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CNL Restaurant Properties Inc ˇ 424B3 ˇ On 1/21/98

Filed On 1/21/98   ˇ   SEC File 333-15411   ˇ   Accession Number 916641-98-41

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  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 1/21/98  CNL Restaurant Properties Inc     424B3                  1:214                                    916641

Prospectus   ˇ   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Cnl American Properties Fund, Inc. 424B3             214  1,015K 


Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"The Offering
"Subsequent Offering
2Business
5Property Acquisitions
99Management Compensation
102Certain Transactions
120Pro Forma Consolidated Balance Sheet
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FILED PURSUANT TO RULE 424B3 FILE NUMBER 333-15411 CNL AMERICAN PROPERTIES FUND, INC. Supplement No. 3, dated January 21, 1998 to Prospectus, dated April 18, 1997 This Supplement is part of, and should be read in conjunction with, the Prospectus dated April 18, 1997. This Supplement replaces all prior Supplements to the Prospectus. Capitalized terms used in this Supplement have the same meaning as in the Prospectus unless otherwise stated herein. Information as to proposed properties for which the Company has received initial commitments and as to the number and types of Properties acquired by the Company is presented as of December 31, 1997, and all references to commitments or Property acquisitions should be read in that context. Proposed properties for which the Company receives initial commitments, as well as property acquisitions that occur after December 31, 1997, will be reported in a subsequent Supplement. THE OFFERING As of the completion of its Initial Offering, the Company had received subscription proceeds of $150,591,765 (15,059,177 shares), including $591,765 (59,177 shares) issued pursuant to the Reinvestment Plan and after deduction of selling commissions, marketing support and due diligence expense reimbursement fees and offering expenses, net proceeds to the Company from its Initial Offering totalled approximately $134,000,000. Following the completion of its Initial Offering on February 6, 1997, the Company commenced this offering of up to 27,500,000 Shares. As of December 31, 1997, the Company had received subscription proceeds of $211,173,099 (21,117,310 Shares), including $1,872,648 (187,265 Shares) issued pursuant to the Reinvestment Plan, from 9,214 stockholders in connection with this offering. Net Offering Proceeds to the Company after deduction of Selling Commissions, marketing support and due diligence expense reimbursement fees and Offering Expenses totalled approximately $190,868,000. As of December 31, 1997, the Company had invested or committed for investment approximately $274,720,000 of aggregate net proceeds from the Initial Offering and this offering in 244 Properties, 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 in paying acquisition fees and certain acquisition expenses, leaving approximately $50,192,000 in Net Offering Proceeds available for investment in Properties and Mortgage Loans. As of December 31, 1997, $9,502,789 of the Net Offering Proceeds from this offering had been incurred as Acquisition Fees to the Advisor. SUBSEQUENT OFFERING On October 10, 1997, the Company filed a registration statement with the Securities and Exchange Commission in connection with the proposed sale by the Company of up to 34,500,000 shares of common stock in a public offering (the "Subsequent Offering") . Of the 34,500,000 shares of common stock to be offered, 2,000,000 will be available only to stockholders purchasing through the Reinvestment Plan. The price per share and the other terms of the Subsequent Offering, including the percentage of gross proceeds payable to the Managing Dealer for selling commissions and expenses in connection with the offering, payable to the Advisor for acquisition fees and acquisition expenses and reimbursable to the Advisor for offering expenses, will be the same as those for this offering. Net proceeds from the Subsequent Offering will be invested in additional Properties and Mortgage Loans.
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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 Equipment financing to operators of Restaurant Chains pursuant to which the Company will finance, through direct financing leases or loans, the Equipment (collectively, the "Secured Equipment Leases.") As of December 31, 1997, the Company owned 244 Properties. It is anticipated that the Company will acquire a total of 400 to 450 Properties if the maximum number of Shares is sold in this offering (including 260 to 300 Properties to be acquired with the proceeds of this 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," in the Prospectus. 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 $335.3 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. -2-
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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 43 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. The table set forth below provides information with respect to certain Restaurant Chains in which the Company and Affiliates of the Company (consisting of a listed public REIT, 18 public partnerships and 8 private partnerships) have invested, as of September 30, 1997: AGGREGATE DOLLARS INVESTED BY PERCENTAGE OF NUMBER OF NAME COMPANY AFFILIATES DOLLARS INVESTED PRIOR PROGRAMS GOLDEN CORRAL $150,613,000 16.6% 26 BURGER KING 105,659,000 11.7% 25 JACK IN THE BOX 94,041,000 10.4% 15 DENNY'S 91,365,000 10.1% 20 HARDEE'S 58,599,000 6.5% 13 BOSTON MARKET 51,351,000 5.7% 8 SHONEY'S 37,240,000 4.1% 13 IHOP 34,165,000 3.8% 6 LONG JOHN SILVER'S 32,029,000 3.5% 6 TGI FRIDAY'S 30,228,000 3.3% 9 WENDY'S 30,011,000 3.3% 16 DARRYL'S 22,296,000 2.5% 4 CHECKERS 21,263,000 2.3% 7 PERKINS 16,311,000 1.8% 9 PIZZA HUT 15,578,000 1.7% 8 KFC 14,436,000 1.6% 11 BLACK-EYED PEA 10,602,000 1.2% 4 POPEYES 10,589,000 1.2% 9 ARBY'S 10,493,000 1.2% 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 -3-
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COMPLETED INVESTMENTS As of December 31, 1997, the Company had invested or committed for investment approximately $274,720,000 of the aggregate net proceeds from the Initial Offering and this offering in 244 Properties (179 Properties which consist of land and building, 44 Properties which consist of land only and 21 Properties which consist of building only), in Mortgage Loans to the tenants of the 44 Properties consisting of land only and two additional properties 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 9 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 December 31, 1997, including the number of Properties by Restaurant Chain and the number of Properties by state. RESTAURANT NUMBER OF PROPERTIES ---------- -------------------- Applebee's 2 Arby's 8 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 28 Ground Round 13 Houlihan's 3 IHOP 8 Jack in the Box 29 Kenny Rogers Roasters 1 KFC 1 Mr. Fable's 1 On The Border 1 Pizza Hut 44 Popeyes 1 Ruby Tuesday's 1 Ruth's Chris Steakhouse 1 Ryan's Family Steak House 1 Shoney's 3 T.G.I. Friday's 1 Tumbleweed Southwest Mesquite Grill & Bar 5 Wendy's 5 --- Total 244 === -4-
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STATE NUMBER OF PROPERTIES ----- -------------------- Alabama 5 Arizona 8 California 22 Colorado 5 Connecticut 1 Delaware 1 Florida 13 Georgia 2 Idaho 1 Illinois 5 Indiana 5 Iowa 4 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 5 Oregon 3 Pennsylvania 6 Tennessee 13 Texas 35 Utah 1 Virginia 8 Washington 2 West Virginia 10 Wisconsin 2 ----- Total 244 ===== PROPERTY ACQUISITIONS Between April 3, 1997 and December 31, 1997, the Company acquired 119 Properties, including 104 Properties consisting of land and building, 14 Properties consisting of building only and one Property consisting of land only, with the remaining net offering proceeds of the Initial Offering and the Net Offering Proceeds of this offering. These Properties are six Arby's Properties (one in each of Lexington, Greensboro, Greenville, Jonesville, Kernersville and Kinston, North Carolina), 15 Boston Market Properties (one in each of Liberty, Missouri; Indianapolis, Indiana; Vacaville, California; Lansing Michigan; Newport News, Virginia; Hoover, Alabama; Arvada and Edgewater, Colorado; San Antonio and Stafford, Texas; and Baltimore, Gambrills, Jessup, Riverdale, and Waldorf, Maryland), 13 Black-eyed Pea Properties (one in each of Forestville, Maryland; Wichita, Kansas; Scottsdale, Mesa and Tucson, Arizona; Dallas, Houston, and Waco, Texas; two in Albuquerque, New Mexico; and three in Phoenix, Arizona), 11 Jack in the Box Properties (one in each of Enumclaw, Washington; Florissant, Missouri; Fresno, Woodland , West Sacramento, Folsom and Los Angeles, California; and Bacliff, Corinth, Channelview, and Garland, Texas), two Einstein Bros. Bagels Properties (one in each of Dearborn, Michigan, and Springfield, Virginia), two Shoney's Properties (one in each of Guadalupe, Arizona; and Las Vegas, Nevada), one Pizza Hut Property (in Dover, Ohio), 12 Golden Corral Properties (one in each of -5-
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Corpus Christi, Texas; Liberty, Missouri; Mobile, Alabama; Olathe, Kansas; Council Bluffs, Iowa; Enid, Duncan and Muskogee, Oklahoma; Fort Walton Beach and Palatka, Florida; and two in Jacksonville, Florida), eight IHOP Properties (one in each of Stockbridge, Georgia; Elk Grove, California; Loveland, Colorado; Leesburg and Fairfax, Virginia; and Houston, Lake Jackson and Victoria, Texas), one Popeyes Property (in Starke, Florida), one Ruth's Chris Steak House Property (in Tampa, Florida), two Charley's Place Properties (one in each of King of Prussia, Pennsylvania, and McLean, Virginia), 15 Darryl's Properties (one in each of Evansville, Indiana; Louisville, Kentucky; Hampton, Virginia; Winston-Salem, North Carolina; Huntsville, Mobile and Montgomery, Alabama; Knoxville and Nashville, Tennessee; Orlando and Pensacola, Florida; and two in each of Raleigh, North Carolina, and Richmond, Virginia), three Houlihan's Properties (one in each of Bethel Park, Langhorne and Plymouth Meeting, Pennsylvania), one KFC Property (in Putnam, Connecticut), five Tumbleweed Southwest Mesquite Grill & Bar Properties (one in each of Lawrence, Kansas; Cookeville, Hendersonville, Nashville and Murfreesboro, Tennessee), one Ruby Tuesday's Property (in London, Kentucky) , one T.G.I. Friday's Property (in Superstition Springs, Arizona), 13 Ground Round Properties (one in each of Allentown and Reading, Pennsylvania; Colerain and Parma, Ohio; Dubuque and Waterloo, Iowa; Janesville and Wauwatosa, Wisconsin; Gloucester and Ewing, New Jersey; Crystal, Minnesota; Kalamazoo, Michigan; and Nanuet, New York), one On The Border Property (in San Antonio, Texas), one Wendy's Property (in Westlake Village, California), and four Chevy's Fresh Mex Properties (one in each of Beaverton and Lake Oswego, Oregon; Arapahoe, Colorado; and Greenbelt, Maryland). For information regarding the Properties acquired by the Company prior to April 3, 1997, see the Prospectus dated April 18, 1997. The Jack in the Box Properties in Folsom and Los Angeles, California, and Florissant, Missouri, were acquired from Affiliates of the Company. The Affiliates had purchased and temporarily held title to these Properties in order to facilitate their acquisition by the Company. The Properties were acquired by the Company for an aggregate purchase price of approximately $3,674,000, representing the cost of the Properties to the Affiliates (including carrying costs). In connection with the purchase of the six Arby's Properties, the 15 Boston Market Properties, the two Einstein Bros. Bagels Properties, the 11 Jack in the Box Properties, the two Shoney's Properties, the 12 Golden Corral Properties, the eight IHOP Properties, the Popeyes Property, the Ruth's Chris Steak House Property, the two Charley's Place Properties, the 15 Darryl's Properties, the three Houlihan's Properties, the KFC Property, the Ruby Tuesday's Property, the T.G.I. Friday's Property, the 13 Ground Round Properties, the Wendy's Property, the four Chevy's Fresh Mex Properties, the Black-eyed Pea Property in Mesa, Arizona, and four of the Tumbleweed Southwest Mesquite Grill & Bar Properties in Lawrence, Kansas; Cookeville, Nashville and Murfreesboro, Tennessee, which are land and building, the Company, as lessor, entered into long-term lease agreements with unaffiliated lessees. The general terms of the lease agreements are described in the section of the Prospectus entitled "Business - Description of Property Leases." For the Properties that are to be constructed or renovated, the Company has entered into development and indemnification and put agreements with the lessees. The general terms of these agreements are described in the section of the Prospectus entitled "Business - Site Selection and Acquisition of Properties - Construction and Renovation." The purchase prices for the Shoney's Properties in Guadalupe, Arizona; and Las Vegas, Nevada, and the T.G.I. Friday's Property in Superstition Springs, Arizona, include development fees of $49,500, $73,191 and $17,500, respectively, to an Affiliate of the Advisor for services provided in connection with the development of the Properties. The Company considers development fees, to the extent that they are paid to Affiliates, to be Acquisition Fees. Such development fees must be approved by a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transactions, subject to a determination that such transactions are 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. See the sections of the Prospectus entitled "Management Compensation" and "Business - Site Selection and Acquisition of Properties." In connection with the Black-eyed Pea Properties, one of which is located in each of Scottsdale and Tucson, Arizona; and three of which are located in Phoenix, Arizona, all of which are building only, the Company, as lessor, entered into long-term lease agreements with unaffiliated lessees. The general terms of the lease agreements are described in the section of the Prospectus entitled "Business - Description of Property Leases." In connection with -6-
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the purchase of the Scottsdale Property, which is to be renovated, the Company has entered into development and indemnification and put agreements with the lessee. The general terms of these agreements are described in the section of the Prospectus entitled "Business - Site Selection and Acquisition of Properties - Construction and Renovation." In connection with these acquisitions, the Company has also entered into landlord estoppel agreements with the landlords of the land and collateral assignments of the ground leases with the lessees in order to provide the Company with certain rights with respect to the land on which the buildings are located. In connection with the Tumbleweed Southwest Mesquite Grill & Bar Property in Hendersonville, Tennessee, the On The Border Property in San Antonio, Texas, and the Black-eyed Pea Properties, one of which is located in each of Dallas, Houston, and Waco, Texas; Forestville, Maryland; and Wichita Kansas; and two of which are located in Albuquerque, New Mexico; all of which are building only, the Company, as lessor, entered into long-term lease agreements with unaffiliated lessees. The general terms of the lease agreements are described in the section of the Prospectus entitled "Business - Description of Property Leases." In connection with the purchase of the Hendersonville Property, which is to be renovated, and the San Antonio Property, which is to be constructed, the Company has entered into development and indemnification and put agreements with the lessees. The general terms of these agreements are described in the section of the Prospectus entitled "Business - Site Selection and Acquisition of Properties - Construction and Renovation." In connection with these acquisitions, the Company has also entered into tri-party agreements with the lessees and the owners of the land. The tri-party agreements provide that the ground lessees are responsible for all obligations under the ground leases and provide certain rights to the Company relating to the maintenance of its interest in the buildings in the event of a default by the lessees under the terms of the ground leases. In connection with the Pizza Hut Property in Dover, Ohio, which is land only, the Company acquired the land and is leasing this parcel to the lessee, Castle Hill Holdings VII, L.L.C. ("Castle Hill"), along with eight Pizza Hut Properties previously acquired, pursuant to a master lease agreement (the "Master Lease Agreement"). Castle Hill has subleased the Pizza Hut Property in Dover, Ohio, along with the eight Pizza Hut Properties previously acquired, to one of its affiliates, Midland Food Services III, L.L.C., which is the operator of the restaurants. The general terms of the Master Lease Agreement are similar to those described in the section of the Prospectus entitled "Business - Description of Property Leases." If the lessee does not exercise its option to purchase the Properties upon termination of the Master Lease Agreement, the sublessee and lessee will surrender possession of the Properties to the Company, together with any improvements on such Properties. The lessee owns the buildings located on the Pizza Hut Property in Dover, Ohio, along with the eight Pizza Hut Properties previously acquired. In addition, the Company provided mortgage financing of $4,200,000 to the lessee, pursuant to a Mortgage Loan evidenced by a master mortgage note (the "Master Mortgage Note") which is collateralized by the building improvements on the Pizza Hut Property in Dover, Ohio, the eight Pizza Hut Properties previously acquired, and two additional Pizza Hut Properties in Wintersville, Ohio, and Weirton, West Virginia, which will not be owned by the Company, as described in the section of the Prospectus entitled "Business - Property Acquisitions." The following table sets forth the location of the 119 Properties, including 104 Properties consisting of land and building, 14 Properties consisting of building only and one Property consisting of land only, acquired by the Company, from April 3, 1997 through December 31, 1997, a description of the competition, and a summary of the principal terms of the acquisition and lease of each Property. -7-
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PROPERTY ACQUISITIONS From April 3, 1997 through December 31, 1997
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- BOSTON MARKET $629,435 04/16/97 04/2012; 10.38% of Total for each lease at any time (the "Arvada #2 Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Arvada #2 Property is (3) fifth lease annual gross located on the northwest year and after sales minus quadrant of West 55th Avenue every five (ii) the and the Wadsworth Bypass, in years minimum annual Arvada, Jefferson County, thereafter rent for such Colorado, in an area of mixed during the lease year retail, commercial, and lease term residential development. Other fast-food and family- style restaurants located in proximity to the Arvada #2 Property include an Applebee's, a Ruby Tuesday, an IHOP, a Fazoli's, a McDonald's, and several local restaurants. BOSTON MARKET $456,801 04/16/97 04/2012; 10.38% of Total for each lease at any time (the "Liberty #1 Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 5% of year The Liberty #1 Property is (3) fifth lease annual gross located at the southeast year and after sales minus corner of the intersection of every five (ii) the North Highway 291 and Landmark years minimum annual Avenue, in Liberty, Clay thereafter rent for such County, Missouri, in an area during the lease year of mixed retail, commercial, lease term and residential development. Other fast-food and family- style restaurants located in proximity to the Liberty #1 Property include a Ponderosa, a KFC, a Perkins, and a Pizza Hut.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- EINSTEIN BROS. BAGELS (5) $422,512 04/16/97 04/2012; 10.38% of Total for each lease at any time (the "Dearborn Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Dearborn Property is (3) fifth lease annual gross located on the southeast year and after sales minus corner of Telegraph Road and every five (ii) the Sheridan Road, in Dearborn, years minimum annual Wayne County, Michigan, in an thereafter rent for such area of mixed retail, during the lease year commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Dearborn Property include a Boston Market, a Subway Sandwich Shop, and several local restaurants. JACK IN THE BOX (6) $843,431 04/16/97 04/2015; $86,452 (7); for each lease at any time (the "Enumclaw Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be renovated year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Enumclaw Property is after every (ii) the located at the northwest five years minimum annual corner of the intersection of thereafter rent for such Griffin Avenue and Cedar during the lease year (8) Street, in Enumclaw, King lease term County, Washington, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Enumclaw Property include a Subway Sandwich Shop, a Burger King, a McDonald's, a Pizza Hut, and a local restaurant.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- SHONEY'S (9) $679,095 04/16/97 04/2017; two 11% of Total for each lease at any time (the "Guadalupe Property") (excluding five-year Cost (4); year, (i) 6% of after the Restaurant to be constructed development renewal increases by annual gross seventh costs) options 10% after the sales minus lease year The Guadalupe Property is (3) fifth lease (ii) the located within the southeast year and after minimum annual quadrant of Interstate 10 and every five rent for such Baseline Road, in Guadalupe, years lease year Maricopa County, Arizona, in thereafter an area of mixed retail, during the commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Guadalupe Property include a Denny's, a Taco Bell, a KFC, a Jack in the Box, a Waffle House, and several local restaurants. BLACK-EYED PEA (10) $769,863 04/17/97 02/2011 $105,450 (7); None at any time (the "Scottsdale Property") (3)(7) increases to after the Restaurant to be renovated $107,511 during fifth lease the eleventh year The Scottsdale Property is through located within the southeast fourteenth quadrant of Indian Bend Road lease years and Pima Road, in Scottsdale, Maricopa County, Arizona, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Scottsdale Property include a KFC, a Denny's, an Arby's, a Taco Bell, a McDonald's, and a local restaurant.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- PIZZA HUT (11)(12) $224,378 04/17/97 03/2017; two $23,560; None at any time (the "Dover Property") ten-year increases by after the Land only renewal 10% after the seventh options fifth and tenth lease year The Dover Property is located lease years and on the west side of Boulevard 12% after the Street, in Dover, Tuscarawas fifteenth lease County, Ohio, in an area of year mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Dover Property include a Taco Bell, a Long John Silver's, a Friendly's, and several local restaurants. JACK IN THE BOX (6) $1,049,420 04/29/97 04/2015; $107,566 (7); for each lease at any time (the "Bacliff Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Bacliff Property is after every (ii) the located on the southeast five years minimum annual corner of Texas State Highway thereafter rent for such 146 and FM 646, in Bacliff, during the lease year (8) Galveston County, Texas, in an lease term area of mixed commercial and residential development.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- BOSTON MARKET (5) $860,790 04/29/97 04/2012; 10.38% of Total for each lease at any time (the "Indianapolis Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Indianapolis Property is (3) fifth lease annual gross located on the west side of year and after sales minus U.S. 31 South, in every five (ii) the Indianapolis, Marion County, years minimum annual Indiana, in an area of mixed thereafter rent for such retail, commercial, and during the lease year residential development. lease term Other fast-food and family- style restaurants located in proximity to the Indianapolis Property include a McDonald's, a Steak N Shake, a Wendy's, and several local restaurants. BOSTON MARKET $469,369 04/30/97 04/2012; 10.38% of Total for each lease at any time (the "San Antonio #1 (excluding five five- Cost (4); year after the after the Property") development year renewal increases by fifth lease fifth lease Restaurant to be constructed costs) options 10% after the year, (i) 4% of year (3) fifth lease annual gross The San Antonio #1 Property is year and after sales minus located at the northwest every five (ii) the corner of Tezel Road and years minimum annual Camino Rosa, in San Antonio, thereafter rent for such Bexar County, Texas, in an during the lease year area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the San Antonio #1 Property include a Burger King, a Taco Bell, and several local restaurants.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- BOSTON MARKET (5) $970,269 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Baltimore Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Baltimore Property is (3) fifth lease annual gross located on the south side of year and after sales minus Security Boulevard and the every five (ii) the north side of Whitehead Court, years minimum annual in Baltimore, Baltimore thereafter rent for such County, Maryland, in an area during the lease year of mixed retail, commercial, lease term and residential development. Other fast-food and family- style restaurants located in proximity to the Baltimore Property include a Wendy's, a Red Lobster, a Burger King, two McDonald's, an IHOP, a Bennigan's, and several local restaurants. BOSTON MARKET (5) $854,895 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Gambrills Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Gambrills Property is (3) fifth lease annual gross located on the south side of year and after sales minus Maryland Route 3, south of its every five (ii) the intersection with Waugh Chapel years minimum annual Road, in Gambrills, Anne thereafter rent for such Arundel County, Maryland, in during the lease year an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Gambrills Property include a Wendy's, a Taco Bell, a Popeyes, a Pizza Hut, a KFC, and a McDonald's.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- BOSTON MARKET (5) $909,041 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Jessup Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Jessup Property is located (3) fifth lease annual gross on the southeast quadrant of year and after sales minus U.S. Route 1 and Assateague every five (ii) the Drive, in Jessup, Howard years minimum annual County, Maryland, in an area thereafter rent for such of mixed retail, commercial, during the lease year and residential development. lease term Other fast-food and family- style restaurants located in proximity to the Jessup Property include a Burger King, a Subway Sandwich Shop, and several local restaurants. BOSTON MARKET $451,618 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Lansing Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 5% of year The Lansing Property is (3) fifth lease annual gross located on the northeast side year and after sales minus of Cedar Street, north of the every five (ii) the intersection of American Road years minimum annual and Cedar Street, in Lansing, thereafter rent for such Ingham County, Michigan, in an during the lease year area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Lansing Property include a Denny's, a KFC, a Long John Silver's, a Wendy's, a Bob Evans, and several local restaurants.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- BOSTON MARKET (5) $629,929 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Riverdale Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Riverdale Property is (3) fifth lease annual gross located within the southeast year and after sales minus corner of the intersection every five (ii) the formed by Kenilworth Avenue years minimum annual and Patterson Road, in thereafter rent for such Riverdale, Prince George's during the lease year County, Maryland, in an area lease term of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Riverdale Property include a Wendy's, a McDonald's, and an IHOP. BOSTON MARKET $711,882 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Vacaville Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Vacaville Property is (3) fifth lease annual gross located on the southeast year and after sales minus corner of Nut Tree Parkway and every five (ii) the Helen Power Drive, in years minimum annual Vacaville, Solana County, thereafter rent for such California, in an area of during the lease year mixed retail, commercial, and lease term residential development. Other fast-food and family- style restaurants located in proximity to the Vacaville Property include an Applebee's and several local restaurants.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- BOSTON MARKET (5) $961,255 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Waldorf Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Waldorf Property is (3) fifth lease annual gross located on the northwest year and after sales minus corner of Crain Highway and every five (ii) the Plaza Drive, in Waldorf, years minimum annual Charles County, Maryland, in thereafter rent for such an area of mixed retail, during the lease year commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Waldorf Property include a Shoney's, a Red Lobster, a McDonald's, a Pizzeria Uno, an Olive Garden, a Kenny Rogers Roasters, a Taco Bell, a Burger King, a Checkers, and several local restaurants. EINSTEIN BROS. BAGELS (5) $601,677 05/06/97 05/2012; 10.38% of Total for each lease at any time (the "Springfield Property") (excluding five five- Cost (4); year after the after the Restaurant to be constructed development year renewal increases by fifth lease fifth lease costs) options 10% after the year, (i) 4% of year The Springfield Property is (3) fifth lease annual gross located at the southeast year and after sales minus quadrant of the intersection every five (ii) the formed by Old Keene Mill Road years minimum annual and Rolling Road, in thereafter rent for such Springfield, Fairfax County, during the lease year Virginia, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Springfield Property include two McDonald's and several local restaurants.
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ˇ Enlarge/Download Table Lease Expira- Property Location Purchase Date tion and Minimum Percentage Option and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase ------------------------------- --------- -------- --------------- --------------- --------------- ------------- GOLDEN CORRAL (13) $561,270 05/06/97 05/2012; 10.75% of Total for each lease during the (the "Jacksonville #1 (excluding four five- Cost (4) year, 5% of the first through Property") development year renewal amount by which seventh lease Restaurant to be constructed costs) (3) options annual gross years and the sales exceed tenth through years The Jacksonville #1 Property $2,893,405 (8) fifteenth lease is located on the southwest only corner of Merrill Road and Jane Street, in Jacksonville, Duval County, Florida, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Jacksonville #1 Property include a Burger King, a Hardee's, a Ryan's Family Steak House, and several local restaurants. GOLDEN CORRAL (13) $558,820 05/21/97 05/2012; 10.75% of Total for each lease during the (the "Corpus Christi (excluding four five- Cost (4) year, 5% of the first Property") closing and year renewal amount by which through Restaurant to be constructed development options annual gross seventh costs) (3) sales exceed lease years The Corpus Christi Property is $2,708,230 (8) and the located on the southwest tenth corner of South Padre Island through Drive and Silverberry Drive, fifteenth in Corpus Christi, Nueces lease years County, Texas, in an area of only mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Corpus Christi Property include a Dairy Queen, a Popeyes Famous Fried Chicken, a Church's Fried Chicken, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- IHOP (14) $1,181,818 05/21/97 05/2017; $119,659; for each lease during the (the "Leesburg Property") three five- increases by year, (i) 4% of eleventh Existing restaurant year renewal 10% after the annual gross lease year options fifth lease sales minus and at the The Leesburg Property is year and after (ii) the end of the located at the northwest every five minimum annual initial quadrant of the intersection years rent for such lease term of Highway 15 Bypass and thereafter lease year Edwards Ferry Road, in during the Leesburg, Loudon County, lease term Virginia, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Leesburg Property include a Ponderosa Steak House, a Burger King, a Taco Bell, a McDonald's, an Applebee's, a Ruby Tuesday, and a Domino's Pizza. POPEYES $199,354 05/22/97 05/2017; two 11.50% of Total for each lease at any time (the "Starke Property") (excluding five year Cost (4); year, (i) 6% of after the Restaurant to be constructed development renewal increases by annual gross seventh costs) options 10% after the sales minus lease year The Starke Property is located (3) fifth lease (ii) the on the east side of U.S. year and after minimum annual Highway 301, just south of every five rent for such Alligator Creek, in Starke, years lease year Bradford County, Florida, in thereafter an area of mixed retail, during the commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Starke Property include a Shoney's, a Taco Bell, a McDonald's, a Captain D's, a KFC, a Western Steer, a Checkers, a Burger King, a Wendy's, and a local restaurant.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- JACK IN THE BOX (6) $839,981 05/30/97 05/2015; $86,098 (7); for each lease at any time (the "Fresno Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Fresno Property is located after every (ii) the within the northwest corner of five years minimum annual the intersection of Golden thereafter rent for such State Boulevard and Ashlon during the lease year (8) Avenue, in Fresno, Fresno lease term County, California, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Fresno Property include a Dairy Queen and several local restaurants. JACK IN THE BOX (6) $955,333 06/05/97 06/2015; $97,922 (7); for each lease at any time (the "Corinth Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Corinth Property is after every (ii) the located on the northwest five years minimum annual corner of Interstate Highway thereafter rent for such 35 and FM 2181, in Corinth, during the lease year (8) Denton County, Texas, in an lease term area of mixed retail, commercial, and residential development.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- RUTH'S CHRIS STEAK HOUSE $2,000,000 06/05/97 08/2011; two $175,000; for each lease None (the "Tampa #2 Property") (excluding five-year increases by year, 6% of Existing restaurant closing renewal $25,000 after annual gross costs) options the fifth lease sales in excess The Tampa #2 Property is year and after of $3,400,000, located at the southwest every five but less than corner of Union Street and years $4,000,000, North West Shore Boulevard in thereafter plus 8% of Tampa, Hillsborough County, during the annual gross Florida, in an area of mixed lease term sales in excess retail, commercial, and of $4,000,000 residential development. Other fast-food and family- style restaurants located in proximity to the Tampa #2 Property include a Steak and Ale and a local restaurant. GOLDEN CORRAL (13) $527,801 06/06/97 06/2012; 10.75% of Total for each lease during the (the "Jacksonville #2 (excluding four five- Cost (4) year, 5% of the first Property") closing year renewal amount by which through Restaurant to be constructed and options annual gross seventh development sales exceed lease years The Jacksonville #2 Property costs) $2,920,205 (8) and the is located at the northwest (3) tenth quadrant of the intersection through of Southside Boulevard and fifteenth Touchton Road, in lease years Jacksonville, Duval County, only Florida, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Jacksonville #2 Property include a Burger King.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- CHARLEY'S PLACE (15) $1,435,865 06/11/97 06/2017; two $150,766; for each lease None (the "King of Prussia five-year increases by year (i) 4.50% Property") renewal 10% after the of annual gross Existing restaurant options fifth lease sales minus year and after (ii) the The King of Prussia Property every five minimum annual is located on the northwest years rent for such corner of the intersection of thereafter lease year North Gulph Road and Goddard during the Boulevard in King of Prussia, lease term Upper Merion Township, Montgomery County, Pennsylvania, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the King of Prussia Property include a Bennigan's, a Denny's, a Chili's, a Pizzeria Uno, a TGI Friday's, a Houlihan's, a McDonald's, a Burger King, a Lone Star Steakhouse & Saloon, and several local restaurants. CHARLEY'S PLACE (15) $1,549,822 06/11/97 06/2017; two $162,731; for each lease None (the "McLean Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The McLean Property is located year and after (ii) the within the intersection of every five minimum annual Dolly Madison Boulevard and years rent for such Old Dominion Drive, in McLean, thereafter lease year Fairfax County, Virginia, in during the an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the McLean Property include a Roy Rogers, a McDonald's, a Pizza Hut, and several local restaurants
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,458,656 06/11/97 06/2017; two $153,159; for each lease None (the "Evansville Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Evansville Property is year and after (ii) the located on the east side of every five minimum annual Green River Road, within the years rent for such Eastland Place shopping thereafter lease year center, in Evansville, during the Vanderburg County, Indiana, in lease term an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Evansville Property include a Denny's, a Chili's, a Grandy's, a Chi Chi's, a Fazoli's, a Lone Star Steakhouse & Saloon, an Olive Garden, a Morrison's Cafeteria, and several local restaurants.
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DARRYL'S (15) $1,203,391 06/11/97 06/2017; two $126,356; for each lease None (the "Hampton Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Hampton Property is year and after (ii) the located on the east side of every five minimum annual Coliseum Drive, north of years rent for such Mercury Boulevard, in Hampton, thereafter lease year York County, Virginia, in an during the area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Hampton Property include a Boston Market, a Bennigan's, a Steak and Ale, a Piccadilly Cafeteria, an Applebee's, a Burger King, a Pizza Hut, a KFC, a Chili's, a McDonald's, a Golden Corral, a Chi Chi's, a Waffle House, a Schlotzsky's, a Red Lobster, a Rally's, an Olive Garden, a Denny's, and several local restaurants.
ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,367,490 06/11/97 06/2017; two $143,586; for each lease None (the "Huntsville Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Huntsville Property is year and after (ii) the located on the south side of every five minimum annual University Drive Northwest, years rent for such east of Route 53, in thereafter lease year Huntsville, Madison County, during the Alabama, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Huntsville Property include a Quincy's, a Steak and Ale, an Olive Garden, a McDonald's, a Wendy's, an Arby's, and several local restaurants. DARRYL'S (15) $1,231,653 06/11/97 06/2017; two $129,324; for each lease None (the "Knoxville #2 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Knoxville #2 Property is year and after (ii) the located on the northeast side every five minimum annual of Merchants Center Boulevard, years rent for such north of Merchants Drive, in thereafter lease year Knoxville, Knox County, during the Tennessee, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Knoxville #2 Property include a Red Lobster, a Bob Evans, a McDonald's, a Burger King, two Waffle Houses, a Captain D's, a Subway Sandwich Shop, a Cracker Barrel, a Denny's, a Sonic Drive-In, an Applebee's, a Ryan's Family Steak House, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,481,448 06/11/97 06/2017; two $155,552; for each lease None (the "Louisville Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Louisville Property is year and after (ii) the located on the west side of every five minimum annual Bardstown Road and the years rent for such southeast side of Gardiner thereafter lease year Lane, in Louisville, Jefferson during the County, Kentucky, in an area lease term of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Louisville Property include a Boston Market and a Steak N Shake. DARRYL'S (15) $1,426,748 06/11/97 06/2017; two $149,809; for each lease None (the "Mobile #1 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Mobile #1 Property is year and after (ii) the located on the south side of every five minimum annual South Beltline Highway, west years rent for such of Airport Boulevard, in thereafter lease year Mobile, Mobile County, during the Alabama, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Mobile #1 Property include a Denny's, a Chili's, an Olive Garden, an Outback Steakhouse, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,230,741 06/11/97 06/2017; two $129,228; for each lease None (the "Montgomery Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Montgomery Property is year and after (ii) the located on the east side of every five minimum annual Eastern Boulevard, north of years rent for such Vaughn Road, in Montgomery, thereafter lease year Montgomery County, Alabama, in during the an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Montgomery Property include an Olive Garden, a Kenny Rogers Roasters, a Wendy's, and several local restaurants. DARRYL'S (15) $1,185,158 06/11/97 06/2017; two $124,442; for each lease None (the "Nashville #1 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Nashville #1 Property is year and after (ii) the located on the west side of every five minimum annual Sidco Drive, in Nashville, years rent for such Davidson County, Tennessee, in thereafter lease year an area of mixed retail, during the commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Nashville #1 Property include a Cracker Barrel, a Waffle House, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $2,142,401 06/11/97 06/2017; two $224,952; for each lease None (the "Orlando Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Orlando Property is year and after (ii) the located at the southwest every five minimum annual quadrant of the intersection years rent for such of International Drive and thereafter lease year Jamaican Court, in Orlando, during the Orange County, Florida, in an lease term area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Orlando Property include a Pizzeria Uno, a Golden Corral, a McDonald's, a Perkins, a Denny's, and several local restaurants. DARRYL'S (15) $1,057,526 06/11/97 06/2017; two $111,040; for each lease None (the "Pensacola Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Pensacola Property is year and after (ii) the located on the north side of every five minimum annual Plantation Road, west of Davis years rent for such Highway, in Pensacola, thereafter lease year Escambia County, Florida, in during the an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Pensacola Property include a Bennigan's, a Denny's, a Shoney's, a Steak and Ale, a Perkins, and a local restaurant.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,276,324 06/11/97 06/2017; two $134,014; for each lease None (the "Raleigh #1 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Raleigh #1 Property is year and after (ii) the located on the west side of every five minimum annual Old Wake Forest Road and the years rent for such north side of Ollie Street, in thereafter lease year Raleigh, Wake County, North during the Carolina, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Raleigh #1 Property include a Pizza Hut, a Boston Market, a Cooker Bar & Grille, a Red Lobster, a Lone Star Steakhouse & Saloon, a TGI Friday's, and a local restaurant. DARRYL'S (15) $1,754,946 06/11/97 06/2017; two $184,269; for each lease None (the "Raleigh #2 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Raleigh #2 Property is year and after (ii) the located on the north side of every five minimum annual Glenwood Avenue and the west years rent for such side of Deblyn Avenue, in thereafter lease year Raleigh, Wake County, North during the Carolina, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Raleigh #2 Property include a Miami Subs, a Boston Market, a Golden Corral, a Chili's, a Taco Bell, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,321,907 06/11/97 06/2017; two $138,800; for each lease None (the "Richmond #1 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Richmond #1 Property is year and after (ii) the located on the north side of every five minimum annual Midlothian Turnpike, east of years rent for such Fairwood Drive and west thereafter lease year Providence Road, in Richmond, during the Chesterfield County, Virginia, lease term in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Richmond #1 Property include a Fuddrucker's, a Morrison's Cafeteria, a Golden Corral, a Bob Evans, a Chili's, a Friendly's, a Steak and Ale, a Red Lobster, and several local restaurants. DARRYL'S (15) $911,660 06/11/97 06/2017; two $95,724; for each lease None (the "Richmond #2 Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Richmond #2 Property is year and after (ii) the located on the southwest every five minimum annual quadrant of Starling Drive and years rent for such Quioccasin Road, in Richmond, thereafter lease year Henrico County, Virginia, in during the an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Richmond #2 Property include an Arby's, a Boston Market, an Applebee's, a Hardee's, a McDonald's, a Subway Sandwich Shop, a KFC, a Pizza Hut, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- DARRYL'S (15) $1,185,158 06/11/97 06/2017; two $124,442; for each lease None (the "Winston-Salem Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Winston-Salem Property is year and after (ii) the located on the north side of every five minimum annual Brownsboro Road and the east years rent for such side of University Parkway, in thereafter lease year Winston-Salem, Forsyth County, during the North Carolina, in an area of lease term mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Winston-Salem Property include a Golden Corral, a Bennigan's, an IHOP, and several local restaurants. HOULIHAN'S (15) $1,367,490 06/11/97 06/2017; two $143,586; for each lease None (the "Bethel Park Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Bethel Park Property is year and after (ii) the located at the northeast every five minimum annual corner of the intersection of years rent for such Washington Road and Fort Couch thereafter lease year Road, in Bethel Park, during the Allegheny County, lease term Pennsylvania, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Bethel Park Property include a TGI Friday's, an Olive Garden, a Burger King, an Einstein Bros. Bagels, and a Boston Market.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- HOULIHAN'S (15) $1,390,282 06/11/97 06/2017; two $145,980; for each lease None (the "Langhorne Property") five-year increases by year (i) 4.50% Existing restaurant renewal 10% after the of annual gross options fifth lease sales minus The Langhorne Property is year and after (ii) the located on the north side of every five minimum annual Old Lincoln Highway, in years rent for such Langhorne, Middletown thereafter lease year Township, Burks County, during the Pennsylvania, in an area of lease term mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Langhorne Property include a Red Lobster, an Olive Garden, a Burger King, a Boston Market, a Pizzeria Uno, a Taco Bell, a Chi Chi's, a Macaroni Grill, and several local restaurants. HOULIHAN'S (15) $1,982,861 06/11/97 06/2017; two $208,200; for each lease None (the "Plymouth Meeting five-year increases by year (i) 4.50% Property") renewal 10% after the of annual gross Existing restaurant options fifth lease sales minus year and after (ii) the The Plymouth Meeting Property every five minimum annual is located at the northwest years rent for such quadrant of the intersection thereafter lease year of West Germantown Pike and during the Hickory Road, in Plymouth lease term Meeting, Montgomery County, Pennsylvania, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Plymouth Meeting Property include a Friendly's, and several local restaurants.
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ˇ 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 (13) $355,340 06/17/97 06/2012; 10.75% of Total for each lease during the (the "Enid Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through costs) (3) options annual gross seventh The Enid Property is located sales exceed lease years on the southeast corner of $2,034,928 (8) and the West Garriott Road and West tenth Brow Road, in Enid, Garfield through County, Oklahoma, in an area fifteenth of mixed retail, commercial, lease years and residential development. only Other fast-food and family- style restaurants located in proximity to the Enid Property include an Applebee's, a Red Lobster, a Grandy's, and several local restaurants. IHOP (14) $1,709,091 06/18/97 06/2017; $173,045; for each lease during the (the "Fairfax Property") three five- increases by year, (i) 4% of eleventh Existing restaurant year renewal 10% after the annual gross lease year options fifth lease sales minus and at the The Fairfax Property is year and after (ii) the end of the located at the southeast every five minimum annual initial corner of the intersection of years rent for such lease term Lee Highway and Blake Lane, in thereafter lease year Fairfax, Fairfax County, during the Virginia, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Fairfax Property include a McDonald's, a Ruby Tuesday, a Subway Sandwich Shop, and several local restaurants.
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ˇ 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 (13) $397,339 06/19/97 06/2012; 10.75% of Total for each lease during the (the "Liberty #2 Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through costs) (3) options annual gross seventh The Liberty #2 Property is sales exceed lease years located within the southwest $2,349,786 (8) and the quadrant of North Church Road tenth and State Route 152, in through Liberty, Clay County, fifteenth Missouri, in an area of mixed lease years retail, commercial, and only residential development. Other fast-food and family- style restaurants located in proximity to the Liberty #2 Property include an Applebee's, a Cracker Barrel, a McDonald's, and a local restaurant. BOSTON MARKET (5) $1,077,979 07/02/97 07/2012; $111,894; for each lease at any time (the "Stafford Property") five five- increases by year after the after the Existing restaurant year renewal 10% after the fifth lease fifth lease options fifth lease year, (i) 4% of year The Stafford Property is year and after annual gross located at the southwest every five sales minus quadrant of the intersection years (ii) the of Southwest Freeway and thereafter minimum annual Airport Boulevard, in during the rent for such Stafford, Fort Bend County, lease term lease year Texas, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Stafford Property include a Captain D's, a Jack in the Box, a Taco Bell, a Macaroni Grill, a Chuck E. Cheese, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- JACK IN THE BOX (6) $1,008,970 07/02/97 07/2015; $103,419 (7); for each lease at any time (the "Channelview Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Channelview Property is after every (ii) the located on the northeast five years minimum annual corner of Interstate Highway thereafter rent for such 10 and Magnolia Avenue, in during the lease year (8) Channelview, Harris County, lease term Texas, in an area of mixed retail, commercial, and residential development. JACK IN THE BOX (6) $936,119 07/02/97 07/2015; $95,952 (7); for each lease at any time (the "Garland Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Garland Property is after every (ii) the located on the northeast five years minimum annual quadrant of the intersection thereafter rent for such of Interstate 30 and Roan during the lease year (8) Road, in Garland, Dallas lease term County, Texas, in an area of mixed retail, commercial, and residential development. KFC $794,700 07/02/97 05/2022; $89,960; None None (the "Putnam Property") four five- increases by Existing restaurant year renewal 10% after the options fifth lease The Putnam Property is located year and after on the east side of the every five entrance drive to the Putnam years Parkade shopping center, in thereafter Putnam, Windham County, during the Connecticut, in an area of lease term mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Putnam Property include a McDonald's, a Wendy's, a Dunkin Donuts, and a Subway Sandwich Shop. ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- ARBY'S (16) $742,536 07/15/97 07/2017; two $74,254; for each lease during the (the "Lexington Property") five-year increases by year, (i) 4% of seventh and Existing restaurant renewal 4.14% after the annual gross tenth lease options third lease sales minus years only The Lexington Property is year and after (ii) the located on the east side of every three minimum annual Cotton Grove Road, north of years rent for such Interstate 85, in Lexington, thereafter lease year Davidson County, North during the Carolina, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Lexington Property include a Burger King, a Taco Bell, and a Cracker Barrel. BOSTON MARKET (5) $1,011,492 07/16/97 07/2012; $104,993; for each lease at any time (the "Newport News Property") five five- increases by year after the after the Existing restaurant year renewal 10% after the fifth lease fifth lease options fifth lease year, (i) 4% of year The Newport News Property is year and after annual gross located on the southwest every five sales minus corner of the intersection of years (ii) the Warwick Boulevard and Prince thereafter minimum annual Drew Road, in Newport News, during the rent for such Virginia, in an area of mixed lease term lease year retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity, to the Newport News Property include a Pizza Hut, a McDonald's, a Hardee's, and a local restaurant. ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- IHOP (14) $1,424,283 07/16/97 07/2017; $144,209; for each lease during the (the "Houston #6 Property") three five- increases by year, (i) 4% of eleventh Existing restaurant year renewal 10% after the annual gross lease year options fifth lease sales minus and at the The Houston #6 Property is year and after (ii) the end of the located at the southwest every five minimum annual initial quadrant of the intersection years rent for such lease term of FM 1960 and U.S. Highway thereafter lease year 290, in Houston, Harris during the County, Texas, in an area of lease term mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Houston #6 Property include a Kettle's, a Pizza Inn, a Denny's, a McDonald's, and a Burger King. IHOP (14) $1,397,047 07/16/97 07/2017; $141,451; for each lease during the (the "Stockbridge Property") three five- increases by year, (i) 4% of eleventh Existing restaurant year renewal 10% after the annual gross lease year options fifth lease sales minus and at the The Stockbridge Property is year and after (ii) the end of the located on the north side of every five minimum annual initial Stockbridge Road, west of years rent for such lease term Interstate 675, in thereafter lease year Stockbridge, Clayton County, during the Georgia, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Stockbridge Property include a Chick-Fil- A, an Applebee's, a McDonald's, a Wendy's, a Long John Silver's, and several local restaurants.
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- JACK IN THE BOX (6) $963,592 07/16/97 07/2015; $98,768 (7); for each lease at any time (the "Woodland Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Woodland Property is after every (ii) the located on the southeast five years minimum annual corner of East Main Street and thereafter rent for such County Road 102, in Woodland, during the lease year (8) Yolo County, California, in an lease term area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Woodland Property include a Wendy's, a Taco Bell, a Burger King, a Denny's, a McDonald's, and a local restaurant. -46-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- JACK IN THE BOX (6) $1,073,031 07/21/97 07/2015; $109,986 (7); for each lease at any time (the "West Sacramento (3)(7) four five- increases by 8% year, (i) 5% of after the Property") year renewal after the fifth annual gross seventh Restaurant to be constructed options lease year and sales minus lease year after every (ii) the The West Sacramento Property five years minimum annual is located on the southeast thereafter rent for such corner of Sheperd Court and during the lease year (8) Stillwater Road, in West lease term Sacramento, Yolo County, California, in an area of mixed retail, commercial, and residential development. -47-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- TUMBLEWEED SOUTHWEST MESQUITE $1,471,963 08/01/97 07/2017; two $161,916 (18); for each lease at any time GRILL & BAR (17) (3)(18) five-year increases by year, (i) 5% of after the (the "Cookeville Property") renewal 10% after the annual gross seventh Restaurant to be renovated options fifth lease sales minus lease year year and after (ii) the The Cookeville Property is every five minimum annual located on the years rent for such northeast corner of the thereafter lease year intersection of South during the Jefferson Avenue and Neal lease term Lane, in Cookeville, Putnam County, Tennessee, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Cookeville Property include a Pizza Hut, an Arby's, a Wendy's, a Captain D's, a Shoney's, a Burger King, a McDonald's, a Long John Silver's, a Ponderosa Steak House, a Cracker Barrel, a Taco Bell, a Schlotzsky's, a Subway Sandwich Shop, a Quincy's, a Ryan's Family Steak House, and a local restaurant. -48-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- TUMBLEWEED SOUTHWEST MESQUITE $747,664 08/01/97 07/2017; two $100,935 (18); for each lease at any time GRILL & BAR (17)(19) (3)(18) five-year increases by year, (i) 5% of after the (the "Hendersonville renewal 10% after the annual gross seventh Property") options fifth lease sales minus lease year Restaurant to be renovated year and after (ii) the every five minimum annual The Hendersonville Property is years rent for such located on the northeast thereafter lease year quadrant of the intersection during the of East Main Street and lease term Cherokee Road North, in Hendersonville, Sumner County, Tennessee, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Hendersonville Property include a Boston Market, a Wendy's, a Subway Sandwich Shop, a Shoney's, an Applebee's, a Pizza Hut, a Burger King, and a local restaurant. -49-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- TUMBLEWEED SOUTHWEST MESQUITE $1,448,598 08/01/97 07/2017; two $159,346 (18); for each lease at any time GRILL & BAR (17) (3)(18) five-year increases by year, (i) 5% of after the (the "Lawrence Property") renewal 10% after the annual gross seventh Restaurant to be renovated options fifth lease sales minus lease year year and after (ii) the The Lawrence Property is every five minimum annual located on the years rent for such east side of Iowa Street thereafter lease year between West 24th Street and during the West 25th Street, in Lawrence, lease term Douglas County, Kansas, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Lawrence Property include an Applebee's, a Chili's, and several local restaurants. -50-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- TUMBLEWEED SOUTHWEST MESQUITE $1,308,411 08/01/97 07/2017; two $143,925 (18); for each lease at any time GRILL & BAR (17) (3)(18) five-year increases by year, (i) 5% of after the (the "Nashville #2 Property") renewal 10% after the annual gross seventh Restaurant to be renovated options fifth lease sales minus lease year year and after (ii) the The Nashville #2 Property is every five minimum annual located on the west side of years rent for such Nolensville Road, in thereafter lease year Nashville, Davidson County, during the Tennessee, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Nashville #2 Property include a McDonald's, a Papa John's Pizza, a Pizza Hut, and several local restaurants. -51-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- ARBY'S (16) $727,273 08/04/97 08/2017; two $72,727; for each lease at any time (the "Greensboro Property") five-year increases by year, (i) 4% of after the Existing restaurant renewal 4.14% after the annual gross seventh options third lease sales minus lease year The Greensboro Property is year and after (ii) the located on the northeast every three minimum annual corner of the intersection of years rent for such South Regional Boulevard and thereafter lease year Boeing Drive, in Greensboro, during the Guilford County, North lease term Carolina, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Greensboro Property include a Wendy's, a Hardee's, a McDonald's, a Shoney's, a Subway Sandwich Shop, and a local restaurant. -52-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- ARBY'S (16) $727,273 08/04/97 08/2017; two $72,727; for each lease at any time (the "Greenville Property") five-year increases by year, (i) 4% of after the Existing restaurant renewal 4.14% after the annual gross seventh options third lease sales minus lease year The Greenville Property is year and after (ii) the located on the north side of every three minimum annual Greenville Boulevard, south of years rent for such the Wal-Mart Super Center, in thereafter lease year Greenville, Pitt County, North during the Carolina, in an area of mixed lease term retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Greenville Property include a Perkins, a McDonald's, an Applebee's, and a Boston Market. -53-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- ARBY'S (16) $727,273 08/04/97 08/2017; two $72,727; for each lease at any time (the "Jonesville Property") five-year increases by year, (i) 4% of after the Existing restaurant renewal 4.14% after the annual gross seventh options third lease sales minus lease year The Jonesville Property is year and after (ii) the located on the south side of every three minimum annual State Highway 67, east of years rent for such Interstate 77, in Jonesville, thereafter lease year Yadkin County, North Carolina, during the in an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Jonesville Property include a Cracker Barrel, a McDonald's, a Wendy's, a Shoney's, and several local restaurants. ARBY'S (16) $650,000 08/04/97 08/2017; two $65,000; for each lease at any time (the "Kernersville Property") five-year increases by year, (i) 4% of after the Existing restaurant renewal 4.14% after the annual gross seventh options third lease sales minus lease year The Kernersville Property is year and after (ii) the located on the south side of every three minimum annual South Main Street, west of years rent for such Interstate 40, in thereafter lease year Kernersville, Forsyth County, during the North Carolina, in an area of lease term mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Kernersville Property include a Taco Bell, and several local restaurants. -54-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- ARBY'S (16) $713,636 08/04/97 08/2017; two $71,364; for each lease at any time (the "Kinston Property") five-year increases by year, (i) 4% of after the Existing restaurant renewal 4.14% after the annual gross seventh options third lease sales minus lease year The Kinston Property is year and after (ii) the located on the north side of every three minimum annual West New Bern Road, west of US years rent for such Highway 258, in Kinston, thereafter lease year Lenoir County, North Carolina, during the in an area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Kinston Property include a Subway Sandwich Shop, a Hardee's, a Golden Corral, and several local restaurants. TUMBLEWEED SOUTHWEST MESQUITE $1,425,234 08/05/97 08/2017; two $156,776 (18); for each lease at any time GRILL & BAR (17) (3)(18) five-year increases by year, (i) 5% of after the (the "Murfreesboro Property") renewal 10% after the annual gross seventh Restaurant to be renovated options fifth lease sales minus lease year year and after (ii) the The Murfreesboro Property is every five minimum annual located on the southeast years rent for such corner of the intersection of thereafter lease year Northwest Broad Street and during the South Front Street, in lease term Murfreesboro, Rutherford County, Tennessee, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Murfreesboro Property include a Shoney's, a Captain D's, a Burger King, a KFC, a McDonald's, a Subway Sandwich Shop, and a local restaurant. -55-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BOSTON MARKET (5) $904,691 08/19/97 08/2012; $93,907; for each lease at any time (the "Edgewater Property") five five- increases by year after the after the Existing restaurant year renewal 10% after the fifth lease fifth lease options fifth lease year, (i) 4% year The Edgewater Property is year and after of annual gross located within the Market every five sales minus Place Shopping Center on the years (ii) the west side of Sheridan thereafter minimum annual Boulevard, in Edgewater, during the rent for such Jefferson County, Colorado, in lease term lease year an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Edgewater Property include a Taco Bell, a Fazoli's, an A&W, a McDonald's, and several local restaurants. -56-
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ˇ 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 (13) $168,813 08/19/97 08/2012; 10.75% of Total for each lease during the (the "Duncan Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through costs) (3) options annual gross seventh The Duncan Property is located sales exceed lease years on the west side of U.S. $1,956,403 (8) and the Highway 81, south of State tenth Road 7, in Duncan, Stephens through County, Oklahoma, in an area fifteenth of mixed retail, commercial, lease years and residential development. only Other fast-food and family- style restaurants located in proximity to the Duncan Property include a McDonald's, an Arby's, a Pizza Hut, and several local restaurants. -57-
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ˇ 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 (13) $570,497 08/19/97 08/2012; 10.75% of Total for each lease during the (the "Fort Walton Beach (excluding four five- Cost (4) year, 5% of the first Property") closing and year renewal amount by which through Restaurant to be constructed development options annual gross seventh costs) (3) sales exceed lease years The Fort Walton Beach Property $2,764,503 (8) and the is located on the southeast tenth corner of Mary Esther through Boulevard south of Beal fifteenth Parkway, in Fort Walton Beach, lease years Okaloosa County, Florida, in only an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Fort Walton Beach Property include an Applebee's, a Burger King, a Chili's, a Blimpie's, a Fazoli's, a Krystal Burger, a McDonald's, a Hardee's, a Wendy's, and a Sonic Drive-in. -58-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- RUBY TUESDAY'S $1,123,720 08/19/97 08/2017; two $123,609 (7); for each lease at any time (the "London Property") (3)(7) five-year increases by year, (i) 6% of after the Restaurant to be renovated renewal 10% after the annual gross seventh options fifth lease sales minus lease year The London Property is located year and after (ii) the on the east side of Interstate every five minimum annual 75, on the south side of years rent for such Highway 192 and Park South thereafter lease year Road, in London, Laurel during the County, Kentucky, in an area lease term of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the London Property include an Arby's, a Hardee's, a Fazoli's, a Frisch's Big Boy, a Krystal Burger, a Burger King, a Ponderosa Steak House, a Taco Bell, a Captain D's, and several local restaurants. -59-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- IHOP (14) $1,540,356 08/20/97 08/2017; $155,961; for each lease during the (the "Elk Grove Property") (excluding three five- increases by year, (i) 4% eleventh Existing restaurant closing year renewal 10% after the of annual gross lease year costs) options fifth lease sales minus and at the The Elk Grove Property is year and after (ii) the end of the located on the south side of every five minimum annual initial East Stockton Boulevard, just years rent for such lease term north of Bond Boulevard and thereafter lease year east of Route 99, in Elk during the Grove, Sacramento County, lease term California, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Elk Grove Property include a Taco Bell, an Applebee's, a McDonald's, and several local restaurants. -60-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- IHOP (14) $1,196,060 08/20/97 08/2017; $121,101; for each lease during the (the "Lake Jackson Property") (excluding three five- increases by year, (i) 4% of eleventh Existing restaurant closing year renewal 10% after the annual gross lease year costs) options fifth lease sales minus and at the The Lake Jackson Property is year and after (ii) the end of the located on the west side of every five minimum annual initial State Highway 332, in Lake years rent for such lease term Jackson, Brazoria County, thereafter lease year Texas, in an area of mixed during the retail, commercial, and lease term residential development. Other fast-food and family- style restaurants located in proximity to the Lake Jackson Property include a Boston Market, a Ryan's Family Steak House, a Pizza Hut, a Burger King, a Red Lobster, a Whataburger, a McDonald's, a Taco Bell, a Chick-Fil-A, and several local restaurants. -61-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- IHOP (14) $1,376,767 08/20/97 08/2017; $139,398; for each lease during the (the "Loveland Property") (excluding three five- increases by year, (i) 4% eleventh Existing restaurant closing year renewal 10% after the of annual gross lease year costs) options fifth lease sales minus and at the The Loveland Property is year and after (ii) the end of the located on the south side of every five minimum annual initial Stone Creek Circle, with years rent for such lease term visibility from Highway 34 and thereafter lease year Interstate 25, in Loveland, during the Larimer County, Colorado, in lease term an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Loveland Property include a Lone Star Steak House & Saloon. IHOP (14) $1,073,262 08/20/97 08/2017; $108,668; for each lease during the (the "Victoria Property") (excluding three five- increases by year, (i) 4% of eleventh Existing restaurant closing year renewal 10% after the annual gross lease year costs) options fifth lease sales minus and at the The Victoria Property is year and after (ii) the end of the located on the north side of every five minimum annual initial Lentz Parkway west of U.S. years rent for such lease term Highway 77, in Victoria, thereafter lease year Victoria County, Texas, in an during the area of mixed retail, lease term commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Victoria Property include a Denny's, a Red Lobster, a Taco Bell, a McDonald's, a Ryan's Family Steak House, a Sonic Drive-in, and several local restaurants. -62-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- SHONEY'S (9) $799,047 08/20/97 08/2017; two 11% of Total for each lease at any time (the "Las Vegas Property") (excluding five-year Cost (4); year, (i) 6% after the Restaurant to be constructed development renewal increases by of annual gross seventh costs) (3) options 10% after the sales minus lease year The Las Vegas Property is fifth lease (ii) the located on the west side of year and after minimum annual Rock Springs Drive, north of every five rent for such Lake Mead Drive, in Las Vegas, years lease year Clark County, Nevada, in an thereafter area of mixed retail, during the commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Las Vegas Property include a Boston Market, a Wendy's, an Arby's, a Chili's, a Macaroni Grill, a Tony Roma's, a McDonald's, and an In and Out Burgers. -63-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BOSTON MARKET (5) $1,062,327 09/05/97 09/2012; $110,270; for each lease at any time (the "Hoover Property") five five- increases by year after the after the Existing restaurant year renewal 10% after the fifth lease fifth lease options fifth lease year, (i) 4% of year The Hoover Property is located year and after annual gross on the southeast quadrant of every five sales minus U.S. Highway 31 and Lorna years (ii) the Road, in Hoover, Jefferson thereafter minimum annual County, Alabama, in an area of during the rent for such mixed retail, commercial, and lease term lease year residential development. Other fast-food and family- style restaurants located in proximity to the Hoover Property include a Taco Bell, a McDonald's, a Wendy's, and a Pizza Hut. -64-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- T.G.I. FRIDAY'S $872,422 09/05/97 09/2017; 10.75% of Total for each lease at any time (the "Superstition Springs (excluding four five- Cost (4); year, (i) 6% of after the Property") development year renewal increases by annual gross seventh Restaurant to be constructed costs) (3) options 10% after the sales minus lease year fifth lease (ii) the The Superstition Springs year and after minimum annual Property is located on the every five rent for such northwest corner of the years lease year intersection of Superstition thereafter Springs Boulevard and South during the Power Road, in Superstition lease term Springs, Maricopa County, Arizona, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Superstition Springs Property include a Burger King, an Outback Steakhouse, a Jack in the Box, a Denny's, a McDonald's, a Wendy's, a Chili's, and several local restaurants. -65-
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ˇ 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 (13) $417,329 09/17/97 03/2013; 10.75% of Total for each lease during the (the "Mobile #2 Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through costs) (3) options annual gross seventh The Mobile #2 Property is sales exceed lease years located on the southeast side $2,502,407 (8) and the of Halls Mill Road, south of tenth Range Line Road, in Mobile, through Mobile County, Alabama, in an fifteenth area of mixed retail, lease years commercial, and residential only development. Other fast-food and family-style restaurants located in proximity to the Mobile #2 Property include a KFC, a McDonald's, an Arby's, a Popeyes, a Checkers, a Waffle House, a Quincy's Family Steak House, a Shoney's, a Pizza Inn, a Taco Bell, a Burger King, a Pizza Hut, a Godfather's Pizza, and several local restaurants. -66-
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ˇ 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 (13) $319,140 09/17/97 03/2013; 10.75% of Total for each lease during the (the "Palatka Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through costs) (3) options annual gross seventh The Palatka Property is sales exceed lease years located on the southeast side $2,191,973 (8) and the of Highway 19, south of U.S. tenth 17, in Palatka, Putnam County, through Florida, in an area of mixed fifteenth retail, commercial, and lease years residential development. only Other fast-food and family- style restaurants located in proximity to the Palatka Property include an In and Out Burgers, a Pizza Hut, and several local restaurants. BLACK-EYED PEA (20) $1,600,000 09/30/97 09/2017; two $168,000; for each lease during the (the "Mesa Property") five-year increases by year, 6% of the eighth, Existing restaurant renewal 11% after the amount by which tenth, and options fifth lease annual gross twelfth The Mesa Property is located year and after sales exceed lease years on the northeast corner of the every five $2,200,000 only intersection of South Alma years School Road and West Holmes thereafter Road, in Mesa, Maricopa during the County, Arizona, in an area of lease term mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Mesa Property include a Chevy's, a McDonald's, a Denny's, an Applebee's, an American Grill, an Olive Garden, a Bennigan's, a Red Lobster, and several local restaurants. -67-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (10)(20) $641,254 09/30/97 11/2006 $109,225 None at any time (the "Phoenix #1 Property") after the Existing restaurant fifth lease year The Phoenix #1 Property is located on the southeast quadrant of Peoria Avenue and 35th Avenue, in Phoenix, Maricopa County, Arizona, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Phoenix #1 Property include a McDonald's, a Jack in the Box, a Taco Bell, a Wendy's, a Sizzler, a Whataburger, a Bennigan's, and several local restaurants. -68-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (10)(20) $641,371 09/30/97 06/2008 $100,195; None at any time (the "Phoenix #2 Property") increases to after the Existing restaurant $100,583 after fifth lease the tenth lease year The Phoenix #2 Property is year located on the southeast quadrant of North 75th Avenue and Thomas Road, in Phoenix, Maricopa County, Arizona, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Phoenix #2 Property include a Wendy's, a Fazoli's, a McDonald's, an Olive Garden, a Denny's, a Whataburger, a Taco Bell, and several local restaurants. -69-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (10)(20) $645,471 09/30/97 08/2009 $95,149; None at any time (the "Phoenix #3 Property") increases to after the Existing restaurant $96,112 after fifth lease the tenth lease year The Phoenix #3 Property is year located on the southeast quadrant of Cactus Road and 48th Street, in Phoenix, Maricopa County, Arizona, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Phoenix #3 Property include a Red Lobster, an Olive Garden, a Don Pablo's, an Outback Steakhouse, a Denny's, an IHOP, a McDonald's, and several local restaurants. -70-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (10)(20) $641,871 09/30/97 08/2010 $91,251; None at any time (the "Tucson Property") increases to after the Existing restaurant $92,576 after fifth lease the tenth lease year The Tucson Property is located year on the southwest quadrant of West River Road and Stone Road, in Tucson, Pima County, Arizona, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Tucson Property include a Chili's, an On The Border, and several local restaurants. -71-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $667,290 10/01/97 09/2013 $86,087; None at any time (the "Albuquerque #1 increases to after the Property") $88,584 after seventh Existing restaurant the tenth lease lease year year The Albuquerque #1 Property is located on the northwest corner of San Mateo Boulevard Northeast and Lumber Avenue Northeast, in Albuquerque, Bernalillo County, New Mexico, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Albuquerque #1 Property include a Sweet Tomatoes, a Hooters, a Pizza Hut, a Grady's, a Chili's, an Austin's, an Applebee's, an Olive Garden, and a local restaurant. -72-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $666,355 10/01/97 07/2011 $91,517; None at any time (the "Albuquerque #2 increases to after the Property") $93,270 after seventh Existing restaurant the tenth lease lease year year The Albuquerque #2 Property is located on the northwest quadrant of Interstate 40 and Juan Tabo Boulevard Northeast, in Albuquerque, Bernalillo County, New Mexico, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Albuquerque #2 Property include an Olive Garden, a Village Inn, a Grandy's, and several local restaurants. -73-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $660,748 10/01/97 09/2011 $90,265; None at any time (the "Dallas #3 Property") increases to after the Existing restaurant $92,064 after seventh the tenth lease lease year The Dallas #3 Property is year located on the south side of Beltline Road, in Dallas, Dallas County, Texas, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Dallas #3 Property include a Chili's, an On The Border, an Olive Garden, a Grady's, a Macaroni Grill, and several local restaurants. -74-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $643,925 10/01/97 06/2004 $133,563 None at any time (the "Forestville Property") after the Existing restaurant seventh lease year The Forestville Property is located on the northeast quadrant of the intersection of Silver Hill Road and Pennsylvania Avenue, in Forestville, Prince Georges County, Maryland, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Forestville Property include a Subway Sandwich Shop, a Pizza Hut, and several local restaurants. -75-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $648,598 10/01/97 08/2008 $99,659; None at any time (the "Houston #7 Property") increases to after the Existing restaurant $100,213 after seventh the tenth lease lease year The Houston #7 Property is year located on the corner of Northwest Freeway and Deauville Plaza Drive, in Houston, Harris County, Texas, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Houston #7 Property include a Ryan's Steakhouse, a Denny's, an Olive Garden, a Bennigan's, a Chili's, a Kettle's, and several local restaurants. -76-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $661,682 10/01/97 03/2012 $89,029; None at any time (the "Waco Property") increases to after the Existing restaurant $91,002 after seventh the tenth lease lease year The Waco Property is located year on the north side of Bosque Road within the Lake Air Mall, in Waco, McLennan County, Texas, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Waco Property include a Piccadilly Cafeteria, a Chili's, a Fuddrucker's, and several local restaurants. -77-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- BLACK-EYED PEA (19)(21) $660,748 10/01/97 12/2011 $89,571; None at any time (the "Wichita Property") increases to after the Existing restaurant $91,456 after seventh the tenth lease lease year The Wichita Property is year located on the south side of East Central Avenue within Dillow's Superstore Shopping Center, in Wichita, Sedgwick County, Kansas, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Wichita Property include a Chili's, and an Olive Garden. -78-
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ˇ 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 (13) $529,105 10/02/97 03/2012; 10.75% of Total for each lease during the (the "Olathe Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through costs) (3) options annual gross seventh The Olathe Property is located sales exceed lease years on the west side of Blackbob $2,886,067 (8) and the Road, north of U.S. 169, in tenth Olathe, Johnson County, through Kansas, in an area of mixed fifteenth retail, commercial, and lease years residential development. only Other fast-food and family- style restaurants located in proximity to the Olathe Property include a Dairy Queen, a Fazoli's, a KFC, a Taco Bell, and an Applebee's. -79-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- JACK IN THE BOX (6) $1,076,237 10/17/97 09/2015; $110,243 (7); for each lease at any time (the "Florissant Property") (3)(7) four five- increases by 8% year, (i) 5% of after the Restaurant to be constructed year renewal after the fifth annual gross seventh options lease year and sales minus lease year The Florissant Property is after every (ii) the located on the southern five years minimum annual quadrant of Charbonier Road thereafter rent for such and Howdershell Road, in during the lease year (8) Florissant, St. Louis County, lease term Missouri, in an area of mixed retail, commercial, and residential development. JACK IN THE BOX (6) $1,263,688 10/17/97 09/2015; $129,482 (7); for each lease None (the "Folsom Property") (3)(7) four five- increases by 8% year, (i) 5% of Restaurant to be constructed year renewal after the fifth annual gross options lease year and sales minus The Folsom Property is located after every (ii) the on the eastern quadrant of five years minimum annual Blue Ravine Road and East thereafter rent for such Bidwell Street, in Folsom, during the lease year (8) Sacramento County, California, lease term in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Folsom Property include an IHOP, an Arby's, a Burger King, a Boston Market, a Manhattan Bagel, a Subway Sandwich Shop, a Taco Bell, a McDonald's, a KFC, a Pizza Hut and several local restaurants. -80-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- ON THE BORDER (19) $292,767 10/17/97 10/2012; 13.64% of Total for each lease at any time (the "San Antonio #2 (excluding three five- Cost (4); (22) year, (i) 4% of after the Property") development year renewal annual gross tenth lease Restaurant to be constructed costs) (3) options sales minus year (ii) the The San Antonio #2 Property is minimum annual located on the east side of rent for such U.S. Highway 281, within the lease year (8) Alamo Quarry Market Shopping Center, in San Antonio, Bexar County, Texas, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the San Antonio #2 Property include a Ruth's Chris Steakhouse and several local restaurants. GROUND ROUND (23) $1,220,761 10/20/97 10/2017; $125,128 (24) at any time (the "Allentown Property") five five- after the Existing restaurant year renewal seventh options lease year The Allentown Property is located on the north side of Grape Street, in Allentown, Lehigh County, Pennsylvania, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Allentown Property include a Pizza Hut, a Lone Star Steak House & Saloon, a Red Lobster, a Chili's, a KFC, an Olive Garden, a Ponderosa Steakhouse, a Friendly's, a Wendy's, a Perkins, a Burger King, a Boston Market and several local restaurants. -81-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $772,727 10/20/97 10/2017; $79,205 (24) at any time (the "Colerain Property") five five- after the Existing restaurant year renewal seventh options lease year The Colerain Property is located on the north side of Springdale Road, in Colerain, Hamilton County, Ohio, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Colerain Property include a Red Lobster, an Outback Steak House, an Applebee's, an Olive Garden, a White Castle, an Arby's, a McDonald's, a T.G.I. Friday's and several local restaurants. GROUND ROUND (23) $759,091 10/20/97 10/2017; $77,807 (24) at any time (the "Crystal Property") five five- after the Existing restaurant year renewal seventh options lease year The Crystal Property is located on the northeast corner of Bass Lake Road and Jersey Street, in Crystal, Hennepin County, Minnesota, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Crystal Property include a Dairy Queen, a Taco Bell, a Subway Sandwich Shop, a KFC and an Applebee's. -82-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $1,422,727 10/20/97 10/2017; $145,830 (24) at any time (the "Dubuque Property") five five- after the Existing restaurant year renewal seventh options lease year The Dubuque Property is located on the west side of John F. Kennedy Road and Cedar Cross Road, in Dubuque, Dubuque County, Iowa, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Dubuque Property include a Hardee's, an Olive Garden, a Wendy's and several local restaurants. GROUND ROUND (23) $900,000 10/20/97 10/2017; $92,250 (24) at any time (the "Gloucester Property") five five- after the Existing restaurant year renewal seventh options lease year The Gloucester Property is located on the southeast corner of Blackwood- Clementon Road and Dartmouth Drive, in Gloucester, Camden County, New Jersey, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Gloucester Property include a Friendly's, a Boston Market, a Chili's, an Olive Garden, a Red Lobster, a Denny's, a Burger King, a McDonald's, a Taco Bell, a Checkers and several local restaurants. -83-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $945,455 10/20/97 10/2017; $96,909 (24) at any time (the "Janesville Property") five five- after the Existing restaurant year renewal seventh options lease year The Janesville Property is located on the northwest corner of Milton Avenue and Lodge Street, in Janesville, Rock County, Wisconsin, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Janesville Property include an Applebee's, a Pizzeria Uno, a Perkins, a Fazoli's and several local restaurants. GROUND ROUND (23) $945,455 10/20/97 10/2017; $96,909 (24) at any time (the "Kalamazoo Property") five five- after the Existing restaurant year renewal seventh options lease year The Kalamazoo Property is located on Stadium Drive, east of the intersection of Seneca Road, in Kalamazoo, Kalamazoo County, Michigan, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Kalamazoo Property include an Olive Garden, an Applebee's, a Chili's, a McDonald's, a Burger King and several local restaurants. -84-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $1,118,187 10/20/97 10/2017; $114,614 (24) at any time (the "Parma Property") five five- after the Existing restaurant year renewal seventh options lease year The Parma Property is located on the south side of Day Drive, in Parma, Cuyahoga County, Ohio, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Parma Property include an Outback Steak House, a Red Lobster, an Olive Garden, an Arby's, a Denny's and a local restaurant. GROUND ROUND (23) $1,439,551 10/20/97 10/2017; $147,554 (24) at any time (the "Reading Property") five five- after the Existing restaurant year renewal seventh options lease year The Reading Property is located on the west side of Fifth Street Highway at the entrance to the Fairgrounds Mall, in Reading, Berks County, Pennsylvania, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Reading Property include an Arby's, a Pizza Hut, a McDonald's, a Burger King, a Bojangles, a Taco Bell, a Ponderosa Steakhouse, a Boston Market, a Subway Sandwich Shop and several local restaurants. -85-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $1,036,364 10/20/97 10/2017; $106,227 (24) at any time (the "Waterloo Property") five five- after the Existing restaurant year renewal seventh options lease year The Waterloo Property is located on the southwest corner of East San Marnan Drive and Penneys Street, in Waterloo, Black Hawk County, Iowa, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Waterloo Property include an Olive Garden, a Lone Star Steak House & Saloon, an Applebee's, a Pizza Hut, a Boston Market, a Long John Silver's and several local restaurants. GROUND ROUND (23) $1,354,545 10/20/97 10/2017; $138,841 (24) at any time (the "Wauwatosa Property") five five- after the Existing restaurant year renewal seventh options lease year The Wauwatosa Property is located on the northwest corner of Mayfair Road and Blue Mound Road, in Wauwatosa, Milwaukee County, Wisconsin, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Wauwatosa Property include a Chili's, an Applebee's, a Taco Bell, a Pizza Hut and several local restaurants. -86-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $1,000,000 11/18/97 11/2017; $102,500 (24) at any time (the "Ewing Property") five five- after the Existing restaurant year renewal seventh options lease year The Ewing Property is located on the northwest quadrant of the intersection of North Olden Avenue and Pennington Road, in Ewing, Mercer County, New Jersey, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Ewing Property include a McDonald's, an IHOP, an Applebee's, a TGI Friday's, a Taco Bell, a Wendy's, a Burger King, and a Boston Market. WENDY'S $811,350 11/18/97 11/2017; two 10.25% of Total for each lease at any time (the "Westlake Village (excluding five-year Cost (4) year, (i) 7% of after the Property") development renewal annual gross seventh Restaurant to be constructed costs) (3) options sales minus lease year (ii) the The Westlake Village Property minimum annual is located on the southeast rent for such quadrant of Thousand Oaks lease year Boulevard and Lindero Canyon Road, in Westlake Village, Los Angeles County, California, in an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Westlake Village Property include a McDonald's, a KFC, and a local restaurant. -87-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- GROUND ROUND (23) $927,273 12/02/97 12/2017; $95,045 (24) at any time (the "Nanuet Property") five five- after the Existing restaurant year renewal seventh options lease year The Nanuet Property is located on the northwest corner of Route 59 West and Dykes Road, in Nanuet, Rockland County, New York, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Nanuet Property include a Ruby Tuesday's, a Red Lobster, a Pizza Hut, and a local restaurant. GOLDEN CORRAL (13) $384,530 12/03/97 06/2013; 10.75% of Total for each lease during the (the "Muskogee Property") (excluding four five- Cost (4) year, 5% of the first Restaurant to be constructed development year renewal amount by which through nt costs) (3) options annual gross seventh The Muskogee Property is sales exceed lease years located on the south side of $2,212,853 (8) and the West Shawnee Avenue, in tenth Muskogee, Muskogee County, through Oklahoma, in an area of mixed fifteenth retail, commercial, and lease years residential development. only Other fast-food and family- style restaurants located in proximity to the Muskogee Property include an Applebee's, a Red Lobster, a Burger King, a Long John Silver's, a Western Sizzlin, and several local restaurants. -88-
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ˇ 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 (13) $467,593 12/30/97 06/2013; 10.75% of Total for each lease during the (the "Council Bluffs (excluding four five- Cost (4) year, 5% of the first Property") development year renewal amount by which through Restaurant to be constructed costs) (3) options annual gross seventh sales exceed lease years The Council Bluffs Property is $2,713,081 (8) and the located on the northeast tenth quadrant of Dial Drive and through 32nd Avenue, in Council fifteenth Bluffs, Pottawattamie County, lease years Iowa, in an area of mixed only retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Council Bluffs Property include a Cracker Barrel, a Red Lobster, a Perkins, a Dairy Queen, a Burger King, a Long John Silver's, a Taco Bell, a McDonald's, a Hardee's, and a Fazoli's. JACK IN THE BOX (6) $1,333,345 12/30/97 04/2015; $136,668; for each lease at any time (the "Los Angeles #3 (3) four five- increases by 8% year, (i) 5% of after the Property") year renewal after the fifth annual gross seventh Existing restaurant options lease year and sales minus lease year after every (ii) the The Los Angeles #3 Property is five years minimum annual located on the southeast thereafter rent for such corner of Crenshaw Boulevard during the lease year (8) and Washington Boulevard, in lease term Los Angeles, Los Angeles County, California, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Los Angeles #3 Property include a Taco Bell, a McDonald's, and several local restaurants. -89-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- CHEVY'S FRESH MEX (25) $2,521,428 12/31/97 12/2012; two $248,075; for each lease at any time (the "Arapahoe Property") five-year increases by year, 5% of the during the Existing restaurant renewal 10% after the amount by which lease term options fifth lease annual gross The Arapahoe Property is year and after sales exceed located on the south side of every five $3,213,500 Arapahoe Road, in Arapahoe, years Arapahoe County, Colorado, in thereafter an area of mixed retail, during the commercial, and residential lease term development. Other fast-food and family-style restaurants located in proximity to the Arapahoe Property include a Bennigan's, a Wendy's, a Ruby Tuesday's, an Arby's, a McDonald's, a Denny's, and several local restaurants. CHEVY'S FRESH MEX (25) $2,477,078 12/31/97 12/2012; two $243,712; for each lease at any time (the "Beaverton Property") five-year increases by year, 5% of the during the Existing restaurant renewal 10% after the amount by which lease term options fifth lease annual gross The Beaverton Property is year and after sales exceed located on the southeast every five $2,548,750 quadrant of the intersection years of Hall Boulevard and Nimbus thereafter Avenue, in Beaverton, during the Washington County, Oregon, in lease term an area of mixed retail, commercial, and residential development. Other fast-food and family-style restaurants located in proximity to the Beaverton Property include an Arby's, and a local restaurant. -90-
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ˇ 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 --------------------- --------- -------- --------------- --------------- --------------- ----------- CHEVY'S FRESH MEX (25) $2,288,676 12/31/97 12/2012; two $225,176; for each lease at any time (the "Greenbelt Property") five-year increases by year, 5% of the during the Existing restaurant renewal 10% after the amount by which lease term options fifth lease annual gross The Greenbelt Property is year and after sales exceed located on the southeast every five $2,722,250 quadrant of the intersection years of Greenbelt Road and the thereafter Baltimore Washington Parkway, during the in Greenbelt, Prince Georges lease term County, Maryland, in an area of mixed retail, commercial, and residential development. Other fast-food and family- style restaurants located in proximity to the Greenbelt Property include a Denny's, a Wendy's, a T.G.I Friday's, and several local restaurants. CHEVY'S FRESH MEX (25) $2,334,198 12/31/97 12/2012; two $229,654; for each lease at any time (the "Lake Oswego Property") five-year increases by year, 5% of the during the Existing restaurant renewal 10% after the amount by which lease term options fifth lease annual gross The Lake Oswego Property is year and after sales exceed located between Interstate every five $2,983,250 Highway 5 and Bangy Road, in years Lake Oswego, Clackamas County, thereafter Oregon, in an area of mixed during the retail, commercial, and lease term residential development. Other fast-food and family- style restaurants located in proximity to the Lake Oswego Property include an Applebee's, an Olive Garden, and a Taco Bell. -91-
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FOOTNOTES: (1) The estimated federal income tax basis of the depreciable portion (the building portion) of each of the Properties acquired, and for construction Properties, once the buildings are constructed, is set forth below: ˇ Enlarge/Download Table Property Federal Tax Basis Property Federal Tax Basis --------- ----------------- -------- ----------------- Arvada #2 Property $ 667,000 Nashville #1 Property $ 734,000 Liberty #1 Property 357,000 Orlando Property 770,000 Dearborn Property 266,000 Pensacola Property 723,000 Enumclaw Property 764,000 Raleigh #1 Property 503,000 Guadalupe Property 905,000 Raleigh #2 Property 717,000 Scottsdale Property 810,000 Richmond #1 Property 773,000 Bacliff Property 691,000 Richmond #2 Property 648,000 Indianapolis Property 883,000 Winston-Salem Property 810,000 San Antonio #1 Property 336,000 Bethel Park Property 593,000 Baltimore Property 471,000 Langhorne Property 646,000 Gambrills Property 471,000 Plymouth Meeting Property 905,000 Jessup Property 435,000 Enid Property 776,000 Lansing Property 651,000 Fairfax Property 703,000 Riverdale Property 474,000 Liberty #2 Property 925,000 Vacaville Property 805,000 Stafford Property 679,000 Waldorf Property 455,000 Channelview Property 708,000 Springfield Property 34,000 Garland Property 608,000 Jacksonville #1 Property 1,105,000 Putnam Property 534,000 Corpus Christi Property 984,000 Lexington Property 462,000 Leesburg Property 579,000 Newport News Property 584,000 Starke Property 405,000 Houston #6 Property 888,000 Fresno Property 601,000 Stockbridge Property 705,000 -92-
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ˇ Enlarge/Download Table Property Federal Tax Basis Property Federal Tax Basis --------- ----------------- -------- ----------------- Corinth Property 615,000 Woodland Property 661,000 Tampa #2 Property 1,056,000 West Sacramento Property 612,000 Jacksonville #2 Property 1,124,000 Cookeville Property 1,026,000 King of Prussia Property 547,000 Hendersonville Property 779,000 McLean Property 687,000 Lawrence Property 1,019,000 Evansville Property 971,000 Nashville #2 Property 946,000 Hampton Property 536,000 Greensboro Property 403,000 Huntsville Property 661,000 Greenville Property 488,000 -93-
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Knoxville #2 Property 706,000 Jonesville Property 538,000 Louisville Property 912,000 Kernersville Property 411,000 Mobile #1 Property 1,005,000 Kinston Property 483,000 Montgomery Property 949,000 Murfreesboro Property 973,000 Edgewater Property $ 625,000 Olathe Property 1,097,000 Duncan Property 931,000 Florissant Property 723,000 Fort Walton Beach Property 983,000 Folsom Property 702,000 London Property 828,000 San Antonio #2 Property 1,265,000 Elk Grove Property 1,036,000 Allentown Property 882,000 Lake Jackson Property 799,000 Colerain Property 533,000 Loveland Property 960,000 Crystal Property 188,000 Victoria Property 810,000 Dubuque Property 807,000 Las Vegas Property 939,000 Gloucester Property 527,000 Hoover Property 618,000 Janesville Property 547,000 Superstition Springs Property 1,269,000 Kalamazoo Property 710,000 Mobile #2 Property 988,000 Parma Property 791,000 Palatka Property 932,000 Reading Property 790,000 Mesa Property 910,000 Waterloo Property 657,000 Phoenix #1 Property 675,000 Wauwatosa Property 802,000 Phoenix #2 Property 675,000 Ewing Property 683,000 Phoenix #3 Property 680,000 Westlake Village Property 759,000 Tucson Property 676,000 Nanuet Property 603,000 Albuquerque #1 Property 703,000 Muskogee Property 853,000 Albuquerque #2 Property 702,000 Council Bluffs Property 1,059,000 Dallas # 3 Property 696,000 Los Angeles #2 Property 585,000 Forestville Property 678,000 Arapahoe Property 1,674,000 Houston # 7 Property 683,000 Beaverton Property 1,675,000 Waco Property 697,000 Greenbelt Property 1,470,000 Wichita Property 696,000 Lake Oswego Property 1,500,000
(2) Minimum annual rent for each of the Properties became payable on the effective date of the lease, except as indicated below. For the Liberty #1, Dearborn, San Antonio #1, Indianapolis, Baltimore, Gambrills, Jessup, Lansing, Riverdale, Vacaville, Waldorf and Springfield Properties, minimum annual rent will become due and payable on the date the tenant receives from the landlord its final funding of the construction costs. For the Arvada #2, Indianapolis, Lansing and Vacaville Properties, minimum annual rent for the remainder of 1997 and 1998 shall be prepaid on the date the tenant receives from the landlord its final funding of the construction costs. For the Guadalupe Property, minimum annual rent will become due and payable on the earlier of (i) 210 days after execution of the lease, (ii) the date the certificate of occupancy for the restaurant is issued, (iii) the date the restaurant opens for business to the public, or (iv) the date the tenant receives from the landlord its final funding of the construction costs. For the Jacksonville #1, Corpus Christi, Jacksonville #2, Enid, Liberty #2, Duncan, Fort Walton Beach, Mobile #2, Palatka, Olathe, Muskogee and Council Bluffs 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. For the Las Vegas , Superstition Springs and San Antonio #2 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, (iii) the date the restaurant opens for business to the public, or (iv) the date the tenant receives from the landlord its final funding of the construction -94-
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costs. For the Starke and Westlake Village Properties, minimum annual rent will become due and payable on the earlier of (i) 120 days after execution of the lease, (ii) the date the certificate of occupancy for the restaurant is issued, (iii) the date the restaurant opens for business to the public, or (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 Arvada #2, Liberty #1, Dearborn, San Antonio #1, Indianapolis, Baltimore, Gambrills, Jessup, Lansing, Riverdale, Vacaville, Waldorf, Springfield, Jacksonville #1, Corpus Christi, Jacksonville #2, Enid, Liberty #2, Duncan, Fort Walton Beach, Mobile #2, Palatka, Olathe, Muskogee and Council Bluffs Properties, as described above, interim rent equal to a specified rate per annum (ranging from 10% to 10.38%) 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 Guadalupe, Starke, Las Vegas , Superstition Springs, San Antonio #2 and Westlake Village Properties, as described above, the tenant shall pay monthly "interim rent" equal to a specified rate per annum (ranging from 10.25% to 11.50%) of the amount funded by the Company in connection with the purchase and construction of the Properties. (3) The development agreements for the Properties which are to be constructed or renovated, provide that construction or renovation 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 amounts set forth below: ˇ Enlarge/Download Table Property Estimated Maximum Cost Estimated Final Completion Date -------- ---------------------- -------------------------------- Arvada #2 Property $1,152,262 Opened for business July 21, 1997 Liberty #1 Property 764,164 Opened for business August 18, 1997 Dearborn Property 667,305 Opened for business July 12, 1997 Enumclaw Property 843,431 Opened for business July 31, 1997 Guadalupe Property 1,452,517 Opened for business August 27, 1997 Scottsdale Property 769,863 Opened for business September 30, 1997 Bacliff Property 1,049,420 Opened for business August 3, 1997 Indianapolis Property 1,663,194 Opened for business September 2, 1997 San Antonio #1 Property 757,069 Opened for business September 25, 1997 Baltimore Property 1,378,051 Opened for business August 19, 1997 Gambrills Property 1,264,241 Opened for business August 26, 1997 Jessup Property 1,285,243 Opened for business July 13, 1997 Lansing Property 1,033,941 Opened for business October 2, 1997 Riverdale Property 1,041,107 Opened for business October 7, 1997 Vacaville Property 1,437,474 Opened for business July 13, 1997 Waldorf Property 1,357,356 Opened for business July 13, 1997 Springfield Property 633,101 Opened for business July 7, 1997 Jacksonville #1 Property 1,681,435 Opened for business September 24, 1997 Corpus Christi Property 1,577,372 Opened for business September 24, 1997 Starke Property 599,800 Opened for business August 11, 1997 Fresno Property 839,981 Opened for business August 31, 1997 Corinth Property 955,333 Opened for business September 16, 1997 Jacksonville #2 Property 1,696,394 Opened for business September 3, 1997 Enid Property 1,202,286 Opened for business November 24, 1997 Liberty #2 Property 1,378,020 Opened for business October 23, 1997 Channelview Property 1,008,970 Opened for business September 21, 1997 Garland Property 936,119 Opened for business September 27, 1997 Woodland Property 963,592 Opened for business October 9, 1997 -95-
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West Sacramento Property 1,073,031 Opened for business September 28, 1997 Cookeville Property 1,471,963 July 31, 1998 Hendersonville Property $ 747,664 July 31, 1998 Lawrence Property 1,448,598 July 31, 1998 Nashville #2 Property 1,308,411 July 31, 1998 Murfreesboro Property 1,425,234 August 4, 1998 Duncan Property 1,158,457 February 15, 1998 Fort Walton Beach Property 1,609,490 February 15, 1998 London Property 1,123,720 Opened for business November 4, 1997 Las Vegas Property 1,577,243 February 16, 1998 Superstition Springs Property 2,044,922 March 4, 1998 Mobile #2 Property 1,463,204 March 16, 1998 Palatka Property 1,289,938 March 16, 1998 Olathe Property 1,677,340 March 31, 1998 Florissant Property 1,075,539 March 16, 1998 Folsom Property 1,263,239 March 4, 1998 San Antonio #2 Property 1,260,879 April 15, 1998 Westlake Village Property 1,488,479 March 18, 1998 Muskogee Property 1,301,592 June 1, 1998 Council Bluffs Property 1,580,790 June 28, 1998 Los Angeles #3 Property 1,341,495 Opened for business September 28, 1997
(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. (5) The lessee of the Dearborn, Indianapolis, Baltimore, Gambrills, Jessup, Riverdale, Waldorf, Springfield, Stafford, Newport News, Edgewater and Hoover Properties is the same unaffiliated lessee. (6) The lessee of the Enumclaw, Bacliff, Fresno, Corinth, Channelview, Garland, Woodland , West Sacramento, Florissant, Folsom and Los Angeles #3 Properties is the same unaffiliated lessee or group of unaffiliated lessees. (7) The Company paid for all construction or renovation costs in advance at closing; therefore, minimum annual rent was determined on the date acquired and is not expected to change. (8) Percentage rent shall be calculated on a calendar year basis (January 1 to December 31). (9) The lessee of the Guadalupe and Las Vegas Properties is the same unaffiliated lessee. (10) The Company owns the building only for this Property. The Company does not own the underlying land; although, the Company entered 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. (11) The lease relating to this Property is a land lease only. -96-
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(12) The Company entered into a Master Lease Agreement for the Dover Property and eight Pizza Hut Properties previously acquired. The amounts presented in the table above represent additional amounts due under the Master Lease Agreement, as described in the section of the Prospectus entitled "Business - Property Acquisitions," as a result of the acquisition of the Dover Property. (13) The lessee of the Jacksonville #1, Corpus Christi, Jacksonville #2, Enid, Liberty #2, Duncan, Fort Walton Beach, Mobile #2, Palatka, Olathe, Muskogee and Council Bluffs Properties is the same unaffiliated lessee. (14) The lessee of the Leesburg, Fairfax, Houston # 6, Stockbridge, Elk Grove, Lake Jackson, Loveland and Victoria Properties is the same unaffiliated lessee. (15) The lessee of the King of Prussia, McLean, Evansville, Hampton, Huntsville, Knoxville #2, Louisville, Mobile #1, Montgomery, Nashville #1, Orlando, Pensacola, Raleigh #1, Raleigh #2, Richmond #1, Richmond #2, Winston-Salem, Bethel Park, Langhorne and Plymouth Meeting Properties is the same unaffiliated lessee. (16) The lessee of the Lexington, Greensboro, Greenville, Jonesville, Kernersville and Kinston Properties is the same unaffiliated lessee. (17) The lessee of the Cookeville, Hendersonville, Lawrence, Nashville #2 and Murfreesboro Properties is the same unaffiliated lessee. (18) The Company paid for all construction or renovation costs in advance at closing; therefore, minimum annual rent was determined on the date acquired and is not expected to change. In accordance with the lease agreement, these Properties are being converted from Barb Wires Steakhouse & Saloon restaurants to Tumbleweed Southwest Mesquite Grill & Bar restaurants. Renovation of the Properties is expected to be completed within 365 days of the effective date of the lease. The Properties are expected to remain operational during renovations. (19) The Company owns the building only for this Property. The Company does not own the underlying land; although, the Company entered 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. (20) The lessee of the Mesa, Phoenix #1, Phoenix #2, Phoenix #3 and Tucson Properties is the same unaffiliated lessee. (21) The lessee of the Albuquerque #1, Albuquerque #2, Dallas # 3, Forestville, Houston # 7, Waco and Wichita Properties is the same unaffiliated lessee. (22) Base rent shall increase after every five years during the lease term by the lesser of (i) 10% of the minimum base rent during the preceding year or (ii) 150% of the percentage change in the Consumer Price Index. (23) The lessee of the Allentown, Colerain, Crystal, Dubuque, Gloucester, Janesville, Kalamazoo, Parma, Reading, Waterloo, Wauwatosa, Ewing and Nanuet Properties is the same unaffiliated lessee. (24) For each lease year, percentage rent shall be calculated upon the amount by which gross sales exceed 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. Base sales are as follows: Property Base Sales -------- ---------- Allentown Property $2,085,487 Colerain Property 1,320,076 Crystal Property 1,296,780 -97-
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Dubuque Property 2,430,493 Gloucester Property 1,537,500 Janesville Property 1,615,152 Kalamazoo Property 1,615,152 Parma Property 1,910,355 Reading Property 2,459,233 Waterloo Property 1,770,455 Wauwatosa Property 2,314,015 Ewing Property 1,708,333 Nanuet Property 1,583,777 (25) The lessee of the Arapahoe, Beaverton, Greenbelt and Lake Oswego Properties is the same unaffiliated lessee. -98-
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BORROWING The Company has entered into a revolving $35,000,000 unsecured Line of Credit with a bank to enable the Company to receive advances to fund Secured Equipment Leases and to purchase and develop Properties and fund Mortgage Loans. The advances will bear interest at a rate of LIBOR plus 1.65%, or the bank's prime rate, whichever the Company selects at the time of borrowing. Interest only is repayable monthly until July 31, 1999, at which time all remaining interest and principal shall be due. The Line of Credit provides for two one-year renewal options. As of December 31, 1997, the Company had used approximately $21,882,000 of the $35,000,000 available under the Line of Credit to fund Secured Equipment Leases. Advances used to fund Secured Equipment Leases will be repaid using payments received from Secured Equipment Leases and will be refinanced in regard to any Secured Equipment Lease not fully repaid at the end of the term of the Line of Credit. Advances used to purchase and develop Properties and to fund Mortgage Loans will be repaid using additional offering proceeds or refinanced on a long-term basis. As of December 31, 1997, the Company had used $19,000,000 of uninvested net offering proceeds to temporarily reduce the balance outstanding under the Line of Credit pending the investment of such offering proceeds in Properties or Mortgage Loans in order to reduce interest expense incurred by the Company. The Company will not encumber Properties in connection with the Line of Credit. Management believes that during the offering period the Line of Credit will allow the Company to make investments that the Company otherwise would be forced to delay until it raised a sufficient amount of proceeds from the sale of Shares to allow the Company to make the investments. By eliminating this delay the Company will also eliminate the risk that these investments will no longer be available, or the terms of the investment will be less favorable, when the Company has raised sufficient offering proceeds. Alternatively, Affiliates of the Advisor could make such investments, pending receipt by the Company of sufficient offering proceeds, in order to preserve the investment opportunities for the Company. However, Properties acquired by the Company in this manner would be subject to closing costs both on the original purchase by the Affiliate and on the subsequent purchase by the Company, which would increase the amount of expenses associated with the acquisition of Properties and reduce the amount of offering proceeds available for investment in income-producing assets. Management believes that the use of the Line of Credit by the Company will enable the Company to reduce or eliminate the instances in which the Company will be required to pay duplicate closing costs. The Board of Directors does not anticipate that the Company will borrow funds, other than the Line of Credit and any additional financing the Board of Directors may determine to obtain to fund Secured Equipment Leases or to purchase and develop Properties and fund Mortgage Loans. However, the Company may also borrow funds for the purpose of preserving its status as a REIT. For example, the Company may borrow to the extent necessary to permit the Company to make Distributions required in order to enable the Company to qualify as a REIT for federal income tax purposes; however, the Company will not borrow for the purpose of returning capital to the stockholders unless necessary to eliminate corporate-level tax to the Company. Until Listing occurs, the Company will not encumber Properties in connection with any borrowing. If Listing occurs, however, the Board of Directors may elect to cause the Company to borrow funds in connection with the purchase of additional Properties or for other Company purposes and to encumber any or all of the Company's Properties in connection with any such borrowing. The aggregate borrowing of the Company, secured and unsecured, shall be reasonable in relation to Net Assets of the Company and shall be reviewed by the Board of Directors at least quarterly. The Board of Directors anticipates that the aggregate amount of any borrowing will not exceed 50% of Real Estate Asset Value, although the maximum amount of borrowing in relation to Net Assets, in the absence of a satisfactory showing that a higher level of borrowing is appropriate, shall not exceed 300% of Net Assets (an amount which the Company anticipates will correspond to approximately 75% of Real Estate Asset Value). Any excess in borrowing over such 300% level shall occur only with approval by a majority of the Independent Directors and will be disclosed and explained to stockholders in the first quarterly report of the Company prepared after such approval occurs. Any additional financing obtained to fund Secured Equipment Leases may not exceed 10% of aggregate gross proceeds of the Company's Prior Offerings, this offering and any subsequent offering. -99-
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PENDING INVESTMENTS As of December 31, 1997, the Company had initial commitments to acquire seven properties, including six properties consisting of land and building and one property 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 seven of these properties are expected to be entered into on substantially the same terms described in the section of the Prospectus entitled "Business -Description of Property Leases." In connection with the IHOP property in Saugus, Massachusetts, the Company anticipates owning only the building and not the underlying land. However, 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. Set forth below are summarized terms expected to apply to the leases for each of the properties. More detailed information relating to a property and its related lease will be provided at such time, if any, as the property is acquired. -100-
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ˇ Enlarge/Download Table Lease Term and Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase -------- --------------- ------------------- --------------- ------------------ Boston Market 15 years; five 10.38% of the Company's for each lease year after at any time Colorado Springs, CO five-year renewal total cost to purchase the the fifth lease year, (i) after the Existing restaurant options property; increases by 10% 4% of annual gross sales fifth lease after the fifth lease year minus (ii) the minimum year and after every five years annual rent for such lease thereafter during the lease year term Golden Corral 15 years; four 10.75% of Total Cost (1) for each lease year, 5% of during the Dubuque, IA (#2) five-year renewal the amount by which annual first through Restaurant to be options gross sales exceed a to be seventh lease constructed determined breakpoint years and the tenth through lease years fifteenth only -101-
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ˇ Enlarge/Download Table Lease Term and Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase -------- --------------- ------------------- --------------- ------------------ Golden Corral 15 years; four 10.75% of Total Cost (1) for each lease year, 5% of during the Edmond, OK five-year renewal the amount by which annual first through Restaurant to be options gross sales exceed a to be seventh lease constructed determined breakpoint years and the Ground Round 20 years; five 10.25% of the Company's (2) at any time Maple Shade, NJ five-year renewal total cost to purchase the after the Existing restaurant options property seventh lease year IHOP (3) (4) 11.78% of the Company's for each lease year, (i) 3% at any time Saugus, MA total cost to purchase the of annual gross sales minus after the Existing restaurant building; increases by (ii) the minimum annual fifth lease 5.81% after the fifth lease rent for such lease year year year, 4.66% after the tenth lease year, and 2.83% after the fifteenth lease year -102-
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ˇ Enlarge/Download Table Lease Term and Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase -------- --------------- ------------------- --------------- ------------------ Ruby Tuesday's 20 years; two 11% of Total Cost (1); for each lease year, (i) 6% at any time Georgetown, KY five-year renewal increases by 10% after the of annual gross sales minus after the Restaurant to be options fifth lease year and after (ii) the minimum annual seventh lease constructed every five years thereafter rent for such lease year year during the lease term Shoney's 20 years; two 11% of Total Cost (1); for each lease year, (i) 6% at any time Phoenix, AZ (#4) five-year renewal increases by 10% after the of annual gross sales minus after the Restaurant to be options fifth lease year and after (ii) the minimum annual seventh lease renovated every five years thereafter rent for such lease year year during the lease term -103-
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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. -105-
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SALE OF PROPERTIES AND SECURED EQUIPMENT LEASES During the nine months ended September 30, 1997, the Company sold five of its Properties to tenants for a total of approximately $6,301,000. The Company reinvested the net sales proceeds from the sale of Properties in additional Properties. In addition, during the nine months ended September 30, 1997, the Company sold the Equipment relating to four Secured Equipment Leases to the tenants and used the proceeds therefrom to repay amounts previously advanced under its Line of Credit. SELECTED FINANCIAL DATA The following table sets forth certain financial information for the Company, and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements included in Exhibit B to this Prospectus. ˇ Enlarge/Download Table May 2, 1994 (Date of Inception) Nine Months Ended Year Ended through September 30, 1997 September 30, 1996 December 31, December 31, (Unaudited) (Unaudited) 1996 1995 1994 ------------------ ------------------ ------ ------ ------------- Revenues $12,252,450 $3,883,714 $6,206,684 $ 659,131 $ - Net earnings 9,737,809 2,757,759 4,745,962 368,779 - Cash distributions declared (1) 10,879,969 3,403,427 5,436,072 638,618 - Funds from operations (2) 10,834,302 3,080,556 5,257,040 469,097 - Earnings per Share 0.48 0.41 0.59 0.19 - Cash distributions declared per Share 0.55 0.53 0.71 0.34 - Weighted average number of Shares outstanding (3) 20,368,867 6,771,120 8,071,670 1,898,350 - September 30, 1997 September 30, 1996 December 31, December 31, December 31, (Unaudited) (Unaudited) 1996 1995 1994 ------------------ ------------------ ------------ ------------ ------------ Total assets $288,151,045 $97,998,150 $134,825,048 $33,603,084 $929,585 Total equity 255,603,278 89,528,514 122,867,427 31,980,648 200,000 -113-
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(1) Approximately eight percent, 12 percent, 13 percent and 42 percent of cash distributions ($0.04, $0.06, $0.06 and $0.14 per Share) for the nine months ended September 30, 1997 and 1996, and the years ended December 31, 1996 and 1995, respectively, represent a return of capital in accordance with generally accepted accounting principles ("GAAP"). Cash distributions treated as a return of capital on a GAAP basis represent the amount of cash distributions in excess of accumulated net earnings on a GAAP basis. The Company has not treated such amount as a return of capital for purposes of calculating Invested Capital and the Stockholders' 8% Return. (2) Funds from operations ( "FFO "), based on the revised definition adopted by the Board of Governors of NAREIT and as used herein, means net earnings determined in accordance with generally accepted accounting principles ( "GAAP "), excluding gains or losses from debt restructuring and sales of property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. FFO was developed by NAREIT as a relative measure of performance and liquidity of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. However, FFO (i) does not represent cash generated from operating activities determined in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events that enter into the determination of net earnings), (ii) is not necessarily indicative of cash flow available to fund cash needs and (iii) should not be considered as an alternative to net earnings determined in accordance with GAAP as an indication of the Company's operating performance, or to cash flow from operating activities determined in accordance with GAAP as a measure of either liquidity or the Company's ability to make distributions. Accordingly, the Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO should be considered in conjunction with the Company's net earnings and cash flows as reported in the accompanying consolidated financial statements and notes thereto. See Exhibit B - Financial Information. (3) The weighted average number of Shares outstanding is based upon the period the Company was operational. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE COMPANY INTRODUCTION The Company is a Maryland corporation that was organized on May 2, 1994, to acquire Properties, directly or indirectly through Joint Venture or co-tenancy arrangements, to be leased on a long-term, "triple-net" basis to operators of certain Restaurant Chains. In addition, the Company may provide Mortgage Loans for the purchase of buildings, generally by borrowers that lease the underlying land from the Company. To a lesser extent, the Company may offer Secured Equipment Leases to operators of Restaurant Chains. LIQUIDITY AND CAPITAL RESOURCES In April 1995, the Company commenced the Initial Offering of its shares of common stock. During the period April 1, 1995 through February 6, 1997, the Company received subscription proceeds of $150,591,765 (15,059,177 shares) including $591,765 (59,177 shares) pursuant to the Company's Reinvestment Plan, from the Initial Offering, thereby completing such offering. Following the completion of the Initial Offering on February 6, 1997, the Company commenced this offering. As of September 30, 1997, the Company had received subscription proceeds of $137,883,078 (13,788,308 shares) from this offering, including $1,183,289 (118,329 shares) pursuant to the Reinvestment Plan. As of September 30, 1997, net proceeds to the Company from the Initial Offering and this offering, after deduction of selling commissions, marketing support and due diligence expense reimbursement fees and offering expenses totalled $257,685,387. Approximately $230,368,000 of such amount had been used to invest, -114-
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or committed for investment, in 212 Properties (16 Properties which were under construction as of September 30, 1997), in providing mortgage financing of $17,047,000 and to pay acquisition fees to the Advisor totalling $12,981,368 and certain acquisition expenses. The Company acquired 15 of the 212 Properties from Affiliates for purchase prices totalling approximately $11,000,000. The Affiliates had purchased and temporarily held title to these Properties in order to facilitate the acquisition of the Properties by the Company. Each Property was acquired at a cost no greater than the lesser of the cost of the Property to the Affiliate (including carrying costs) or the Property's appraised value. In connection with the 16 Properties under construction at September 30, 1997, the Company has entered into various development agreements with tenants which provide terms and specifications for the construction of buildings the tenants have agreed to lease. The agreements provide a maximum amount of development costs (including the purchase price of the land and closing costs) to be paid by the Company. The aggregate maximum development costs the Company has agreed to pay are approximately $20,121,000, of which approximately $13,390,000 had been incurred as of September 30, 1997. The buildings under construction as of September 30, 1997, are expected to be operational by March 1998. In connection with the purchase of each Property, the Company, as lessor, entered into a long-term lease agreement. During the nine months ended September 30, 1997, the Company sold five of its Properties and the Equipment relating to four Secured Equipment Leases to tenants. The Company received net proceeds of approximately $7,612,000 which was equal to the carrying value of the Properties and the Equipment at the time of the sale. As a result, no gain or loss was recognized for financial reporting purposes. The Company reinvested the proceeds from the sale of Properties in additional Properties. The Company used the net sales proceeds relating to the sale of the Equipment to repay amounts previously advanced under the Line of Credit. During the period October 1, 1997 through December 31, 1997, the Company acquired 32 additional Properties (seven on which restaurants are being constructed ) for cash at a total cost of approximately $34,231,500. Three of the Properties were acquired from an Affiliate for approximately $3,674,000. In connection with the three Properties acquired from an Affiliate, the Affiliate had purchased and temporarily held title to the three Properties in order to facilitate the acquisition of the Properties by the Company. The three Properties were acquired at a cost no greater than the lesser of the cost of each Property to the Affiliate, including its carrying costs, or the Property's appraised value. In connection with the purchase of each of the 32 Properties, the Company, as lessor, entered into a long-term lease agreement. The buildings under construction are expected to be operational by August 1998. The Company currently is negotiating to acquire additional Properties, but as of December 31, 1997, had not acquired any such Properties. As of December 31, 1997, the Company had received aggregate subscription proceeds of $361,764,864 (36,176,486 shares) from the Initial Offering and this offering, including $2,464,413 (246,441 shares) through its Reinvestment Plan. As of December 31, 1997, the Company had invested or committed for investment approximately $274,720,000 of aggregate net proceeds from the Initial Offering and this offering in 244 Properties, in providing mortgage financing to the tenants of 44 Properties consisting of land only and two additional Properties through Mortgage Loans and in paying acquisition fees and certain acquisition expenses, leaving approximately $50,192,000 in aggregate net offering proceeds available for investment in Properties and Mortgage Loans. The Company expects to use the uninvested Net Offering Proceeds, plus any Net Offering Proceeds from the sale of additional Shares, to purchase additional Properties, to fund construction costs relating to the Properties under construction and to make Mortgage Loans. The number of Properties to be acquired and Mortgage Loans to be entered into will depend upon the amount of Net Offering Proceeds available to the Company, although the Company is expected to have a total portfolio of 400 to 450 Properties if the maximum number of Shares are sold in this offering. The Company expects to use the proceeds of the Line of Credit to fund the Secured Equipment Lease program. The Company intends to limit the amount of Secured Equipment Leases it enters into to ten percent of gross offering proceeds from its offerings. On October 10, 1997, the Company filed a registration statement with the Securities and Exchange Commission in connection with the proposed sale by the Company of up to 34,500,000 shares of common stock in the Subsequent Offering expected to commence in February 1998. Of the 34,500,000 -115-
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shares of common stock to be offered, 2,000,000 will be available only to stockholders purchasing through the Reinvestment Plan. The price per share and the other terms of the Subsequent Offering, including the percentage of gross proceeds payable to the Managing Dealer for selling commissions and expenses in connection with the offering, payable to the Advisor for acquisition fees and acquisition expenses and reimbursable to the Advisor for offering expenses, will be the same as those for this offering. Net proceeds from the Subsequent Offering will be invested in additional Properties and Mortgage Loans. The Company has entered into a revolving $35,000,000 unsecured Line of Credit with a bank to fund Secured Equipment Leases and to purchase and develop Properties or fund Mortgage Loans. The advances will bear interest at a rate of LIBOR plus 1.65% or the bank's prime rate, whichever the Company selects at the time of borrowing. Interest only will be repayable monthly until July 31, 1999, at which time all remaining interest and principal shall be due. The Line of Credit provides for two one-year renewal options. Management believes that during the offering period the Line of Credit will allow the Company to make investments that the Company otherwise would be forced to delay until it raised sufficient offering proceeds. Advances used to fund Secured Equipment Leases will be repaid using payments received from Secured Equipment Leases and will be refinanced in regard to any Secured Equipment Lease not fully repaid at the end of the term of the Line of Credit. Advances used to purchase and develop Properties and fund Mortgage Loans will be repaid using additional offering proceeds from this offering or refinanced on a long-term basis. The Company will not encumber Properties in connection with the Line of Credit. The Company does not intend to use Net Offering Proceeds to fund Secured Equipment Leases; however, as of December 31, 1997, the Company had used $19,000,000 of uninvested Net Offering Proceeds to temporarily reduce the balance outstanding under the Line of Credit pending investment of such offering proceeds in Properties or Mortgage Loans in order to reduce interest expense incurred by the Company. Properties are and will be leased on a triple-net basis, meaning that tenants are generally required to pay all repairs and maintenance, property taxes, insurance and utilities. Rental payments under the leases are expected to exceed the Company's operating expenses. For these reasons, no short-term or long-term liquidity problems currently are anticipated by management. Until Properties are acquired, or Mortgage Loans are entered into, Net Offering Proceeds are held in short-term, highly liquid investments which management believes to have appropriate safety of principal. This investment strategy provides high liquidity in order to facilitate the Company's use of these funds to acquire Properties or to fund Mortgage Loans at such time as Properties suitable for acquisition and investments in Mortgage Notes are identified. At September 30, 1997, the Company had $41,324,755 invested in such short-term investments, as compared to $42,450,088 at December 31, 1996. These funds will be used primarily to purchase and develop or renovate Properties (directly or indirectly through joint venture arrangements), to make Mortgage Loans, to pay offering and acquisition costs, to pay Distributions to stockholders, to temporarily reduce amounts outstanding under the Company's Line of Credit pending the investment of Net Offering Proceeds, to meet Company expenses and, in management's discretion, to create cash reserves. During the nine months ended September 30, 1997 and 1996, Affiliates of the Company incurred on behalf of the Company $1,794,722 and $615,600, respectively, for certain offering expenses, $428,114 and $136,341, respectively, for certain acquisition expenses, and $291,633 and $208,156 , respectively, for certain operating expenses. As of September 30, 1997, the Company owed the Advisor $689,214 for such amounts, unpaid acquisition fees and accounting and administrative expenses. As of October 31, 1997, the Company had reimbursed all such amounts. The Advisor has agreed to pay or reimburse to the Company all offering expenses in excess of three percent of the aggregate gross proceeds from the Company's offerings. As of September 30, 1997, the offering expenses had not exceeded this amount. During the nine months ended September 30, 1997 and 1996, the Company generated cash from operations (which includes cash received from tenants and interest and other income received, less cash paid for operating expenses) of $10,800,147 and $3,244,519, respectively. Based on current -116-
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and anticipated future cash from operations, the Company declared Distributions to the stockholders of $10,879,969 and $3,403,427 during the nine months ended September 30, 1997 and 1996, respectively. In addition, on October 1, 1997, November 1, 1997, and December 1, 1997, the Company declared Distributions to its stockholders totalling $1,845,170, $1,991,363 and $2,139,006, respectively, payable in December 1997. For the nine months ended September 30, 1997 and 1996, approximately 92 and 88 percent, respectively, of the Distributions received by stockholders were considered to be ordinary income and approximately eight and 12 percent, respectively, were considered a return of capital for federal income tax purposes. However, no amounts distributed or to be distributed to the stockholders as of December 31, 1997, are required to be or have been treated by the Company as a return of capital for purposes of calculating the stockholders' return on their invested capital. Management believes that the Properties are adequately covered by insurance. In addition, the Advisor obtained contingent liability and property coverage for the Company. This insurance policy is intended to reduce the Company's exposure in the unlikely event a tenant's insurance policy lapses or is insufficient to cover a claim relating to the Property. The Company's investment strategy of acquiring Properties for cash and leasing them under triple-net leases to operators who meet specified financial standards is expected to minimize the Company's operating expenses. Due to the fact that the Properties are leased on a long-term, triple-net basis, management does not believe that working capital reserves are necessary at this time. Management has the right to cause the Company to maintain reserves if, in their discretion, they determine such reserves are required to meet the Company's working capital needs. Management expects that the cash generated from operations will be adequate to pay operating expenses. RESULTS OF OPERATIONS As of September 30, 1997, the Company and its consolidated joint venture, CNL/Corral South Joint Venture (hereinafter, collectively referred to as the Company) had purchased and entered into long-term, triple-net leases for 217 Properties (including five Properties which were sold in 1997). The Property leases provide for minimum base annual rental payments ranging from approximately $34,800 to $467,500, which are payable in monthly installments. In addition, certain leases provide for percentage rent based on sales in excess of a specified amount. The majority of the leases also provide that, commencing in generally the sixth lease year, the annual base rent required under the terms of the leases will increase. In connection therewith, during the nine months ended September 30, 1997 and 1996, the Company earned $9,636,626 and $2,667,866, respectively, in rental income from operating leases and earned income from direct financing leases from 217 Properties and 23 Secured Equipment Leases in 1997 (including five Properties and four Secured Equipment Leases which were sold during the nine months ended <