     year             
                                                     years thereafter during the lease annual rent for such lease                  
                                                     term                              year                                        

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                            Lease Term and                                                                                         
Property                    Renewal Options         Minimum Annual Rent            Percentage Rent       Option to Purchase        
--------                    ---------------         -------------------            ---------------       ------------------        

Shoney's                 20 years;  two five-     11% of Total Cost (1);        for each lease year, (i)  at any time after        
Phoenix, AZ (#4)         year renewal options     increases by 10% after the    6% of annual gross sales  the seventh lease        
Restaurant to be                                  fifth lease year and after    minus (ii) the minimum    year                     
renovated                                         every five years thereafter   annual rent for such                               
                                                  during the lease term         lease year                                         

Shoney's (6)                      (7)           11% of Total Cost (1);       for each lease year, (i) 2.5% at any time after       
Phoenix, AZ (#5)                                increases by 10% after the   of annual gross sales minus   the seventh lease       
Restaurant to be                                fifth lease year and after   (ii) the minimum annual rent  year                    
constructed                                     every five years thereafter  for such lease year                                   
                                                during the lease term                                                              


-----------------------                                                         
FOOTNOTES:                                                                      

(1)      The "Total Cost" is equal to the sum of (i) the  purchase  price of the
         property,  (ii)  closing  costs,  and (iii)  actual  development  costs
incurred under the development agreement.                     

(2)      For each  lease  year,  percentage  rent shall be  calculated  upon the
         amount by which gross sales exceed a to be determined  breakpoint (base
         sales) as follows; 6% for an increase of 0% to 33.33% above base sales,
         5.5% for an increase of 33.34% to 66.7% above base sales, and 5% for an
         increase  of 66.8% to 100% above base  sales.  For  increases  in gross
         sales in excess of 100%,  percentage  rent  shall  decrease  by .5% for
every additional 33.33% increase above base sales.            

(3)      The Company anticipates owning the building only for this property. The
         Company  will  not own  the  underlying  land;  although,  the  Company
         anticipates  entering  into a  landlord  estoppel  agreement  with  the
         landlord of the land and a  collateral  assignment  of the ground lease
         with the lessee in order to provide the  Company  with  certain  rights
with respect to the land on which the building is located.    

(4)      The lease term shall  expire  upon the earlier of (i) the date 20 years
         from the date of closing,  (ii) the  expiration of the original term of
         the ground lease, or (iii) the earlier termination of the ground lease.

(5)      In the event the  Company  purchases  the  property  directly  from the
  lessee, the lessee will have no option to purchase the property.

(6)      The Company anticipates owning the building only for this property. The
         Company  will  not own  the  underlying  land;  although,  the  Company
         anticipates entering into a tri-party agreement with the lessee and the
         landlord  of the land in order to  provide  the  Company  with  certain
   rights with respect to the land on which the building is located.

(7)      The lease term shall expire upon the earlier of (i) the  expiration  of
         the original term of the ground lease, or (ii) the earlier  termination
of the ground lease.                                          

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INVESTMENT OF OFFERING PROCEEDS                                                 

         Acquisition of a restaurant  Property  generally involves an investment
in land and building of approximately $400,000 to $1,250,000, although higher or
lower figures for individual Properties are possible. The Company estimates that
it will acquire 320 to 360 additional Properties,  based on an estimated average
purchase  price  of  $800,000  to  $900,000  per  Property,  if the  maximum  of
34,500,000  Shares is sold.  Management has estimated the average purchase price
of a Property based on its past experience in acquiring  similar  properties and
in light of current market conditions.  In certain cases, the Company may become
a co-venturer in a Joint Venture that will own the Property.  In each such case,
the  Company's  cost to purchase an interest in such  Property will be less than
the total  purchase  price and the  Company  therefore  will be able to  acquire
interests  in  a  greater  number  of  Properties.   Management  estimates  that
approximately 30% to 50% of the Company's  investment in a Property generally is
for the cost of land,  and 50% to 70% generally is for the cost of the building.
See "Joint Venture  Arrangements" below and "Risk Factors -- Investment Risks --
Possible Inability to Further Diversify Investments."                           

         Although  management cannot estimate the number of additional  Mortgage
Loans  that  may  be  entered  into,  management  currently  expects  to  invest
approximately 5% to 10% of Gross Proceeds of this offering, assuming the maximum
of 34,500,000 Shares is sold, in Mortgage Loans.                                

         Additional Secured Equipment Leases will be funded with the proceeds of
the Line of Credit.  No portion of Gross  Proceeds of this offering will be used
to fund Secured Equipment Leases. Although management cannot estimate the number
of additional  Secured  Equipment Leases that may be entered into, the aggregate
outstanding  principal amount of Secured Equipment Leases will not exceed 10% of
the gross  proceeds of this  offering,  the Prior  Offerings and any  subsequent
offerings,  including the approximately  $23,388,700 of Secured Equipment Leases
funded as of March 2,  1998.  The Board of  Directors  may  determine  to obtain
additional financing to be used by the Company to fund Secured Equipment Leases,
provided  that the  amount of such  additional  financing  may not exceed 10% of
gross  proceeds  of this  offering,  the  Prior  Offerings  and  any  subsequent
offering. Management has undertaken, consistent with its objective of qualifying
as a REIT for federal income tax purposes, to ensure that the total value of all
Secured Equipment Leases will not exceed 25% of the Company's total assets,  and
that Secured  Equipment  Leases to a single lessee,  in the aggregate,  will not
exceed 5% of total assets.                                                      

SITE SELECTION AND ACQUISITION OF PROPERTIES                                    

         General. The Restaurant Chains selected by the Advisor, and as approved
by the Board of Directors,  have full-time  staffs engaged in site selection and
evaluation.  All new  sites  must be  approved  by the  Restaurant  Chains.  The
Restaurant  Chains generally  conduct or require the submission of studies which
typically  include  such  factors  as  traffic  patterns,   population   trends,
commercial and industrial  development,  office and  institutional  development,
residential  development,  per capita or household median income,  per capita or
household median age, and other factors.  The Restaurant  Chains also review and
approve all proposed tenants and restaurant  sites. The Restaurant Chains or the
operators  generally  make  their  site  evaluations  and  analyses,  as well as
financial information regarding proposed tenants, available to the Company.     

         The Board of  Directors,  on behalf of the Company,  elects to purchase
and lease Properties  based  principally on an examination and evaluation by the
Advisor of the potential value of the site, the financial condition and business
history  of the  proposed  tenant,  the  demographics  of the area in which  the
restaurant Property is located or to be located, the proposed purchase price and
proposed lease terms, geographic and market diversification, and potential sales
expected to be generated by the restaurant.  In addition,  the potential  tenant
must meet at least the minimum  standards  established by a Restaurant Chain for
its operators.  The Advisor also performs an independent  break-even analysis of
the potential  profitability of a restaurant  property using historical data and
other data developed by the Company and provided by the Restaurant Chains.      

         Although the Restaurant Chains that are selected by the Advisor approve
each tenant and each  Property,  the Board of  Directors  will  exercise its own
judgment as to, and will be solely  responsible  for, the ultimate  selection of
both tenants and  Properties.  Therefore,  some of the properties  approved by a
Restaurant Chain may not be purchased by the Company.                           

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         In  each  Property  acquisition,   the  Advisor  negotiates  the  lease
agreement with the tenant.  In certain  instances,  the Advisor may negotiate an
assignment of an existing  lease,  in which case the terms of the lease may vary
substantially  from  the  Company's  standard  lease  terms,  if  the  Board  of
Directors, based on the recommendation of the Advisor, determines that the terms
of an acquisition  and lease of a Property,  taken as a whole,  are favorable to
the Company.  It is expected that the  structure of the  long-term  "triple-net"
lease  agreements,  which  provide for monthly  rental  payments  and  automatic
increases  in base rent at  specified  times  during  the lease  terms  and/or a
percentage of gross  restaurant sales over specified  levels,  will increase the
value of the  Properties and provide an inflation  hedge.  See  "Description  of
Leases"  below  for a  discussion  of the  terms  of the  Company's  leases.  In
connection with a Property  acquisition,  in the event the tenant does not enter
into a Secured Equipment Lease with the Company,  the tenant provides at its own
expense all Equipment (such as deep fryers, grills, refrigerators, and freezers)
necessary to operate the Company's Property as a restaurant. Generally, a tenant
either pays cash or obtains a loan from a third party to purchase such items. If
the tenant  obtains  such a loan,  the tenant  will own this  personal  property
subject to the tenant's  obligations  under its loan.  In the  experience of the
Affiliates of the Company and the Advisor,  there may be rare  circumstances  in
which a tenant defaults under such a loan, in which event the lender may attempt
to remove the personal  property  from the  building,  resulting in the Property
becoming  inoperable  as a restaurant  until new  Equipment can be purchased and
installed.  In order to prevent  repossession  of this personal  property by the
lender,  and  only on an  interim  basis in order  to  preserve  the  value of a
Property,  the  Company  may elect (but only to the extent  consistent  with the
Company's objective of qualifying as a REIT) to use Company reserves to purchase
this  personal  property  from  the  lender,  generally  at a  discount  for the
remaining unpaid balance under the tenant's loan. The Company then would expect,
consistent  with the Company's  objective of qualifying as a REIT, to resell the
personal  property to a new tenant in connection  with the transfer of the lease
to that tenant.                                                                 

         Some lease  agreements  provide  the  tenant  with the  opportunity  to
purchase the Property under certain conditions,  generally either at a price not
less than fair market value  (determined by appraisal or otherwise) or through a
right of first  refusal to purchase  the  Property.  In either  case,  the lease
agreements  provide that the tenant may exercise these rights only to the extent
consistent  with the Company's  objective of qualifying as a REIT.  See "Sale of
Properties,  Mortgage Loans,  and Secured  Equipment  Leases" below and "Federal
Income Tax Considerations -- Characterization of Leases."                       

         The purchase of each  Property is supported by an appraisal of the real
estate prepared by an independent appraiser. The Advisor, however, relies on its
own independent  analysis and not on such  appraisals in determining  whether or
not to  recommend  the Company to acquire a  particular  Property.  The purchase
price of each such Property,  plus any  Acquisition  Fees paid by the Company in
connection with such purchase,  may not exceed the Property's  appraised  value.
(In connection  with the acquisition of a Property which is to be constructed or
renovated,  the comparison of the purchase price and the appraised value of such
Property  ordinarily will be based on the "when  constructed" price and value of
such  Property.) It should be noted that  appraisals  are estimates of value and
should not be relied upon as measures of true worth or  realizable  value.  Each
appraisal  will be maintained  in the Company's  records for at least five years
and will be available for inspection and duplication by any stockholder.        

         The titles to  Properties  purchased  by the Company will be insured by
appropriate title insurance  policies and/or abstract  opinions  consistent with
normal practices in the jurisdictions in which the Properties are located.      

         Construction and Renovation.  In some cases, construction or renovation
is required  after the purchase  contract has been entered into,  but before the
total  purchase  price has been paid.  In  connection  with the  acquisition  of
Properties  that are to be  constructed or renovated and as to which the Company
will own both the land and the building or building only, the Company  generally
advances  funds for  construction  or  renovation  costs,  as they are incurred,
pursuant to a development agreement with the developer. The developer may be the
tenant or an Affiliate of the Company. An Affiliate may serve as a developer and
enter into the  development  agreement  with the Company if the  transaction  is
approved by a majority of the Directors, including a majority of the Independent
Directors. The Company believes that the ability to have an Affiliate capable of
serving as the  developer  provides the Company an  advantage  by enhancing  its
relationship with key tenants and by giving it access to tenant opportunities at
an earlier stage of the development cycle. As a result,                         

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the Company  believes it has a greater  number of  opportunities  for investment
presented  to it than it might  otherwise  have and it is able to obtain  better
terms by  negotiating  the terms of its  investment  at an earlier  stage in the
development cycle when there are fewer competitive alternatives to the tenant.  

         The  developer  will enter  into all  construction  contracts  and will
arrange for and coordinate all aspects of the  construction or renovation of the
restaurant  improvements.  The developer is responsible for the  construction or
renovation of the restaurant improvements,  although it may employ co-developers
or  sub-agents  in  fulfilling  its   responsibilities   under  the  development
agreement.  All general  contractors  performing  work in  connection  with such
restaurant  improvements  must provide a payment and  performance  bond or other
satisfactory  form of guarantee of performance.  All construction and renovation
must be  performed  or  supervised  by persons  or  entities  acceptable  to the
Advisor.  The Company is obligated,  as  construction  or  renovation  costs are
incurred,  to make the remaining  payments due as part of the purchase price for
the  Properties,  provided  that the  construction  or  renovation  conforms  to
definitive  plans,  specifications,  and costs  approved  by the Advisor and the
Board of Directors and embodied in the construction contract.                   

         Under the terms of the  development  agreement,  the Company  generally
advances its funds on a monthly basis to meet  construction draw requests of the
developer.  The  Company,  in  general,  only  advances  its  funds  to meet the
developer's   draw  requests  upon  receipt  of  an  inspection   report  and  a
certification of draw requests from an inspecting architect or engineer suitable
to the  Company,  and the  Company  may  retain a portion of any  advance  until
satisfactory  completion of the project.  The  certification  generally  must be
supported by color photographs showing the construction work completed as of the
date of  inspection.  The total  amount of the funds  advanced to the  developer
(including  the purchase  price of the land plus closing costs and certain other
costs) generally does not exceed the maximum amount specified in the development
agreement.  Such maximum amount is based on the Company's  estimate of the costs
of such construction or renovation.                                             

         In some  cases,  construction  or  renovation  is  required  before the
Company  acquires the Property.  In this situation,  the Company may have made a
deposit  on the  Property  in  cash or by  means  of a  letter  of  credit.  The
renovation  or  construction  may be made by an Affiliate or a third party.  The
Company  may  permit the  proposed  developer  to arrange  for a bank or another
lender,  including  an  Affiliate,  to  provide  construction  financing  to the
developer. In such cases, the lender may seek assurance from the Company that it
has  sufficient  funds to pay to the developer  the full  purchase  price of the
Property upon completion of the  construction  or renovation.  In the event that
the  Company  segregates  funds as  assurance  to the  lender of its  ability to
purchase the  Property,  the funds will remain the property of the Company,  and
the lender  will have no rights  with  respect to such funds upon any default by
the developer under the  development  agreement or under the loan agreement with
such  lender,  or if the closing of the  purchase of the Property by the Company
does not occur for any reason,  unless the  transaction is supported by a letter
of credit in favor of the lender.                                               

         Under the development  agreement,  the developer generally is obligated
to complete the construction or renovation of the restaurant improvements within
120 to 180 days from the date of the development agreement.  If the construction
or  renovation  is not  completed  within that time and the  developer  fails to
remedy this default  within 10 days after  notice from the Company,  the Company
has  the  option  to  grant  the  developer  additional  time  to  complete  the
construction,  to  take  over  construction  or  renovation  of  the  restaurant
improvements,  or  to  terminate  the  development  agreement  and  require  the
developer  to  purchase  the  Property  at a price  equal  to the sum of (i) the
Company's  purchase price of the land,  including all fees,  costs, and expenses
paid by the Company in connection  with its purchase of the land, (ii) all fees,
costs,  and  expenses  disbursed  by the  Company  pursuant  to the  development
agreement  for  construction  of the  restaurant  improvements,  and  (iii)  the
Company's  "construction financing costs." The "construction financing costs" of
the Company is an amount equal to a return,  at the annual  percentage rate used
in calculating the minimum annual rent under the lease, on all Company  payments
and disbursements described in clauses (i) and (ii) above.                      

         The  Company  also  generally  enters into an  indemnification  and put
agreement (the  "Indemnity  Agreement")  with the developer and any guarantor of
the obligations of the tenant under the lease in connection with the acquisition
of  Properties to be  constructed  or renovated.  The Indemnity  Agreement  will
provide for certain  additional rights to the Company unless certain  conditions
are met. In general, these                                                      

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conditions are (i) the developer's  acquisition of all permits,  approvals,  and
consents  necessary to permit  commencement of construction or renovation of the
restaurant  within a  specified  period of time after the date of the  Indemnity
Agreement  (normally,  60  days),  or (ii) the  completion  of  construction  or
renovation of the  restaurant  as evidenced by the issuance of a certificate  of
occupancy,  within a specified period of time (generally, 120 to 180 days) after
the date of the Indemnity Agreement. If such conditions are not met, the Company
has the right to grant the developer  additional  time to satisfy the conditions
or to require the  developer  to  purchase  the  Property  from the Company at a
purchase price equal to the total amount  disbursed by the Company in connection
with the acquisition and  construction or renovation of the Property  (including
closing  costs),  plus an amount equal to the return  described in item (iii) of
the preceding paragraph.  Failure of the developer to purchase the Property from
the Company upon demand by the Company under the  circumstances  specified above
entitles the Company to declare the  developer in default under the lease and to
declare  each  guarantor  in  default  under any  guarantee  of the  developer's
obligations to the Company.                                                     

         In certain  situations where construction or renovation is required for
a restaurant  Property,  the Company will pay a negotiated  maximum  amount upon
completion of construction or renovation rather than providing  financing to the
developer,  with such  amount to be based on the  developer's  costs and fees of
such construction or renovation.                                                

         Affiliates  of the Company also may provide  construction  financing to
the  developer  of a Property.  In addition,  the Company may  purchase  from an
Affiliate  of the Company a Property  that has been  developed,  constructed  or
renovated  by the  Affiliate.  Any fees paid to  Affiliates  of the  Company  in
connection with the financing, construction or renovation of a Property acquired
by the  Company  will be  considered  Acquisition  Fees and will be  subject  to
approval  by a majority of the Board of  Directors,  including a majority of the
Independent  Directors,  not  otherwise  interested  in  the  transaction.   See
"Management  Compensation"  and  "Conflicts  of  Interest  --  Certain  Conflict
Resolution  Procedures."  Any  such  fees  will be  included  in the cost of the
Property and, therefore, will be included in the calculation of base rent.      

         In all  situations  where  construction  or  renovation of a restaurant
Property  is  required,  the Company  also has the right to review the  tenant's
books,  records,  and agreements during and following completion of construction
to verify actual costs.                                                         

         Interim  Acquisitions.  The  Affiliates of the Advisor  regularly  have
opportunities  to  acquire   restaurant   properties  of  a  type  suitable  for
acquisition by the Company as a result of their existing  relationships and past
experience  with  various  Restaurant  Chains  and  restaurant  operators.   See
"General" above. These acquisitions often must be made within a relatively short
period of time,  occasionally  at a time when the  Company may be unable to make
the  acquisition.  In an effort to address  these  situations  and  preserve the
acquisition  opportunities  of the Company  (and other  entities  with which the
Company is affiliated),  the Advisor and its Affiliates maintain lines of credit
which enable them to acquire these restaurant properties on an interim basis and
temporarily  own them for the purpose of facilitating  their  acquisition by the
Company (or other entities with which the Company is  affiliated).  At such time
as a Property  acquired on an interim  basis is  determined  to be suitable  for
acquisition  by the Company,  the interim  owner of the  Property  will sell its
interest  in the  Property  to the Company at a price equal to the lesser of its
cost (which  includes  carrying costs and, in instances in which an Affiliate of
the Company has provided real estate  brokerage  services in connection with the
initial purchase of the Property,  indirectly includes fees paid to an Affiliate
of the  Company) to purchase  such  interest in the  Property or the  Property's
appraised value, provided that a majority of Directors,  including a majority of
the Independent Directors, determine that the acquisition is fair and reasonable
to the  Company.  See  "Conflicts  of  Interest -- Certain  Conflict  Resolution
Procedures."  Appraisals of Properties acquired from such interim owners will be
obtained in all cases.                                                          

         Acquisition  Services.  Acquisition  services  performed by the Advisor
include,  but are not limited to, site  selection  and/or  approval;  review and
selection of tenants and negotiation of lease agreements and related  documents;
monitoring  Property  acquisitions;  and the  processing of all final  documents
and/or procedures to complete the acquisition of Properties and the commencement
of tenant occupancy and lease payments.                                         

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         The Company will pay the Advisor an Acquisition  Fee not to exceed 4.5%
of the Gross Proceeds from the sale of Shares.  See  "Management  Compensation."
The total of all Acquisition  Fees and Acquisition  Expenses shall be reasonable
and shall not exceed an amount  equal to 6% of the Real Estate  Asset Value of a
Property, or in the case of a Mortgage Loan, 6% of the funds advanced,  unless a
majority of the Board of  Directors,  including  a majority  of the  Independent
Directors,  not otherwise  interested in the transaction approves fees in excess
of these limits subject to a determination  that the transaction is commercially
competitive,  fair and reasonable to the Company.  The total of all  Acquisition
Fees  payable to all  persons  or  entities  will not  exceed  the  compensation
customarily  charged in arm's-length  transactions by others  rendering  similar
services  as an  ongoing  activity  in the same  geographical  location  and for
comparable types of properties.                                                 

         The Advisor engages counsel to perform legal services, and such counsel
also  may  provide  legal  services  to  the  Company  in  connection  with  the
acquisition of Properties. The legal fees payable to such counsel by the Company
will not exceed those generally charged for similar services.                   

STANDARDS FOR INVESTMENT IN PROPERTIES                                          

         Selection of Restaurant  Chains.  The selection of Restaurant Chains by
the Advisor, as approved by the Board of Directors, is based on an evaluation of
the operations of restaurants in the Restaurant Chain, the number of restaurants
operated  throughout the Restaurant  Chain's system, the relationship of average
restaurant  gross  sales  to the  average  capital  costs of a  restaurant,  the
Restaurant  Chain's  relative  competitive  position  among  the  same  type  of
restaurants  offering  similar  types  of food,  name  recognition,  and  market
penetration.  The Restaurant Chains may not be affiliated with the Advisor,  the
Company or an Affiliate.                                                        

         Selection  of  Properties  and  Tenants.   In  making   investments  in
Properties,  the Advisor considers relevant real property and financial factors,
including the  condition,  use, and location of the  Property,  income-producing
capacity, the prospects for long-term appreciation,  the relative success of the
Restaurant  Chain in the geographic  area in which the Property is located,  and
the  management  capability and financial  condition of the tenant.  The Company
obtains an  independent  appraisal for each Property it purchases.  In selecting
tenants,  the Advisor will  consider the prior  experience  of the tenant in the
restaurant  industry,  the net worth of the tenant,  past  operating  results of
other  restaurants  currently  or  previously  operated by the  tenant,  and the
tenant's prior experience in managing restaurants within a particular Restaurant
Chain.                                                                          

         In selecting specific  Properties within a particular  Restaurant Chain
and in selecting lessees for the Company's Properties,  the Advisor, as approved
by the Board of Directors, applies the following minimum standards.             

         1.  Each  Property  will be in what  the  Advisor  believes  is a prime
business location.                                                              

         2. Base (or  minimum)  annual  rent will  provide a  specified  minimum
return on the Company's cost of purchasing  and, if  applicable,  developing the
Property,  and the lease typically also will provide for automatic  increases in
base rent at specified times during the lease term and for payment of percentage
rent based on gross restaurant sales over specified levels.                     

        3.   The initial lease term typically will be at least 15 to 20 years.

         4. The Company  will  reserve the right to approve or reject any tenant
and restaurant site selected by a Restaurant Chain.                             

         5. In evaluating  prospective tenants, the Company will examine,  among
other factors,  the tenant's ranking in its market segment,  trends in per store
sales,  overall  changes in consumer  preferences,  and the tenant's  ability to
adapt to changes in market and competitive  conditions,  the tenant's historical
financial performance, and its current financial condition.                     

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         6. In  general,  the  Company  will not  acquire a  Property,  if, as a
result, more than 25% of its Gross Proceeds would be invested in Properties of a
single  Restaurant  Chain or if more  than 30% of its  Gross  Proceeds  would be
invested in Properties in a single state.                                       

DESCRIPTION OF PROPERTIES                                                       

         The 250  Properties  owned by the  Company as of March 2, 1998  conform
generally to the following  specifications  of size,  cost, and type of land and
buildings and based on these  Properties and on past experience and knowledge of
the fast-food,  family-style, and casual dining restaurant industry, the Advisor
expects that the Properties purchased by the Company with the remaining proceeds
of the 1997  Offering and with the proceeds of this  offering  will also conform
generally  to  the  following  specifications.  These  specifications  may  vary
substantially if the Company invests in any full-service restaurant Properties. 

         Land.  Lot sizes  generally  range from  25,000 to 60,000  square  feet
depending upon building size and local demographic factors.  Restaurants located
on land  within  shopping  centers  will be  freestanding  and may be located on
smaller  parcels if sufficient  common  parking is available.  Restaurant  sites
purchased by the Company are in locations  zoned for  commercial  use which have
been reviewed for traffic  patterns and volume of traffic.  There is substantial
competition for quality sites; accordingly, land costs may be high and generally
range from  $150,000 to $500,000,  although the cost of the land for  particular
Properties may be higher or lower in some cases.                                

         Buildings.  Either  before or after  construction  or  renovation,  the
restaurant  Properties  acquired by the Company are one of a Restaurant  Chain's
approved  designs.  Prior to purchase of all restaurant  Properties,  other than
those purchased prior to completion of construction, the Company receives a copy
of the certificate of occupancy issued by the local building  inspector or other
governmental  authority  which  permits the use of the Property as a restaurant,
and receives a certificate  from the Restaurant Chain to the effect that (i) the
Property is  operational  and (ii) the Property and the tenant are in compliance
with all of the Restaurant Chain's requirements,  including, but not limited to,
building plans and specifications  approved by the Restaurant Chain. The Company
also  receives  a  certificate  of  occupancy  for  each  restaurant  for  which
construction  has not  been  completed  at the  time of  purchase,  prior to the
Company's  payment  of the  final  installment  of the  purchase  price  for the
restaurant Property.                                                            

         The restaurant buildings generally are rectangular and constructed from
various  combinations of stucco,  steel,  wood, brick, and tile.  Building sizes
generally  range from 2,500 to 6,000  square feet,  with the larger  restaurants
having greater seating and equipment areas.  Building and site preparation costs
vary  depending upon the size of the building and the site and the area in which
the  restaurant  Property is located.  It is  estimated  that  building and site
preparation   costs  generally  range  from  $250,000  to  $1,250,000  for  each
restaurant Property.                                                            

         Generally,  Properties acquired by the Company consist of both land and
building,  although in a number of cases the  Company may acquire  only the land
underlying  the  restaurant  building with the building owned by the tenant or a
third  party,  and also may acquire the  building  only with the land owned by a
third party. In general, the Properties are freestanding and surrounded by paved
parking areas.  Buildings are suitable for conversion to various uses,  although
modifications   will  be  required  prior  to  use  for  other  than  restaurant
operations.                                                                     

         A tenant  generally  is  required by the lease  agreement  to make such
capital  expenditures  as may be  reasonably  necessary to refurbish  restaurant
buildings,  premises,  signs,  and  equipment  so as to comply with the tenant's
obligations  under the  franchise  agreement  to reflect the current  commercial
image of its Restaurant Chain. These capital expenditures are paid by the tenant
during the term of the lease.                                                   

DESCRIPTION OF PROPERTY LEASES                                                  

         The terms and  conditions of any lease entered into by the Company with
regard to a restaurant Property may vary from those described below. The Advisor
in all cases uses its best  efforts  to obtain  terms at least as  favorable  as
those described below. If the Board of Directors determines, based on the       

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recommendation  of the Advisor,  that the terms of an acquisition and lease of a
Property, taken as a whole, are favorable to the Company, the Board of Directors
may, in its sole  discretion,  cause the Company to enter into leases with terms
which are  substantially  different than the terms described  below, but only to
the extent  consistent with the Company's  objective of qualifying as a REIT. In
making such  determination,  the Advisor  considers such factors as the type and
location of the restaurant,  the  creditworthiness  of the tenant,  the purchase
price of the  Property,  the  prior  performance  of the  tenant,  and the prior
business  experience of  management of the Company and the Company's  Affiliates
with a Restaurant Chain or restaurant operator.                                 

         General. In general,  the leases are "triple-net"  leases,  which means
that the tenants  are  required to pay for all  repairs,  maintenance,  property
taxes,  utilities,  and  insurance.  The  tenants  also are  required to pay for
special  assessments,  sales  and use  taxes,  and the  cost of any  renovations
permitted  under the  leases.  The Company  will be the lessor  under each lease
except in certain  circumstances  in which it may be a party to a Joint  Venture
which will own the Property. In those cases, the Joint Venture,  rather than the
Company,  will be the lessor,  and all references in this section to the Company
as lessor therefore should be read accordingly.                                 
See "Joint Venture Arrangements" below.                                         

         Term of Leases. Properties are generally leased on a "triple-net" basis
for an initial term of either 15 or 20 years with up to five,  five-year renewal
options.  The minimum  rental  payment  under the renewal  option  generally  is
greater than that due for the final lease year of the initial term of the lease.
Upon  termination  of the lease,  the tenant will  surrender  possession  of the
Property to the Company,  together  with any  improvements  made to the Property
during the term of the lease,  except that for  Properties  in which the Company
owns only the land  underlying  the  building,  the tenant may in certain  cases
retain ownership of the building.                                               

         The following table sets forth  the  number of Property leases expiring
in each year for the Properties  owned by the Company as of March 2, 1998. Since
lease renewal  options are  exercisable  at the option of the tenant,  the table
below only presents the year in which the initial lease term expires.           

Year of Initial Lease                       
             Term Expiration                Number of Properties
             ---------------                --------------------

            2002                                 1
            2006                                 1
            2008                                 2
            2009                                 1
            2010                                10
            2011                                22
            2012                                39
            2013                                 8
            2014                                 4
            2015                                31
            2016                                54
            2017                                72
            2018                                 4
            2022                                 1
                                              ----

                    Total                      250
                                              ====

         Computation  of Lease  Payments.  During the initial term of the lease,
the tenant pays the Company, as lessor, minimum annual rent equal to a specified
percentage of the  Company's  cost of purchasing  the Property.  Typically,  the
leases   provide  for  automatic   increases  in  the  minimum  annual  rent  at
predetermined  intervals during the term of the lease. In the case of Properties
that are to be constructed or renovated pursuant to a development agreement, the
Company's  costs of purchasing  the Property  include the purchase  price of the
land,  including all fees, costs, and expenses paid by the Company in connection
with its purchase of the land, and all fees,  costs,  and expenses  disbursed by
the Company for construction of restaurant improvements. See "Site Selection and
Acquisition of Properties -- Construction and Renovation" above.                

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         In  addition  to  minimum  annual  rent,  the tenant  pays the  Company
"percentage rent." Percentage rent is computed as a percentage of the restaurant
gross  sales  at a  particular  Property.  The  leases  generally  provide  that
percentage  rent will  commence  in the first  lease year in which  gross  sales
exceed a specified amount. Certain leases, however, provide that percentage rent
is to be paid quarterly beginning at the end of the first two years of the lease
and each succeeding  quarter thereafter to the extent the restaurant gross sales
in that quarter  exceed the average  quarterly  gross sales during the first two
lease years.  The leases also  generally  provide that the tenant will receive a
credit against  percentage rent for the amount of the escalations in the minimum
annual rent due under the lease.  Gross sales  include sales of all products and
services of the restaurant,  excluding sales taxes, tips paid to serving people,
and sales from vending machines.                                                

         In the case of  Properties in which the Company owns only the building,
the Company will  structure its leases to have  recovered its  investment in the
building by the expiration of the lease.                                        

         Assignment  and  Sublease.  In  general,  leases may not be assigned or
subleased  without  the  Company's  prior  written  consent  (which  may  not be
unreasonably  withheld)  except to a tenant's  corporate  franchisor,  corporate
affiliate or subsidiary,  a successor by merger or  acquisition,  or, in certain
cases,  another franchisee,  if such assignee or subtenant agrees to operate the
same type of restaurant on the premises,  but only to the extent consistent with
the Company's  objective of  qualifying as a REIT.  The leases set forth certain
factors  (such as the financial  condition of the proposed  tenant or subtenant)
that are deemed to be a reasonable basis for the Company's refusal to consent to
an  assignment  or sublease.  In addition,  the Company may refuse to permit any
assignment  or  sublease   that  would   jeopardize   the  Company's   continued
qualification as a REIT. The original tenant generally will remain fully liable,
however, for the performance of all tenant obligations under the lease following
any such  assignment or sublease unless the Company agrees in writing to release
the original tenant from its lease obligations.                                 

         Alterations to Premises.  A tenant generally has the right, without the
prior  consent of the Company and at the tenant's  own expense,  to make certain
immaterial structural  modifications to the restaurant building and improvements
(with a cost of up to $10,000) or, with the Company's  prior written consent and
at the tenant's own expense, to make material structural  modifications that may
include  demolishing  and rebuilding the restaurant.  Under certain leases,  the
tenant,  at its own  expense,  may make any type of  alterations  to the  leased
premises  without the Company's  consent but must provide the Company with plans
of any proposed structural modifications at least 30 days before construction of
the  alterations  commences.  Certain  leases may  require  the tenant to post a
payment  and  performance  bond for any  structural  alterations  with a cost in
excess of a certain amount.                                                     

         Right of Tenant to Purchase.  Generally,  if the Company  wishes at any
time to sell a Property  pursuant to a bona fide offer from a third  party,  the
tenant of that  Property  has the right to purchase  the  Property  for the same
price,  and on the same terms and  conditions,  as  contained  in the offer.  In
certain cases,  the tenant also has a right to purchase the Property seven to 20
years after  commencement  of the lease at a purchase price equal to the greater
of (i) the Property's  appraised value at the time of the tenant's purchase,  or
(ii) a specified amount,  generally equal to the Company's purchase price of the
Property,  plus a  predetermined  percentage  (generally,  15% to  20%)  of such
purchase price.                                                                 

         Substitution of Properties.  Under certain leases,  the tenant,  at its
own expense,  is entitled to operate another form of approved  restaurant on the
Property as long as such  approved  restaurant  has an operating  history  which
reflects an ability to generate gross sales and potential  sales growth equal to
or  greater  than that  experienced  by the  tenant in  operating  the  original
restaurant.                                                                     

         In addition,  certain leases provide the tenant with the right,  to the
extent consistent with the Company's objective of qualifying as a REIT, to offer
the substitution of another  national or regional  fast-food,  family-style,  or
casual dining  restaurant  property selected by the tenant in the event that (i)
the Property that is the subject of the lease is not producing  percentage  rent
pursuant  to the terms of the  lease,  and (ii) the tenant  determines  that the
Property has become  uneconomic  (other than as a result of an insured  casualty
loss or  condemnation)  for the  tenant's  continued  use and  occupancy  in its
business  operation and the tenant's  board of directors has determined to close
and discontinue use of the Property.  The tenant's determination that a Property
has  become  uneconomic  is to be made  in  good  faith  based  on the  tenant's
reasonable business                                                             

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judgment  after  comparing  the  results of  operations  of the  Property to the
results of operations at the majority of other  properties  then operated by the
tenant.  If either of these  events  occurs,  the tenant  will have the right to
offer the Company the opportunity to exchange the Property for another  national
or regional fast-food,  family-style,  or casual dining restaurant property (the
"Substituted  Property")  with a total  cost for land and  improvements  thereon
(including overhead,  construction interest, and other related charges) equal to
or greater than the cost of the Property to the Company.                        

         Generally,  the  Company  will have 30 days  following  receipt  of the
tenant's  offer for exchange of the Property to accept or reject such offer.  In
the event that the Company requests an appraisal of the Substituted Property, it
will have at least ten days  following  receipt  of the  appraisal  to accept or
reject the  offer.  If the  Company  accepts  such  offer,  (i) the  Substituted
Property  will be  exchanged  for the  Property in a  transaction  designed  and
intended to qualify as a "like-kind exchange" within the meaning of section 1031
of the Code with respect to the Company and (ii) the lease of the Property  will
be  amended  to (a)  provide  for  minimum  rent in an  amount  equal to the sum
determined by multiplying the cost of the  Substituted  Property by the Property
lease rate and (b) provide for the number of  five-year  lease  renewal  options
sufficient to permit the tenant, at its option, to continue its occupancy of the
Substituted  Property  for up to 35 years from the date on which the exchange is
made.  The Company  will pay the tenant the  excess,  if any, of the cost of the
Substituted Property over the cost of the Property. If the substitution does not
take place within a specified period of time after the tenant makes the offer to
exchange the Property for the Substituted Property, either party thereafter will
have the right not to proceed with the substitution.  If the Company rejects the
Substituted  Property offered by the tenant, the tenant is generally required to
offer  at  least  three  additional  alternative  properties  for the  Company's
acceptance  or  rejection.  If the Company  rejects all  Substituted  Properties
offered to it pursuant to the lease, or otherwise fails or refuses to consummate
a  substitution  for any reason other than the  tenant's  failure to fulfill the
conditions  precedent  to the  exchange,  then the tenant  will be  entitled  to
terminate the lease on the date  scheduled  for such exchange by purchasing  the
Property from the Company for a price equal to the then-fair market value of the
Property.                                                                       

         Neither   the   tenant   nor  any  of  its   subsidiaries,   licensees,
concessionaires, or sublicensees or any other affiliate will be permitted to use
the original  Property as a  restaurant  of the same type and style for at least
one year after the closing of the original Property.  In addition,  in the event
the tenant or any of its  affiliates  sells the Property  within  twelve  months
after the Company acquires the Substituted  Property,  the Company will receive,
to the extent  consistent  with its objective of qualifying as a REIT,  from the
proceeds of the sale the amount by which the selling  price  exceeds the cost of
the Property to the Company.                                                    

         Special  Conditions.  Certain  leases  provide  that the  lessee is not
permitted to own or operate,  directly or  indirectly,  another  Property of the
same or similar type as the leased  Property that is or will be located within a
specified distance of the leased Property.                                      

         Insurance,  Taxes, Maintenance,  and Repairs. All of the leases require
that the tenant pay all taxes and assessments, maintenance, repair, utility, and
insurance  costs  applicable  to the real  estate  and  permanent  improvements.
Tenants will be required to maintain all Properties in good order and repair.   

         Tenants  generally  are  required,  under the terms of the  leases,  to
maintain,  for the benefit of the Company and the tenant,  casualty insurance in
an amount not less than the full  replacement  value of the  building  and other
permanent  improvements  (or a  percent  of such  value in the  case of  certain
leases, but in no case less than 90%), as well as liability insurance, generally
in an amount not less than $2,000,000 for each location and event.  All tenants,
other than those tenants with a substantial  net worth,  generally  also will be
required to obtain "rental value" or "business  interruption" insurance to cover
losses  due to the  occurrence  of an  insured  event  for a  specified  period,
generally six to twelve months. In general,  no lease is entered into unless, in
the opinion of the Advisor, as approved by the Board of Directors, the insurance
required by the lease adequately insures the Property.                          

         The tenants  generally  will be required to maintain  the  Property and
repair any damage to the Property, except damage occurring during the last 24 to
48 months of the lease term (as  extended),  which in the  opinion of the tenant
renders the Property  unsuitable  for  occupancy,  in which case the tenant will
have  the  right  instead  to pay the  insurance  proceeds  to the  Company  and
terminate the lease.                                                            

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         The tenants  generally are required to repair the Property in the event
that less than a material portion of the Property (for example, more than 20% of
the  building or more than 40% of the land) is taken for public or  quasi-public
use.  The  Company's  leases  generally  provide  that,  in  the  event  of  any
condemnation  of the Property  that does not give rise to an option to terminate
the lease or in the event of any condemnation  which does give rise to an option
to terminate the lease and the tenant elects not to terminate,  the Company will
remit to the  tenant  the award from such  condemnation  and the tenant  will be
required  to repair and  restore  the  Property.  To the  extent  that the award
exceeds the estimated  costs of restoring or repairing the Property,  the tenant
is required to deposit such excess  amount with the  Company.  Until a specified
time  (generally,  ten days) after the tenant has  restored the premises and all
improvements  thereon to the same condition as existed immediately prior to such
condemnation  insofar  as is  reasonably  possible,  a "just and  proportionate"
amount  of the  minimum  annual  rent  will  be  abated  from  the  date of such
condemnation. In addition, the minimum annual rent will be reduced in proportion
to the  reduction  in the then rental  value of the  premises or the fair market
value of the premises after the condemnation in comparison with the rental value
or fair market value prior to such condemnation.                                

         Events of Default.  The leases  generally  provide  that the  following
events,  among  others,  will  constitute  a default  under the  lease:  (i) the
insolvency or  bankruptcy  of the tenant,  provided that the tenant may have the
right, under certain  circumstances,  to cure such default,  (ii) the failure of
the tenant to make timely payment of rent or other charges due and payable under
the lease, if such failure  continues for a specified period of time (generally,
five to 30 days)  after  notice  from the  Company  of such  failure,  (iii) the
failure  of the  tenant to comply  with any of its other  obligations  under the
lease (for example,  the discontinuance of operations of the leased Property) if
such failure  continues  for a specified  period of time  (generally,  ten to 45
days),  (iv) a default under or termination of the franchise  agreement  between
the tenant and its  franchisor,  (v) in cases  where the  Company  enters into a
development   agreement   relating  to  the  construction  or  renovation  of  a
restaurant, a default under the development agreement or the Indemnity Agreement
or  the  failure  to  establish  the  minimum  annual  rent  at  the  end of the
development  period,  and (vi) in cases where the Company has entered into other
leases with the same tenant, a default under such lease.                        

         Upon default by the tenant,  the Company  generally will have the right
under the lease and under  most  state laws to evict the  tenant,  re-lease  the
Property to others,  and hold the tenant  responsible  for any deficiency in the
minimum lease payments. Similarly, if the Company determined not to re-lease the
Property, it could sell the Property.  (Unless required to do so by the lease or
its  investment  objectives,  however,  the Company  does not intend to sell any
Property prior to five to ten years after the  commencement of the lease on such
Property.  See "Right of Tenant to  Purchase"  above.) In the event that a lease
requires the tenant to make a security deposit (which it is anticipated normally
would be equal to two months' base rent),  the Company will have the right under
the lease to apply the security deposit, upon default by the tenant, towards any
payments  due from the  defaulting  tenant.  In general,  the tenant will remain
liable  for all  amounts  due  under  the  lease to the  extent  not paid from a
security deposit or by a new tenant.                                            

         In the event that a tenant defaults under a lease with the Company, the
Company  either  will  attempt  to  locate  a  replacement  restaurant  operator
acceptable to the Restaurant Chain involved or will discontinue operation of the
restaurant.  In  lieu of  obtaining  a  replacement  restaurant  operator,  some
Restaurant  Chains may have the option and may elect to operate the  restaurants
themselves. The Company will have no obligation to operate the restaurants,  and
no  Restaurant  Chain will be obligated  to permit the Company or a  replacement
restaurant operator to operate the restaurants.                                 

JOINT VENTURE ARRANGEMENTS                                                      

         The  Company  may  enter  into a Joint  Venture  to own and  operate  a
Property with various  unaffiliated  persons or entities or with another program
formed by the principals of the Company or the Advisor or their Affiliates, if a
majority of the Directors,  including a majority of the  Independent  Directors,
not otherwise interested in the transaction determine that the investment in the
Joint  Venture is fair and  reasonable to the Company and on  substantially  the
same terms and  conditions  as those to be  received by the  co-venturer  or co-
venturers.  The Company  may take more or less than a 50%  interest in any Joint
Venture, subject to obtaining the requisite approval of the Directors. See "Risk
Factors -- Real Estate and  Financing  Risks -- Impasse or Conflicts of Interest
with Joint Venture Partner."                                                    

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         Under the terms of each Joint Venture  agreement,  the Company and each
joint  venture  partner  will be  jointly  and  severally  liable for all debts,
obligations,  and other  liabilities of the Joint  Venture,  and the Company and
each  joint  venture  partner  will have the power to bind each  other  with any
actions they take within the scope of the Joint Venture's business. In addition,
it is  expected  that  the  Advisor  or  its  Affiliates  will  be  entitled  to
reimbursement,  at cost,  for actual  expenses  incurred  by the  Advisor or its
Affiliates on behalf of the Company. Joint Ventures entered into to purchase and
hold a Property for  investment  generally will have an initial term of 15 to 20
years (generally the same term as the initial term of the lease for the Property
in which the Joint Venture  invests),  and,  after the expiration of the initial
term,  will  continue in existence  from year to year unless  terminated  at the
option of either joint venturer or unless terminated by an event of dissolution.
Events of dissolution will include the bankruptcy, insolvency, or termination of
any  co-venturer,  sale of the  Property  owned  by the  Joint  Venture,  mutual
agreement  of the Company and its joint  venture  partner to dissolve  the Joint
Venture,  and the expiration of the term of the Joint Venture. The Joint Venture
agreement typically will restrict each venturer's ability to sell, transfer,  or
assign its joint  venture  interest  without  first  offering it for sale to its
co-venturer. In addition, in any Joint Venture with another program sponsored by
the Advisor or its Affiliates,  where such arrangements are entered into for the
purpose of purchasing and holding  Properties for investment,  in the event that
one party  desires to sell the  Property  and the other party does not desire to
sell,  either  party  will have the right to  trigger  dissolution  of the Joint
Venture by sending a notice to the other party.  The notice will  establish  the
price and terms for the sale or  purchase of the other  party's  interest in the
Joint  Venture to the other party.  The Joint Venture  agreement  will grant the
receiving party the right to elect either to purchase the other party's interest
on the terms set forth in the notice or to sell its own interest on such terms. 

         The following  paragraphs  describe the allocations  and  distributions
under the expected terms of the joint venture agreement for any Joint Venture in
which the Company and its co-venturer each have a 50% ownership interest. In any
other case,  the  allocations  and  distributions  are expected to be similar to
those  described  below,  except that  allocations and  distributions  which are
described  below as being made 50% to each  co-venturer  will instead be made in
proportion to each co-venturer's respective ownership interest.                 

         Under the terms of each joint venture agreement,  operating profits and
losses  generally  will be allocated 50% to each  co-venturer.  Profits from the
sale or other  disposition of Joint Venture  property first will be allocated to
any  co-venturers  with negative  capital account balances in proportion to such
balances  until such capital  accounts  equal zero,  and  thereafter 50% to each
co-venturer.  Similarly,  losses  from the sale or  other  disposition  of Joint
Venture property first will be allocated to joint venture partners with positive
capital  account  balances in  proportion  to such  balances  until such capital
accounts equal zero, and thereafter 50% to each co-venturer. Notwithstanding any
other  provisions  in the Joint  Venture  agreement,  income,  gain,  loss,  and
deductions with respect to any  contributed  property will be shared in a manner
which takes into account the  variation  between the basis of such  property and
its fair market value at the time of  contribution  in  accordance  with section
704(c) of the Code.                                                             

         Net cash flow from  operations of the Joint Venture will be distributed
50% to each joint venture partner. Any liquidation proceeds,  after paying joint
venture debts and liabilities and funding  reserves for contingent  liabilities,
will be distributed  first to the joint venture  partners with positive  capital
account  balances in proportion to such balances until such balances equal zero,
and thereafter 50% to each joint venture partner.                               

         In order that the allocations of Joint Venture income,  gain, loss, and
deduction  provided in Joint  Venture  agreements  may be respected  for federal
income tax purposes,  it is expected  that any Joint Venture  agreement (i) will
contain a "qualified income offset" provision, (ii) will prohibit allocations of
loss or  deductions  to the extent  such  allocation  would cause or increase an
"Adjusted  Capital  Account  Deficit,"  and (iii) will  require (a) that capital
accounts be maintained for each joint venture partner in a manner which complies
with Treasury  Regulation  ss.1.704-1(b)(2)(iv)  and (b) that  distributions  of
proceeds  from the  liquidation  of a partner's  interest  in the Joint  Venture
(whether or not in connection with the liquidation of the Joint Venture) be made
in accordance with the partner's positive capital account balance.  See "Federal
Income Tax Considerations -- Investment in Joint Ventures."                     

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         Prior  to  entering  into  any  Joint  Venture   arrangement  with  any
unaffiliated  co-venturer (or the principals of any  unaffiliated  co-venturer),
the Company  will  confirm  that such person or entity has  demonstrated  to the
satisfaction of the Company that requisite financial qualifications are met.    

MORTGAGE LOANS                                                                  

         The Company  provides  Mortgage  Loans to operators  of the  Restaurant
Chains,  or their  affiliates,  to  enable  them to  acquire  the  building  and
improvements on real property.  Generally in these cases,  the Company  acquires
the  underlying  land and enters into a long-term  ground lease for the Property
with the borrower as the tenant.  The  Mortgage  Loan is secured by the building
and  improvements  on the  land.  Management  believes  that  the  criteria  for
investing in the Mortgage Loans are  substantially the same as those involved in
the Company's investments in Properties consisting of buildings only; therefore,
the Company uses the same underwriting  criteria as described above in "Business
- Standards for Investment in Properties."                                      

         As of